CA FINAL

TEST SERIES
NOV 24 EXAM
MOCK TEST - 1
suggested answers

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 CA FINAL TEST SERIES NOVEMBER’ 24 EXAM
MOCK TEST – 1 SUGGESTED ANSWER

Section – A: MCQ’S

1. D)
Gross GST liability of Mumbai Head Office of Zoom Air for the month of January
Liability on sale of Air tickets (400,000*18%) 72,000
Liability on collection charges given by Airport authority [(Rs.1,00,000*5%)*18%] 900
Liability on sale of tickets through ECO [2,00,000*18%] 36,000
Liability on gifts given to employees (since the value of gift exceeds Rs.50,000 1,08,000
entire value will be taxable)[Rs.60,000*10 employees = 600000*18%]
Gross GST Liability 2,16,900
[2 MARKS]

2. A)
All kinds of credits available to Mumbai Head Office
Commission to Supertrip India [Rs.2,00,000*5%]*18% 1,800
TCS collected by supertrip India [Rs.2,00,000*1%] 2,000
Total Credits available 3,800
[2 MARKS]

3. C)
Credits available to customers
ITC paid on basic fare [` 4,00,000*18%] 72,000
ITC paid on PSF 7 USF [`. 1,00,000/118*18] 15,254
Total Credits available 87,254
[2 MARKS]

4. D) Correct statement
As per sec 12(2), Place of supply shall be the location of recipient. Therefore, POS will be
Haryana. Since the LOS and POS is in the same state CGST & SGST will be payable
[2 MARKS]

5. D) No, since service is provided to a business entity that is registered under GST in the
preceding financial year under section 22 of the CGST Act, 2017. Further, tax shall be payable
by Veranta India (P) Ltd. under reverse charge.
[2 MARKS]

6. C) As per sec 13(3), in case of reverse charge, Time of supply shall be For ` 1 lakh a) Date
of payment (i.e. 5 Apr 2021) b) 61st day from Supplier Date of Invoice [ 15th Feb + 61 days
= 17 Apr 2021] Whichever is earlier Note- DOP = ( BE or Dr in Bank) w.i.earlier Hence time
of supply for ` 1 lakh shall be 5th April 2021
As per Sec 13(6) - For Int.Late Fee or Penalty for delay of consideration TOS = Date of
Receipt of lnt./Late Fee etc. Hence for ` 10,000, Time of supply = 5th April 2021
[2 MARKS]

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7. A) ` 110,000 15(1): Value of taxable supply = Transaction Value, Further as per Sec 15(2) (d)
Interest or late fee or penalty for delayed payment is included in value Hence Value of
Supply = `1,00,000 + `10,000 = `1,10,000
[2 MARKS]

8. C) (ii) and (iv) As per sec 10(1) & (2), only Restaurant service provider is eligible for
composition scheme. Hence legal service provider M/s Gopi Narayan & Company is not
eligible to opt for composition levy under sec 10(1) & (2). As per sec 10(2A), other service
provider can claim composition scheme but subject to condition that aggregate turnover in
P.Y not exceed ` 50,00,000. Further there is a condition that he should not make inter-
state supply. But in our case M/s Gopi Narayan & Company is making inter-state supply to
M/s Veranta India (P) Ltd. Hence, Gopi Narayan & Company is not eligible to opt for
composition levy under sec 10(2A) also
[2 MARKS]

9. B) The transportation services provided to students, teachers, other staff is exempt from
GST.
[2 MARKS]

10. C) No GST is payable on consideration of `12,00,000 received from students in the form of
entrance exam fee as such amount is exempt from GST. However, it still qualifies to be a
supply as per the CGST Act, 2017 and needs to be reported in the return for the month of
May as exempt supply. Entry 66(aa): Services provided - by an educational institution by way
of conduct of entrance examination against consideration in the form of entrance fee is
exempt
[2 MARKS]

11. B) lt is an exempt supply under section 11 of the CGST Act, 2017 as CBSE is treated as
educational institution for the limited purpose of providing services by way of conduct of
examination to the students. Entry 66: Services provided, by any person by way of, services
relating to admission to, or conduct of examination by, such institution is exempt It is
important to note that 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
[2 MARKS]

12. D) GST is not payable on the services provided by Ambaji Transporters as they have been
specifically exempted under section 11 of the CGST Act, 2017. Tax is not payable on reverse
charge basis on the same under section 9(3) of the CGST Act, 2017
Since, Bright Public School is providing education up to higher secondary school or
equivalent. Hence services provided by Ambaji Transporters to Bright Public School is
exempt. Further, since no tax payable. No question of reverse charge u/s 9(3)
[2 MARKS]

13. D) he view taken by Mr. Bansi Lal is incorrect. Further, Mr. Mota Lal can inspect the goods
and ensure that goods do not deteriorate during storage in the warehouse and also
thereafter, he can show them for sale to Mr. Manohar Lal.
[2 MARKS]

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14. A) Personal effects is exempted
Laptop computer is exempted
Jewellery upto 40 gms subject to value of 1,00,000 is covered under jewllery allowance
Music system is dutiable after a General Free Allowance of `50,000 = `1,25,000 (-) `50,000
= `75,000 X 38.5% = `28.875
[2 MARKS]

15. C) Assessable value = $50,000 X `60/$ = `30,00,000

Customs duty payable = `30,00,000 X 12% = `3,60,000
[2 MARKS]

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 Section B: Descriptive
Question no:1 is compulsory, Answer any four out of 5 remaining question below:

ANSWER FOR QUESTION 1:

IGST @ CGST SGST

Value
Particulars 18% @ 9% @ 9%
` ` ` `
Outward Supply:
Sale of old warehouse building Nil - - -
[Since sale of building is neither supply of goods
nor supply of services in terms of para 5 of
Schedule III of the CGST Act, 2017, it does not
qualify as supply.]
Supply of laptops 2,39,400 - -
[Inter-State supply since place of supply here is 1330000
the location as per the address of the [12,00,000+
unregistered recipient (name of the State) 1,30,000]
recorded in the invoice issued in respect of the
supply, viz. Haryana, in terms of section 10(1)(ca)
of the IGST Act, 2017.
Further, as per section 8(a), supply of laptops
with packing is a composite supply, chargeable
to tax at the rate applicable to the principal
supply (viz. supply of laptops) i.e.,18%.]
Direct Selling Agent service 4,00,000 - 36,000 36,000
[Intra-State supply since place of supply here is
the location of recipient, viz. Karnataka, in
terms of section 12(2)(a) of the IGST Act,
2017.Further, tax will be payable under forward
charge since such services are provided by a
person other than individual - Notification No.
13/2017 CT(R) dated 28.06.2017.]
Pure labour servicer 6,20,000 1,11,600 - -
[Inter-State supply since place of supply here is
the location of immoveable property, viz.
Maharashtra in terms of section 12(3) of the
IGST Act, 2017.Further, services by way of pure
labour contracts of erection and installation of
original works pertaining to a single residential
unit otherwise than as a part of a residential
complex are exempt in terms of Notification No.
12/2017 CT(R) dated 28.06.2017.However, such
services in relation to renovation work are not
exempt.]
Free training to agents [Services provided by 1,00,000 - - -
the company to agents
[Services provided by the company to agents
without consideration is not deemed as supply
in terms of para 3 of Schedule-I since only
goods supplied by principal to agent are covered
therein. Further, such services are also not

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 covered in para 2 of Schedule I as agents are
not related persons.]
Corporate guarantee provided to Laxmi 2,00,000 - 18,000 18,000
Logistics Limited
[Supply of service between related parties even
when made without any consideration is deemed
supply in terms of Schedule I.
Further, value of corporate guarantee, in terms
of rule 28(2), will be higher of:
(i) 1% of the amount of such guarantee
offered,
or
(ii) actual consideration] (i.e. 1% of ` 2 crore)
[Circular No. 204/16/2023 GST dated
27.10.2023]
Interest received on fixed deposits 2,00,000 - - -
[Services by way of extending deposits, loans
or advances in so far as the consideration is
represented by way of interest are exempt vide
Notification No. 12/2017 CT (R) dated
28.06.2017]
Gross GST liability [A] 3,51,000 54,000 54,000
Less: ITC available for set off [Refer Note (iii) 24,958 16,639 16,639
below]
Net GST payable in cash 3,26,042 37,361 37,361

Notes:
(i) Computation of ITC admissible to Sitaram Industries Ltd. for the month of October, 2023
Value IGST CGST SGST
Particulars
` ` ` `
Debit note received 4,00,000 - 36,000 36,000
[ITC on debit notes issued in a financial year can be
availed any time till 30th November of the succeeding
financial year or the date of filing of the relevant
annual return, whichever is earlier, irrespective of the
date of original invoice/ supply, in terms of section
16(4).]
Solar panels purchased - - -
[ITC cannot be claimed in respect of solar panels,
since ITC on goods or services or both received by a
taxable person for construction of an immovable
property (other than plant and machinery on his own
account including when such goods or services or both
are used in the course of furtherance of business is
blocked in terms of section 17(5)(d).]
Uniforms purchased 3,00,000 54,000 - -
[ITC on the uniforms which are necessary to ensure
the safety of the employees while carrying out the
business activity, is available. However, uniforms not
provided for any safety purpose are construed as
being used for personal consumption and thus, ITC
thereon is blocked in terms of section 17(5)(d).]
Total 54,000 36,000 36,000

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(ii) Computation of common credit attributable to exempt supplies in respect of Sitaram
Industries Ltd. for the month of October, 2023
Value IGST CGST SGST
Particulars
(`) (`) (`) (`)
Common credit on receipt of debit note -- 36,000 36,000
[Debit note, although received in respect of taxable
inward supply, is being used for all goods
manufactured in factory which comprises of both
taxable and exempt goods.]
Common credit on purchase of uniforms [Uniforms 54,000
are being used commonly for manufacturing of both
taxable and exempt
goods.]
Common credit attributable to exempt supplies 29,042
(rounded off)
= Common credit x (Exempt turnover during the
period / Total turnover during the period)
= ` 54,000 x ` 32,00,000/` 59,50,000 (IGST)
= ` 36,000 x ` 32,00,000 / ` 59,50,000 19,361 19,361
(CGST/SGST)
Exempt turnover = ` 32,00,000 and total turnover =
` 59,50,000 [Refer note below]
Note: As per explanation to section 17(3), the expression "value of exempt supply" shall not include
the value of activities or transactions specified in Schedule III, except, inter alia, sale of building
subject to clause (b) of paragraph 5 of Schedule II. Further, as per explanation to Chapter V
(Input Tax Credit) of the CGST Rules, 2017, for determining the value of an exempt supply as
referred to in section 17(3), the value of exempt supply in respect of land and building is the
value adopted for the purpose of paying stamp duty.Further, as per explanation 1 to rule 43, the
aggregate value of exempt supplies for the purpose of rules 42 and 43, inter alia, excludes the
value of services by way of accepting deposits, extending loans or advances in so far as the
consideration is represented by way of interest or discount, except in case of a banking company
or a financial institution including a non-banking financial company, engaged in supplying
services by way of accepting deposits, extending loans or advances.Therefore, value of exempt
turnover in the given case will be the value of building (` 32,00,000).Total turnover will be sum
of value of building (` 32,00,000) + supply of laptop (` 13,30,000) + supply of Direct Selling Agent
service (` 4,00,000)+ supply of pure labour service (` 6,20,000) + supply of corporate guarantee
(` 2,00,000) + interest received on fixed deposits (` 2,00,000) = ` 59,50,000

(iii) Computation of ITC available for set off of Sitaram Industries Limited for the month of
October, 2023
Particulars Value IGST CGST SGST
(`) (`) (`) (`)
Common credit on inputs and input services 54,000 36,000 36,000
ITC available in the Electronic Credit Ledger 54,000 36,000 36,000
Less: Common credit attributable to exempt 29,042 19,361 19,361
supplies during the tax period
[As calculated in Note (ii) above]
ITC available for set off 24,958 16,639 16,639
[14 MARKS]

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ANSWER FOR QUESTION 2(a):

Sr. No. Particulars `

1. Monthly subscription collected from member families (`8,500 each from 8,50,000
100 families) [Note 1]
2. Electricity charges levied by State Electricity Board on the members of Nil
RWA [The same was collected from members and remitted to the Board
on behalf of members.] [Note 2]
3. Electricity charges levied by State Electricity Board on the RWA in respect Nil
of electricity consumed for common use of lifts and lights in common
area on actual basis as charged by State Electricity board. [Note 3]
4. Proceeds from sale of entry tickets to a cultural programme conducted 40,000
by the RWA in the park of Blue Heaven Housing Society [Note 4]
5. Proceeds from sale of space for advertisement in Members directory 3,00,000
[from members ` 1,00,000 and from non-members ` 2,00,000] [Note 4]
Value of taxable service 11,90,000

Notes:
1. As per Exemption Notification 12/2017 Central Tax (Rate) there is an exemption upto ` 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. In the above case the
amount exceeds the prescribed limit. Hence, the same is liable to GST
2. This has been collected as a 'pure agent' basis as per the explanation provided in Rule 33 of
CGST Rules. Hence, the same is not liable to GST
3. As per CBIC circular No. 206/18/2023, where RWA charge for electricity on actual basis i.e.,
they charge the same amount for electricity from their lessees or occupants as charged by
state electricity board from them, they will be deemed to be acting as pure agent for this
supply.
4. The same is not covered under exemption. Hence, liable to GST
[5 MARKS]

ANSWER FOR QUESTION 2(b):

(i) GST Liability for Samsung on the Replacement of the Defective Smartphone Under the
Manufacturer’s Warranty:
As per Circular No. 195/07/2023-GST, the replacement of the defective smartphone falls
under the manufacturer’s warranty, which was part of the original supply of goods. Since GST
has already been paid at the time of the initial sale of the smartphone, no additional GST is
applicable when Samsung replaces the defective smartphone. The replacement is considered
part of the original transaction, and therefore, Samsung is not required to charge GST or
reverse Input Tax Credit (ITC) on this replacement.
(ii) GST Implications for Samsung When Replenishing the Distributor's Stock:
When Samsung replenishes the distributor’s stock with a new smartphone to compensate for
the replacement made by the distributor, the replenishment is done via a delivery challan
without any monetary consideration. According to the circular, since there is no consideration
involved in this transaction, it does not constitute a taxable supply under GST. As such, no
GST is payable on the replenishment, and Samsung is not required to reverse ITC for this
transaction.
(iii) GST Treatment for the Extended Warranty Provided by Warranty Plus:
In this scenario, the customer has purchased an extended 2-year warranty from a third-
party service provider, Warranty Plus, which is separate from the manufacturer’s warranty.
since the extended warranty is provided by a different supplier (Warranty Plus) than the one
who supplied the goods (Samsung), this is treated as a separate supply of services. GST will

Page 7
 be charged on the value of the extended warranty as a service, distinct from the original
supply of goods. The applicable GST rate for services will apply to the extended warranty
provided by Warranty Plus.
(iv) GST Liability If the Extended Warranty Was Purchased From Samsung:
If the extended warranty had been purchased from Samsung directly at the time of the
original sale, this would be considered a composite supply. As per Circular No. 195/07/2023-
GST, when an extended warranty is part of the same transaction as the sale of the
smartphone and is supplied by the same supplier (Samsung), it forms part of a composite
supply. In this case, the principal supply is the smartphone, and the GST rate applicable to
the smartphone will also apply to the extended warranty. Therefore, Samsung would charge
GST at the same rate as the smartphone on the entire transaction, including the extended
warranty.
(5 MARKS)

ANSWER FOR QUESTION 2(c):

Import share from
Country of Category Quantity imported
developing country to
Origin (Developing/developed) (Metric Tons)
total
Country A Developed 500 500/20000 × 100 = 2.5%
Country B Developing 150 150/20000 × 100 = 0.75%
Country C Developing 50 50/20000 × 100 = 0.25%
Country D Developed 300 300/20000 × 100=1.5%
Country E Developing 100 100/20000 × 100=0.5%
Total 20,000 MT’s
▪ Country A and Country D (Developed): Since these countries are classified as developed,
the exemption for developing countries does not apply. Therefore, safeguard duty applies
to these imports.
▪ Country B, C, and E (Developing): The collective import share from all developing
countries is: 0.75%+0.25%+0.5%=1.5%, which is less than 9%.
Therefore, safeguard duty exemption applies to these developing countries.
For countries where safeguard duty applies (Countries A and D), the safeguard duty rate is 20%
on the assessable value.

Assessable Value per Metric Ton: ₹40,000

Quantity Imported Assessable Value Total Assessable Safeguard Duty
Country
(Metric Tons) (₹ per ton) Value (₹) (20%) (₹)
Country 500 40,000 500 × 40,000 = 20,000,000 × 20% =
A 20,000,000 4,000,000
Country 300 40,000 300 × 40,000 = 12,000,000 × 20% =
D 12,000,000 2,400,000
Total Safeguard Duty = ₹4,000,000 + ₹2,400,000 = ₹6,400,000

Computation of total customs duty payable:

Total
Social
Basic Safeguard customs
Country Assessable Value Welfare
Customs Duty duty duty
Surcharge
payable
A 20,000,000 20,00,000 2,00,000 40,00,000 62,00,000
B 60,00,000 6,00,000 60,000 X 6,60,000
C 20,00,000 2,00,000 20,000 X 2,20,000
D 12,000,000 12,00,000 1,20,000 24,00,000 37,20,000
E 40,00,000 4,00,000 40,000 X 4,40,000
(4 MARKS)

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ANSWER FOR QUESTION 3(a):
(i) Calculation of Total Value of Supply for the Month of October:
• Number of Indian players: 10,000
• Entry fee per player: $100 USD
• Exchange rate as notified by CBIC: ₹80/$
Total Entry Fee in USD: 10,000 × 100 = 1,000,000 USD
Total Value in INR (using the CBIC notified rate): 1,000,000 × 80 = ₹8,00,00,000
Thus, the total value of supply for the month of October from Indian players is ₹8,00,00,000.

(ii) (As per Section 14A(1) of IGST Act, Global Gaming Inc., not being located in the taxable
territory, is liable to pay Integrated Tax (IGST) on the supply of online money gaming to
Indian players. So, the IGST liability that must be remitted for the month of October is
₹1,44,00,000.
Under Section 14A(2), Global Gaming Inc. can appoint Mr. Arjun, based in Mumbai, as their
representative in India to comply with IGST provisions. Mr. Arjun will be responsible for:
• Registering under the Simplified Registration Scheme.
• Paying the IGST liability on behalf of Global Gaming Inc. as their appointed
representative.
If Mr. Arjun is appointed, he will fulfill the obligations and remit the ₹1,44,00,000 IGST for
the month of October.

(iii) If Global Gaming Inc. does not appoint Mr. Arjun or any other representative in India to
comply with IGST provisions:
• Under Section 14A(2): The company is still liable to register and pay IGST. If Global
Gaming Inc. does not have a physical presence or a representative in India, they are
required to appoint someone in the taxable territory to pay the IGST.
• Section 14A(3): In case of non-compliance, including failure to appoint a representative
or register under the Simplified Registration Scheme, the government has the power to
block access to the online money gaming services provided by Global Gaming Inc. This
blocking can occur under the provisions of the Information Technology Act, 2000, and
will make it impossible for Indian players to access the platform.
[5 MARKS]

ANSWER FOR QUESTION 3(b):

Computation of value taxable services of Om Shree Transport Agency:-
Nature of services provided Value Rs. Remarks
Transpiration of salt and food grains - Transpiration of salt and food grains
by GTA is exempt
Consignment of books transported in 1,50,000 Taxable as not covered in any
single carriage exemption
Transport of colour TV sets to M/s 3,55,000 Services provided by GTA to a
XYZ Ltd. a registered entity under registered person is taxable under
GST forward charge.
Transport of auto spares for an - Services provided by GTA to an
unregistered person unregistered person is exempt.
Transport of military equipments - It is specifically exempt.
Freight collected for transporting 10,000 Taxable as not covered in any
small consignment for person who exemption.
paid Rs. 700 for each consignment
Transported goods of local authority - It is specifically exempt.
Value of taxable services 5,15,000
[4 MARKS]

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ANSWER FOR QUESTION 3(c):
Provisional Assessment is allowed when the proper officer is unable to determine the final duty
payable due to incomplete information, such as the need for a chemical test in this case. Under
Section 18(1) of the Customs Act, 1962, certain conditions need to be met for provisional
assessment before the payment of duty:
1. Furnishing a Bond: Aayaat Enterprises is required to execute a bond in the prescribed
form, binding itself to pay the difference between the duty provisionally assessed and
the duty finally assessed.
2. Security for Differential Duty: The company also needs to furnish appropriate security
(usually a bank guarantee) to cover any additional duty that may arise due to the final
assessment.
In this case, Aayaat Enterprises fulfilled these requirements on 16th April when the goods were
provisionally assessed at ₹24,00,000 and provisional duty of ₹2,40,000 was paid.

Interest is payable on the differential duty when the provisional duty is lower than the finally
assessed duty, as per Section 18(3) of the Customs Act, 1962. The interest is calculated from the
first day of the month in which provisional duty was assessed to the day the differential duty is
paid.
Details for Interest Calculation:
• Provisional Duty Paid: ₹2,40,000 (on 16th April)
• Finally Assessed Duty: ₹2,80,000 (on 30th June)
• Differential Duty: ₹2,80,000 − ₹2,40,000 = ₹40,000
• Interest Rate: As per Notification No. 28/2002-Customs (N.T.), the interest rate is 15%
per annum (applicable as per the prevailing rate).

Period for Interest Calculation: Interest is payable from 1st April to 30th June, which is a total
of 91 days.
Interest = `40,000 X 15% X 91/365 = `1,496
[5 MARKS]

ANSWER FOR QUESTION 4(a):

As per Section 16 of the IGST Act, 2017, supplies of goods and services to a unit in a Special
Economic Zone (SEZ) in relation to their authorised operations are treated as zero-rated
supplies. Consequently, supplier of such supplies claims refund under either of the options
available under Section 16 and shall not charge GST to SEZ unit. However, when the supplies are
for other than authorised operations then it is not a zero rated and supplier shall charge GST to
SEZ unit as the supplier is not eligible for any refund.

Such GST paid by recipient can be availed as ITC and can claim refund of such ITC upon making
export

Value of Taxable Services Used Exclusively for Authorized Operations: Nil

Value of Taxable Services Used Partly for Authorized Operations and Partly for Non-Authorized
Operations: ₹9,00,000 × 18% = ₹1,62,000
Value of Taxable Services Used Wholly for Non-Authorized Operations: ₹7,00,000 × 18% =
₹1,26,000

Total Eligible ITC = ₹1,62,000 + ₹1,26,000 = ₹2,88,000

Refund = `2,88,000 X 90/150 = `1,72,800

[5 MARKS]

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ANSWER FOR QUESTION 4(b):
Based on the analysis of the Circular No. 171/03/2022-GST, the following points apply to the case
you described:

XYZ Ltd. is liable for penal action under Section 122(1)(ii) for issuing invoices without actual
supply. The penalty is the higher of the tax amount of `60 lakhs X 18% ₹10.8 lakhs. or `10,000.
Therefore, the penalty is `10.8 lakhs

PQR Ltd. will be liable for demand and recovery of fraudulent ITC under Section 74 (₹10.8 lakhs)
as they have utilised ITC for payment of their liability of `80 lakhs X 18% = `14.4 lakhs and further
penal action under Section 122(1)(vii) for invoice without supply i.e., `30 lakhs X 18% = `5.4 lakhs
(or) `10,000 whichever is higher and the total penalty shall be `16.2 lakhs.

DEF Ltd. is liable for penal action under Section 122(1)(vii) (i.e., ITC default) for fraudulent
ITC of ₹5.4 lakhs.
[5 MARKS]

ANSWER FOR QUESTION 4(c):

As per Notification No. 45/2017 Cus. dated 30.06.2017, duty payable on re-importation of goods
which had been exported for repairs abroad is the duty of customs which would be leviable if the
value of re-imported goods after repairs were made up of the fair cost of repairs carried out
including cost of materials used in repairs (whether such costs are actually incurred or not),
insurance and freight charges, both ways. However, following conditions need to be satisfied for
availing this concession:
a) goods must be re-imported within 3 years, extendable by further 2 years, after their
exportation;
b) exported goods and the re-imported goods must be the same;
c) ownership of the goods should not change.
Since all the conditions specified above are fulfilled in the given case, the customs duty payable
on re-imported goods will be computed as under:
Particulars Amount`
Value of goods re-imported after exports [Cost of materials ` 10 lakh + fair cost 20,00,000
of repairs ` 5 lakh + actual insurance and freight Rs. 5 lakh]
Add: Basic customs duty @ 15% (A) 3,00,000
Add: Social Welfare Surcharge @ 10% on ` 3,00,000 30,000
(B)
Value for computing integrated tax 23,30,000
Integrated tax @ 12% (` 23,30,000 x 12%) - (C) 2,79,600
Customs duty and integrated tax payable [(A) +(B)+ (C)] 6,09,600
[4 MARKS]

ANSWER FOR QUESTION 5(a):

Offence Imprisonment Arrest Bail
(i) Fraudulently The offense falls under Erroneous refund not N.A
availing a refund Section 132(1)(i), which an offence for arrest.
of ₹510 lakh, and prescribes rigorous
the said tax has imprisonment for a term
been recovered that may extend up to 5
from the buyer. years along with a fine.
(ii) Abdul This falls under Section Collected an amount Since the amount
collected ₹720 132(1)(i), which prescribes as tax but not paid, is exceeds ₹500 lakh, it
lakh as tax from imprisonment for a term a notified offence for is classified as a
clients but arrest under sec. 69

Page 11
 deposited only that may extend up to 5 and as the tax cognizable and non-
₹120 lakh. The years along with a fine. involved exceeds 200 bailable offense
net amount not lakh, arrest can be
deposited is made
₹600 lakh.
(iii) Rohan has Only collected an amount N.A N.A
evaded payment as tax but not paid is an
of tax amounting offence for imprisonment.
to ₹480 lakh. But collected tax but not
paid is not an offence for
imprisonment.
[5 MARKS]

ANSWER FOR QUESTION 5(b):

1 ➢ Export of goods is treated as inter- State supply
➢ Miss Riddhima is liable to obtain registration compulsorily irrespective of the quantum
of her aggregate turnover since she is engaged in making inter-State supply (exports
of goods.
➢ It is assumed that the exporter of goods- Miss Riddhima-has availed the export
benefits available under GST.
2 ➢ Any person engaged exclusively in making exempt supplies is not liable to registration.
➢ However, Ajanta Enterprises is liable to get registered as it has also made taxable
supply along with exempt supplies during the year and its aggregate turnover (`48.25
lakh) exceeds the threshold limit for registration (`40 lakhs),
3 ➢ Since registration in GST is PAN based, once a supplier is liable to register, he has to
obtain registration in each of the States/Union Territories in which he operates under
the same PAN.
➢ Thus, Mr. P is liable to get registered in Haryana also, provided he is not engaged
exclusively in making exempt supplies from Haryana.
➢ However, a person who is voluntarily registered in one State needs to obtain
registration in other States from where he makes a taxable supply only if his aggregate
turnover exceeds applicable threshold limit for registration. In that case, Mr. P is not
liable to obtain registration from Haryana since the aggregate turnover does not
exceed the threshold limit for registration
4 ➢ A supplier is liable to obtain registration in a State/Union Territory from where he
makes taxable supply of goods and/or services.
➢ Shares are excluded from the definition of goods as well as services hence, buying
and selling of shares is not a supply of goods and/or services under GST law.
➢ Thus. Mr. John is not liable to obtain registration since he is not engaged in making
a taxable supply of goods and/or services.
5 ➢ “Agriculturist” means only an individual or HUF, but not others
➢ As per Sec. 23 of CGST Act, an agriculturist engaged in supply out of cultivation of
land is exempted from registration
➢ In the present case, such exemption not available as the cultivator is other than
Individual or HUF. Also, as Baba P. Ltd. turnover exceeds threshold limit of 40 lakhs,
they are required to get registered.
[5 MARKS]

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ANSWER FOR QUESTION 5(c):
Under the FTP, third-party exports refer to exports made by an exporter on behalf of another
party. In such cases:
• The manufacturer supplies the goods to the merchant exporter (in this case, SDL).
• The export is undertaken by the merchant exporter (SDL), who is responsible for the
export documents.
• The shipping bills and other related documents are in the name of the merchant exporter.
In such a scenario, the manufacturer (JKL) does not get deemed to be the exporter, as all export-
related obligations (including compliance and documentation) are fulfilled by SDL.
In the light of the Foreign Trade Policy 2023:
• SDL is the exporter of the goods, as they are responsible for fulfilling all export-related
formalities and documentation.
• JKL cannot be deemed the exporter of the machines since they were only involved in the
manufacturing process and were not responsible for the export documentation or
shipment.
• However, JKL can be classified as a manufacturer supplying goods to SDL under a third-
party export arrangement.
Thus, JKL is not the exporter under FTP 2023, and SDL remains the official exporter on record.
[4 MARKS]

ANSWER FOR QUESTION 6(a):

Under Rule 59 of the Central Goods and Services Tax (CGST) Rules, 2017, there are certain
situations where a registered person is not allowed to furnish the details of outward supplies in
Form GSTR-1 or using the Invoice Furnishing Facility (IFF), as per Section 37 of the CGST Act,
2017.
▪ A registered person will not be allowed to furnish GSTR-1 if they have not filed the GSTR-
3B return for the previous two months in cases where they are required to file monthly
GSTR-3B.
▪ If the registered person is opting for the quarterly return filing option (under the QRMP
Scheme) and has not furnished GSTR-3B for the previous tax period, they will not be
allowed to furnish details of outward supplies using the Invoice Furnishing Facility (IFF)
or in Form GSTR-1 for the current quarter.
▪ If a registered person has an outstanding liability in GSTR-3B for a previous tax period,
which is beyond the threshold limit of ₹50 lakh, they will not be allowed to file GSTR-1 for
the current period unless 1% of the liability is discharged through electronic cash ledger.
▪ If the liability of the registered person in GSTR-1 > Liability in GSTR-3B for one or more
tax periods and the proceedings are not concluded in terms of Rule 88C.
▪ If the ITC of the registered person in GSTR-3B > ITC in GSTR-2B for one or more tax
periods and the proceedings are not concluded in terms of Rule 88D.

Or

Application by registered person (or) suo-moto cancellation by officer:

1. Transfer or discontinuance of business
2. Change in constitution of business
3. Taxable person no longer liable to be registered

Suo-moto cancellation by officer:

1. Contravention of provisions of Act or Rules
2. Person opting for composition scheme not filed annual return within 3 months after due date
3. Registered person (other than above) has not filed returns for 6 consecutive months or 2
consecutive quarters.
4. Registration obtained by fraud
5. Obtained voluntary registration and not commenced business within 6 months

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Note:
1) Even, TCS/TDS deductor can make application for cancellation of registration.
2) Aadhar authentication is required in case of application of cancellation of registration
[5 MARKS]

ANSWER FOR QUESTION 6(b):

To compute the Profit Petroleum payable to the government, we need to calculate the profit
made by Draco Pvt. Ltd. from the sale of crude petroleum after deducting expenses incurred for
exploration, development, and production from the total consideration received.
Consideration from sale of crude petroleum: `2,00,00,000
Exploration expenses: 50,00,000
Development expenses: 8,00,000
Production expenses: 70,00,000
Cost petroleum recovered by Draco P. Ltd. (`1,28,00,000)
Royalty paid: (15,00,000)
Profit petroleum 57,00,000
Profit Petroleum Payable to Government (40%): 22,80,000
Profit Petroleum Payable to Draco P. Ltd. (60%): 34,20,000

Royalty paid by Draco Pvt. Ltd. to the government is consideration for the right to explore,
develop, and produce crude petroleum. Royalty is subject to GST under the reverse charge
mechanism (RCM). Draco Pvt. Ltd. is required to discharge GST on royalty under RCM, and it
can claim Input Tax Credit (ITC) on the GST paid on the royalty.

Cost petroleum is recovery of expenses by Draco Pvt. Ltd. and consequently as per CBIC circular
is it exempted.

any amount paid as "Profit Petroleum" to the government is in the nature of revenue sharing
and the same is exempted as per Sec. 11 read with Notification No. 12/2017.
[5 MARKS]

ANSWER FOR QUESTION 6(c):

Applying the principles laid down in Oswal Agro Mills Ltd. to the case of Aayaat Enterprises, the
rejection of the refund claim by the Department on the ground that it is time-barred under
Section 27 is not correct in law.
The Court observed that when duty is collected by invoking a bank guarantee due to a failure to
meet a condition (like an export obligation), it is not considered a voluntary payment of duty.
Rather, it is a contingent payment.
Since the duty was realized by invoking a bank guarantee due to a contingent event (non-
fulfillment of the export obligation), and Aayaat Enterprises later fulfilled the obligation, the refund
claim should not be subject to the one-year time limit under Section 27. Therefore, Aayaat
Enterprises is entitled to the refund of the amount realized under the bank guarantee.
The Department’s rejection of the claim on the basis of the time limitation is contrary to the
ruling in the Oswal Agro Mills Ltd. case, and the refund should be granted to Aayaat Enterprises.
[4 MARKS]

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