CA Jasmeet Singh 1

Chapter 1: Introduction To GST

1. Differentiate between direct and indirect taxes.
Solution:

Direct taxes Indirect taxes

A direct tax is charge, which is imposed directly
Indirect taxes are imposed on goods and
on the taxpayer and paid directly to the services. Its incidence is borne by the
Government by the persons on whom it is consumers who ultimately consume the
imposed. The burden of this tax cannot be product or the service. It is also called
shifted by the taxpayer to someone else. consumption taxes.
A significant direct tax imposed in India is Income
Indirect taxation in India has witnessed a
tax. drastic change on July 01, 2017 and all
indirect taxes have been amalgamated
into – GST & Customs.
Direct taxes are progressive in nature. Hence a Indirect taxes are regressive in nature
rich person pays more compared to poor person. because they equally impact the rich or
Example: Income tax is higher for higher income the poor.
groups and lower for lower income groups. Example: GST paid on food in restaurant
is same whether a person is rich or poor.

2. Explain the salient features of indirect taxes.

Solution:
(i) 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.
(ii) Tax on commodities and services: It is levied on commodities at the time of manufacture
or purchase or sale or import/export thereof. Hence, it is also known as commodity
taxation. It is also levied on provision of services.
(iii) 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.
(iv) 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.
(v) 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.
(vi) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base. Majority of
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the products or services are subject to indirect taxes with low thresholds.
(vii) 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.
(viii) 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.
3. Write a short note on various Lists provided under Seventh Schedule to the Constitution of
India.
Solution:
Seventh Schedule to Article 246: It contains three lists which enumerate the matters under
which the Union and the State Governments have the authority to make laws.
Union list – List I State list – List II Concurrent list - List III
(Parliament) (State legislature)
It contains the matters in It contains the matters in respect It contains the matters in
respect of which the of which the State Government respect of which both the
Parliament (Central has the exclusive right to make Central & State
Government) has the laws. Governments have
exclusive right to make laws. power to make laws.

4. Enumerate the deficiencies of the existing indirect taxes which led to the need for ushering into
GST regime.

Solution:
Under the earlier indirect tax regime, despite the introduction of the principle of taxation of
value added in India – at the Central level in the form of CENVAT and at the State level in the form
of State VAT - its application always remained piecemeal and fragmented on account of the
following reasons:

(i) Double taxation of a transaction as both goods and services as the distinction between
goods and services was often blurred, e.g. software was liable to both VAT and service tax.
(ii) CENVAT did not include chain of value addition in the distributive trade below the stage of
production. Similarly, in the State-level VAT, CENVAT load on the goods was not removed
leading to the cascading of taxes. To illustrate, when the goods were manufactured and
sold, both central excise duty (CENVAT) and State-Level VAT were levied.
(iii) Though CENVAT and State-Level VAT were essentially value added taxes, set off of one
against the credit of another was not possible as CENVAT was a central levy and State-
Level VAT was a State levy.
(iv) There were several taxes in the States, such as, Luxury Tax, Entertainment Tax, etc. which
were not subsumed in the VAT.
(v) VAT on goods was not integrated with tax on services, at the State level, to remove the
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cascading effect of service tax. With service sector being the fastest growing sector in the
economy, the exclusion of services from the tax base of the States potentially eroded their
tax- buoyancy.
(vi) CST was another source of distortion in terms of its cascading nature since it was non-
VATABLE. Being an origin based tax, CST was also against one of the basic principles of
consumption taxes that tax should accrue to the jurisdiction where consumption takes
place.

5. Why is Dual GST required?

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

6. Which of the existing taxes are subsumed under GST? List any four State levies, which are
subsumed in GST.
Solution:
The GST would replace the following taxes:
(i) Taxes currently levied and collected by the Centre:
(a) Central Excise duty
(b) Duties of Excise (Medicinal and Toilet Preparations)
(c) Additional Duties of Excise (Goods of Special Importance)
(d) Additional Duties of Excise (Textiles and Textile Products)
(e) Additional Duties of Customs (commonly known as CVD)
(f) Special Additional Duty of Customs (SAD)
(g) Service Tax
(h) Central Surcharges and Cesses so far as they relate to supply of goods and services

(ii) State taxes that would be subsumed under the GST are:
(a) State VAT
(b) Central Sales Tax
(c) Luxury Tax
(d) Entry Tax (all forms)
(e) Entertainment and Amusement Tax (except when levied by the local bodies)
(f) Taxes on advertisements
(g) Purchase Tax
(h) Taxes on lotteries, betting and gambling
(i) State Surcharges and cesses so far as they relate to supply of goods and services
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The GST Council shall make recommendations to the Union and States on the taxes, cesses and
surcharges levied by the Centre, the States and the local bodies which may be subsumed in the
GST.

7. List the taxes, which are not subsumed in GST

Solution:
(a) Basic Customs Tax
(b) Property tax and stamp duty
(c) Electricity duty
(d) Excise duty on alcohol
(e) Excise duty on petrol, diesel etc.
(f) Entertainment tax charged by local bodies (municipality)

8. What is Goods and Services Tax (GST)?

Solution:
GST has been defined under Article 366(12-A) of the Constitution of India. GST has been defined
to mean a tax on supply of goods or services or both except tax on supply of alcoholic liquor for
human consumption.

Following are the broad features of this tax:

1) GST a tax:
 Being a tax, it can be levied only under authority of law. (Article 265)
 Regarding GST, Article 246-A (not article 246) provides authority of law.
2) GST is tax on ‘SUPPLY’ of goods or services or both:
 The taxable event for levy of GST is ‘supply’.
 Supply is a word of wide import. GST law has defined the term ‘supply’ under section 7
of CGST Act, 2017.

3) GST is an indirect tax:

 GST taxes ‘goods’ and/or ‘services’, thus it is an indirect tax.
 Supplier making such supply has been made responsible to pay GST to the Government.
Supplier is entitled to collect GST from the recipient of supply.
 Supplier liable to pay GST to Government shall take registration.
 Such registered supplier now shall issue specified document (tax invoice) for the supply
made by him.
 GST element collected from recipient shall be separately indicated on such document.

4) GST is a consumption tax:

 "Consumption tax" means, in economic terms, that the tax is ultimately borne by
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consumers, not by suppliers (producers, traders or service providers).

 Business Entity, in reality, acts as collector of tax for Government. Ultimately, burden of
tax is to be borne by the final consumer.

5) GST is also a VALUE ADDED TAX

 It is levied at all stages right from manufacture up to final consumption with credit of
taxes paid at previous stages available as setoff. In a nutshell, only value addition will be
taxed and burden of tax is to be borne by the final consumer.

6) GST is a destination-based tax

 Destination based tax is a tax that would accrue to the taxing authority which has
jurisdiction over the place of consumption which is also termed as place of supply.
 Being a consumption tax, tax revenue arising out of GST shall belong to the destination
territory. In other words, import into India will be subjected to GST, while export from
India shall be kept free of GST.

9. Which are the commodities which have been kept outside the purview of GST?

Solution:
Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016
defines the Goods and Services tax (GST) as a tax on supply of goods or services or both, except
supply of alcoholic liquor for human consumption. So, alcohol for human consumption is kept
out of GST by way of definition of GST in constitution. Five petroleum products viz. petroleum
crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel have
temporarily been kept out and GST Council shall decide the date from which they shall be
included in GST.
a. Supply of alcoholic for human consumption
b. Petroleum products
i. H- High speed diesel
ii. P- Petroleum crude
iii. M- Motor spirit
iv. A- Aviation turbine fuel
v. N- Natural gas

10. What is the status of Tobacco and Tobacco products under the GST regime?

Solution:
Tobacco & tobacco products is leviable to GST. In addition, the Centre has the power to levy CED
duty.

11. List of special category states under GST

Solution:
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H- Himachal Pradesh
U- Uttarakhand
M- Mizoram Manipur Meghalaya
A- Arunachal Pradesh Assam
N- Nagaland
S- Sikkim
Of Tripura and Jammu & Kashmir

12. What is IGST?

Solution:
Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Centre on
inter-State supply of goods and services. Under Article 269-A of the Constitution, the 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 GST Council.

13. What would be the role of GST Council?

Alternative,
Enumerate any five matters on which the GST council may make recommendation under Article 279A
of the constitution of India.

Solution:
A GST Council would be constituted comprising the Union Finance Minister (who will be the
Chairman of the Council), the Minister of State (Revenue) and the State Finance/Taxation
Ministers to make recommendations to the Union and the States on
(i) the taxes, cesses and surcharges levied by the Centre, the States and the local bodies
which may be subsumed under GST;
(ii) the goods and services that may be subjected to or exempted from the GST;
(iii) the date on which the GST shall be levied on petroleum crude, high speed diesel, motor
sprit (commonly known as petrol), natural gas and aviation turbine fuel;
(iv) model GST laws, principles of levy, apportionment of IGST and the principles that govern
the place of supply;
(v) the threshold limit of turnover below which the goods and services may be exempted
from GST;
(vi) the rates including floor rates with bands of GST;
(vii) any special rate or rates for a specified period to raise additional resources during any
natural calamity or disaster;
(viii) special provision with respect to the North-East States, J&K, Himachal Pradesh and
Uttarakhand; and any other matter relating to the GST, as the Council may decide

14. How will decisions be taken by GST Council?

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Solution:
Article 279-A of the Constitution of India makes provisions as to GST Council. It provides that
every decision of the GST Council shall be taken at a meeting by a majority of not less than 3/4th
of the weighted votes of the Members present and voting.
 The vote of the Central Government shall have a weightage of 1/3rd of the votes cast and
the votes of all the State Governments taken together shall have a weightage of 2/3rd of
the total votes cast in that meeting.
 One half of the total number of members of the GST Council shall constitute the quorum at
its meetings.

15. What is GSTN and its role in the GST regime? Discuss any two functions of GSTN.

Solution:
GSTN stands for Goods and Services Tax Network (GSTN). It is not-for Profit Company
incorporated under provisions of Sec 8 of Companies Act, 2013. GSTN has been set up to cater to
the needs of GST. GSTN has made up site/ portal which have been notified as common GST
electronic portal (u/Sec 146 of CGST Act).
Thus, GSTN has provided IT infrastructure under GST law. GST portal developed by it is used by
Central Government as well as by the State Governments. GST portal is referred as ‘common
portal’. This portal is the taxpayer interface with the Government.

GSTN is providing facilities to taxpayers as well as Government. Following are some important
functions which are performed by GSTN
(i) Facilitation of registration (as under GST, registration is online);
(ii) Payment of GST (Challan for GST payment is created online);
(iii) Returns filing (as under GST, all returns are online);
(iv) Maintenance of ledgers of taxpayers (e-liability, e-credit and e-cash ledger for each
registered taxpayer);
(v) Running the matching engine for matching, reversal and reclaim of input tax credit
(presently, it has been deferred);
(vi) Providing analysis of tax payers’ profile (based on such analysis, cases will be selected
for scrutiny/ audit);
(vii) Sharing of information in taxpayers returns with Centre and State Governments / tax
authorities;
(viii) providing various MIS reports to the Central and the State Governments based on the tax
payer return information;
(ix) Computation and settlement of IGST (transfer of funds in between Central Tax Account,
State Tax Accounts and Integrated Tax Account);

Multiple Choce Question

1. Which of the following taxes have been subsumed in GST?
(a) Central Sales Tax
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(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 asPetrol), Natural Gas
and Aviation Turbine Fuel:
(a) GST will not be 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. of the Constitution provides that no tax shall be levied or collected except by authority
of law?
(a) Article 254
(b) Article 245
(c) Article 265
(d) Article 256
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8. Tobacco products are subject to:

(a) Excise duty
(b) Excise duty plus GST
(c) Only GST
(d) VAT

9. India has adopted its GST model from

(a) US
(b) UK
(c) Europe
(d) Canada

10. Which is known as the GST common portal?

(a) www.cbic.gov.in
(b) www.gstn.gov.in
(c) www.gst.gov.in
(d) all of the above

Solutions

1. d 2. a 3. a 4. b 5. d 6. b 7. c 8. b 9. d 10.c
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Chapter 2: Supply under GST

1. What is the taxable event under GST?

Solution:
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.

2. What is the tax treatment of composite supply and mixed supply under GST?

Solution:
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.

3. Supply of all goods and/or services is taxable under GST. Discuss the validity of the statement.

Solution:
The statement is incorrect. Supplies of all goods and services are taxable except:
i. Supply of alcoholic for human consumption
ii. Petroleum products
• High speed diesel
• Petroleum crude
• Motor spirit
• Aviation turbine fuel
• Natural gas
shall be taxable with effect from a future date. This date would be notified by the Government on
the recommendations of the GST Council.

4. Whether transfer of title and/or possession is necessary for a transaction to constitute supply of
goods?

Solution:
Title as well as possession both has 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.

5. Examine whether the following activities would amount to supply under section 7 of the CGST
Act:
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(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 Solution be different if in the above case, Raman has taken advice in respect of
his business unit in Chennai?

Solution:

(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, 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 [Section 25 of the CGST Act]. 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.

(b) Schedule I of CGST Act, inter alia, stipulates that import of services by a taxable person from a
related person located outside India, without consideration is treated as supply if it is
provided in the course or furtherance of business. Explanation to section 15, inter alia,
provides that persons shall be deemed to be “related persons” if they are members of the
same family. Further, as per section 2(49) of the CGST Act, 2017, family means, —
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or
mainly dependent on the said person.
In the given case, Raman has received free of cost legal services from his brother. However,
in view of section 2(49)(ii) above, Raman and his brother cannot be considered to be related
as Raman’s brother is a well-known lawyer and is not wholly/mainly dependent on Raman.
Further, Raman has taken legal advice from him in personal matter and not in course or
furtherance of business. Consequently, services provided by Raman’s brother to him would
not be treated as supply under section 7 of the CGST Act read with Schedule I.

(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.

6. State whether the following supplies would be treated as supply of goods or supply of services as
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per Schedule II of the CGST Act:

(a) Renting of immovable property
(b) Goods forming part of business assets are transferred or disposed of by/under directions of
person carrying on the business, whether or not for consideration.
(c) Transfer of right in goods without transfer of title in goods.
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a
future date.

Solution:
(a) Supply of services
(b) Supply of goods
(c) Supply of services
(d) Supply of goods

7. Determine whether the following supplies amount to composite supplies:

i. A hotel provides 4 days-3 nights package wherein the facility of breakfast and dinner is
provided along with the room accommodation.
ii. A toothpaste company has offered the scheme of free toothbrush along with the
toothpaste.

Solution:
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 toothbrush along with the toothpaste are not naturally bundled, said
supplies doing not qualify as ‘composite supply’.

8. Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of
services? Give reason.

Solution:
Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title,
albeit at a future date.

9. 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 vaastu consultancy services for her residence located at
Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid for the said
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service is 5,000 Australian dollars.

(ii) Miss Shriniti Kaushik received vaastu consultancy services for her residence located at
Bandra, Mumbai from her son, Mr. Varun residing in Sydney (Australia). Further, Miss
Shriniti did not pay any consideration for the said service.
(iii) Miss Shriniti Kaushik received vaastu consultancy services for her business premises
located at Bandra, Mumbai from her son, Mr. Varun residing in Sydney (Australia). Further,
Miss Shriniti did not pay any consideration for the said service.

Solution:

(i) Supply, under section 7 of the CGST Act, 2017, inter alia,
 includes import of services for a consideration
 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 vaastu consultancy service has been availed in
respect of residence, it would amount to supply.

(ii) Section 7 of the CGST Act, 2017 read with Schedule I provides 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.
In the given case, import of service without consideration by Miss Shriniti from her son – Mr.
Varun [son, being member of the same family, is a related person] will not be treated as
supply as it is not in course or furtherance of business.
\
(iii) Section 7 of the CGST Act, 2017 read with Schedule I provides 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.
Thus, import of service without consideration by Miss Shriniti from her son – Mr. Varun (son,
being member of the same family, is a related person) will be treated as supply as she
receives vaastu consultancy service for her business premises, i.e. in course or furtherance of
business.

10. Explain the meaning of the term "recipient of supply of goods and/or services" under the CGST
Act, 2017.

Solution:
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
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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.

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

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

12. National Electronics Ltd., registered in Kerala dealing in supply of electronic items, transferred
some of its stock to its another unit located in Karnataka (inter-state transfer). Whether such self-
supplies are taxable under GST?

Solution:
Yes, transfers of stocks made by National Electronics Ltd. are taxable under GST. The definition
of supply given under section 7 of CGST Act, 2017 is an inclusive one. It does not specify that
supply is to be made by one person to the another. So, self-supplies are to be treated as supply in
terms of section 7 of CGST Act. Further, section 25(5) provides that where a person who has
obtained or is required to obtain registration in a State or Union territory in respect of an
establishment has an establishment in another State or Union territory, then such
establishments shall be treated as establishments of distinct persons.
Clause (2) of Schedule I of CGST Act, 2017 inter alia provides that supply of goods between
distinct persons as specified in section 25 made in the course or furtherance of business is to
treated as supply even if made without consideration.

Inter-state self-supplies such as stock transfers, branch transfers or consignment sales shall be
taxable under IGST even though such transactions may not involve payment of consideration.
Every supplier is liable to register under the GST law in the State or Union
territory from where he makes a taxable supply of goods or services or both in terms of Section
22 of the CGST Act. However, intra-state self- supplies are not taxable subject to not opting for
registration as business vertical.

13. R-TECH Consultancy, registered in Bangalore, supplies technical consultancy services to its clients.
It has been providing technical services to Tata Ltd., Bangalore since past two years.
Consideration is settled by Tata Ltd. assignment wise. Tata Ltd. paid Rs
66 lakh to R-TECH Consultancy on 10th September, 20XX on R-TECH consultancy agreeing to not
provide similar technical services to any other business entity in India or abroad for a period of 8
years. R-TECH Consultancy is of the view that Rs 66 lakh is not chargeable to GST.
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You are required to examine whether the view taken by R-TECH Consultancy is valid in law.
Calculate GST liability of R-TECH Consultancy, if any. The technical services provided by R-TECH
consultancy are otherwise chargeable to GST at the rate of 18%. It may be noted that Tata Ltd. is
not ready to pay any further amount to R-TECH Consultancy in addition to the amount already
agreed.

Solution:
The view taken by R-TECH Consultancy is not valid in law. The scope of supply is defined by
section 7(1) of CGST Act, 2017. It includes deemed supply given under Schedule II. The paragraph
5(e) of Schedule II provides that agreeing to the obligation to refrain from an act, or to tolerate
an act or a situation, or to do an act is treated as supply of service.
Thus, any consideration received for agreeing to the obligation to refrain from an act, is subject
to GST. Consideration received for non-compete agreement is deemed as consideration for
supply of services Consideration of Rs 66 lakh received on the promise of R- TECH consultancy of
not providing similar services to any other person, is consideration for supply which is
chargeable to GST.
Since GST is not separately collected, it will be assumed that it is included in Rs 66 lakh. Rule 35 of
CGST Rules, 2017 provides that where the value of supply is inclusive of GST, the tax amount is
determined in the following manner:
Tax amount = (Value inclusive of taxes x GST rate in %) [IGST or CGST, SGST/UTGST] / (100 + sum
of GST rates in %)

Consequently, value of taxable supply will be Rs 55,93,220 (i.e., Rs 66,00,000 x 100/118). GST
liability on Rs 55,93,220 will be calculated as follows-
Particulars Rs
Taxable value of supply 55,93,220
Add: CGST @ 9% of Rs 55,93,220 5,03,390
SGST @ 9% of Rs 55,93,220 5,03,390
Total GST liability 10,06,780

14. A professional training institute gets its training material printed from a printing press. The
content of the material is provided by the training institute who owns the usage rights of the
same while the physical inputs including paper used for printing belong to the printer.
Ascertain whether supply of training material by the printing press constitutes supply of goods
or supply of services.

Solution:
Supply of books printed with contents supplied by the recipient of such printed goods, is
composite supply and the question, whether such supplies constitute supply of goods or
services would be determined on the basis of what constitutes the principal supply.
Principal supply has been defined in section 2(90) of the CGST Act as supply of goods or services
which constitutes the predominant element of a composite supply and to which any other supply
forming part of that composite supply is ancillary.
 CA Jasmeet Singh 16

In the case of printing of books where content is supplied by the publisher or the person who
owns the usage rights to the intangible inputs while the physical inputs including paper used for
printing belong to the printer, supply of printing [of the content supplied by the recipient of
supply] is the principal supply and therefore, such supplies would constitute supply of service.

15. "Exchange is a form of supply of goods or services or both, made or agreed to be made for a
consideration by a person in the course or furtherance of business." — Explain it with help of an
example.

Solution:
When two persons mutually transfer the ownership of one thing for the ownership of another,
neither thing nor both things being money only, the transaction is called an exchange.

Exchange offers on products such as televisions, mobile phones and refrigerators are also
leviable under GST as these are also transactions for consideration in course or furtherance of
business.

Example: Mr. Raju is a dealer of new cars. He sells new cars for Rs. 8,25,000 agrees to reduce Rs.
1,25,000 on surrendering of old car. Mr. Abin who intends to buy new car worth Rs. 8,25,000
agreed to exchange his old car with new car.
Under GST law, it will be treated as Mr. Raju has supplied the goods (new car) to Mr. Abin.
Consideration for this supply is old car and some money.
It shall be noted that supply of old car by Mr. Abin to Mr. Raju will not constitute supply if Mr.
Abin is not a business entity. The reason being that any transaction for consideration amounts to
supply only if it is made in course or furtherance of business.

16. Whether actionable claim liable to GST?

Solution:
As per section 2(52) of the CGST/SGST Act actionable claims are to be considered as goods.
Schedule III read with Section 7 of the CGST/SGST Act lists the activities or transactions which
shall be treated neither as supply of goods nor supply of services. The Schedule lists actionable
claims other than lottery, betting and gambling as one of such transactions. Thus, only betting,
gambling and lottery shall be treated as supplies under the GST regime. All the other actionable
claims shall not be supplies.

17. Whether transaction in securities be taxable in GST?

Solution:
Securities have been specifically excluded from the definition of goods as well as services. Thus,
the transaction in securities shall not be liable to GST.

18. Discuss the applicability of GST in the following cases: -

 CA Jasmeet Singh 17

i. Manu transfers 1,000 debentures of Chugg Ltd. to Naresh for a consideration of Rs. 5,94,000.
ii. Taju transfers a plot of land situated in Mumbai to Babu for a consideration of Rs. 55 lakhs.
Consideration is, however, payable in instalments.

Solution:
1. Sale of debentures – GST is applicable on supply of goods and / or services. Debentures are
securities. Under GST law, securities are neither ‘goods’ (as defined u/ Section 2(52)) nor
‘services’ (as defined u/Section 2(102)). Thus, transfer of debentures (securities) is not
subject to GST.

2. Sale of plot of land – Plot of land, being immovable property, is not ‘goods’ as defined
u/Section 2(52) of CGST Act. However, it is covered by definition of ‘service’ as given
u/Section 2(102) of CGST Act. However, transactions of sale of land are out of scope of supply
under GST law (Section 7(2) of CGST Act read with Schedule III of CGST Act). Thus, sale
consideration is not subject to GST.

19. Discuss the applicability of GST in the following cases: -

i. Mr. Amal deposits Rs 1.5 lakh in cash in his savings account with ICICI bank, Delhi.
ii. Sale of derivatives by Mr. Yash for a consideration of Rs. 8,60,000. Mr. Yash is a dealer in
shares and security.
iii. Mr. Zamir takes a housing loan from HDFC bank. Rate of interest is 7.5%. Loan is repayable
after 7 years. Rs. 13,500, being documentation charges is payable by Mr. Zamir at the time of
taking loan. Interest would be part of EMI which will be payable on 10th day of every month.

Solution:
1. Cash deposit in bank – It is a transaction in money. GST is not applicable on making a bank
deposit.
2. Transfers of derivatives – Derivatives are securities. Securities are neither goods nor services.
Thus, GST is not applicable on transfer of securities.
3. Housing loan – Supply of money by bank does not constitute supply of goods or services.
Thus, GST is not applicable. However, document charges of Rs. 13,500 are subject to GST.
Interest payable being for use of money constitutes ‘supply of services’. However, GST on
interest element is exempt (entry 27 of exemption notification).

20. Whether import of services will be liable to tax under GST regime?
Alternative,
Will import of services without consideration be taxable under GST?

Solution:
The following import of service will qualify as supply under CGST Act, 2017:
i. Import of service for a consideration: Such import will constitute ‘supply’ whether or not it is
in the course or furtherance of business is a supply ( Section 7(1)(b) of CGST Act, 2017)
ii. Import of service without consideration: Such import will constitute ‘supply’ only if import of
 CA Jasmeet Singh 18

service has been made by a person from a related person or from any of his other
establishments outside India, in the course or furtherance of business ( Section 7(1)(c) read
with Schedule I of CGST Act, 2017)

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

Solution:
The given situation is a case of import of service (location of supplier outside India, recipient in
India and place of supply of service determined as per Sec 13 of IGST Act is in India)

Solutions to each given situation is as follows

1) Import of legal service for consideration of 1,000 pound:

Importation of service for consideration is supply whether or not in the course or
furtherance of business [section 7(1) (b) of CGST Act]. Thus, even if Mrs Pragati has received
such service for his personal purpose, import will qualify as supply as it is being made for
consideration.
2) Import of legal service without consideration:
a) Import of legal service in personal matter
Import of any service without consideration amounts to supply in terms of Section 7(1) (c)
read with Schedule I (Para 4)
Only if following conditions are fulfilled:
1) Import is by a person;
2) Import is in course or furtherance of business of such taxable person;
3) Import is from related person or own establishment outside India

Presuming Mrs Pragati is taxable person under GST, still import of legal service by will not
amount to supply as such import it not in course or furtherance of business (as such advice
is for personal matter)

b) Import of legal service in business matter

If Mrs Pragati is person and import of service is for business matter, then such import
without consideration would amount to supply if it is from related person or his other
establishment outside India.

Import from real sister is not import from ‘related person’. GST law has defined related
person to include members of same family. Sister is considered as family member if she is
wholly or mainly dependent upon the person. In given question, it seems Mrs Unnati in UK is
 CA Jasmeet Singh 19

quite independent and no way dependent upon Mrs Pragati and therefore, Mrs Pragti and
Mrs Unnati are not ‘related person’ under GST law.
Since import of service without consideration is not from related person or other
establishment outside India, it will not amount to supply under GST law.

22. Sahab Sales, an air-conditioner dealer in Janakpuri, Delhi, needs 4 air-conditioners for his newly
constructed house in Safdarjung Enclave. Therefore, he transfers 4 air - conditioners [on which
ITC has already been availed by it] from its stock, for the said purpose. Examine whether the said
activity amounts to supply under section 7 of the CGST Act, 2017.
Further, a Janakpuri resident, Aakash, approached Sahab Sales. He sold an air- conditioner to
Sahab Sales for Rs. 5,000. Aakash had bought the said air-conditioner six months before, for his
residence. Does sale of the air conditioner by Aakash to Sahab Sales amount to supply under
section 7 of the CGST Act, 2017

Solution:
Section 7 defines the scope of ‘supply’. In general, supply covers those transactions where goods
or services or both are supplied for consideration in course of or furtherance of business (Section
7(1) (a)). Besides that, scope of supply has been extended to cover certain specified
transactions which are undertaken even without any consideration (Section 7(1) (c) read with
Schedule I). One such transaction without consideration is where business assets on which ITC
has been availed are transferred or disposed off permanently.

In view of said provisions, the Solution to given situations are as follows:

(a) Permanent transfer of air-conditioner (trading stock which is his business asset on which he
has availed ITC): permanent transfer of air conditioners by Sahab Sales from its stock for
personal use at its residence, though without consideration, would amount to supply.
(b) Sale by Aakash (non-business entity) of his second-hand air-conditioner: Such sale will not
qualify as supply under section 7 of the CGST Act, 2017 as although it is made for a
consideration, but it’s not in the course or furtherance of business.

23. Examine whether the following activity would amount to supply under section 7 of the CGST Act:
Happy 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.

Solution:
Happy Charitable Trust is providing eye treatment services free of cost to the needy people
(unrelated persons). Its activity does not fall within the scope of supply (as supply made for
without consideration and not getting covered by Section 7(1)(c) read with Schedule I of CGST
Act).

In view of above, it is not GST registered entity. Being an unregistered entity, it must not have
availed any ITC of the tax paid clothes and toys purchased by it. Thus, free supply of such goods
is not getting covered by Section 7(1)(c) read with Schedule I of CGST Act. Thus, even such supply
will not attract any GST in hands of Happy Charitable trust.
 CA Jasmeet Singh 20

24. Whether gifts given by employer to employee will also qualify as supply?

Solution:
Section 7(1)(c) of CGST Act defines scope of supply to include transactions specified in Schedule I
of CGST Act which are made without consideration. One type of such transaction is supply of
goods or services or both between related persons.
Explanation to Section 15 of CGST Act defines ‘related person’. The said definition covers
employer and employee as related persons. Thus, gift by an employer to employee will be a
supply and will attracts levy of GST.
However, any gifts for a value not exceeding Rs. 50,000 in a financial year will not qualify as
supply and as such will not be liable to tax.

25. Mr A paid penalty of Rs 2,00,000 to the Government for contravention of certain provisions of
GST Law. Whether this payment can be considered as consideration towards service activity of
tolerance of an act of Mr A by Government and thus, a taxable supply? Give reason.

Solution:
Penalty under GST law is statutory penalty which has been paid for contravention of law. Its
payment is not arising out of any contract between Mr A and Government. Thus, it is not
contractual payment and hence, cannot be considered as ‘consideration’. That being so, there is
no receipt of consideration by the Government. Thus, there is no supply transaction.

26. What is outside the scope of the term supply as defined in CGST Act, 2017?

Solution:
Section 7(2) of CGST Act, 2017 provides exclusion of following from the scope of supply:
(a) The activities specified under Schedule III of CGST Act;
B- Bond to bond transfer
E- Employee to the employer in the course of or in relation to his employment
N- Non-taxable territory to non-taxable territory without such goods entering to India
C- Court or tribunal established under any law
H- High seas sale

F- Funeral, burial, crematorium or mortuary including transportation of the deceased

L- Sale of land and completed building subjected to the clause (b) of para of schedule II
A- Actionable claims, other than Betting, gambling, and lottery (BGL)
G- Functions performed by the government officials

(b) Any activity undertaken by the Central Govt. or a State Govt. or any local authority in which
they are engaged as public authority and which have been notified by Government (on
recommendation of council). Presently,
 Services by way of any activity in relation to function entrusted to a Panchayat or a
 CA Jasmeet Singh 21

Municipality (as amended on 26th July, 2018) under Constitution of India and
 Services by way of grant of alcoholic liquor license, against consideration in the form of
license fee or application fee or by whatever name it is called.
has been notified and thus, such activity is excluded from scope of supply.

27. What is Mixed Supply? Illustrate with an example.

Solution:
In terms of Section 2(74) of CGST Act, 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.

The example of mixed supply is:

A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated
drinks 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.

28. Brishti Ltd. is manufacturer of cosmetic products: (1) Hair oil (GST Rate - 18%), (2) Sun screen
cream (GST Rate- 28%), (3) Shampoo (GST rate - 28%), and (4) Hair comb (GST Rate - 12%). The said
products are supplied in a single package and the Price per package is Rs.
500 (exclusive of taxes). 20,000 packages were supplied by the company to its dealer. Determine
the nature of supply and its tax liability.

Solution:
The treatment would be as follows:
Nature of Combination Supply: Mixed supply
Each of the goods in the package has individual identity and can be
supplied separately but are deliberately supplied conjointly for a
single consolidated price. Hence, the supply would constitute a mixed
supply.
Treatment under GST: Highest tax rate applicable 28% GST
As per section 8(b) of the CGST Act, tax rates applicable in case of
mixed supply would be the rate of tax attributable to that one supply
(goods, or services) which suffers the highest rate of tax from amongst
the supplies forming part of the mixed supply. Therefore, entire
package will be chargeable to 28% GST.
Value of Supply: Value of taxable supply per package 500
No. of packages 20,000
Total Value 1,00,00,000
GST Liability @ 28% 28,00,000
 CA Jasmeet Singh 22

29. The temple of ancestral deity of Mr. Aman goel and his family is located at Beri, Haryana. The
temple is run by a charitable organisation registered under section 12AA of the Income Tax Act,
1961. The family has got unshakeable faith in their ancestral deity. Mr. Aman is a big entrepreneur
having flourishing business of tiles in Gurugram. Upon the birth of their first child, he donated Rs
10 lakh to the said temple for construction of a sitting hall in the temple. On the main door of the
sitting hall, a name plate was placed stating “Donated by Mr. Aman Goel upon birth of his first
child”.
You are required to examine the leviability of GST on the donation received from Mr. Aman Goel?

Solution:
It has been clarified vide Circular No. 116/35/2019 GST dated 11.10.2019 that when the name of the
donor is displayed in the religious institution premises, by placing a name plate or similar such
acknowledgement, which can be said to be an expression of gratitude and public recognition of
donor’s act of philanthropy and is not aimed at giving publicity to the donor in such manner that it
would be an advertising or promotion of his business, then it can be said that there is no supply of
service for a consideration (in the form of donation). There is no obligation (quid pro quo) on part
of recipient of the donation or gift to do anything (supply a service). Therefore, there is no GST
liability on such consideration.
In the given case, there is no reference or mention of any business activity of the donor which
otherwise would have got advertised. Thus, since the gift or donation is made to a charitable
organization, the payment has the character of gift or donation and the purpose is philanthropic
(i.e., it leads to no commercial gain) and not advertisement, hence GST is not leviable.

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.
 CA Jasmeet Singh 23

(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. Mr. A has received technical consultancy services from IT Star Consultants, USA. The import of
technical consultancy will not be liable to GST if-
(i) Mr. A pays some consideration for the services received
(ii) Mr. A pays some consideration for the services received and if Mr. A uses the said service for
business purposes
(iii) Mr. A uses the said service for business purposes even though he does not pay any
consideration for the same
(iv) Mr. A uses the said service for personal purposes and does not pay any consideration for
the same and is also a partner in IT Star Consultants
(v) Mr. A uses the said service for business purposes and does not pay any consideration for the
same and is also a partner in IT Star Consultants

(a) (i), (ii), (v)

(b) (ii), (iii) and (v)
(c) (iii), (iv)
(d) (iii), (iv) and (v)

8. Which of the given activities does not amount to supply?

(a) An architect in India seeks legal advice from his son settled in London free of cost with regard
to his family dispute.
 CA Jasmeet Singh 24

(b) A Resident Welfare Association provides the service of depositing the electricity bills of the
residents in lieu of some nominal charges.
(c) A dealer of air-conditioners permanently transfers an air conditioner from his stock in trade,
for personal use at his residence.
(d) An electronic commerce operator in India seeks legal advice for its business from its head
office in US free of cost.

9. Which of the following transactions does not qualify as supply under GST law?
(i) When the Head Office makes a supply of services to its own branch outside the State.
(ii) When a person import services without consideration for the purposes of his business from
his son living outside India.
(iii) Disposal of car without consideration and where the supplier has not claimedinput tax credit
on such car.
(iv) When a principal makes supplies to his agent who is also registered and is situated within the
same State.
(a) (i) & (iii)
(b) (i), (ii) & (iii)
(c) (iii)
(d) (iii) & (ii)

10. There is a difference in taxability of goods forming part of composite supply andmixed supply.
Here are few examples from which you need to identify which is correct example of composite
supply and mixed supply.
(i) Mr. A buys a car and purchases warranty and maintenance of the car by paying nominal
amount. Car, warranty and maintenance here are a mixed supply.
(ii) Mr. A buys a car and purchases warranty and maintenance of the car by paying nominal
amount. Car, warranty and maintenance here are a composite supply.
(iii) Mrs. A buys a microwave oven and some utensils for use in microwave oven. Both microwave
oven and utensils are sold at a single price. Microwave oven and its utensils here are a mixed
supply.
(iv) Mrs. A buys chocolates, juices and biscuits from a shop. All items have different prices.
Chocolates, juices and biscuits are a mixed supply.
The correct examples of composite and mixed supply are: -
(a) i,iv
(b) ii,iii
(c) ii,iii,iv
(d) None of the above

11. Mr. Manubhai and Mr. Anubhai are two brothers running a business of supplying lubricants
located in the State of Gujarat in their company, M/s. Ambani Lubricants (P) Ltd. On death of their
respected father, the two brothers have divided their business.
However, they have signed an agreement that Mr. Anubhai will not enter into business

of supplying lubricants similar to business done by M/s. Ambani Lubricants (P) Ltd. run by Mr.
 CA Jasmeet Singh 25

Manubhai, for which Mr. Manubhai will pay him Rs. 2.5 crores as a lump sum payment. State
whether transaction entered through the above agreement constitutes supply under CGST Act,
2017 or not.
(a) Yes, supply of goods by Mr. Manubhai.
(b) Yes, supply of goods by Mr. Anubhai.
(c) Yes, supply of services by Mr. Manubhai.
(d) Yes, supply of services by Mr. Anubhai.

12. M/s. Jolly Electronics (P) Ltd., is an authorized dealer of M/s. GG Micro Ltd., located and registered
in Lucknow, Uttar Pradesh. It has sold following items to Mr. Alla Rakha (a consumer)
Product Amount
Refrigerator (500 litres) taxable @ 18% 40000
Stabilizer for refrigerator taxable @ 12% 5000
LED television (42 inches) taxable @ 12% 30000
Split air conditioner (2 Tons) taxable @ 28% 35000
Stabilizer for air conditioner taxable @12%. 5000
Total value 1,15,000
M/s. Jolly Electronics (P) Ltd. has given a single invoice, indicating price of each item separately to
Mr. Alla Rakha. Mr. Alla Rakha, has given a single cheque of Rs. 1,00,000/- for all the items as a
composite discounted price. State the type of supply and the tax rate applicable on the same.

(a) Composite supply; Highest tax rate applicable to split air conditioner, i.e. 28%
(b) Mixed supply; Highest tax rate applicable to split air conditioner, i.e. 28%
(c) Supply other than composite and mixed supply; Highest tax rate applicable to split air
conditioner i.e. 28%
(d) Supply other than composite and mixed supply; respective tax rate applicable to each item

13. Which of the following is not considered as a supply under the CGST Act, 2017?
(a) Importation of architectural services for Rs.1,00,000/- for construction of residential property
used for personal purposes from unrelated person.
(b) Importation of architectural services free of cost for construction of office used for business
purposes from related person.
(c) Importation of architectural services free of cost for construction of office used for business
purposes from unrelated person.
(d) Both (a) and (c)

14. Which of the following is not a supply under the CGST Act, 2017?
(a) Food supplied free of cost by Mr. A (Owner of a Restaurant) to his agent for further supply to
customer at Rs.500/.
(b) Importation of accounting services free of cost from father residing in US.
(c) A Rolex watch gifted to an employee for Rs. 50,000/.
(d) A machinery given free of cost to an employee on which input tax credit was availed by the
employer.
 CA Jasmeet Singh 26

15. M/s. Vishu Megamart, operating a store located and registered in Rajasthan, has come out with
big discount offers at the time of Diwali on various gift items. In order to attract more customers,
it has decided to supply a gift pack containing 5 packets of Haldiram’s Namkeen (200 gram each)
taxable @ 12%, 1 packet of Roasted Smoked Almonds (100 gram) taxable @ 18%, 1 packet of
Bournville Chocolate (50 mg) taxable @ 28% and 1 bottle of Real Fresh Juice (1 litre) taxable @ 18%
in a single basket for a single price of Rs. 1,000/-.

State the type of supply and the tax rate applicable on the same.
(a) Composite supply; Tax rate of the principal item, i.e. Namkeen @18%
(b) Composite supply; Highest tax rate out of all items, i.e. 28% applicable to chocolates
(c) Mixed supply; Tax rate of principal item, i.e. Namkeen @18%
(d) Mixed supply; Highest tax rate out of all items, i.e. 28% applicable to chocolates

16. Mr. Rupesh Patel, is voluntarily registered under GST having turnover of Rs.
15,00,000/-. He is a practicing Company Secretary providing professional services from his
partnership firm located in Chandigarh to its various clients. He has taken some interior
decoration services from abroad for a residential home owned in the name of the firm which is
under construction in Chandigarh. He has paid Rs.
2,00,000/- for the same.
In view of the above information, state the correct option-
(a) GST is payable on the interior decoration services received from abroad.
(b) Interior decoration services received from abroad are not taxable, since the same are not in
the course or furtherance of business.
(c) Interior decoration services received from abroad are exempt in terms of section 6 of IGST
Act, 2017
(d) Interior decoration services received from abroad are not taxable, since below threshold limit

17. What are the factors differentiating composite supply & mixed supply?
(a) Nature of bundling i.e. artificial or natural
(b) Existence of principal supply
(c) Both of the above
(d) None of the above

18. Booking of Air Tickets with meal on board during travel will be taxed as? And at the rate of?
(a) Composite supply & principle supply
(b) Mixed supply & principle supply
(c) Composite supply & highest rate
(d) Any of the above

19. M/s. XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods.
The auctioneer arranges for the auction and identifies the potential bidders. The highest bid is
 CA Jasmeet Singh 27

accepted and the goods are sold to the highest bidder by M/s. XYZ. The invoice for the supply of
the goods is issued by M/s. XYZ to the successful bidder.
Is Mr. B is an agent of M/s XYZ for the supply of goods in terms of Schedule I para 3?
(a) Yes
(b) No

20. Ram a stock broker charges some service charges or service fees or documentation fees or
broking charges or such like fees or charges are charged in relation to transactions in securities,
the same would be a consideration for provision of service. Will such brokerage/service fees be
chargeable to GST?
(a) Yes
(b) No

21. When will a del-credere agent falls under the ambit of agent under Para 3 ofSchedule I of the
CGST Act?
(a) where the invoice for further supply of goods is issued by the DCA in his own name
(b) where the invoice for further supply of goods is issued by the DCA in his name of principal
(c) where the invoice for further supply of goods is issued by Principal

(d) where the invoice for further supply of goods is not issued at all

22. Whether the temporary short-term transaction-based loan extended by the DCA to the recipient
(buyer), for which interest is charged by the DCA, is to be included in the value of goods being
supplied by the supplier (principal) where DCA is not an agent under Para 3 of Schedule I of the
CGST Act?
(a) interest being charged by the DCA would not be included in the value of supply of goods
supplied (to the buyer) by the supplier (principal)
(b) interest being charged by the DCA would be included in the value of supply of goods supplied
(to the buyer) by the supplier (principal)

23. Whether DCA is an agent under Para 3 of Schedule I of the CGST Act and makes payment to the
principal on behalf of the buyer and charges interest to the buyer for delayed payment along with
the value of goods being supplied, whether the interest will form part of the value of supply of
goods also or not?
(a) Yes
(b) No

24. Which is not considered as supply under GST Law?

(a) Stock transferred from one establishment in Delhi to another establishment in Gurgaon,
Haryana registered under same PAN.
(b) CA Ram supplies accounting services to CA Radha in lieu of taxation services received from CA
Radha.
(c) A Health club supplies lunch to its members at its annual meeting against a nominal charge.
(d) Mr. A sells a flat to Mr. B
 CA Jasmeet Singh 28

(i) Date of completion certificate - 31/01/20XX

(ii) Date of agreement with buyer - 01/02/20XX
(iii) Consideration received - 05/02/20XX

25. 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 ITC 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)

26. ABC Ltd. is a registered pharmaceutical company. The company invented one drug for instant cure
of cancer. They supplied free samples of this medicine to various doctors. What will be the tax
treatment of these free samples under GST?
(a) ABC Ltd. is liable to pay tax on supply of free samples and eligible to claim input tax credit.
(b) ABC Ltd. is not liable to pay tax on supply of free samples but eligible to claim input tax credit.
(c) ABC Ltd. is neither liable to pay tax on supply of free samples nor eligible to claim input tax
credit.
(d) ABC Ltd. is liable to pay tax on supply of free samples but not eligible to claim input tax credit.

27. Mr. Avishkar is a painter registered under GST in Delhi. He sends his artwork for exhibition in
Mumbai. At what point of time, supply is considered to have been made

under GST?
(a) When painting is completed.
(b) When painting is sent for exhibition in Mumbai.
(c) When painting is displayed at the exhibition in Mumbai.
(d) When painting is purchased by one of the visitors in the exhibition.

28. Which of the following is not covered under Schedule III of CGST Act, 2017?
(a) Director’s monthly salary under employment agreement
(b) Sitting fees to independent directors for attending AGMs
(c) Payment to employee for providing broking services to the employer for purchase of
commercial property. Such services do not form part of the employment contract entered into
by the employer with the employee.
(d) Both (b) and (c)

29. M.H. Husain, a famous painter, Delhi, sends his latest art work to Indian Classic gallery, Delhi, for
 CA Jasmeet Singh 29

exhibition. However, no consideration has flown from Indian Classic gallery to M. H. Husain when
the art work is sent to the gallery for exhibition. M. H. Husain is in dilemma whether GST is
payable on said transfer of art work. What would be your advice on the same?
(a) GST is payable as the same amounts to taxable supply of goods.
(b) GST is payable as the same amounts to taxable supply of services.
(c) GST is not payable as the same is an exempt supply.
(d) GST is not payable as the same does not amount to supply at all.

Solutions:
1. a 2. a 3. d 4. d 5. b 6. a 7. c 8. a 9. c 10.b
11.d 12.d 13.c 14.c 15.d 16.a 17.c 18.a 19.b 20.a
21.a 22.a 23.a 24.d 25.d 26.c 27.d 28.d 29.d
 CA Jasmeet Singh 30

Chapter 3: Charge of GST & Composition levy

1. State 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 business
entity.

Solution:
(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/ 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. A person availing composition scheme in Haryana during a financial year crosses the turnover of
Rs 1.5 crore during the course of the year i.e. he crosses the turnover of Rs 1.5 crore in December?
Will he be allowed to pay tax under composition scheme for the remainder of the year, i.e. till
31st March?

Solution:
No. The option to pay tax under composition scheme lapses from the day on which the aggregate
turnover of the person availing composition scheme during the financial year exceeds the
specified limit (Rs 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.

3. Determine whether the supplier in the following cases are eligible for composition levy provided
their turnover in preceding year does not exceed Rs 1.5 crore:
(i) Mohan Enterprises is engaged in trading of pan masala in Rajasthan and is registered in
 CA Jasmeet Singh 31

the same State.

(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in
neighboring States.

Solution:
(i) A supplier engaged in the manufacture of goods as notified under section 10(2)(e), during
the preceding FY is not eligible for composition scheme. Ice cream and other edible ice,
whether or not containing cocoa, Pan masala, Aerated water and Tobacco and
manufactured tobacco substitutes are hereby notified. However, in the given case, since
Mohan Enterprises is engaged in trading of pan masala and not manufacture and his
turnover does not exceed Rs. 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.

4. Subramanian Enterprises has two registered places of business in Delhi. Its aggregate turnover
for the preceding year for both the places of business was Rs 120 lakh. It wishes to pay tax under
composition levy for one of the place of business in the current year while under normal levy for
other. You are required to advice Subramanian Enterprises whether he can do so?

Solution:
A registered person with an aggregate turnover in a preceding financial year up to Rs 1.5 crore is
eligible for composition levy in Delhi. Since the aggregate turnover of Subramanian Enterprises
does not exceed Rs 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.

5. Income is received by Maharashtra Government from renting of immovable property to Ganpati

Morya Pvt. Ltd., registered in Maharashtra (Turnover of the company was Rs 18 lakh in the
preceding financial year). Is GST payable in the present case? If yes, who is liable to pay the same?

Solution:
Notification No. 12/2017 CT (R) dated 28.06.2017 has inter alia exempted the services provided by
the State Government to a business entity with an aggregate turnover of up to Rs 20 lakh (Rs 10
lakh in case of a Special Category States) in the preceding FY. However, the same shall not apply
to services by way of renting of immovable property.
In the given case, a service by way of renting of immovable property is provided by Maharashtra
Government to Ganpati Morya Pvt. Ltd, registered in Maharashtra. Therefore, the above
exemption will not apply in this case even though the turnover of the company was less than Rs
 CA Jasmeet Singh 32

20 lakh in the preceding financial year. Thus, GST is payable in the given case.
Notification No. 13/2017 CT (R) dated 28.06.2017 as amended inter alia provides that reverse
charge is applicable in case of services supplied by the State Government by way of renting of
immovable property to a person registered under the Central Goods and Services Tax Act, 2017.
Thus, GST is payable by Ganpati Morya Pvt. Ltd., being a registered person in the present case.

6. 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 Rs 78 Lakhs in the
preceding financial year.
Determine whether Sai Trading Company will be eligible for composition levy, as on 31 10-2017.
Will your Solution be different, if in the above scenario, M/s Sai Trading Company is making intra
state supply within the state of Jammu and Kashmir?

Solution:
Section 10 of CGST Act, 2017 provides that a registered person, whose aggregate turnover in the
preceding financial year did not exceed Rs 1.5 crores may opt for composition scheme. The
turnover limit is Rs 75 lakhs in case of some Special Category States namely,

In the given case, the applicable turnover limit for composition scheme will be Rs 1.5 crore as
Andhra Pradesh is not a Special Category State.

Further, since the aggregate turnover of the registered person in the given case does not exceed
Rs 1.5 crore and it satisfies other conditions of composition scheme namely, not making inter-
State supplies of goods, it is eligible for composition levy.

Since the turnover limit for determining the eligibility for composition scheme in the State of
Jammu and Kashmir is Rs 1.5 crores, Sai Trading Company will be eligible for composition levy
with other condition of not making inter-State supplies of goods being fulfilled.

7. Mr. Vivek Goyal, director of A2Z Pvt. Ltd. Company has received sitting fee amounting to Rs 1 lakh
from A2Z Pvt. Ltd for attending the Board meetings. Is GST payable in the present case? If yes,
who is liable to pay the same?

Solution:
Notification No. 13/2017 CT (R) dated 28.06.2017 inter alia provides that 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.
Company.

8. M/s Shakshi Associates a recovery agent (located in Chennai) empanelled by State Bank of India,
Local Head Office, Nungambakkam, Chennai. The following service supplied M/s Shakshi
Associates in the month of Nov 2018 are as follows:
I. Fee of Rs 2,25,825 for supply of services in relation to recovery of dues from the defaulting
 CA Jasmeet Singh 33

Borrowers at the place of business/occupation and if such Borrowers is/are unavailable at the
place of business then at his/ her residence.
II. Supply of services with regard to demand for recovery or taking possession of the security
from defaulting Borrowers, for which separate fee charge from the bank Rs 55,175/-
Solution the following:
(a) Is it supply of service?
(b) If so, who is liable to pay GST?
(c) What is the GST liability?
Note: Assume applicable rate of GST for recovery agent services @18%.

Solution:
(a) Yes. It is taxable supply of service
(b) State Bank of India being recipient of service is liable to pay GST under RCM. (c) GST liability =
Rs. 50,580 [i.e. Rs. 2,25,825 + 55,175) x 18%]

9. 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
Solution
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.
10. In the following independent cases, decide, who 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.
(a) '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.
(b) Mr. Kamal Jain, an unregistered famous author, received Rs. 20 lakh 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
 CA Jasmeet Singh 34

of his new book.

Solution:
a) In case of a GTA service, where GST is payable @ 5% and recipient is one of the specified
recipients, tax is payable by the recipient of service under reverse charge.
However, where GST is payable @ 12%, tax is payable under forward charge by the supplier
of service. Therefore, in the given case, tax is payable under forward charge by "Veer
Transport", a registered GTA.
Note In the given case, since the recipient of service is other than specified recipient, i.e.,
unregistered sole proprietorship firm, GTA service is exempt from GST. However, in the
above answer, the said exemption has been ignored since the question specifically requires
the students to ignore the exemptions, if any, available.
b) Supply of services by an author by way of transfer of a copyright covered under section
13(1)(a) of the Copyright Act, 1957 relating to original literary works to a publisher located in
the taxable territory is taxable under reverse charge mechanism.
Thus, in the given case, the recipient of service, i.e. PQR Publications Ltd. is liable to pay
GST. The tax can be paid by the author under forward charge if the author is a registered
person. Since in the given case, the author is an unregistered person, the said option is not
available to him.

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

Solution:
If a person is selling/supplying the goods, which are not leviable to tax under GST, then he is not
eligible to opt for composition scheme.
In this case even though the aggregate turnover is not exceeding Rs. 1.5 crore, Mr. Rahim is not
eligible for composition Scheme since he is in the business of supplying non-taxable supply.

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

Solution:
Mr. H is not eligible for composition as he is making interstate outward supply.
If Mr. H is making purchase from Tamil Nadu then he is eligible for composition scheme as there
is restriction on outward interstate supply not on inward interstate supply.
 CA Jasmeet Singh 35

13. Is there any option for registered taxable person to withdraw from the composition scheme?

Solution:
The registered taxable person who intends to withdraw from the composition scheme shall,
before the date of such withdrawal, file an application in FORM GST CMP-04.
Where the option of composition scheme is lapsed due to non-compliance of any of the eligibility
conditions under Section 10 or rules made thereunder, then taxable person shall file an
intimation of withdrawal in the same FORM GST CMP-04 within 7 days of the occurrence of event
leading to disability under the scheme. An intimation for withdrawal or cancellation of
permission in respect of any place of business in a State or UT shall be deemed to be an
intimation in respect of all other places of business registered on the same PAN.

14. Examine whether the suppliers are eligible for composition scheme in the following independent
cases. Is there any other option available for concessional tax payment with any of these
suppliers, wherever composition scheme cannot be availed?

(a) M/s Devlok, a registered dealer, is dealing in intra-State trading of electronic appliances in
Jaipur (Rajasthan). It has turnover of Rs 130 lakh in the preceding financial year. In the
current financial year, it has also started providing repairing services of electronic
appliances.
(b) M/s Narayan & Sons, a registered dealer, is running a “Khana Khazana” Restaurant near City
Palace in Jaipur. It has turnover of Rs 140 lakh in the preceding financial year. In the current
financial year, it has also started dealing in intra-State trading of beverages in Jaipur
(Rajasthan).
(c) M/s Indra & bro, a registered dealer, is providing restaurant services in Uttarakhand. It has
turnover of Rs 70 lakh in the preceding financial year. It has started providing intra-State
interior designing services in the current financial year and discontinued rendering
restaurant services.
(d) M/s Him Naresh, a registered dealer, is exclusively providing intra-state architect services in
Uttarakhand. It has turnover of Rs 40 lakh in the preceding financial year.

Solution:
As per section 10 of the CGST Act, 2017, the following registered persons, whose aggregate
turnover in the preceding financial year did not exceed Rs 1.5 crore, may opt to pay tax under
composition levy.
(a) Manufacturer,
(b) Persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II
(restaurant services), and
(c) Any other supplier eligible for composition levy.
Thus, essentially, the composition scheme can be availed in respect of goods and only one service
namely, restaurant service. However, the scheme permits supply of other marginal services for a
specified value along with the supply of goods and restaurant service, as the case may be. Such
marginal services can be supplied for a value up to 10% of the turnover in the preceding year or Rs
 CA Jasmeet Singh 36

5 lakh, whichever is higher.

Further, the registered person should not be engaged in making any inter-State outward supplies
of goods.

Furthermore, an option of availing benefit of concessional payment of tax has been provided to a
registered person whose aggregate turnover in the preceding financial year is up to Rs 50 lakh
and who is not eligible to pay tax under composition scheme. Said person can pay tax @ 3%
[Effective rate 6% (CGST+ SGST/UTGST)] on first supplies of goods and/or services up to an
aggregate turnover of Rs 50 lakh made on/after 1st April in any financial year (FY), subject to
specified conditions vide Section 10(2A) as amended. One of such condition is that the registered
person should not be engaged in making any inter-state outward taxable supplies.

In view of the above-mentioned provisions, the Solution to the given independent cases is as
under: -
(a) The turnover limit for composition scheme in case of Jaipur (Rajasthan) is Rs. 1.5 crore. Thus,
M/s Devlok can opt for composition scheme as its aggregate turnover is less than Rs
1.5 crore. Further, since the registered person opting for composition scheme can also supply
services (other than restaurant services) for a value up to 10% of the turnover in the
preceding year or Rs 5 lakh, whichever is higher, in the current financial year, M/s Devlok can
supply repair services up to a value of Rs 13 lakh [10% of Rs 130 lakh or Rs 5 lakh, whichever is
higher] in the current financial year.

(b) In the given case: -

(i) the turnover in the preceding year is less than the eligible turnover limit, i.e. Rs 1.5 crore.
(ii) the supplier is engaged in providing restaurant service which is an eligible supply under
composition scheme.
(iii) the supplier wants to engage in trading of goods which is also an eligible supply under
composition scheme.
Thus, M/s Narayan & Sons is eligible for composition scheme.

(c) The turnover limit for composition scheme in case of Uttarakhand is Rs 75 lakh. Further, a
registered person who is exclusively engaged in supplying services other than restaurant
services are not eligible for composition scheme. Thus, M/s Indra & bro cannot opt for
composition scheme.

Further, the benefit of concessional tax payment under Section 10(2A) is available in case of a
registered person whose aggregate turnover in the preceding financial year does not exceed
Rs 50 lakh.
Thus, in view of the above- mentioned provisions, M/s Indra & bro cannot avail the benefit of
concessional tax payment as its aggregate turnover in the preceding financial year is more
than Rs 50 lakh.

(d) An exclusive service provider can opt for the composition scheme only if he is engaged in
 CA Jasmeet Singh 37

supply of restaurant services. The composition scheme permits supply of marginal services
for a specified value, but only when the same are supplied along with goods and/or
restaurant service.
Since M/s Him Naresh is exclusively engaged in supply of services other than restaurant
services, it is not eligible for composition scheme even though its turnover in the preceding
year is less than Rs 75 lakh, the eligible turnover limit for Uttarakhand.
However, since M/s Him Naresh is not eligible to opt for composition scheme, its aggregate
turnover in the preceding financial year does not exceed Rs 50 lakh and it is exclusively
engaged in supply of services other than restaurant services, M/s Him Naresh is entitled to
avail benefit of concessional payment of tax under U/s 10(2A).

15. Senior Advocate supplied services of Rs 1,50,000/- to business entity for Legal services. Business
entity has ITC of Rs 7,000. Senior Advocate has registered office in Chennai. Business entity is
located in Madurai.
Find the following:
(a) Who is liable to pay GST?
(b) Net GST liability?
Note:
(i) All services rendered in the month of Oct 2018.
(ii)Turnover of business entity in the previous year Rs 43 lakh. (iii)Applicable rate of GST @18%

Solution:
(a) Business entity being recipient of service is liable to pay GST.
(b) Net GST liability of the business entity: CGST 9% on Rs 1,50,000 = Rs 13,500/- SGST 9% on Rs
1,50,000 = Rs 13,500/-

Note: recipient is not allowed to utilize ITC against his GST liability. However, after payment of
GST under RCM, the same can be availed as ITC against his outward supplies.
16. Mr. Priyam, director of Sun Moon Company Private Limited, provided service to the company for
remuneration of Rs. 1,25,000. Briefly answer whether GST is applicable in the below mentioned
independent cases? If yes, who is liable to pay GST?
A) Mr. Priyam is an independent director of Sun Moon Company Private Limited and not an
employee of the company.
B) Mr. Priyam is an executive director, i.e. an employee of Sun Moon Company Private Limited.
Out of total remuneration amounting to Rs. 1,25,000, Rs. 60,000 has been declared as salaries
in the books of Sun Moon Company Private Limited and subjected to TDS under section 192
of the Income-Tax Act (IT Act). However, Rs. 65,000 has been declared separately other than
salaries in the Sun Moon Company Private Limited’s accounts and subjected to TDS under
section 194J of the IT Act as professional services.
Solution
 CA Jasmeet Singh 38

A) As per Para I of Schedule III of the CGST Act, services by an employee to the employer in the
course of or in relation to his employment are non-supplies, i.e. they are neither supply of
goods nor supply of services. Services provided by the independent directors who are not
employees of the said company to such company, in lieu of remuneration as the
consideration for the said services, are clearly outside the scope of Schedule III of the CGST
Act and are therefore taxable. Further, such remuneration paid to the directors is taxable in
hands of the company, on reverse charge basis.
Thus, GST is applicable in this case and Sun Moon Company Private Limited is liable to pay
GST.
B) The part of director’s remuneration which is declared as salaries in the books of a company
and subjected to TDS under section 192 of the Income-tax Act (IT Act), is not taxable being
consideration for services by an employee to the employer in the course of or in relation to his
employment in terms of Schedule III.
Further, the part of employee director’s remuneration which is declared separately other than
salaries in the company’s accounts and subjected to TDS under section 194J of the IT Act as
fees for professional or technical services are treated as consideration for providing services
which are outside the scope of Schedule III and is therefore, taxable. The recipient of the said
services i.e. the company, is liable to discharge the applicable GST on it on reverse charge
basis.
In lieu of the above provisions, Rs. 60,000 declared as salaries in the books of Sun Moon
Company Private Limited and subjected to TDS under section 192 of the Income-Tax Act (IT
Act), is not taxable being consideration for services by an employee to the employer in the
course of or in relation to his employment in terms of Schedule III.
Further, Rs. 65,000 declared separately other than salaries in the Sun Moon Company Private
Limited’s accounts and subjected to TDS under section 194J of the IT Act as professional
services is treated as consideration for providing services which is outside the scope of
Schedule III and is therefore, taxable. The recipient of the said services i.e. the Sun Moon
Company Private Limited, is liable to discharge the applicable GST on it on reverse charge
basis.

17. Mr. Ajay has a registered repair center where electronic goods are repaired/serviced. His repair
center 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 Rs 45 lakh.
With reference to the provisions of the CGST Act, 2017, examine whether Mr. Ajay can opt for the
composition scheme in the current financial year (FY)? Is he eligible le to avail benefit of
concessional payment of tax under U/s 10(2A)? Considering the option 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 Rs 35 lakh.
Will your Solution be different if Mr. Ajay procures few items required for providing repair
services from neighboring State of Madhya Pradesh?

Solution:
 CA Jasmeet Singh 39

Section 10 of the CGST Act, 2017 provides that a registered person, whose aggregate turnover in
the preceding financial year did not exceed Rs 1.5 crore (Rs 75 lakh in Special Category States
except Assam, Himachal Pradesh and Jammu and Kashmir), may opt to pay, in lieu of the tax
payable by him, an amount calculated at the specified rates. However, if, inter alia, such
registered person is engaged in the supply of services other than restaurant services, he shall not
be eligible to opt for composition levy.
In the given case, since Mr. Ajay is a supplier of repair services, he is not eligible for composition
scheme even though his aggregate turnover in the preceding FY does not exceed Rs 1.5 crore.
Therefore, he has to discharge his tax liability under regular provisions at the applicable rates.

However, with effect from 01.04.2019, Section 10(2A) has provided an option to a registered
person whose aggregate turnover in the preceding financial year is upto Rs 50 lakh and who is
not eligible to pay tax under composition scheme, to pay tax @ 3% [Effective rate 6% (CGST+
SGST/UTGST)] on first supplies of goods and/or services upto an aggregate turnover of Rs 50 lakh
made on/after 1st April in any FY, subject to specified conditions.

Thus, in view of the above-mentioned provisions, Mr. Ajay is eligible to avail the benefit of
concessional payment of tax under Section 10(2A) as his aggregate turnover in the preceding FY
does not exceed Rs 50 lakh and he is not eligible to opt for the composition scheme.

Thus, the amount of tax payable by him under Section 10(2A) is Rs 2,10,000 [6% of Rs 35 lakh].

A registered person cannot opt for U/s 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, Solution will remain the same even if Mr. Ajay procures few items from neighboring State
of Madhya Pradesh.

18. Mr. Vicky Frankyn, an unregistered famous author, received Rs 3 crore of consideration from
Shiv Bhawan Publications (SBP) located in Indore 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. He finished his work & made available the book to the
publisher, but has yet not raised the invoice.
Mr. Vicky Frankyn is of the view that SBP is liable to pay tax under reverse charge on services
provided by him. SBP does not concur with his view and is not ready to deposit the tax under any
circumstances.
Examine whether the view of Mr. Vicky Frankyn is correct. Further, if the view of Mr. Vicky
Frankyn is correct, what is the recourse available with Mr. Vicky Frankyn to comply with the
requirements of GST law as SBP has completely refused to deposit the tax.

Solution:
Yes, the view of Mr. Vicky Frankyn is correct. GST is payable under reverse charge in case of
supply of services by an author by way of transfer/permitting the use or enjoyment of a
copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to original literary
work to a publisher located in the taxable territory in terms of reverse charge Notification No.
 CA Jasmeet Singh 40

13/2017 CT(R) dated 28.06.2017. Therefore, in the given case, person liable to pay tax is the
publisher – SBP.
However, since SBP has completely refused to deposit the tax on the given transaction, Mr. Vicky
Frankyn has an option to pay tax under forward charge on the same. For the purpose, he needs
to fulfill the following conditions:
(i) since he is unregistered, he has to first take registration under the CGST Act, 2017
(ii) he needs to file 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;
(iii) he has to make a declaration on the invoice, which he would issue to SBP, in prescribed form.

19. Enumerate the persons who are not eligible to opt for Composition Scheme under section 10(2)
of the CGST Act, 2017.

Solution:
A registered person shall not be eligible to opt for composition scheme if:-
(i) he is engaged in supply of services other than supplies referred to in clause (b) of paragraph
6 of Schedule II.
(ii) he is engaged in supply of goods not leviable to tax
(iii) he is engaged in inter-State outward supplies of goods
(iv) he is engaged in supply of goods through an electronic commerce operator
(v) he is a manufacturer of notified goods, namely, manufacturer of Aerated water, ice cream,
pan masala and tobacco.

20.
(a) Chanchal started providing beauty and grooming services and inaugurated “Care & Care Beauty
Centre” in Janak Puri, Delhi on 01st April, 20XX. She opted to pay tax under Section 10(2A) in
the said financial year.
The aggregate turnover of Care & Care Beauty Centre for the quarter ending 30th June, 20XX
was Rs. 20 lakh. Further, for the half year ending 30th September, 20XX, the turnover reached
Rs. 50 lakh. Care & Care Beauty Centre recorded a rapid growth and the turnover reached Rs. 70
lakh by the end of October, 20XX. Determine the total tax liability of Care & Care Beauty Centre
by the end of October, 20XX.
(b) Care & Care Beauty Centre wishes to opt for composition scheme from the next financial year.
You are required to advise it whether it can do so?
Note: Rate of GST applicable on such services is 18%.

Solution:
 CA Jasmeet Singh 41

(a) Section 10(2A) provides an option to a registered person to pay CGST @ 3% [Effective rate 6%
(CGST+ SGST/ UTGST)] on first supplies of goods and/or services upto an aggregate turnover of
Rs 50 lakh made on/after 1st April in any financial year, subject to specified conditions.
It is clarified in the notification that first supplies of goods or services or both shall, for the
purposes of determining eligibility of a person to pay tax under this notification, include the
supplies from 1st April of a FY to the date from which he becomes liable for registration under
the said Act, but for the purpose of determination of tax payable under this notification, shall
not include the supplies from the first day of April of a financial year to the date from which he
becomes liable for registration under the Act.
Thus, Care & Care Beauty Centre is eligible to pay tax under this notification upto the turnover
of Rs. 50 lakh. The total tax payable by it is as under:-
Period Tax Rate Turnover (Rs) Tax Liability
1st Quarter Since turnover did not exceed Rs 20 lakh, 20 lakhs Nil
it was not required to obtain registration.
Hence, no tax was required to be paid.
2nd Quarter Effective rate is 6% (CGST+ SGST/ 30 Lakhs 1,80,000
UTGST)] under Notification No. 2/2019 CT [(50-20) Lakhs]
(R)
For the month Normal rate of GST of 18% is to be applied 20 lakh 3,60,000
of October, [(70-50) lakh]
20XX
Total Tax payable 5,40,000

(b) No, Care & Care Beauty Centre cannot opt for composition scheme from the next financial year.
Fundamentally, the composition scheme can be availed in respect of goods and only one service
namely, restaurant service. As regards services other than restaurant services are concerned,
only marginal supply of the such services for a specified value along with the supply of goods
and/or restaurant service, as the case may be, is permitted under section 10(1) of CGST Act, 2017.
Therefore, a person engaged exclusively in supply of services other than restaurant services is
not eligible to opt for composition scheme.

21. “Wedding Bells”, a wedding photographer, has commenced providing pre-wedding shoot
services in jaipur from the beginning of current financial year 2020-2021. It has provided the
following details of turnover for the various quarters till December, 2020 :-

S.No. Quarter Amount (Rs. in lakh)

1 April,2020-June,2020 20
2 July,2020-September,2020 30
3 October,2020-December,2020 40

You may assume the applicable tax rate as 18%. Wedding Bells wishes to pay tax at a lower rate
and opts for the composition scheme. You are required to advise whether it can do so and
calculate the amount of tax payable for each quarter?
 CA Jasmeet Singh 42

Solution

Section 10(2A) of the CGST Act, 2017 provides the turnover limit of Rs. 50 lakh in the preceding
financial year for becoming eligible for composition levy for services. Wedding Bells has started
the supply of services in the current financial year (FY), thus, it’s aggregate turnover in the
preceding FY is Nil. Consequently, in the current FY, Wedding Bells is eligible for composition
scheme for services. A registered person opting for composition levy for services shall pay tax
@ 3% [Effective rate 6% (CGST+ SGST/UTGST)] of the turnover of supplies of goods and services
in the State.

Further, Wedding Bells becomes eligible for the registration when the aggregate turnover
exceeds Rs. 20 lakh (the threshold limit of obtaining registration). While registering under GST,
Wedding Bells can opt for composition scheme for services.
The option of a registered person to avail composition scheme for services shall lapse with
effect from the day on which his aggregate turnover during a financial year exceeds the
threshold limit of Rs. 50 lakh.

However, for the purposes of determining the tax payable under composition scheme, the
expression “turnover in State” shall not include the value of supplies from the first day of April
of a FY up to the date when such person becomes liable for registration under this Act.

Thus, for determining the turnover of the State for payment of tax under composition scheme
for services, turnover of April,2020 – June,2020 quarter [Rs. 20 lakh] shall be excluded. On next
Rs. 30 lakh [turnover of July,2020 – September, 2020 quarter], it shall pay tax @ 6% [3% CGST and
3% SGST].

For the purposes of computing aggregate turnover of a registered person for determining his
eligibility to pay tax under this section, aggregate turnover includes value of supplies from the
1st April of a FY up to the date of his becoming liable for registration.

Thus, while computing aggregate turnover for determining Wedding Bells’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 it becomes liable for registration under this Act (i.e. turnover of April,2020 –
June,2020 quarter), are included.

By the end of July, 2020 – September, 2020 quarter, the aggregate turnover reaches Rs. 50 lakh.
Consequently, the option to avail composition scheme for services shall lapse by the end of July,
2020 – September, 2020 quarter and thereafter, it is required to pay tax at the normal rate of
18%.

Considering the above provisions, the tax payable for each quarter is as under:-
 CA Jasmeet Singh 43

S.No. Quarter GST rate Turnover GST payable

[CGST + SGST] (Rs. in lakh) (Rs. in lakh)
1 April, 2020 – June, 2020 - 20 -
2 July, 2020 – September, 6% 30 1.8
2020
3 October, 2020 – December, 18% 40 7.2
2020

22. 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 as per the provisions of
Secction 10(2A) as amended, with effect from 1st April, 2019.

Solution

The registered person desirous of availing the option to pay concessional tax @ 3% (effective rate
6%) under section 10(2A) should –

(i) not be engaged in making any supply which is not leviable to tax.
(ii) not be engaged in making any inter-State outward supply of goods and/or services.
(iii) neither be a casual taxable person nor a non-resident taxable person.
(iv) not be engaged in making any supply through an electronic commerce operator who is
required to collect tax at source.
(v) not be engaged in making supplies of notified goods.
(vi) neither collect any tax from the recipient nor be entitled to any input tax credit.
(vii) issue a bill of supply instead of tax invoice.
(viii) not have the aggregate turnover in the preceding financial year exceeding Rs. 50 lakh
(ix) not be eligible for composition scheme.
Note: Any five conditions may be mentioned out of the above mentioned nine conditions.

23. Mr. Zafar of Assam, provides the following information for the preceding financial year 2018-19.
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. 2019-20.

Particulars Amount
(Rs. in lakh)
Value of taxable outward supplies (out of above, Rs. 10 lakh was in course of 50.00
inter-state transactions).
Value of exempt supplies (which include Rs. 30 lakh received as interest 70.00
on loans & 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.
 CA Jasmeet Singh 44

Solution:
Computation of aggregate turnover of Mr. Zafar for FY 2018-19 for the purpose of eligibility of
composition levy scheme

Particulars Amount in
lakh (Rs.)
Value of taxable outward supplies 50
[Value of all taxable supplies including inter-State supplies are includible in
aggregate turnover]
Value of exempt supplies 40
[Value of exempt supplies is includible in aggregate turnover. However, value
of supply of exempt services by way of extending deposits, loans or advances
in so far as the consideration is represented by way of interest or discount,
though exempt, is not includible in aggregate turnover for determining
eligibility for composition scheme]
Value of inward supplies on which Mr. Zafar is liable to pay tax under reverse Nil
charge
[Excludible from aggregate turnover]
Value of exports 5
[Includible in aggregate turnover]
Aggregate turnover for determining eligibility for composition scheme 95
A registered person of Assam is eligible to opt for composition levy if his aggregate turnover
does not exceed Rs. 1.5 crore in the preceding financial year provided he is not engaged in inter-
State outward supplies of goods. Therefore, in the given case, assuming that he is not engaged
in making any inter-State outward supply of goods in FY 2019-20, Mr. Zafar is eligible to opt for
composition levy for FY 2019-20 since his aggregate turnover does not exceed Rs. 1.5 crore in FY
2018-19.

Multiple choice questions

1. What is the maximum rate prescribed under CGST Act?
(a) 12%
(b) 28%
(c) 20%
(d) 18%

2. Which of the following taxes levied on an intra-State supply?

(a) CGST
(b) SGST/UTGST
(c) Both (a) & (b)
 CA Jasmeet Singh 45

(d) IGST

3. What is the threshold limit of turnover in the preceding financial year to be eligiblefor
composition levy in Delhi?
(a) Rs 50 lakh
(b) Rs 75 lakh
(c) Rs 80 lakh
(d) Rs 1.5 crore

4. 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

5. IGST is levied on:

(a) Inter-State supplies
(b) Intra-State Supplies
(c) Both (a) and (b)
(d) None of the above

6. is levied on the import of goods and/or services.

(a) IGST
(b) CGST and SGST
(c) CGST and UTGST
(d) None of the above

7. The maximum rate of IGST can be:

(a) 20%
(b) 30%
(c) 40%
(d) None of Above

8. 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

9. GST is payable by the recipient under reverse charge on:

 CA Jasmeet Singh 46

(a) Sponsorship services

(b) Transport of goods by rail
(c) Transport of passengers by air
(d) All of the above

10. State person liable to pay GST in the following independent cases provided recipientis 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.

11. Mr. Fardeen Khan, is the owner of a proprietorship firm (located in the State of Arunachal
Pradesh), which is engaged in trading of ice-cream (not containing cocoa) and supplies the same
locally within the same State itself. The turnover details of his firm are as under:
For the period April, 20XX to March, 20XX: Rs. 70,00,000/-
He wants to opt for Composition Scheme. State the composition turnover limit for the State of
Arunachal Pradesh and whether he is eligible to opt for Composition Scheme or not.
(a) Rs. 75,00,000/-: Yes
(b) Rs. 75,00,000/-: No
(c) Rs. 1,00,00,000/-: Yes
(d) Rs. 80,00,000/-: Yes

12. Which of the following legal services does not fall under RCM provisions as contained under
section 9(3) of the CGST Act-
(a) Representation services provided by an individual advocate
(b) Representation services provided by a senior advocate
(c) Representation services provided by a firm of advocates
(d) Legal services provided by an advocate to an unregistered individual
13. Jhulelal Palkiwala & Co. is a firm of advocates registered in GST in the State of Punjab. It provides
legal consultancy services to various clients. It has provided consultancy services of Rs. 50,000 on
5-Sep-20XX to Burger Queen (P) Ltd., a registered business entity located in Mizoram. Burger
Queen (P) Ltd. achieved the turnover of Rs. 15,00,000/- in the preceding financial year. The law
firm raised proper invoice on the Burger Queen (P) Ltd. on 25-Sep-20XX. Calculate the taxability of
above transaction if applicable rate of tax is 18%.
(a) Exempt supply
(b) 9,000 payable by Jhulelal Pakiwala & Co.
(c) 9,000 payable by Burger Queen (P) Ltd.
(d) Non-taxable supply

14. What happens if the turnover of a registered person paying taxes under composition scheme
during the year 2018-19 crosses threshold limit?
(a) He can continue under composition scheme till the end of the financial year
 CA Jasmeet Singh 47

(b) He will be liable to pay tax at normal rates of GST on the entire turnover for the financial year
2018-19
(c) He will cease to remain under the composition scheme with immediate effect
(d) He will cease to remain under the composition scheme from the quarter following the quarter
in which the aggregate turnover exceeds threshold limit

15. Are services provided by a partnership firm of Direct Selling Agents (DSAs) to banks/ NBFCs under
RCM:
(a) Yes
(b) No

16. whether tax will be paid under reverse charge is payable by composition dealer:
(a) Yes
(b) No

17. When can credit of tax paid under RCM be availed?

(a) Next year
(b) Current month
(c) Next month
(d) No credit can be taken

18. Are services provided by way of transfer of development rights to promotor under RCM:
(a) Yes
(b) No

19. Who is liable to pay tax on renting of Immovable property by Government to a registered person?
(a) Registered person
(b) Government

20. GTA services to a department of CG/SG/LA, which has taken registration as TDS deductor. Is RCM
applicable?
(a) Yes
(b) No

21. What is the threshold limit of turnover in the preceding financial year to be eligible for
composition levy in Uttarakhand?
(a) Rs 50 lakh
(b) Rs 75 lakh
(c) Rs 80 lakh
(d) Rs 1.5 crore

22. What is the threshold limit of turnover in the preceding financial year to be eligible for
composition levy in Assam?
 CA Jasmeet Singh 48

(a) Rs 50 lakh
(b) Rs 75 lakh
(c) Rs 80 lakh
(d) Rs 1.5 crore

23. What is the threshold limit of turnover in the preceding financial year to be eligible for
composition levy in Karnataka?
(a) Rs 50 lakh
(b) Rs 75 lakh
(c) Rs 80 lakh
(d) Rs 1.5 crore

24. Which are the three special category states allowing a limit of 1.5 cr under composition scheme?
(a) Assam, Arunachal Pradesh, Sikkim
(b) Assam, Arunachal Pradesh, J&K
(c) Assam, Himachal Pradesh, J&K
(d) Assam, Himachal Pradesh, Sikkim

25. What is the specified value of service [other than restaurant services] allowed to registered
person opting for composition scheme.
(a) 5 lacs
(b) 10% of TO in state/UT in CFY
(c) 10% of TO in state/UT in PFY
(d) Higher of: 10% of TO in state/UT in PFY or 5 lakhs

26. Ram has opted for composition scheme in the financial year 2019-2020. His aggregate turnover in
FY 2018-19 is Rs 60 lakh. Since his aggregate turnover in the preceding FY does not exceed Rs 1.5
crore, he is eligible for composition scheme. What is the maximum amount of service allowed to
be provided by him?
(a) Rs 10 lakhs
(b) Rs 5 lakhs
(c) Rs 6 lakhs
(d) Nil

27. Miss. Raksha is engaged in providing private coaching services in Noida, Uttar Pradesh and is not
registered under GST till 25-Sep-20XX. Her aggregate turnover is Rs 19,00,000/- on 30-Sep-20XX.
She got GST registration on 30-Sep-20XX. Which of the following options are available to her?
(a) She can pay tax @ 18%, charge it from customer and avail full input tax credit on
procurements made.
(b) She can pay tax @ 6% under exemption scheme for service providers but she cannot charge
GST from customer and also cannot avail input tax credit.
(c) She is not liable for registration since her aggregate turnover is less than `40,00,000/-
(d) Either (a) or (b)
 CA Jasmeet Singh 49

28. Mr. Ajay has a registered repair center where electronic goods are repaired/serviced. His repair
center 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 Rs 45 lakh.
With reference to the provisions of the CGST Act, 2017, examine whether Mr. Ajay can opt for the
composition scheme in the current financial year (FY)? Is he eligible to avail benefit of
concessional payment of tax under U/s 10(2A)?
(a) He is ineligible for composition but can avail the benefit of notification no 02/2019.
(b) He is eligible for composition
(c) He is eligible for composition and also can avail the benefit of notification no 02/2019.
(d) Eligible for none.

29. Which of the following cases is input tax credit (ITC) under the CGST Act, 2017 available: -
(i) AMT Co. Ltd. purchased a mini bus having seating capacity of 16 persons for transportation of
its employees from their residence to office and back.
(ii) Bangur Ceramics Ltd., a manufacturing company purchased two trucks for transportation of
its finished goods from the factory to dealers located in various locations within the country.
(iii) “Hans premium” dealing in luxury cars in Chankyapuri, Delhi purchased five Skoda VRS cars
for sale to customers.
(iv) Sun & Moon Packers Pvt. Ltd. availed outdoor catering service to run a canteen in its factory.
The Factories Act, 1948 requires the company to set up a canteen in its factory.
Choose the correct option:
(a) (i), (ii), (iii)
(b) (i), (ii) & (iv)
(c) (i), (iii) & (iv)
(d) (i), (ii), (iii) & (iv)

30. Is RCM applicable on Security services (services provided by way of supply of security personnel)
provided to a registered person by a body corporate.
(a) Yes
(b) No

31. Is RCM applicable on Security services (services provided by way of supply of security personnel)
provided by any person (other than body corporate) to a registered composition dealer.
(a) Yes
(b) No

32. Is RCM applicable on Long term lease of land (30 years or more) by any person against
consideration in the 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.
(a) Yes
(b) No
 CA Jasmeet Singh 50

Solution:

1. c 2. c 3. d 4. d 5. a 6. a 7. c 8. a 9. a 10.a
11.a 12.d 13.c 14.c 15.b 16.a 17.b 18.a 19.a 20.b
21.b 22.d 23.d 24.c 25.d 26.c 27.d 28.a 29.d 30.b
31.b 32. a
 CA Jasmeet Singh 51

Chapter 4: Time of Supply

1. Determine the time of supply in the following cases assuming that GST is payable under reverse
charge:
S. Date of receipt Date of payment by recipient of Date of issue of invoice
No of goods goods by supplier of goods
(i) July 1 August 10 June 29
(ii) July 1 June 25 June 29
(iii) July 1 Part payment made on June 30 and June 29
balance amount paid on July 20
(iv) July 5 Payment is entered in the books of June 1
account on June 28 and debited in
recipient’s bank account on June 30
(v) July 1 Payment is entered in the books of June 29
account on June 30 and debited in
recipient’s bank account on June 26
(vi) August 1 August 10 June 29

Solution:
S. Date of Date of payment Date of issue Date immediately Time of supply of
No receipt of by recipient of of invoice by following 30 days goods
goods goods supplier of from date [Earlier of (1),
goods of invoice (2) & (4)]

(1) (2) (3) (4) (5)

(i) July 1 August 10 June 29 July 30 July 1
(ii) July 1 June 25 June 29 July 30 June 25
(iii) July 1 Part payment June 29 July 30 June 30 for part
made on June 30 payment made and
and balance July 1 for balance
amount paid on amount
July 20
(iv) July 5 Payment is June 1 July 2 June 28 (i.e., when
entered in the payment is entered
books of account in the books of
on June 28 and account of the
debited in recipient)
recipient’s bank
account on June
30
 CA Jasmeet Singh 52

(v) July 1 Payment is June 29 July 30 June 26 (i.e., when

entered in books payment is debited
of account on in the recipient’s
June 30 & debited bank account)
in recipient’s
bank account on
June
26
(vi) August 1 August 10 June 29 July 30 July 30 (i.e., 31st day
from issuance of
invoice)

2. Determine the time of supply in the following cases assuming that GST is payable under reverse
charge:
S. No Date of payment by recipient for supply of Date of issue of invoice
services by supplier of services

(i) August 10 June 29

(ii) August 10 June 1
(iii) Part payment made on June 30 and balance June 29
amount paid on September 1
(iv) Payment is entered in the books of account on June 1
June 28 and debited in recipient’s bank account
on June 30
(v) Payment is entered in the books of account on June June 29
30 and debited in recipient’s bank account
on June 26

Solution:
S. Date of payment by Date of issue Date Time of
No recipient for supply of of invoice by immediately Supply of goods
services supplier of following 60 [Earlier of (1) & (3)]
services days from
invoice
(1) (2) (3)
(i) August 10 June 29 August 29 August 10
(ii) August 10 June 1 August 1 August 1
(iii) Part payment made on June 29 August 29 June 30 for part
June payment and
30 and balance amount August
paid on September 1 29 for balance
amount
 CA Jasmeet Singh 53

(iv) Payment is entered in the June 1 August 1 June 28 (i.e. when

books of account on June payment is entered in
28 and debited in the books of account
recipient’s bank account on of the
June 30 recipient)
(v) Payment is entered in the June 29 August 29 June 26 (i.e. when
books of account on June payment is debited in
30 and debited in the recipient’s bank
recipient’s bank account on account)
June 26

3. 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.

Solution:
Time of supply of service taxable under reverse charge is the earlier of the following two dates in
terms of section 13(3):
 Date of payment
 61st day from the date of issue of invoice
In this case, the date of payment precedes 61st day from the date of issue of invoice by the supplier
of service. Hence, the date of payment, that is 17th June, will be treated as the time of supply of
service [Section 13(3)(a)].

4. 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?

Solution:
Since the invoice has not been issued within the prescribed time period, time of supply of service
will be the earlier of the following two dates in terms of section 13(2)(b):
 Date of provision of service
 Date of receipt of payment
The payment was received on 5th January and the service was provided on 23rd April. Therefore,
the date of payment, i.e., 5th January is the time of supply of the service in this case.

5. 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
 CA Jasmeet Singh 54

receipt of payment. What is the time of supply of 150 cartons for the purpose of payment of tax?

Solution:
As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in
section 12(2)(a) i.e., date of issue of invoice or the last date on which invoice ought to have been
issued in terms of section 31.
In this case since the invoice has not been issued, the time of supply will be the last date on which
the invoice is required to be issued.
The invoice for supply of goods must be issued on or before the dispatch of goods i.e., on 2nd
August. Therefore, time of supply of the goods will be 2nd August, the date when the invoice
should have been issued.

6. An order is placed on Ram & Co. on 18th August for supply of a consignment of customized shoes.
Ram & Co. gets the consignment ready and informs the customer and issues the invoice on 2nd
December. The customer collects the consignment from the premises of Ram & Co. on 7th
December and electronically transfers the payment on the same date, which is entered in the
accounts on the next day, 8th December.
What is the time of supply of the shoes for the purpose of payment of tax?

Solution:
As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in section
12(2)(a) i.e., date of issue of invoice or the last date on which invoice ought to have been issued in
terms of section 31.
In this case, the invoice is issued before the removal of the goods and is thus, within the time limit
prescribed under section 31(1). Therefore, time of supply is the date of issue of invoice, which is 2nd
December.

7. Food 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?

Solution:
As the coupons can be used for a variety of food items, which are taxed at different rates, the
supply cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of
the coupons is the date of their redemption in terms of section 12(4).

8. 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
 CA Jasmeet Singh 55

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.

Solution:
Time of supply of services that are taxable under reverse charge is earliest of the following two
dates in terms of section 13(3):
 Date of payment [3rd November]
 61st day from the date of issue of invoice [19th April]
The date of payment comes subsequent to the 61st day from the issue of invoice by the supplier of
service. Therefore, the 61st day from supplier’s invoice has to be taken as the time of supply. This
fixes 19th April as the time of supply.

9. 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?

Solution:
The time of supply of services, if the invoice is not issued in time, is the date of payment or the date
of provision of service, whichever is earlier [Section 13(2)(b)]. In this case, the service is provided on
5th September but not invoiced within the prescribed time limit. Therefore, the date of provision of
service, i.e., 5th September, will be the time of supply.

10. A machine has to be supplied at site. It is done by sourcing various components from vendors and
assembling the machine at site. The details of the various events are:
17th September Purchase order with advance of Rs 50,000 is received for goods
worth Rs 12 lakh and entry duly made in the seller’s books of
account
20th October The machine is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
4th November Balance payment of Rs 11,50,000 received
Determine the time of supply (ies) in the above scenario.

Solution:
As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in
section 12(2)(a) i.e., date of issue of invoice or the last date on which invoice ought to have been
issued in terms of section 31.
Therefore, the time of supply of goods for the entire amount of Rs 12,00,000 is 20th October which
is the date on which the goods were made available to the recipient as per section 31(1)(b), and the
invoice should have been issued on this date [Section 12(2)(a)].
 CA Jasmeet Singh 56

11. Gas is supplied by a pipeline. Monthly payments are made by the recipient as per contract. Every
quarter, invoice is issued by the supplier supported by a statement of the goods dispatched and
payments made, and the recipient has to pay the differential amount, if any. The details of the
various events are:
August 5, September Payments of Rs 2 lakh made in each month
5, October 6
October 3 Statement of accounts issued by supplier, with invoice for the
quarter July – September
October 17 Differential payment of Rs 56,000 received by supplier for the
quarter July – September as per statement of accounts
Determine the time of supply for the purpose of payment of tax.

Solution:
As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in section
12(2)(a) i.e., date of issue of invoice or the last date on which invoice ought to have been issued in
terms of section 31.
As per section 31(4), in case of continuous supply of goods, where successive statements of
accounts or successive payments are involved, the invoice is issued before or at the time of each
such statement is issued or, as the case may be, each such payment is received. Therefore, invoice
should be issued on August 5, September 5 and October 6 when monthly payments of Rs 2 lakh are
received.
Thus, time of supply will be August 5, September 5 and October 6 respectively for goods valued at
Rs 2 lakh each. Time of supply for goods valued at Rs 56,000 will be October 3, the date of issuance of
invoice.

12. 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

Solution:
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.)

13. 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
 CA Jasmeet Singh 57

Solution:
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)].

14. Determine the time of supply from the following particulars:

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

Solution:
As per section 31(2) 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(2)(b), 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 6 th 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.

15. Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an
apartment complex, for which the Apartment Owners’ Association showed a payment in cash on
4th April to them against work of this description. The dates of the work are not clear from the
records of ABC & Co. ABC & Co have not issued invoice or entered the payment in their books of
account.

Solution:
The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13(2)
as neither the invoice has been issued nor the date of provision of service is available as also the
date of receipt of payment in the books of the supplier is also not available. Therefore, the time of
supply will be determined vide clause (c) of section 13(2) i.e., the date on which the recipient of
service shows receipt of the service in his books of account.

Thus, time of supply will be 4th April, the date on which the Apartment Owners’ Association
records the receipt of service in its books of account.

16. Determine the time of supply from the given information. (Assuming that service being supplied is
taxable under reverse charge)
 CA Jasmeet Singh 58

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

Solution:
Here, July 4 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.

17. Determine the time of supply from the given information.

May 4 A German company issues email informing its associated company ABC
Ltd. of the cost of technical services provided to it.
July 2 ABC Ltd transfers the amount to the account of the German company

Solution:
As there is no prior entry of the amount in the books of account of ABC Ltd., July 2 will be the time
of supply, being the date of payment in terms of second proviso to section 13(3).

18. Explain the meaning of the term “date of receipt of payment” as per section 13 of the CGST Act,
2017.

Solution:
“Date of receipt of payment” in terms of section 13 of CGST Act, 2017 refers to the
(a) date on which the payment is recorded in the books of account of the entity (supplier of service)
that receives the payment, or
(b) the date on which the payment is credited to the entity’s bank account, whichever is earlier.

19. Gupta & Sons, a registered supplier, paying tax under normal scheme is a wholesale supplier of
ready-made garments located in Bandra, Mumbai. On 5th September, 20XX, Mohini, owner of
Charming Boutique located in Dadar, Mumbai, approached Gupta & Sons for supply of a
consignment of customised dresses for ladies and kids.
Gupta & Sons gets the consignment ready by 2nd December, 20XX and informs Mohini about the
same. The invoice for the consignment was issued the next day, 3rd December, 20XX.
Due to some reasons, Mohini could not collect the consignment immediately. So, she collects the
consignment from the premises of Gupta & Sons on 18th December, 20XX and hands over the cheque
for payment on the same date. The said payment is entered in the accounts on 20th December, 20XX
and amount is credited in the bank account on 21st December, 20XX.

Solution:
As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in
section 12(2)(a) of CGST Act, 2017 i.e., date of issue of invoice or the last date on which invoice
ought to have been issued in terms of section 31.
Therefore, the time of supply of goods is 3rd December which is the date on which the invoice for
 CA Jasmeet Singh 59

the consignment was issued.

20. M/s Mansh & Vansh Trading Company, a registered supplier, is liable to pay GST under forward
charge. Determine the time of supply from the following information furnished by it:
(i) Goods were supplied on 03-10-2017
(ii) Invoice was issued on 05-10-2017
(iii) Payment received on 09-10-2017

Solution:
As per section 12 of CGST Act, 2017, the time of supply of goods, tax on which is payable under
forward charge, is the earlier of the following two dates:
(i) Date of issue of invoice/last date on which the invoice is required to be issued
(ii) Date of receipt of payment i.e., the date on which the payment is recorded in the books of
account of the supplier or date on which the payment is credited to the supplier’s bank
account, whichever is earlier

Further, a registered person is required to issue a tax invoice before or at the time of removal of
goods for supply to the recipient. Thus, in the given case, the invoice for supply of goods should
have been issued on or before the removal of goods i.e., on 03-10-2017.

However, since the invoice has not been issued within the prescribed time, the time of supply will
be the last date on which the invoice is required to be issued (03 -10-2017) or date of receipt of
payment (09-10-2017), whichever is earlier.

Thus, the time of supply of the goods will be 03-10-2017.

21. Determine the time of supply from the following particulars:

8th September Community hall booked for a marriage, sum agreed
Rs 1,20,000, advance Rs 20,000 recorded in the books of account.
10th September Advance amount credited in bank account.
2nd November Marriage held in the Community hall.
18th December Invoice issued for Rs 1,20,000 indicating the balance of Rs 1,00,000
payable
22nd December Balance Rs 1,00,000 recorded in the books of account.
24th December Payment Rs 1,00,000 credited to the bank account

Solution:
As per section 31(2) of the CGST Act, 2017 read with rule 47 of CGST Rules, 2017 a tax invoice is to be
issued within 30 days of supply of service. In the given case, the invoice is not issued within the
prescribed time limit. As per section 13(2) (b) of CGST Act, 2017, in a case where the invoice is not
issued within the prescribed time, the time of supply of service is –
(i) date of provision of service
 CA Jasmeet Singh 60

or
(ii) date of recording the payment in the books of account of the supplier or
(iii) date of crediting of payment in the supplier’s bank account
whichever is earlier.

Therefore, the time of supply of service to the extent of advance of Rs 20,000 is 8th September
(date of recording the payment in the books of account) as it is earlier than the date of crediting of
payment in the bank account and the date of provision of service.

The time of supply of service to the extent of the balance Rs 1,00,000 is 2nd November, which is the
date of provision of service as it is earlier than the other two events in this case.

22. MS. ANTIRA, a RP, supplied certain goods to Mr. G also a RP. The tax in respect of the said goods is
liable to be paid on Reverse Charges basis. Other details of the transaction are as under:
Date of receipt of goods by Mr. G 26.11.2017
Date on which the payment is made entered in the books of accounts by 22.12.2017
Mr. G
Date when the payment is debited in bank account of Mr. G 24.12.2017
Date of issue of invoice by Ms. Antira, the supplier 20.11.2017
Date immediately following 30 days from the date of issue of invoice by 21.12.2017
the supplier
You are required to determine the time of supply of goods under reverse charge basis

Solution:
Time of supply of Goods in the given case, shall be earlier of the following dates
Date of receipt of goods by Mr. G 26.11.17
Date on which the payment is made entered in the books of accounts by Mr. G 22.12.17
Date when the payment is debited in bank account of Mr. G 24.12.17
Date immediately following 30 days from the date of issue of invoice by the supplier 21.12.17
Thus, the time of supply of goods shall be 26.11.2017 being the earliest of four stipulated dates
specified above.

23. Mr. Ram sold goods to Mr. Ravi worth Rs 5,00,000. The invoice was issued on 15th November. The
payment was received on 31st October. The goods were supplied on 20th November. Find the time
of supply of goods. Previous year turnover of Mr. Ram was Rs 72 lakhs.
Solution:
Time of supply of goods = 15th November.

24. M/s AB Oil Corporation entered into a contract with Mr. B to supply of oil throughout the year. M/s
AB Oil Corporation issues monthly statement for the oil supplied to Mr. B. Determine the time of
supply of goods in following independent cases:
(i) Mr. B made payment for the month of July on 31st July 2017 and M/s AB Oil Corporation issued
statement for the month of July on 8th August 2017.
 CA Jasmeet Singh 61

(ii) M/s AB Oil Corporation issued statement for the month of August on 5thSeptember 2017, the
payment of which not received till 30th September 2017.

Solution:
(i) 31st July 2017 will be the time of supply.
Earliest of the following:
 Date of Invoice: 8th August 2017
 Last date on which invoice has to be issued in case of continuous supply:
 Date of payment (31.07.2017) or
 statement (08.08.2017),
whichever is earlier i.e. 31st July 2017.
(ii) 5th September 2017 will be the time of supply.
Earliest of the following:
 Date of Invoice: 5th September 2017.
 Last date on which invoice has to be issued:
 Date of payment (not known) or
 statement (05.09.2017), whichever is earlier i.e. 5th September 2017.

25. ABC & Co., a Cost Accountants firm issued invoice for services rendered to Mr. Ram on 5th August
2017. Determine the time of supply in following independent cases:
(i) The provisions of services were completed on 1st July 2017.
(ii) The provisions of services were completed on 15th July 2017.
(iii) Mr. Ram made the payment on 3rd July 2017, where provisions of services were remaining to
be completed.
(iv) Mr. Ram made the payment on 15th August 2017, where provisions of services were remaining
to be completed.

Solution:
(i) 1st July 2017 will be the time of supply of services as invoice is not issued within the time
frame of 30 days.
(ii) 5th August 2017 will be the time of supply of services as invoice is issued within the time
frame.
(iii) 3rd July 2017 will be the time of supply of services as payment received before invoice date.
(iv) 5th August 2017 will be the time of supply of services as invoice is issued before the
completion of provisions of services.

26. C Ltd., a registered firm received services from a Raman & Co., an Advocate firm., an unregistered
person. The firm issued invoice to C Ltd. on 1st July 2017. Determine the time of supply of services in
the following independent cases:
(i) C Ltd. made the payments to the firm on 15th August 2017.
(ii) C Ltd. made the payments to the firm on 11th September 2017.
Note: C Ltd turnover in the preceding financial year was Rs 2 crore
 CA Jasmeet Singh 62

Solution:
(i) Time of supply of service = 15-08-2017
Note: as payment made earlier than the date immediately following 60 days from date of
issue of invoice.
(ii) Time of supply of service = 30-08-2017
Note: as payment made after the date immediately following 60 days from date of issue of
invoice.

27. X Ltd. & Y Ltd. (London) is associated enterprises. X Ltd., a registered firm received the services of Y
Ltd., an unregistered firm. Determine the time of supply in following cases:
(i) X Ltd. recorded the liability in the books on 15th July 2017 and payment will be made in the
next month.
(ii) X Ltd. made advance payment to Y Ltd. on 10th July and recorded liability in the books on
15th Aug 2017.

Solution:
(i) Time of supply =15-07-2017
Note: as the date of entry in the books is prior to the date of payment.
(ii) Time of supply = 10-07-2017
Note: as the payment is made earlier to the date of entry in the books.

28. Reliable Industries a readymade garment manufacturer issued the voucher on 10-07- 2017 to their
prospective customer for enabling them to buy readymade garments manufactured by them from
their shop. Customer purchased readymade garments on 20th Aug 2017.
Find the time of supply of goods?

Solution:
Time of supply of goods = 10-07-2017
Note: time of supply will be the issuance of the voucher. Since, the voucher is identifiable with the
goods.

29. Shopper’s Stop store a large retailer who sells various types of products like readymade garment,
jewellery, cosmetics, fabrics, shoes etc., issued the voucher on 10-07-2017 to their prospective
customer for enabling them to buy any product from their shop. Customer purchased readymade
garments on 20th Aug 2017.Find the time of supply of goods?

Solution:
Time of supply of goods = 20-08-2017
Note: time of supply will be the date of encashment of voucher (i.e. Redemption of voucher). Since,
the voucher is not identifiable with any specific product.
 CA Jasmeet Singh 63

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 goods liable to tax under reverse charge mechanism?
(a) rayteDate of receipt of goods
(b) Date on which the payment is made
(c) Date immediately following 30 days from the date of issue of invoice by the supplier
(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 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 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)

5. 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)

6. 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)

7. What is the time of supply of service in case of reverse charge mechanism?

(a) Date on which payment is made to the supplier
 CA Jasmeet Singh 64

(b) Date immediately following 60 days from the date of issue of invoice
(c) Date of invoice
(d) Earlier of (a) and (b)

8. 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

9. Mr. X enters into a contract with a client for supply of certain services on 18.12.2017. GST is payable on
such services under forward charge. Services are supplied on 25.12.2017 and invoiced on 05.01.2018.
The client makes payment by cheque for the services on 29.12.2017 and such payment is credited to
the bank account of Mr. X on 06.01.2018. The payment is recorded in the books of account of the
client and Mr. X on 30.12.2017 and 07.01.2018 respectively.
The time of supply of services is:
(a) 29.12.2017
(b) 30.12.2017
(c)06.01.2018
(d) 05.01.2018

10. Mr. A purchases redeemable vouchers worth INR 8000/- on 1st January. The vouchers are
redeemable against purchase of any goods. The vouchers are valid till 30th June. What will be the
time of supply in case of such vouchers?
(a) 1st January
(b) 30th June
(c) The date of redemption of vouchers
(d) None of the above

11. M/s. Ramchandra Associates has received some taxable services from Mohan Dalal (P) Ltd. on
12.01.20XX by making a cash payment of Rs 5,00,000 on same day. The payment was entered in the
books of account of M/s. Ramchandra Associates on 16.01.20XX and in the books of account of
Mohan Dalal (P) Ltd. on 20.01.20XX. The invoice was issued by Mohan Dalal (P) Ltd. on 18.01.20XX.
Determine the time of supply in the given case. (a)12.01.20XX
(b) 16.01.20XX
(c)18.01.20XX
(d) 20.01.20XX

Solution: -
1. C 2. D 3. a 4. b 5. d 6. d 7. d 8. c 9. d 10. c
11. c
 CA Jasmeet Singh 65

Chapter 5: Value of supply

1. Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it to
Colorful Pvt. Ltd.
Particulars Amount
List price of the goods (exclusive of taxes and discounts) 50000
Tax levied by Municipal Authority on the sale of such goods 5000
CGST and SGST chargeable on the goods 10440
Packing charges (not included in price above) 1000
Black and White Pvt. Ltd. received Rs 2000 as a subsidy from an NGO on sale of such goods. The
price of Rs 50,000 of the goods is after considering such subsidy.
Black and White Ltd. offers 2% discount on the list price of the goods which is recorded in the
invoice for the goods. Determine the value of taxable supply made by Black and White Pvt. Ltd.

Solution:
Computation of Value of taxable supply
Particulars Amount
List price of the goods (exclusive of taxes and discounts) 50000
Tax levied by Municipal Authority on sale of such goods [Includible in value - sec 5000
15(2)(a)]
CGST & SGST chargeable on the goods [Not includible in the value as per section
15(2)(a)]
Packing charges [Includible in the value as per section 15(2)(c)] 1000
Subsidy received from a non-Government body [Since subsidy is received from a 2000
non-Government body, the same is included in the value in terms of section
15(2)(e)]
Total 58000
Less: Discount @ 2% on Rs 50,000 [Since discount is known at the time of supply, 1000
it is deductible from the value in terms of section 15(3)(a)]
Value of Taxable supply 57000

2. Samriddhi Advertisers conceptualized and designed the advertising campaign for a new product
launched by New Moon Pvt Ltd. for a consideration of Rs 5,00,000. Samriddhi Advertisers owed
Rs 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 Rs 15,000 as interest. Assume the
rate of GST to be 18%. Determine the value of taxable supply made by Samriddhi Advertisers.

Solution:
 CA Jasmeet Singh 66

Computation of value of taxable supply

Particulars Amount
Service Charges 500000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi Advertisers [Liability 20000
of the supplier being discharged by recipient, is includible in the value in terms of
sec 15(2)(b)]
Interest for delay in payment of consideration [Includible in the value in terms of 12712
section 15(2)(d) – Refer note below] (rounded off)
Value of taxable Supply 532712

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 will be taken to be inclusive of GST and the value will be computed by making
back calculations [Interest /100 + tax rate) x 100].

3. AKJ Foods Pvt. Ltd. gets an order for supply of processed food from a customer. The customer
wants the consignment tested for gluten or specified chemical residues. AKJ Foods Pvt. Ltd. does
the testing and charges a testing fee for the same from the customer. AKJ Foods Pvt. Ltd. argues
that such testing fess should not form part of the consideration for the sale as it is a separate
activity.
Is his argument correct in the light of section 15?

Solution:
Section 15 (2) mandates the addition of certain elements to transaction value to arrive at taxable
value. Clause (c) of section 15(2) specifies that amount charged for anything done by the supplier in
respect of the supply at the time of or before delivery of goods or supply of services shall be
included in taxable value.
Since AKJ Foods Pvt. Ltd. does the testing before the delivery of goods, the charges therefor will
be included in the taxable value. Therefore, AKJ Foods Pvt. Ltd. Rss argument is not correct. The
testing fee should be added to the price to arrive at taxable value of the consignment.

4. A philanthropic association makes a substantial donation each year to a reputed private

management institution to subsidize the education of low income group students who have
gained admission there. The fee for these individuals is reduced thereby, coming to Rs 3 lakh a
year compared to Rs 5 lakh a year for other students.
What would be the taxable value of the service of coaching and instruction provided by the
institution?

Solution:
As per section 15(2)(e), the value of a supply includes subsidies directly linked to the price,
excluding State Government and Central Government subsidies. In this case, the subsidy is not
from the Government but is from a philanthropic association. Therefore, the subsidy is to be added
 CA Jasmeet Singh 67

back to the price to arrive at the taxable value, which comes to Rs 5 lakh a year.

5. 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 twodays.
The Department wants to add interest for two days as per contract. Should notional interest be
added to the taxable value?

Solution:
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.

6. 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?

Solution:
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).

7. Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the
following details of taxable inter-State supply made by it for the month of March, 20XX.
Particulars Amount (Rs)
List price of goods supplied inter-state (exclusive of taxes) 15,00,000
Subsidy received from Central Government for supply of taxable goods to 2,10,000
Government School.
Subsidy received from a NGO for supply of taxable goods to an old age 50,000
home
Tax levied by Municipal Authority 20,000
Packing charges 15,000
Late fee paid by the recipient of supply for delayed payment of invoice 6,000
The list price of the goods takes into account the two subsidies received. However, the other
charges/taxes/fee are charged to the customers over and above the list price. Calculate the value
of taxable supply made by M/s Red Pepper Ltd. for the month of March, 20XX. Rate of IGST is
18%.

Solution:
 CA Jasmeet Singh 68

Computation of value of taxable supply made by Red Pepper Ltd. for the month of March, 20XX
Particulars Rs
List price of the goods 15,00,000
Add: Subsidy amounting to Rs 2,10,000 received from Central Government NIL
[Since subsidy is received from Government, the same is not includible in the
value in terms of section 15 of the CGST Act, 2017]
Subsidy received from NGO 50,000
[Since subsidy is received from a non-Government body, the same is includible
in the value in terms of section 15 of the CGST Act, 2017]
Tax levied by the Municipal Authority 20,000
[Includible in the value as per section 15 of the CGST Act, 2017]
Packing charges 15,000
[Being incidental expenses, the same are includible in the value as per section
15 of the CGST Act, 2017]
Late fees paid by recipient of supply for delayed payment [Includible in the 5,085
value as per section 15 of the CGST Act, 2017] (assumed to be inclusive of
taxes) [Rs 6,000 x 100/118] rounded off
Value of taxable supply 15,90,085

8. A manufacturer of machinery supplied a special machine to Modern Furnishers. Following details

are provided in relation to amounts charged:

S. No. Particulars Rs.

(i) Price of machinery excluding taxes (before cash discount) 5,00,000
Additional charges not included above:-
(ii) Freight 13,000
(iii) Packing charges 10,000
(iv) Charges for designing the machine 17,000
Other information furnished is -
(a) Cash discount @ 2% on price of machinery has been allowed to the customer at the time of
supply and also recorded in invoice.
(b) GST rate – 18%.
Calculate value of supply of the special machine.

Solution:
Particulars Rs.
Price of machinery 5,00,000
Add: Freight [Note 1] 13,000
Packing charges [Note 2] 10,000
Designing charges [Note 3] 17,000
Total 5,40,000
 CA Jasmeet Singh 69

Less: 2% cash discount on price of machinery [Rs. 5,00,000 x 2%] [Note 4] 10,000
Value of taxable supply 5,30,000

Notes:
1. Supply of machinery (goods) with supply of ancillary services like freight is a composite supply,
the principle supply of which is the supply of machinery. Thus, value of such ancillary supply is
includible in the value of composite supply.
2. All incidental expenses including packing charged by the supplier to the recipient of a supply
are includible in the value of supply in terms of section 15(2)(c) of CGST Act, 2017.
3. Designing charges are includible in the value of supply as any amount charged for anything
done by the supplier in respect of the supply of goods at the time of, or before delivery of
goods is so includible in terms of section 15(2)(c) of CGST Act, 2017.
4. Cash discount was given at the time of supply and also recorded in invoice, so the same is not
to be included while computing value of supply in terms of section 15(3)(a) of CGST Act, 2017.

9. 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,
2017.

Particulars Amount in
(Rs)
List price of goods supplied inter-state 12,40,000
Items already adjusted in the price given in (i) above:
1,20,000
(1) Subsidy from CG for supply of biscuits to Government School.
(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,
2017.
Solution:
Computation of value of taxable supply made by Candy Blue Ltd. for the month of October, 2017
Particulars Rs
List Price of the goods 12,40,000
Add: Subsidy amounting to Rs 1,20,000 received from Central Government NIL
[Since subsidy is received from Government, the same is not includible
in the value in terms of section 15 of the CGST Act, 2017.]
 CA Jasmeet Singh 70

Subsidy received from Trade Association [Since subsidy is received 30,000

from
a non-Government body, the same is includible in the value in terms of
section 15 of the CGST Act, 2017.]
Tax levied by the Municipal Authority [Includible in the value as per 24,000
section 15 of the CGST Act, 2017]
Packing charges [Being incidental expenses, the same are includible in 12,000
the value as per section 15 of the CGST Act, 2017]
Late fees paid by recipient of supply for delayed payment [Includible in
the value as per section 15 of the CGST Act, 2017] 5,000
Value of taxable supply 13,11,000
Note: - In the above solution, list price of the goods and late fee for delayed payment of invoice
have been assumed to be exclusive of taxes.

10. Laxmi Ltd. of Bhopal (Madhya Pradesh) is a supplier of machinery. Laxmi Ltd. has supplied
machinery to PQR Enterprises in Indore (Madhya Pradesh) on 1st October, 2017. The invoice for
supply has been issued on 1st October, 2017. Thus, the time of supply of machinery is 1st October,
2017. Laxmi Ltd. and PQR Enterprise are not related. Following information is provided:
 Basic price of machinery excluding all taxes but including design and engineering charges of
Rs 10,000 and loading charges of Rs 20,000 - Rs 20,00,000.
 Laxmi Ltd. provides 2 years free warranty for the machinery. Laxmi Ltd. also provides an
extended one-year warranty on payment of additional charges of Rs 1,00,000. PQR
Enterprises opted for one-year warranty.
 Laxmi Ltd. has collected consultancy charges in relation to pre-installation planning of Rs
10,000 and freight and insurance charges from place of removal to buyer’s premises of Rs
20,000.
 Laxmi Ltd. received subsidy of Rs 50,000 from Central Government for supplying the
machinery to backward region since receiver was located in a backward region. Laxmi Ltd.
also received Rs 50,000 from the joint venture partner of PQR Enterprises for making timely
supply of machinery to the recipient.
 A cash discount of 1% on the basic price of the machinery is offered at the time of supply, if
PQR Enterprises agrees to make the payment within 30 days of the receipt of the machinery at
his premises. Discount @ 1% was given to PQR Enterprises as it agreed to make the payment
within 30 days.
 The machinery attracts CGST and SGST @ 18% (9% + 9%) and IGST @18%. Compute the CGST and
SGST or IGST payable, as the case may be, on the machinery.

Solution:
Computation of GST payable
Particulars Rs
Price of the machinery [Note 1] 20,00,000
Add: Extended warranty cost [Note 2] 1,00,000
Consultancy charges in relation to pre-installation planning [Note 4] 10,000
 CA Jasmeet Singh 71

Freight and insurance charges [Note 3] 20,000

Subsidy received from Central Government [Note 5] Nil
Receipts from Joint Venture of PQR Enterprises [Note 5] 50,000
Less: 1% discount on basic price* = Rs 20,00,000 x 1% [Note 6] (20,000)
Value of supply 21,60,000
CGST @ 9% [Note 7] 1,94,400
SGST @ 9% [Note 7] 1,94,400

Notes:
1. Laxmi Ltd. and PQR Enterprises are not related and price is assumed to be the sole
consideration for the supply. Therefore, in terms of section 15(1) of the CGST Act, 2017, the
value of the supply is the transaction value i.e., price actually paid or payable for the
machinery by PQR Enterprises.
Design and engineering charges are includible in the value of supply as any amount charged
for anything done by the supplier in respect of the supply of goods at the time of, or before
delivery of goods is so includible in terms of section 15(2)(c) of CGST Act, 2017.
Further, loading charges being incidental expenses charged by the supplier to the recipient of
supply, are includible in the value as per section 15 (2)(c) of the CGST Act, 2017.

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

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

4. Any amount charged for anything done by the supplier in respect of the supply of goods at
the time of, or before delivery of goods is includible in the value of supply in terms of section
15(2)(c) of CGST Act, 2017.

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

6. Cash discount has been given to PQR Enterprises upfront at the time of supply and thus
would have been recorded in the invoice and hence, the same is excluded from the value of
supply in terms of section 15(3)(a) of the CGST Act, 2017.
 CA Jasmeet Singh 72

7. In the given case-

 the location of the supplier is in Bhopal (Madhya Pradesh); and
 the place of supply of machinery is the location of the machinery at the time at which the
movement of the same terminates for delivery to the recipient i.e., Indore (Madhya
Pradesh) vide section 10(1)(a) of IGST Act, 2017.
Therefore, as per section 8(1) of IGST Act, 2017, the given supply is an intra-State supply as the
location of the supplier and the places of supply are in the same State.
Thus, the supply will be leviable to CGST and SGST.
*Note: It is also possible to take a view that the basic price of the machinery is Rs 19,70,000 [Rs
20,00,000– Rs 10,000 – Rs 20,000] and design and engineering charges and loading charges are
added to such price. In that case, 1% of discount amount will come out to be Rs 19,700, value of
supply would be Rs 21,60,300 and CGST and SGST would be Rs 1,94,427 each.

11. Vayu Ltd. provides you the following particulars relating to goods supplied by it to Agni Ltd.:
Particulars Rs
List price of the goods (exclusive of Taxes and discounts). 76,000
Special packing at the request of customer to be charged to the customer. 5,000
Duty levied by local authority on the sale of such goods. 4,000
CGST and SGST charged in invoice. 14,400
Subsidy received from an NGO (The price of Rs 76,000 given above is 5,000
after considering the subsidy)
Vayu Ltd. offers 3% discount of the list price of the goods which is recorded in the invoice for the
goods. Determine the value of taxable supplies made by Vayu Ltd.

Solution:

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

Notes:
1. Being incidental expenses charged by the supplier to the recipient of supply, packing charges
are includible in the value as per section 15(2)(c) of the CGST Act, 2017.
2. Taxes, duties, etc. levied under any law for the time being in force other than CGST,
SGST/UTGST, IGST are includible in the value as per section 15(2)(a) of CGST Act, 2017. Duty
 CA Jasmeet Singh 73

levied by local authority on sale of goods has been assumed to be recovered from Agni Ltd.
and not included in the list price of the goods.
3. Subsidy directly linked to the price received from a non-Government body is includible in the
value in terms of section 15(2) (e) of CGST Act, 2017.
4. Since discount is known at the time of supply, it is deductible from the value in terms of
section 15(3) (a) of CGST Act, 2017.

12. M/s. Flow Pro sold a machine to BP Ltd. It provides the following particulars in this regard:-
Sl No. Particulars Rs
(i) Price of the machine (excluding taxes and incidental charges) 30,000
(ii) Machine was subject to third party inspection. The inspection charges 5,000
have been directly paid by BP Ltd. to the inspection agency
(iii) Freight charges for delivery of the machine (M/s Flow Pro has agreed to 2,000
deliver the goods at BP Ltd’s premises)
(iv) Subsidy received from State Government on sale of machine under skill 5,000
Development Programme. [The subsidy is directly linked to the price].
(v) Discount of 2% is offered to BP Ltd. on the price and recorded in the
invoice
Note: Items given in S. No. (ii) to (v) have not been considered in the price at S. No. (i). Determine
the value of taxable supply made by M/s Flow Pro to BP Ltd.

Solution:
Particulars Rs
Price of the machine (Price Rs 30,000 - Rs 5,000 subsidy) [Note-1] 25,000
Third party inspection charges [Note-2] 5,000
Freight charges for delivery of the machine value [Note-3] 2,000
Total 32,000
Less: Discount @ 2% on ` 30,000 being price charged to BP Ltd. [Note-4] 600
Value of taxable supply 31,400

Notes:
1. Since subsidy is received from State Government, the same is deductible to arrive at taxable
value under section 15 of the CGST Act, 2017.
2. Any amount that the supplier is liable to pay in relation to such supply but has been incurred
by the recipient, is includible in the value of supply under section 15 of the CGST Act, 2017.
3. 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.
Discount given before or at the time of supply if duly recorded in the invoice is deductible from
the value of supply under section 15 of the CGST Act, 2017.

13. Following are the particulars, relating to one of the machine sold by SQM Ltd. to ACD Ltd. in
the month of February 2020 at list price of Rs. 9,50,000. (exclusive of taxes and discount)
Further, following additional amounts have been charged from ACD Ltd :
 CA Jasmeet Singh 74

S. No. Particulars Amount

(Rs.)
(i) Municipal taxes chargeable on the machine 45,000
(ii) Outward freight charges (Contract was to deliver machine at ACD Ltd.’s 65,000
factory i.e. F.O.R. contract)
Additional information :
1. 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 SQM Ltd. waived the interest payable.
2. SQM Ltd. received Rs. 50,000 as subsidy, from one non-government organization (NGO) on
sale of such machine. This subsidy was not linked to the price of machine and also not
considered in list price of Rs. 9,50,000.
3. ACD Ltd. deducted discount of Rs. 15,000 at the time of final payment, which was not as per
agreement.
4. SQM Ltd. collected Rs. 9,500 as TCS (tax collected at source) under the provisions of the
Income Tax Act, 1961.
Compute the value of taxable supply as per the 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
S. No. Particulars Amount (Rs.)
List price (exclusive of taxes and discount) 9,50,000
(i) Municipal taxes [Note-1] 45,000
(ii) Outward freight charges [Note-2] 65,000
Value of taxable supply 10,60,000
Notes:
1. Tax other than GST, if charged separately, are includible in the value in terms of section 15.
2. Since contract is to deliver machine at buyer’s factory, it is a composite supply wherein the
freight charges will be added to the value of principal supply of machine.
3. Value of supply includes interest charged for delayed payment. However, since the interest
on delayed payment has been waived off, the same has not been added to the value.
4. Subsidy provided by non-Government bodies is includible in the value in terms of section 15
provided the same is directly linked to the price. Since subsidy received from NGO is not
directly linked to the price of the machine, the same has not been added to the value.
5. Since the discount was not known or agreed to at the time of supply of goods to the
buyers, such discount cannot be reduced from the price, in terms of section 15.
6. TCS is not includible in the value of supply as it is an interim levy not having the character
of tax.
 CA Jasmeet Singh 75

Multiple Choice Question

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 not the sole consideration
(c) It can never be rejected
(d) Both (a) & (b)

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
 CA Jasmeet Singh 76

Solution: -
1) D 2) d 3) a 4) (d) 5) c 6) d
 CA Jasmeet Singh 77

Chapter 6: Input Tax Credit

1. What are the conditions necessary for obtaining ITC?

Solution:
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) The supplier has actually paid the tax charged in respect of the supply to the Government;&
(d) He has furnished the return under section 39.

2. Can a person take ITC without payment of consideration for the supply along with tax to the
supplier?

Solution:
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. Further, in case of deemed supplies without consideration and
additions made to the value of supplies on account of supplier’s liability, in relation to such
supplies, being incurred by the recipient of the supply, consideration is deemed to have been paid.

3. What is the time limit for taking ITC?

Solution:
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.

4. What is the ITC entitlement of a newly registered person?

Solution:
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.
 CA Jasmeet Singh 78

5. What is the tax implication of supply of capital goods by a registered person who had taken ITC
on such capital goods?

Solution:
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 &
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.

6. 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?

Solution:
No. As per section 17(5)(a), 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.

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 Rs 4 crore and
Rs 1 crore respectively, the ITC on thread and lining material procured in July is Rs 5000 and Rs
15000 respectively.
Calculate the eligible ITC on thread and lining material.

Solution:
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 = Rs 15,000 + Rs 5,000 = Rs 20,000
Exempt turnover = Rs 1 crore
Total turnover = Rs 5 crore [Rs 1 crore + Rs 4 crore]
 CA Jasmeet Singh 79

Credit attributable to exempt supplies = (Rs 1 crore /Rs 5 crore) x Rs 20,000 = Rs 4,000. Ineligible
credit of Rs 4,000 will be added to the output tax liability for the month of July. Credit of Rs
16,000 will be eligible credit for the month of July.

8. 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?

Solution:
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 [Section 18(1)(c)].

9. ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following items
during the month of July.
SN. Items GST Paid
(i) Electrical transformers to be used in the manufacturing process 520000
(ii) Trucks used for the transport of raw materials 100000
(iii) Raw materials 200000
(iv) Confectionery items for consumption of employees working in the 25000
factory
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.

Solution:
SN. Items ITC
(i) Electrical transformers 520000
[Being goods used in the course or furtherance of business, ITC thereon is
available in terms of section 16(1)]
(ii) Trucks used for the transport of raw material 100000
[Though ITC on motor vehicles has been specifically disallowed under section
17(5)(a), ITC on motor vehicles used for transportation of goods is not blocked
hence allowed]
(iii) Raw material 200000
[Being goods used in the course or furtherance of business, ITC thereon is
available in terms of section 16(1)]
 CA Jasmeet Singh 80

(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-Section 17(5)(b)(i)]
Total ITC 820000

10. XYZ Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with XYZ Ltd.
for the month of October, 2018 from the following particulars: -
S.No. Inward Supplies GST Remarks
(i) Inputs ‘A’ 100000 One invoice on which GST payable was Rs 10,000,
is missing
(ii) Inputs ‘B’ 50000 Inputs are to be received in two instalments.
First instalment has been received in October, 2018.

(iii) Capital Goods 120000 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 225000 One invoice dated 20.01.2018 on which GST payable
was Rs 50,000 has been received in
October, 2018.
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 2017-18 was filed on 15.09.2018

Solution:
Inward Supplies ITC
Inputs ‘A’ 90000
[ITC cannot be taken on missing invoice. The registered person should have the
invoice in its possession to claim ITC-Section 16(2)(a)]
Inputs ‘B’ NIL
[When inputs are received in instalments, ITC can be availed only on receipt of
last installment-First proviso to section 16(2)]
Capital goods NIL
[Input tax paid on capital goods cannot be availed as ITC, if depreciation has
been claimed on such tax component – Section 16(3)]
Input services 175000
[As per section 16(4), ITC on an invoice cannot be availed after the due date of
furnishing of the return for the month of September following the end of
financial year to which such invoice pertains or the date of filing annual return,
whichever is earlier.
 CA Jasmeet Singh 81

Since the annual return for the FY 2017-18 has been filed on 15th September, 2018
(prior to due date of filing the return for September, 2018 i.e., 20th October,
2018), ITC on the invoice pertaining to FY 2017-18 cannot be availed
after 15th September, 2018.
Input services 175000
[As per section 16(4), ITC on an invoice cannot be availed after the due date of
furnishing of the return for the month of September following the end of
financial year to which such invoice pertains or the date of filing annual return,
whichever is earlier.
Since the annual return for the FY 2017-18 has been filed on 15th September, 2018
(prior to due date of filing the return for September, 2018 i.e., 20th October,
2018), ITC on the invoice pertaining to FY 2017-18 cannot be availed
after 15th September, 2018.
Total 265000

11. 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 aircrafts. Offer
your comments.

Solution:
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.

12. Shipra Traders is a registered supplier of goods in Assam. It purchased goods valued at Rs 10,000
from Kartik Suppliers located within the same State. Kartik Suppliers charged CGST & SGST
separately in its invoice. Subsequently, Shipra Traders sold goods valuing Rs 9,500 to Rabina
Manufacturers located in Assam. 20% of the inputs purchased are still lying in stock and there was
no opening stock of goods. Rate of CGST and SGST on supply and purchase of goods is 9% each.
Calculate the net GST payable by Shipra Traders and input tax credit (ITC) to be carried forward,
if any.

Solution:
Computation of net GST payable by Shipra Traders
Particulars CGST @ 9% SGST @ 9%
(Rs) (Rs)
GST payable on intra-State supply of goods 855 855
[Being an intra-State supply, CGST and CGST is [9,500 × 9%] [9,500 × 9%]
payable on the same]
Less: ITC on intra-State purchase of goods 900 900
 CA Jasmeet Singh 82

[ITC of CGST and SGST paid on intra-State purchase is available [10,000 × [10,000 ×
in full, even if some inputs are lying in stock] 9%] 9%]
Net GST payable Nil Nil
Input tax credit carried forward in Electronic Credit 45 45
Ledger

13. Granites Textiles Ltd. purchased a needle detecting machine on 8th July, 2017 from Makhija
Engineering Works Ltd. for Rs 10,00,000 (excluding GST) paying GST @ 18% on the same. It
availed the ITC of the GST paid on the machine and started using it for manufacture of goods. The
machine was sold on 22nd October, 2018 for Rs 7,50,000 (excluding GST), as second hand machine
to LT. Pvt. Ltd. The GST rate on supply of machine is 18%.
State the action which Granites Textiles Ltd. is required to take, if any, in accordance with the
statutory GST provisions on the sale of the second-hand machine.

Solution:

Section 18 of the CGST Act, 2017 read with the CGST Rules, 2017 provides that if capital goods or
plant and machinery on which input tax credit has been taken are supplied outward by the
registered person, he must pay an amount that is the higher of the following:
(a) input tax credit taken on such goods reduced by 5% per quarter of a year or part thereof
from the date of issue of invoice for such goods (i.e., input tax credit pertaining to remaining
useful life of the capital goods), or
(b) tax on transaction value.
Accordingly, the amount payable on supply of needle detecting machine shall be computed as
follows:
Particulars Rs Rs
Input tax credit taken on the machine (Rs 10,00,000 × 18%) 1,80,000
Less: Input tax credit to be reversed @ 5% per quarter for the period 27,000
of use of machine 27,000
(i) For the year 2017-18 = (Rs 1,80,000 × 5%) × 3 quarters
(ii) For the year 2018-19 = (Rs 1,80,000 × 5%) × 3 quarters 54,000
Amount required to be paid (A) 1,26,000
Duty leviable on transaction value (Rs 7,50,000 × 18%) (B) 1,35,000
Amount payable towards disposal of machine is higher of 1,35,000
(A) and (B)

14. Cloud Seven Private Limited, 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 February, 20XX:
 CA Jasmeet Singh 83

SN Particulars GST paid

(Rs)
(i) Trucks used for the transport of raw material 1,20,000
(ii) Foods & beverages for consumption of employees in the factory 40,000
(iii) Inputs are to be received in five lots, out of which third lot was 80,000
received during the month
(iv) Membership of a club availed for employees working in the factory 1,50,000
(v) Capital goods (out of five items, invoice for one item was missing 4,00,000
and GST paid on that item was Rs 50,000)
(vi) Raw material (to be received in March, 20XX) 1,50,000
Determine the amount of input tax credit available with Cloud Seven Private Limited for the
month of February, 20XX by giving necessary explanations for treatment of various items. All the
conditions necessary for availing the input tax credit have been fulfilled.

Solution:
Particulars Rs
Trucks used for the transport of raw material [Note-1] 1,20,000
Foods & beverages for consumption of employees in the factory [Note-2] Nil
Inputs are to be received in five lots, out of which third lot was received during Nil
the month [Note-3]
Membership of a club availed for employees working in the factory [Note-4] Nil
Capital goods (out of five items, invoice for one item was missing and GST paid 3,50,000
on that item was Rs 50,000) [Note-5]
Raw material to be received in March, 20XX [Note-6] Nil
Total ITC 4,70,000
Notes:-
1. 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.
2. 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- [Section 17(5)].
3. When inputs are received in instalments, ITC can be availed only on receipt of last
installment- [Section 16(2)].
4. Membership of a club is specifically disallowed under section 17(5) of the CGST Act, 2017.
5. ITC cannot be taken on missing invoice. The registered person should have the invoice in its
possession to claim ITC [Section 16(2) of CGST Act, 2017].
6. Input tax credit is available only upon the receipt of goods in terms of section 16(2) of CGST
Act, 2017.

15. Le Marc Ltd. of Nashik, Maharashtra, a registered supplier, is engaged in manufacturing taxable
 CA Jasmeet Singh 84

goods provides the following details of items purchased and services availed by it from Gujarat,
for the month of March, 20XX:

SN Particulars IGST
1 Motor vehicle purchased for employees to be used for personal as 1,50,000
well as business purposes
2 Motor vehicle purchased for transportation of goods within the 2,00,000
factory
3 Food items for consumption of employees. These items were supplied 2,000
free of cost to the employees in lieu of services rendered by them to
the manufacturer in the course of employment.
4 Rent-a-cab facility availed for employees to fulfill a statutory 36,000
obligation in this regard. The Government has notified such service
under section 17(5)(b)(iii)(A) of the CGST Act, 2017.
Calculate the amount of eligible input tax credit for the month of March, 20XX.

Solution:
Computation of eligible input tax credit
Particulars Eligible
ITC (Rs)
Motor vehicle purchased for employees to be used for personal as well as -
business purposes [Note-1]
Motor vehicle purchased for transportation of goods within the factory 2,00,000
[Note-1]
Food items for consumption of employees [Note-2] -
Rent-a-cab facility given to employees [Note-3] 36,000
Total eligible input tax credit 2,36,000

Notes:-
As per section 17(5) of the CGST Act, 2017:
1. ITC on motor vehicles and other conveyances is blocked except when they are used—
(i) …………………………………………………………………………..for making the following
taxable supplies, namely :—
(A) further supply of such vehicles or conveyances; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods.
Thus, in the given case, ITC on motor vehicle purchased for transportation of goods within
the factory will only be allowed
2. ITC in respect of food and beverages is blocked unless the same is used for making
outward taxable supply of the same category or as an element of the taxable composite or
 CA Jasmeet Singh 85

mixed supply. Thus, in the given case, ITC of taxes paid on food for employees is not
allowed.
3. ITC on supply of rent-a cab services is not blocked where the Government notifies the
services which are obligatory for an employer to provide such service to its employees.
Thus, ITC is available on said service.

16. Ramoplast Soap Factory, a registered supplier, is engaged in manufacturing beauty soaps –
‘Forever Glow’ in Mumbai. It has provided the following information pertaining to purchases
made/services availed in the month of January, 20XX:
Particulars GST paid (Rs.)
Soap making machine 50,000
Motor vehicles for transportation of inputs 70,000
Membership of ‘Fit and Fine’ health and fitness center for its employees 25,000
Inputs purchased, but stolen from the factory 40,000
You are required to compute the input tax credit (ITC) available with Ramoplast Soap Factory for
the month of January, 20XX assuming that all the other conditions for availing ITC, wherever
applicable, have been fulfilled.

Solution:
Computation of ITC available with Ramoplast Soap Factory
Particulars Amount
(Rs.)
Soap making machine 50,000
[ITC in respect of goods used in course/furtherance of business is available in
terms of section 16 of the CGST Act]
Motor vehicles for transportation of inputs 70,000
[ITC in respect of motor vehicles and conveyances is blocked, except when used,
inter alia, for transportation of goods, in terms of section 17 (5) of the CGST Act]
Membership of ‘Fit and Fine’ health and fitness center for its employees Nil
[ITC in respect of membership of a club, health and fitness center is blocked in
terms of section 17(5) of the CGST Act]
Inputs stolen from the factory Nil
[ITC in respect of goods stolen is blocked in terms of section 17 (5) of the CGST
Act]
Total ITC available 1,20,000

17. 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 2017:
Particulars GST paid
(Rs)
 CA Jasmeet Singh 86

(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 1,25,000
during the month
(iii) Capital Goods (out of three items, invoice for one item was missing and 2,50,000
GST paid on that item was Rs 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, 2017 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 input tax credit (ITC) available with Fun Pharma Private Limited for the month of
September, 2017
Particulars Rs
Purchase of cabs used for the transportation of its employees [Note-1] Nil
Inputs consisting of three lots, out of which first lot was received during the Nil
month [Note-2]
Capital goods [Note-3] 2,25,000
Outdoor catering service availed on Women’s day [Note-4] Nil
Total ITC 2,25,000

Notes:-
1. Section 17 of CGST Act, 2017 provides that ITC on motor vehicles can be availed, inter alia,
when they are used for making the taxable supply of transportation of passengers i.e., if
the taxable person is in the business of transport of passengers. In the given case, since the
supplier is a manufacturer, it cannot avail credit on cabs used for transportation of its
employees.
2. When inputs are received in instalments, ITC can be availed only on receipt of last
instalment in terms of section 16 of CGST Act, 2017.
3. ITC cannot be taken on missing invoice. The registered person should have the invoice in
its possession to claim ITC vide section 16 of CGST Act, 2017.
4. ITC on outdoor catering 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 in terms of section 17 of CGST Act, 2017.

18. Krishna Motors is a car dealer selling cars of an international car company. It also provides
maintenance and repair services of the cars sold by it as also of other cars. It seeks your advice on
availability of input tax credit in respect of the following expenses incurred by it during the course
of its business operations:
 CA Jasmeet Singh 87

(i) Cars purchased from the manufacturer for making further supply of such cars. Two of such
cars are destroyed in accidents while being used for test drive by potential customers.
(ii) Works contract services availed for constructing a car shed in its premises.

Solution:
As per section 16(1) of the CGST Act, 2017, every registered person can take credit of input tax
charged on any supply of goods or services or both to him which are used or intended to be used
in the course or furtherance of his business. However, section 17(5) of CGST Act, 2017 specifies
certain goods and services on which the input tax credit is not available.

In the light of the foregoing provisions, the availability of input tax credit (ITC) in respect of the
various expenses incurred by Krishna Motors is discussed below:
(i) Section 17(5) specifically blocks ITC on motor vehicles used for transportation of person with
seating capacity upto 13 including driver. However, the same is allowed when the motor
vehicles are used, inter alia, for further supply of such vehicles. Thus, ITC on cars purchased
from the manufacturer for making further supply of such cars will be allowed.

However, ITC on the cars destroyed in accident will not be allowed as the ITC on goods
destroyed for whichever reason is specifically blocked under section 17(5) (h) of CGST Act.

(ii) Section 17(5)(c) specifically blocks ITC on works contract services when supplied for
construction of an immovable property (other than plant and machinery) except where it is
an input service for further supply of works contract service. Since, in this case the car shed
is not a plant and machinery and the works contract service is not used for further supply of
works contract service, ITC thereon will not be allowed.

19. M/s A Ltd. of Aluva (Kerala) receives the input service from M/s B Ltd. of Bengaluru who raises
the invoice for supply of service on 17th Dec 2018 and availed the credit on the same date.
Find the time limit within which M/s A Ltd. is required to pay the bill amount inclusive of tax to
supplier of service.
Also explain consequence if payment is not made within the stipulated time period as mentioned
in 2nd proviso to section 16(2) of the CGST Act, 2017.

Solution:
In the given case M/s A Ltd. must pay to M/s B Ltd. the value of services and GST payable thereon
by 15th June 2019.
From To No. of days
18th Dec 2018 15th June 2019 180
In case M/s A Ltd. does not pay by 15th June 2019, the credit availed by it will be added to his
output liability. The amount will be added to their output tax liability with interest.
 CA Jasmeet Singh 88

20. M/s X Ltd. has establishment in Chennai, and establishment in Hyderabad. Supply of goods (open
market value of Rs. 5,00,000) made by M/s X Ltd. Chennai to M/s X Ltd. Hyderabad. M/s X Ltd.
Chennai paid IGST of Rs. 60,000. Accordingly, M/s X Ltd. Hyderabad availed the input tax credit of
Rs. 60,000. 2nd Proviso to Section 16(2) of CGST Act, 2017 is applicable in the given case (i.e. to
reverse the credit where payment is not made within 180 days from the date of invoice). Advise.

Solution:
As per proviso to Rule 37(1) of the CGST Rules, 2017, the value of supplies made without
consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the
purposes of the second proviso to section 16(2).
In the given case M/s X Ltd. Hyderabad is not required to reverse the input tax credit. Since, as
per Section 25(5) of the CGST Act, 2017 two establishments are considered as establishment of
distinct person and accordingly, supply made by one establishment to another establishment will
be covered under Schedule I without consideration.

21. M/s Jay Ltd. being a manufacturer purchased machinery worth Rs 10,00,000 on which GST Rs
1,80,000 is paid. What are the options available to Mr. Jay with respect to availing ITC on GST
paid?

Solution:
The manufacturer has following two options:
Option 1: claim depreciation on the entire value of machinery inclusive of GST (i.e. Rs 11,80,000) by
forgoing ITC on capital goods.
Option 2: claim depreciation on the cost of machine (i.e. Rs 10,00,000) and avail the ITC of GST
portion (i.e. 1,80,000).

22. M/s X Ltd. delivered a machine to M/s Y Ltd. in January 2018 under Invoice No. 180 dated 21st
January for Rs 5,00,000 plus GST, and undertook trial runs and calibration of the same machine as
per the requirements of M/s Y Ltd. The amount chargeable for the past delivery activities were
covered in a debit note raised in May 2018 for Rs 1,25,000 plus GST. M/s Y Ltd did not file its
annual return till October 2018. Find the time limit u/s 16(4) of the CGST Act, 2017 within which
input tax credit can be availed by M/s Y Ltd.

Solution:
Time limit to avail the ITC on machine (vide Invoice No. 180 dt. 21.01.2018) is 30th September 2018.
Time limit to avail the ITC on debit note is also 30th September 2018.

Note: though the debit note was received in the next financial year (2018-19), it relates to an
invoice received in the financial year ending 31st March 2018 (i.e. 2017-18).
 CA Jasmeet Singh 89

Therefore, the time limit for taking ITC available on Rs 5,00,000 as well as on Rs 1,25,000 is 30th
September 2018; earlier of the date of filing the annual return for 2017-18 or the due date for
filing return for September 2018

23. M/s X Ltd manufacturer of textile products. Company received order from Government to supply
goods to defense (exempted supply). The turnover of the other taxable goods and exempted
goods Rs 4 crore and Rs 1 crore respectively. Common inputs on which GST paid Rs 20,000.
Calculate the eligible ITC on common inputs?

Solution:
Common inputs credit = Rs 20,000 Total turnover = Rs 5 crores
Credit attributable to exempted supplies = Rs 4,000 (Rs 20,000 x Rs 1 crore/Rs 5 crore) Eligible ITC
is Rs 16,000 (i.e. 20,000 – 4,000).

24. Y Ltd. manufactures taxable and exempted goods. Y Ltd. also simultaneously provides taxable as
well as exempted output services.
Raw material 10,000 units were purchased @ Rs 100 per unit used commonly during the month of
January 2018 to produce all final products.
GST paid on inputs 12%.
Input services commonly used for all goods and services in the month of January 2018. Total ITC on
inputs & input services taken into books of account in the relevant tax period is Rs 1,74,000.
Turnover for the month of January 2018 (excluding all taxes)
Particulars Value of finished goods
Taxable supply of goods 2,00,000
Exempted supply of goods (Rs 80 per unit) 1,00,000
Taxable supply of services 1,00,000
Exempted supply of services 50,000
Total 4,50,000

You are required to compute the amount of reversal of input tax credit as per rule 42(1)(i) of the
CGST Rules, 2017 of the month of January 2018.
Note: Each unit of exempted final product needs 2 units of raw materials. Assumed that there is no
process loss.

Solution:
Step 1: Calculate common input tax credit on inputs and input services which are used to supply
taxable as well as exempted output supplies:
 CA Jasmeet Singh 90

Particulars Value of Working notes

finished
goods
Total ITC 174000
Less: ITC on supplies exclusively used for the purpose other Nil
than business
Less: ITC on supplies exclusively used for providing exempted (30000) 2500 units X Rs
supplies 100 X 12%
Less: ITC not available u/s 17(5) of the CGST Act, 2017 Nil
Input tax credit which are used to supply taxable as well as 144000
exempted output supplies
Less: ITC on supplies used exclusively for taxable supply (90000) (10000 – 2500
including Zero rated supply (i.e. ITC on normal supplies) units) X 12%
Common ITC, which are used to supply taxable as well 54000
as exempted supplies (C2)

Step 2: Amount of reversal of input tax credit attributable towards exempted supplies rule
42(1)(i) of the CGST Rules, 2017 is as follows: (Rs. 1,50,000/4,50,000) x Rs 54,000 = Rs 18,000/-

Working Note:
(i) Number of units of exempted final products 1,250 units (i.e. Rs 1,00,000/80 per unit = 1,250
units)
(ii) Since, each unit of exempted final product needs 2 units of raw materials. Raw material used
exclusively for exempted final product 2,500 units (i.e. 1,250 units x 2 units = 2,500 units).

25. X Bank of India has corporate office in Mumbai and branches in Chennai, Delhi and Kolkata.
Mumbai office provided services to Chennai office accordingly IGST paid. Office of Chennai will
avail the credit of IGST. Chennai office is required to reverse such credit? Explain.

Solution:
As per Section 17(4) of the CGST Act, 2017 that reversal of 50% shall not be made for the credit
availed by Chennai office on services provided by corporate office. Thus, no credit reversal shall
be made for the credit availed on input services provided by one registered person to another
registered person holding same PAN.

26. OK Bank has availed credit of Rs 25,00,000 lacs in the month of December 2017. Total credit, out
of which Rs 5,00,000 pertains to non-business purpose and Rs 7,00,000 pertains to credit availed
under 2nd proviso of section 17(4). Find the total input tax credit eligible to OK Bank.
Note: OK Bank opted to avail ITC an amount equal to 50% of eligible credit.

Solution:
 CA Jasmeet Singh 91

Statement showing eligible ITC to OK Bank for the month of December 2017:
Particulars Value of Working notes
finished goods
ITC attributable to non-business purpose Nil ITC not allowed
ITC from its other establishment 700000 ITC fully allowed
Other ITC 650000 (2500000-500000-700000)X50%
Total ITC allowed in Form GSTR-2 1350000

27. M/s A Ltd. a registered person under GST law and purchased 10 cars for Rs. 45 lakhs plus 28% GST.
M/s A Ltd sold 8 cars for Rs. 55 Lakh plus 28% GST.
Find the GST liability in the following two independent cases: M/s A Ltd is a dealer of motor
vehicles
M/s A Ltd is not a dealer of motor vehicles

Solution:
Statement showing net GST liability of M/s A Ltd.

Particulars M/s A Ltd. is a M/s A Ltd. is not Remarks

dealer in motor a dealer in motor
vehicles vehicles
(Rs. In lacs) (Rs. In lacs)
GST on Supply of 15.40 15.40 Rs. 55 lacs x
goods 28%
Less: ITC (12.60) Not allowed Rs. 45 lacs x
28%
Net GST liability 2.80 15.40

28. Mr. Ram a school van driver and also registered person under GST law. He purchased Omni
vehicle for Rs. 8 lacs plus GST 28%. Mr. Ram is eligible for ITC on this vehicle. Explain.

Solution:
Since, Mr. Ram is a registered person supplying taxable services in the nature of transportation
of passengers, he is eligible to avail the ITC on motor vehicle.

29. M/s Maruti Driving School Pvt. Ltd. supplied taxable services in the month of October 20XX for
Rs. 15 lacs (plus GST 18%) to provide training on driving. Company purchased two vehicles for this
 CA Jasmeet Singh 92

purpose namely passenger vehicle for Rs. 20 lacs plus GST 28% and goods vehicle for Rs. 33 lacs
plus GST 28%. Find the net GST liability of M/s Maruti Driving School Pvt. Ltd.

Solution:
Computation of Net GST Liability:
Particulars Amount (Rs)
GST on output supply 2,70,000
Less: ITC
On passenger vehicle 5,60,000
On goods vehicle 9,24,000
Net Excess ITC c/f 12,14,000

30. Guideline Academy organizes parents meeting and provides meal during meeting to students and
their parents. The supplier of food charged Rs. 72,500 plus GST 18%, under the category of
outdoor catering. Explain Guideline Academy being provider of taxable supply of services namely
commercial training and coaching services is eligible to avail the credit of GST paid on outdoor
catering service.

Solution:
GST paid on outdoor catering is not allowed as ITC even though such services are used for
business purpose. Such credit is blocked as per provisions of Section 17(5) of the CGST Act, 2017.

31. Course completion certificate/training offered M/s Sky Ltd. (Flying Training Institute) purchased
aircraft for Rs 22 crores plus GST 28%. Whether the flying institute is eligible for input tax credit on
purchase of air craft.

Solution:
Yes. M/s Sky Ltd. (Flying Training Institute) is eligible to avail ITC.

32. Annapoorna caterings supply outdoor catering services to its customers by sub- contracting the
same. Sub- contractor supplied food items like ice creams, North Indian Meals, South Indian Meals
and so on to Annapoorna caterings. Sub-contractor raised invoice on Annapoorna caterings for
supply of outdoor catering services Rs. 2,00,000 plus GST 18%. Annapoorna caterings supplied
outdoor catering to its customers for Rs. 2,10,000 plus GST 18%. Find the Net GST liability of
Annapoorna caterings.

Solution:
Statement showing net GST liability of Annapoorna caterings:
Particulars GST (Rs.) Remarks
GST on outward supply 37,800 Rs. 2,10,000 x 18%
 CA Jasmeet Singh 93

Less: ITC from similar line of business (36,000) Rs. 2,00,000 x 18%
Net GST liability 1,800

33. Sky Ltd. is engaged in supply of service of transport of passengers by air. The company avails
outdoor catering services of M/s Anna Caterers in order to provide food and beverages to the
passengers. M/s Anna Caterers raises an invoice on Sky Ltd charging GST.
Sky Ltd. wants to avail the ITC on outdoor catering services supplied by M/s Anna Caterers.
Advise.

Solution:
ITC shall be available where an inward supply of goods or services or both of a particular category
is used by a registered person as an element of a taxable composite or mixed supply.

Advise: In the given case, Sky Ltd will be entitled to avail the ITC of the GST paid to M/s Anna
Caterers since outdoor catering services forms part of taxable composite supply of passengers by
air services.

34. M/s MRFL Ltd. being a manufacturer of taxable goods paid general insurance premium to cover
loss of stock of finished goods. Company wants to avail the GST paid on such premium as input
tax credit. Advise.

Solution:
GST paid on general insurance premium to cover loss of stock of finished goods is well allowed as
input tax credit. Hence, M/s MRFL Ltd. is eligible to avail the tax paid on general insurance
premium as ITC.

35. Mr. D a director of company PQR Ltd. obtains a membership of a club located in Maharashtra. Mr.
D is there for the business promotion activity of his company. PQR Ltd. pays 10,00,000/annum to
such club for the membership of Mr. D in such club. Whether PQR Ltd. will be eligible for the
input tax credit of GST paid on membership fees?

Solution:
The input tax credit of the same will not be eligible to PQR Ltd. in terms of Section 17(5) of the
CGST Act.

36. Hotel King Pvt Ltd. provider of short-term accommodation services and also provides picking up
guest from airport. Accordingly, Hotel King Pvt. Ltd availed rent-a-cab services from M/s X & Co.
Rent-a-cab services provided by M/s X & Co to Hotel King Pvt Ltd. during Nov 20XX for Rs.
2,00,000 plus GST 18%. Hotel King Pvt Ltd. provided short-term accommodation services to its
customers (i.e. guests) during Nov 20XX for Rs. 15,75,250 plus GST 18%. Find the Net GST liability of
 CA Jasmeet Singh 94

Hotel King Pvt Ltd. during the month of Nov 20XX.

Solution:
Statement showing Net GST liability of Hotel King Pvt. Ltd for the month of Nov 20XX
Particulars GST (Rs.) Remarks
GST on outward supplies 2,83,545 15,75,250 x 18%
Less: ITC on rent-a-cab service (36,000) 2,00,000 x 18%
Net GST liability 2,47,545

Note: - In the given case Hotel King Pvt. Ltd. is providing a composite supply of rent-a-cab and
accommodation service. The principal supply of service is accommodation service. Hence, GST
paid on rent-a-cab will be available as a credit to Hotel King Pvt. Ltd.

37. M/s A Ltd. being a manufacturer of laptops registered under GST. M/s A Ltd. appointed M/s B Ltd.
for construction of factory building in the factory premises. Contract price is Rs. 120 lacs plus GST
18%. M/s B Ltd., supplied cement, steel and labour while executing the contract. Whether M/s A
Ltd is eligible to avail the input tax credit on such works contract service.

Solution:
GST paid on works contract services which are used for land, building or any other civil structures
specifically excluded from availing input tax credit under section 17(5) read with explanation of
the CGST Act, 2017.
Therefore, in the given case M/s A Ltd. is not eligible for input tax credit.

38. M/s Bharti Airtel Limited purchased antennas, towers and parts thereof by paying GST. Company
also received works contract service from M/s B Ltd. for its installation by paying GST thereon.
Finally towers and parts thereof are fastened and are fixed to the earth and after their erection
become Immovable. Find the eligibility of input tax credit to M/s Bharti Airtel Limited.

Solution:
GST Paid on works contract service ITC not allowed GST paid on Antenna allowed as ITC
GST paid on purchase of towers and parts of towers not allowed as ITC (since not plant &
machinery)

39. M/s. X Ltd. supplied taxable goods from the factory after manufacture in the month of Oct 20XX
for sale to a distributor for Rs. 8,00,000. M/s X Ltd has suppressed this transaction. However, he
deposited the GST @12% on these goods on 10-1-20X1 against show cause notice issued under
Section 74 (when there is fraud) of the CGST Act, 2017 by the Central Tax Officer and passed the
order accordingly. Whether distributor namely recipient of these goods is eligible to take input
 CA Jasmeet Singh 95

tax credit.

Solution:
As per Sec 17(5) of the CGST Act 2017*, No credit on payment of tax due to fraud, willful-
misstatement or suppression of fact etc. shall be allowed.

In the given case no input tax credit was available to registered person if the supplier has paid
tax in pursuance of order where any demand has been confirmed on account of any fraud, willful-
misstatement or suppression of facts and so on under Sec. 74 of the CGST Act, 2017.
Hence, input tax credit is not allowed to recipient of these goods (i.e. distributor in the given
case).

40. Moksha Bank ltd., is engaged in providing services, which are both taxable and exempted. You
have following information: Value of different services of bank for year ended 31 March —
Particulars GST (Rs.)
Value of Exempted services (interest earned on loans and advances) 2,00,000
Value of Taxable services 8,00,000
Input Credit on input services for the month of April 2019 60,000
Input Credit of Rs. 60,000 includes —
(a) Input services exclusively used for provision of exempted services 20,000
(b) Input services exclusively used for provision of taxable services 10,000
Bank wants to determine input credit for set-off against output tax, during next month April and
avail option more beneficial to it. Determine which of the two options is more beneficial to the
bank.

Solution:
The Banks have two options: (a) Pro rata, and (b) 50% adhoc.

Option I: In case the Bank opts for option to avail 50% Eligible Input tax credit under Section 17(4):
Particulars GST (Rs.)
Total Eligible Input tax credit available 60,000
Less: Amount of input tax credit credited to electronic ledger (50% of 30,000
eligible input tax credit on input services) i.e., Rs. 60,000 × 50%
Remaining input tax credit Lapsed 30,000
Tax on taxable supply of services [Rs. 8,00,000 × 18% Total] 1,44,000
Less: Net/Eligible Credit available on Input services 30,000
Net output Tax liability of bank after availing eligible Input tax Credit 1,14,000

Option II: In case Bank opted to comply with the provisions of Section 17(2) [Pro rata reversal]
Particulars GST (Rs.)
1. Input services exclusively used for provision of exempted services Ineligible
 CA Jasmeet Singh 96

2. Input services exclusively used for provision of taxable services (fully 10,000
allowed)
3. Common Credit = 30,000 divided in ratio of 2 lakh (Exempt): 8 lakh 24,000
(Taxable). Hence, that relating to exempt services = 6,000 and that for
taxable services = 24,000.
4. Total eligible credit = 24,000 + 10,000 34,000
Tax on taxable supply of services of [Rs. 8,00,000 × 18% total) 1,44,000
Less: Net/Eligible Credit available on Input services 34,000
Net output Tax liability of bank after availing eligible Input tax 1,10,000
Credit

Option 2 (pro rata reversal is better); this is so because taxable services are more (80%), as
compared to deemed adhoc figure of 50% under Option 1.

41. M/s X Ltd. becomes liable to pay tax on 1st December and has obtained registration on 15th
December. The GST paid goods lying in the premises of M/s X Ltd. as on 30th November are as
follows:
Particulars Value in Rs. (Excluding tax) GST (Rs.)
Raw material 2,00,000 36,000
Capital goods 5,00,000 1,40,000
Raw material lying work in progress 3,00,000 54,000
Raw material lying in Finished Goods 12,00,000 2,16,000
You are required to Solution the following:
(a) Eligible amount of input tax credit.
(b) Time limit to submit declaration on common portal.
(c) Whether any certification required while availing the credit, if so from whom.

Solution:
(a) Eligible input tax credit is Rs. 3,06,000/- (36000 + 54000 + 216000)
(b) Declaration in Form GST ITC -01 on or before 14th January should be summited on common
portal of GSTN
(c) Declaration regarding inputs tax credit shall be duly certified by a practicing Chartered
Accountant or a Cost Accountant if the aggregate value of the claim on account of central tax,
State tax, Union territory tax and integrated tax exceeds Rs 2,00,000.
In the give case, since, input tax credit declared is Rs 3,06,000. Therefore, certificate from a
practicing Chartered Accountant or a Cost Accountant is required.
Note: M/s X Ltd. cannot take ITC on capital goods.

42. Mr. A applies for voluntary registration on 22nd November and obtained registration on 25th
November. Mr. A has stock on the following two dates:
 CA Jasmeet Singh 97

Date Opening balance (units) Purchased (units) Sold (units)

21st November 12,000 20,000 8,000
On 24th November, Mr. A purchased 5,000 units and sold 15,000 units.
On 24th November, Mr. A is also purchased plant and machinery for Rs 2,00,000 plus GST 28%.
Mr. A purchased good at uniform rate throughout the year at Rs 100 per unit plus GST paid 18%.
You are required to find the eligible input tax credit to Mr. A.

Solution:
Stock as on 24th November = 14,000 units
Value of stock = Rs 14,00,000 (i.e. 14,000 units x Rs 100 per unit). Input tax credit eligible is Rs
2,52,000/-.
Note: ITC on capital goods not allowed.

43. Mr. C a registered taxable person, was paying tax at composition scheme upto 30th July.
However, w.e.f. 31st July, Mr. C becomes liable to pay tax under regular scheme. Other
information:
(a) Input as on 30th July for Rs. 3,54,000 (inclusive of GST paid @18%).
(b) Capital goods purchased for Rs. 5,00,000 (invoice date 22nd April 2017, GST 18%) Find the
eligible ITC to Mr. C.
Note: Mr. C not availed depreciation on the GST paid on capital goods.

Solution:
 ITC allowed on inputs = Rs. 54,000
 ITC allowed on capital goods= [90,000 (-) 5% for two quarters/part] = 81,000
 Thus, total ITC allowed to Mr. C as on 31st July= Rs.1,35,000

44. M/s A Ltd. sold plant and machinery after being used in the manufacture of taxable goods for Rs.
4,00,000 on 1st November 20X1. GST is payable on transaction value of plant and machinery 18%.
M/s A Ltd. had purchased this machine vide invoice dated 22nd November 20X0 for Rs. 5,50,000/-
plus GST 18%.
M/s A Ltd. availed the credit on said plant and machinery. Find the amount payable by M/s A Ltd.
under section 18(6) of the CGST Act, 2017.

Solution:
Particulars Amount
ITC taken on capital goods (5,50,000 x 18%) 99,000
Less: 25% reduction (5 quarters) – 5*5% = 25% (24,750)
Balance ITC 74,250
Tax on Transaction value (4,00,000 x 18%) 72,000
Note: M/s A Ltd. shall pay amount equal to the input tax credit taken on the said capital goods
 CA Jasmeet Singh 98

reduced by 5% per quarter or part thereof from the date of the issue of the invoice for such goods
or the tax on the transaction value of such capital goods u/s 15 of the CGST Act, 2017 whichever is
higher.
Therefore, M/s A Ltd. is liable to pay an amount of Rs 74,250/-.

45. With reference to the provisions of section 17 of the CGST Act, 2017, examine the availability of
input tax credit under the CGST Act, 2017 in the following independent cases: -
(i) MBF Ltd., an automobile company, has availed works contract service for construction of
a foundation on which a machinery (to be used in the production process) is to be
mounted permanently.
(ii) Shah & Constructions procured cement, paint, iron rods and services of architects and
interior designers for construction of a commercial complex for one of its clients.
(iii) ABC Ltd. availed maintenance & repair services from “Jaggi Motors” for a truck
used for transporting its finished goods.

Solution:
(i) Section 17(5)(c) of the CGST Act, 2017 blocks input tax credit in respect of works contract
services when supplied for construction of an immovable property (other than plant and
machinery) except where it is an input service for further supply of works contract service.
Further, the term “plant and machinery” means apparatus, equipment and machinery fixed
to earth by foundation or structural support that are used for making outward supply of goods
and/or services and includes such foundation or structural support but excludes land, building
or other civil structures, telecommunication towers, and pipelines laid outside the factory
premises.
Thus, in view of the above-mentioned provisions, ITC is available in respect of works contract
service availed by MBF Ltd.as the same is used for construction of plant and machinery which
is not blocked under section 17(5)(c) of the CGST Act, 2017.

(ii) Section 17(5)(d) of the CGST Act, 2017 blocks ITC on goods and/or services received by a
taxable person for construction of an immovable property (other than plant and machinery)
on his own account even though such goods and/or services are used in the course or
furtherance of business. Thus, ITC on goods and/or services used in the construction of an
immovable property is blocked only in those cases where the taxable person constructs the
immovable property for his own use even if the immovable property being constructed is used
in the course or furtherance of his business.
In the given case, taxable person has used the goods and services for construction of
immovable property for some other person and not on its own account. Hence, ITC in this
case will be allowed.

(iii) As per section 17(5) of the CGST Act, 2017, ITC is allowed on repair and maintenance services
 CA Jasmeet Singh 99

relating to motor vehicles, which are eligible for input tax credit. Further, as per section
17(5)(a) ITC is allowed on motor vehicles which are used for transportation of goods.
Thus, ITC on maintenance & repair services availed from “Jaggi Motors” for a truck used for
transporting its finished goods is allowed to ABC Ltd.

46. Advise regarding availability of input tax credit (ITC) under the CGST Act, 2017 in the following
independent cases:-
(i) AMT Co. Ltd. purchased a mini bus having seating capacity of 16 persons for transportation
of its employees from their residence to office and back.
(ii) Bangur Ceramics Ltd., a manufacturing company purchased two trucks for transportation
of its finished goods from the factory to dealers located in various locations within the
country.
(iii) “Hans premium” dealing in luxury cars in Chankyapuri, Delhi purchased five Skoda
VRS cars for sale to customers.
(iv) Sun & Moon Packers Pvt. Ltd. availed outdoor catering service to run a canteen in its
factory. The Factories Act, 1948 requires the company to set up a canteen in its factory.

Solution:
Section 17(5) of the CGST Act, 2017, inter alia, blocks input tax credit in respect of motor vehicles
for transportation of persons having approved seating capacity of not more than 13 persons
(including the driver), except when they are used for certain specified purposes.
Since in the given case, the mini bus has a seating capacity of 16 persons, the ITC thereon will
not be blocked.
(i) Section 17(5) of the CGST Act, 2017, inter alia, blocks input tax credit in respect of motor vehicles
for transportation of persons with certain exceptions. Thus, ITC on motor vehicles for
transportation of goods is allowed unconditionally.
Therefore, ITC on trucks purchased by Bangur Ceramics Ltd for transportation of its finished
goods from the factory to dealers located in various locations within the country is allowed.
(ii) Section 17(5) of the CGST Act, 2017, inter alia, blocks input tax credit in respect of motor vehicles
for transportation of persons having approved seating capacity of not more than 13 persons
(including the driver), except when they are used for making further supply of such motor
vehicles.
Being a dealer of cars, “Hans Premium” has purchased the cars for further supply. Therefore,
ITC on such cars is allowed even though seating capacity is less than 13.
(iii) Section 17(5) of the CGST Act, 2017 inter alia, blocks input tax credit in respect of outdoor
catering services. However, ITC is available on such services, when the same are provided by an
employer to its employees under a statutory obligation.
Thus, in view of the above- mentioned provisions, Sun & Moon packers Pvt. Ltd. can avail ITC in
respect of outdoor catering services availed by it as the same is being provided under a
 CA Jasmeet Singh 100

statutory obligation.

47. Ramesh a taxpayer receives 100 invoices (for inward supply of goods/services) involving ITC of Rs.
10 lakhs, from various suppliers during the month of Nov, 2019 and has to claim ITC in his FORM
GSTR-3B of November, to be filed by 20th Dec, 2019. Suppliers have furnished in FORM GSTR-1, 80
invoices involving ITC of Rs. 6 lakhs as on the due date of furnishing of the details of outward
supplies by the suppliers.

Solution:
Total Credit as per Invoices - 10.00 Lakh
-
-
Total Credit can be availed in 3B -

48. Ramesh a taxpayer receives 100 invoices (for inward supply of goods/services) involving ITC of Rs.
10 lakhs, from various suppliers during the month of Nov, 2019 and has to claim ITC in his FORM
GSTR-3B of November, to be filed by 20th Dec, 2019.

Suppliers have furnished in FORM GSTR-1, 80 invoices involving ITC of Rs. 7 lakhs as on the due
date of furnishing of the details of outward supplies by the suppliers.

Solution:
Total Credit as per Invoices -
-
-
Total Credit can be availed in 3B -

49. Ramesh a taxpayer receives 100 invoices (for inward supply of goods/services) involving ITC of Rs.
10 lakhs, from various suppliers during the month of Nov, 2019 and has to claim ITC in his FORM
GSTR-3B of November, to be filed by 20th Dec, 2019. Suppliers have furnished in FORM GSTR-1, 80
invoices involving ITC of Rs. 8.50 lakhs as on the due date of furnishing of the details of outward
supplies by the suppliers.

Solution:
Total Credit as per Invoices -
-
 CA Jasmeet Singh 101

-
Total Credit can be availed in 3B -
Total Credit as per Invoices -

50. When can balance ITC be claimed in case availment of ITC is restricted as per the provisions of rule
36(4)?

Solution:
The balance ITC may be claimed by the taxpayer in any of the succeeding months provided details
of requisite invoices are uploaded by the suppliers. Taxpayer can claim proportionate ITC as and
when details of some invoices are uploaded by the suppliers provided that credit on invoices, the
details of which are not uploaded (under sub-section (1) of section 37) remains under __ per cent
of the eligible input tax credit, the details of which are uploaded by the suppliers

51. A Ltd. procured the following goods in the month of December, 2020.

Inward Supplies GST (Rs.)

(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) Confectionery items for consumption of employees working in the 3,250
factory
(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 2020 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 2020

S. No. Particulars GST (Rs.)

(1) Goods used in construction of additional floor of office building Nil
[ITC on goods 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.]
 CA Jasmeet Singh 102

(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 blocked3.]
(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 Nil
factory
[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 8,050
machinery
[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

52. 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?
(a) The Commissioner or an officer (not below the rank of an Assistant Commissioner) authorised
by him has been empowered to impose restrictions on utilization of ITC available in the
electronic credit ledger.
The restrictions can be imposed under the CGST Rules, 2017 in the following circumstances:
(i) ITC has been availed on the basis of tax invoices/valid documents -
 issued by a non-existent supplier or by a person not conducting any business from
the registered place of business; or
 without receipt of goods and/or services; or
 the tax in relation to which has not been paid to the Government.
(ii) Registered person availing ITC has been found non-existent or not to be conducting any
business from the registered place of business; or
(iii) Registered person availing ITC is not in possession of tax invoice/valid document.

Multiple Choice Question

1. 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
 CA Jasmeet Singh 103

(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

2. What is the time limit for taking ITC on invoices pertaining to a financial year?
(a) 180 days
(b) 1 year
(c) Due date of filing return for the month of September of the next financial year or the date of
filing annual return, whichever is earlier
(d) No limit

3. 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.

4. For banking companies using inputs and input services partly for taxable supplies and partly for
exempt supplies, which of the statement is true?
(a) ITC shall be compulsorily restricted to credit attributable to taxable supplies including zero
rated supplies
(b) 50% of eligible ITC on inputs, capital goods, and input service shall be mandatorily availed in a
month and the rest shall lapse.
(c) Banking company can choose to exercise either option (a) or option (b)
(d) None of the above

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
 CA Jasmeet Singh 104

7. 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.
8. Krishna Motors is a car dealer selling cars of an international car company. It also provides
maintenance and repair services of the cars sold by it as also of other cars. Determine the amount
of input tax credit available with the help of the following information regarding expenses
incurred by it during the course of its business operations:
Particulars GST paid
Cars purchased from the manufacturer for making further supply of such cars. 20,00,000
[Two of such cars are destroyed in accidents while being used for test drive by
potential customers. GST paid on their purchase
is Rs 1,00,000]
Works contract services availed for constructing a car shed in its 50,000
premises.

(a) Rs 19,00,000
(b) Rs 21,10,000
(c) Rs 19,50,000
(d) Rs 20,50,000

9. Compute the value of ‘exempted supply’ for purpose of section 17(2) of the CGST Act, 2017 from
the following details:
(i) Value of alcoholic liquor for human consumption: Rs 1,50,000
(ii) Value of architect services supplied: Rs 2,00,000
(iii) Securities of face value of Rs 1,00,000 sold for Rs 95,000

(a) Rs 1,50,000
(b) Rs 2,50,000
(c) Rs 2,45,000
(d) Rs 1,50,950

10. Calculate the amount of eligible input tax credit-

S. No Particulars GST Paid (Rs)
1 A Mini bus having seating capacity of 15 persons (including 15,00,000
driver) used for running on hire
2 Car having seating capacity of 8 people used for business 1,00,00,000
purposes
 CA Jasmeet Singh 105

3 Car having seating capacity of 4 persons used for imparting 50,00,000

training on driving such car
4 Special purpose vehicle having seating capacity of 2 persons 60,00,000
used for transportation of goods
(a) Rs. 2,25,00,000
(b) Rs. 2,10,00,000
(c) Rs. 1,25,00,000
(d) Rs. 75,00,000

11.
(i) A software professional providing technical consultancy buys a motorcycle for use of his
employee.
(ii) A motor driving school buys a car for being used in imparting motor driving training.
(iii) A flying school imports an aircraft for use in its training activity.
(iv) A manufacturer buys a small truck for the purpose of transporting its inputs and finished
goods.
Input tax credit cannot be taken on:
(a) (iii)
(b) (i), (ii), (iii), (iv)
(c) (i)
(d) (i), (iii)

12. Kamlesh hires a works contractor for repairing his factory building on a lumpsum payment of Rs.
11,80,000. He debits half of the expenditure in the profit and loss account and the remaining half
in the building account.
Assuming the rate of GST to be 18%, Kamlesh can take input tax credit of:
(a) Rs 90,000
(b) Rs 1,06,200
(c) Rs 2,12,400
(d) Nil

13. Input tax Credit is available on all supplies which are used or intended to be used in the course or
furtherance of business. Input tax credit will be available under which of the following
situations?
(a) GST paid on motor vehicle for transportation of persons with seating capacity < 13, used in
the course and furtherance of business.
(b) GST paid on club membership fees.
(c) GST paid on goods or services or both used for personnel consumption.
(d) IGST @18% paid on inputs purchased from a vendor in Bangalore where the supplier is
registered in Rajasthan.
 CA Jasmeet Singh 106

14. Mr. X becomes liable to pay tax on 1st August, 2018 and has obtained registration on 15th August,
2018. Such person is eligible for input tax credit on inputs held in stock as on:
(a) 1st August, 2018
(b) 31st July, 2018
(c) 15th August, 2018
(d) He cannot take credit for the past period

15. Mr. Rahul Roy, proprietor of M/s. Royal Shoe & Company is running a business of manufacturing
shoes with the brand name of ‘JUNOON’. The manufacturing unit is located in Delhi and
registered under GST. However, due to low profitability in the business, he has decided to
transfer his business to his friend Mr. Dilip Tijori. Mr. Dilip Tijori is already running the business of
manufacturing shoes under a proprietorship firm named M/s Hawai Shoes & Company which is
located in Mumbai and registered under GST.
Mr. Rahul Roy has approached you to help him with the issue of transfer of unutilized input tax
credit in electronic credit ledger of M/s. Royal Shoe & Company to M/s Hawai Shoes & Company.
Advise Mr. Rahul Roy with the correct option in accordance with the provisions of the CGST Act,
2017:
(a) M/s. Royal Shoe & Company cannot transfer unutilised input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company, as the proprietors are different.
(b) M/s. Royal Shoe & Company can transfer unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company and it can further be utilized in setting off GST liability
for succeeding period.
(c) M/s. Royal Shoe & Company can transfer unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company and it can be further utilized in setting off GST liability
for a period upto the month of September following the year in which ITC was transferred.
M/s. Royal Shoe & Company cannot transfer unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company but can claim refund of such unutilized input tax
credit.

16. Mr. Chamcham, registered under GST in Delhi, is a domestic trader as also an exporter of whole
sale goods. His annual turnover and input tax details are as follows:
Turnover inputs Tax paid on
Taxable goods 90 lakhs 9 lakhs
Exempt goods 10 lakhs 1 lakh
Exported goods 15 lakhs 2 lakhs
No GST is payable on exempt and exported goods. Mr. Chamcham seeks your expert help in
calculating the amount of ITC, which he is eligible to claim:
(a) 12,00,000/-
(b) 11,00,000/-
(c) 10,00,000/-
 CA Jasmeet Singh 107

(d) 9,00,000/-

17. Mr. Arun, a registered supplier, is engaged in selling sweets. The sweets are sold in boxes and the
cost of each sweet box is Rs 500/-. In order to increase his turnover, he purchased certain juice
cans @ Rs. 20/- each and added juice can with every sweet box as a gift. A sweet box along with
free juice can is sold at Rs 500/- each.
Which of the statements is correct?
(a) He is liable to pay tax on Rs 520/- and eligible to claim input tax credit on purchase of juice
cans
(b) He is liable to pay tax on Rs 500/- and not eligible to claim input tax credit on purchase of juice
cans
(c) He is liable to pay tax on Rs 500/- and also eligible to claim input tax credit on purchase of
juice cans
(d) Either (a) or (b)

18. What do you mean by Value of assets for the purpose of apportionment of ITC in case of
demerger?
(a) “value of assets” means the value of the entire assets of the business, on which ITC has been
availed thereon.
(b) “value of assets” means the value of the entire assets of the business, whether or not ITC
has been availed thereon.

19. Whether ITC allowed or Blocked in the independent cases?

(i) ITC on cars purchased by a manufacturing company for official use of its employees.
(ii) ITC on cars purchased by a car dealer for sale to customers.
(iii) ITC on cars purchased by a company engaged in renting out cars for transportation of
passengers.
(iv) ITC on cars purchased by a car driving school.
(v) ITC on buses purchased by a company for transportation of its employees from their residence
to office and back.
(vi) ITC on trucks purchased by a company for transportation of its finished goods.

(a) Blocked, Blocked, Blocked, allowed, allowed, allowed

(b) Blocked, allowed, allowed, allowed, Blocked, allowed
(c) Blocked, allowed, allowed, allowed, allowed, Blocked
(d) Blocked, allowed, allowed, allowed, allowed, allowed

20. Whether ITC allowed or Blocked in the independent cases?

(i) ITC on general insurance taken on a car used by employees of a manufacturing company for
official purposes.
(ii) ITC on maintenance & repair services availed by a company for a truck used for transporting
 CA Jasmeet Singh 108

its finished goods

(a) Blocked, Allowed

(b) Allowed, Blocked

21. 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
(a) Blocked
(b) Allowed

22. ITC on outdoor catering services availed by a company, for a team development event organised
for its employees, is
(a) Blocked
(b) Allowed

23. ITC on outdoor catering service availed by a company to run a 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
(a) Blocked
(b) Allowed

24. Which form is to be filed for Transfer of credit on obtaining separate registrations for multiple
places of business within a State/Union territory.
(a) Form GST ITC 02
(b) Form GST ITC 02A

Solution: -
1) C 2) c 3) b 4) c 5) b 6) d 7) c 8) a 9) d 10) c
11) c 12) a 13) d 14) b 15) b 16) b 17) c 18) b 19) d 20) a
21) b 22) a 23) b 24) b
 CA Jasmeet Singh 109

Chapter 7: Registration

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

(a) The aggregate turnover of Mr. A, a service provider in Delhi has exceeded Rs. 20 lakhs on 1st
September. It submits the application for registration on 20th September. Registration
certificate is granted to it on 25th September.
(b) Mr. Ram is a service provider in Lucknow. Its aggregate turnover exceeds Rs.20 lakhs on 25th
October. It submits the application for registration on 27th November. Registration
certificate is granted to it on 5th December.

Solution:
(a) Every supplier becomes liable to registration if his turnover exceeds Rs 20 lakh [in a State/UT
other than Special Category States except Manipur, Mizoram, Nagaland, Tripura (M2NT)] in a
financial year [Section 22]. Since in the given case, the turnover of Mr. A exceeded Rs 20 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) Since in the given case, the turnover of Mr. Ram exceeds Rs 20 lakh on 25th October, it
becomes liable to registration on said date.
Further, since the application for registration has been submitted after 30 days from the date
such person becomes liable to registration, the registration shall be effective from the date
of grant of registration. Therefore, the effective date of registration is 5th December.

2. 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.

Solution:
A Permanent Account Number is mandatory to be eligible for grant of registration. One
exception to this is a non-resident taxable person. A non- resident taxable person may be granted
registration on the basis of other prescribed documents instead of PAN. He has to submit a self-
attested copy of his valid passport along with the application signed by his authorized signatory
who is an Indian Resident having valid PAN and application will be submitted in a different
prescribed form [Section 25(6) & (7)].

3. State which of the following suppliers are liable to be registered:

 CA Jasmeet Singh 110

a. Agent supplying goods on behalf of some other taxable person and its aggregate turnover
does not exceed Rs 20 lakh during the financial year.
b. An agriculturist who is only engaged in supply of produce out of cultivation of land.

Solution:
(a) Section 22 stipulates that every supplier becomes liable to registration if his turnover
exceeds Rs. 20 lakhs in a State/UT [Rs. 10 lakhs in Special Category States Manipur,
Mizoram, Nagaland and Tripura] 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
Rs. 20 lakhs 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.
4. What are the advantages of taking registration in GST?

Solution:
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.

5. Can a person without GST registration collect GST and claim ITC?

Solution:
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.

6. If a person is operating in different States, with the same PAN number, can he operate with a
single registration?

Solution:
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.

7. Is there a provision for a person to get himself voluntarily registered though he may not be liable
to pay GST?
 CA Jasmeet Singh 111

Solution:
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.

8. Can the Department, through the proper officer, Suo-moto proceed to register of a person?

Solution:
Yes. In terms of sub-section (8) 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.

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

Solution:
Yes, the registration certificate once granted is permanent unless surrendered, cancelled,
suspended or revoked.
10. Is it necessary for the UN bodies to get registration under GST?

Solution:
Yes. 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.

11. What is the responsibility of the taxable person making supplies to UN bodies?

Solution:
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) and the invoices
of the same will be uploaded by the supplier.

12. What is the validity period of the registration certificate issued to a casual taxable person and
non- resident taxable person?
 CA Jasmeet Singh 112

Solution:
In terms of section 27(1) read with proviso thereto, the certificate of registration issued to a
“casual taxable person” or a “non-resident taxable person” shall be valid for a period specified
in the application for registration or 90 days from the effective date of registration, whichever
is earlier. However, the proper officer, at the request of the said taxable person, may extend the
validity of the aforesaid period of 90 days by a further period not exceeding 90 days.

13. What happens when the registration is obtained by means of willful mis-statement, fraud or
suppression of facts?

Solution:
In such cases, the registration may be cancelled with retrospective effect by the proper officer
[Section 29(2)(e)].

14. Is there an option to take centralized registration for services under GST Law?

Solution:
No, the tax paper has to take separate registration in every State from where he makes taxable
supplies.

15. What could be the liabilities (in so far as registration is concerned) on transfer of a business?

Solution:
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)].

16. At the time of registration, will the assesses have to declare all his places of business?

Solution:
Yes. 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.

17. What will be the time limit for the decision on the on-line registration application?

Solution:
If the information and the uploaded documents are found in order, the proper officer has to
respond to the application within 3 common working days. If he communicates any deficiency or
discrepancy in the application within such time, then the applicant will have to remove the
 CA Jasmeet Singh 113

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

18. What will be the time of response by the applicant if any query is raised in the online application?

Solution:
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 3 common working days. The applicant will reply to the
query/rectify the error/ Solution 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.

19. Does cancellation of registration impose any tax obligations on the person whose registration is
so cancelled?

Solution:
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, 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 or capital goods or plant and machinery on the day immediately
preceding the date of such cancellation or the output tax payable on such goods, whichever is
higher.

20. Pure Oils, Delhi has started the supply of machine oils and high speed diesel in the month of April,
20XX. The following details have been furnished by it for the said month:-
Sl. Particulars Rs*
No.
(i) Supply of machine oils in Delhi 2,00,000
(ii) Supply of high speed diesel in Delhi 4,00,000
(iii) Supply made through Fortis Lubricants - an agent of Pure Oils in 1,75,000
Delhi
(iv) Supply made by Pure Oils from its branch located in Punjab 1,80,000
*excluding GST
Determine whether Pure Oils is liable for registration. Will your Solution change, if Pure Oils
supplies machine oils amounting to Rs 2,50,000 from its branch located in tripura in addition to the
above-mentioned supplies?
 CA Jasmeet Singh 114

Solution:
As per section 22 of the CGST Act, 2017, 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 Rs 40 lakh.
However, if such taxable supplies are made from a special category States, namely Manipur,
Mizoram, Nagaland, Tripura, he shall be liable to be registered if his aggregate turnover in a
financial year exceeds Rs 10 lakh.

As per section 2(6) of the CGST Act, 2017, aggregate turnover includes the aggregate value of:
(i) all taxable supplies,
(ii) all exempt supplies,
(iii) exports of goods and/or services and
(iv) all inter-State supplies of persons having the same PAN.
The above is computed on all India basis.
Further, the aggregate turnover excludes central tax, State tax, Union territory tax, integrated tax
and cess. Moreover, the value of inward supplies on which tax is payable under reverse charge is
not taken into account for calculation of ‘aggregate turnover’.

Section 9 of the CGST Act, 2017 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) of the CGST Act, 2017, exempt supply includes non-taxable supply. Thus, supply of
high speed diesel in Delhi, being a non- taxable 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 for the month of
April, 20XX is computed as under:
Sl. Particulars Amount
No. (in Rs)
(i) Supply of machine oils in Delhi 2,00,000
(ii) Add: Supply of high-speed diesel in Delhi 4,00,000
(iii) Add: Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi 1,75,000
(iv) Add: Supply made by Pure Oils from its branch located in Punjab 1,80,000
Aggregate Turnover 9,55,000
Since the aggregate turnover does not exceed Rs 40 lakh, Pure Oils is not liable to be registered. If
Pure Oils made supply of machine oils amounting to Rs 2,50,000 from its branch in Himachal
Pradesh in addition to the above supply, then threshold limit of registration will be reduced to Rs
10 lakh as Tripura is one of the specified Special Category States.
Aggregate Turnover in that case would be Rs 9,55,000 + Rs 2,50,000 = Rs 12,05,000. So, if Pure Oils
 CA Jasmeet Singh 115

supplies machine oils amounting to Rs 2,50,000 from its branch in Tripuira, then it is liable to be
registered.

21. Mr. Akash Malhotra of Gujarat often participates in the jewellery exhibition at Trade Fair in Delhi,
which is organised every year in the month of February. Mr. Akash Malhotra applied for
registration in January. The proper officer demanded an advance deposit of tax in an amount
equivalent to the estimated tax liability of Mr. Akash Malhotra.
You are required to examine whether any advance tax is to be paid by Mr. Akash Malhotra at the
time of obtaining registration?

Solution:
Yes, advance tax is to be paid by Mr. Akash Malhotra at the time of obtaining registration. Since
Mr. Akash Malhotra occasionally undertakes supply of goods in the course or furtherance of
business in a State where he has no fixed place of business, thus he qualifies as casual taxable
person in terms of section 2(20) of CGST Act, 2017.

While a normal taxable person does not have to make any advance deposit of tax to obtain
registration, a casual taxable person shall, at the time of submission of application for registration
is required, in terms of section 27(2) read with proviso thereto, to make an advance deposit of tax
in an amount equivalent to the estimated tax liability of such person for the period for which the
registration is sought. If registration is to be extended beyond the initial period of 90 days, an
advance additional amount of tax equivalent to the estimated tax liability is to be deposited for
the period for which the extension beyond 90 days is being sought.

22. Determine the effective date of registration in the following instances:

a. The aggregate turnover of Ganesh Ltd., engaged in taxable supply of services in the state of
Punjab, exceeded Rs. 20 lakh on 25th August, 20XX. It applies for registration on 19th
September, 20XX and is granted registration certificate on 29th September, 20XX.
b. What will be your Solution, if in the above scenario; Ganesh Ltd. submits the application for
registration on 27th September, 20XX and is granted registration on 5th October, 20XX?

Solution:
A supplier whose aggregate turnover in a financial year exceeds Rs. 20 lakh in a State/UT [Rs. 10
lakh in Special Category States except Jammu and Kashmir] is liable to apply for registration
within 30 days from the date of becoming liable to registration (i.e., the date of crossing the
threshold limit of Rs. 20 lakh / Rs. 40 Lakh / Rs. 10 lakh).

Where the application is submitted within the said period, the effective date of registration is the
date on which the person becomes liable to registration; otherwise it is the date of grant of
registration.
 CA Jasmeet Singh 116

In the given case, the applicable turnover limit for registration will be Rs. 20 lakh as Punjab is not a
Special Category State.
a) Since Ganesh Ltd. applied for registration within 30 days of becoming liable to registration,
the effective date of registration is 25th August, 20XX.
b) In this case, since Ganesh Ltd. applies for registration after the expiry of 30 days from the
date of becoming liable to registration, the effective date of registration is 5th October,
20XX.

23. Discuss the procedure for amendment of registration under CGST Act and rules thereto?

Solution:
The procedures for amendment of registration are contained in section 28 read with rule 19 of
CGST Rules. The significant aspects of the same are discussed hereunder:
1. Where there is any change in the particulars furnished in registration application/UIN
application, registered person shall submit an application in prescribed manner, within 15
days of such change, along with documents relating to such change at the Common Portal.
2. In case of amendment of core fields of information, the proper officer may, on the basis of
information furnished or as ascertained by him, approve or reject amendments in the
registration particulars in the prescribed manner. Such amendment shall take effect from the
date of occurrence of event warranting such amendment.
3. However, where change relates to non-core fields of information, registration certificate
shall stand amended upon submission of the application for amendment on the Common
Portal.
4. Where a change in the constitution of any business results in change of PAN of a registered
person, the said person shall apply for fresh registration. The reason for the same is that
GSTIN is PAN based. Any change in PAN would warrant a new registration.

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

Particulars Rs
Supply of petrol at Chennai 18,00,000
Value of inward supplies on which tax is payable on reverse charge basis 9,00,000
Supply of transformer oil at Chennai 2,00,000
Value of branch transfer from Chennai to Bengaluru without payment of 1,50,000
consideration
Value of taxable supplies at Manipur branch 11,50,000

Decide based on the above facts: The aggregate turnover of Rajesh Dynamics.
 CA Jasmeet Singh 117

Solution:
Computation of aggregate turnover of Rajesh Dynamics
Particulars Rs
Supply of petrol at Chennai [Being a non-taxable supply, it is an exempt 18,00,000
supply & thus, includible in aggregate turnover vide section 2(6) of CGST
Act, 2017]
Value of inward supplies on which tax is payable on reverse charge basis Nil
Supply of transformer oil at Chennai 2,00,000
Value of branch transfer from Chennai to Bengaluru without payment of 1,50,000
consideration [Being a taxable supply, it is includible in aggregate
turnover]
Value of taxable supplies of Manipur Branch 11,50,000
Aggregate turnover 33,00,000

25. Mr. X a dealer (situated in Delhi) dealing with Intra State supply of goods and services has place
of business in India furnished the following information in the financial year 20XX-X1:
a) Sale of taxable goods by Head Office located in Chennai for Rs. 1,00,000
b) Supply of taxable services by Branch office at Bengaluru for Rs. 50,000
c) Supply of goods exempted from GST Rs. 10,000
d) Export of goods for Rs. 2,00,000 Whether Mr. X is liable for Registration?

Solution:
Statement showing computation of aggregate turnover in a Financial Year 20XX-X1
Particulars Value in Rs.
Sale of taxable goods by Head Office located in Chennai (*presumed to be 1,00,000
intra-state supply)
Supply of taxable services by Branch office at Bengaluru (*presumed to be 50,000
intra-state supply)
Supply of goods exempted from GST (*presumed to be intra-state supply) 10,000
Export of goods (Export is considered as inter-state supply under GST law) 2,00,000
Aggregate turnover 3,60,000

though aggregate turnover is not exceeding Rs. 40 lakhs, but since he is engaged in exports
which are inter-state supplies, his registration falls under section 24 which provides for
compulsory registration (i.e., no threshold limit of 40 Lakhs).

26. Who is a Casual Taxable Person?

 CA Jasmeet Singh 118

Solution: Casual Taxable Person has been defined in Section 2 (20) of the CGST Act meaning a
person who occasionally undertakes transactions involving supply of goods and/or services in the
course or furtherance of business, whether as principal, or agent or in any other capacity, in a
State or a Union territory where he has no fixed place of business.

27. Who is a Non-resident Taxable Person?

Solution: In terms of Section 2(77) of the CGST Act, a non- resident taxable person means any
person who occasionally undertakes transactions involving supply of goods and/or services
whether as principal or agent or in any other capacity, but who has no fixed place of business or
residence in India.

28. What will be the effective date of registration?

Solution:
Date of effectiveness in case of person required to take registration
Where the application for registration has been submitted within thirty days from the date on
which the person becomes liable to registration, the effective date of registration shall be the
date on which he became liable for registration.
Where an application for registration has been submitted by the applicant after thirty days from
the date of his becoming liable to registration, the effective date of registration shall be the date
of grant of registration.
Date of effectiveness in case of person opting for voluntarily registration
In case of a person taking registration voluntarily while being within the threshold exemption
limit for paying tax, the effective date of registration shall be the date of grant of registration.

29. Whether Amendments to the Registration Certificate is permissible?

Solution:
Yes. In terms of Section 28, the proper officer may, on the basis of such information furnished
either by the registrant or as ascertained by him, approve or reject amendments in the
registration particulars within a period of 15 working days from the date of receipt of application
for amendment.
It is to be noted that permission of the proper officer for making amendments will be required
for only certain core fields of information [Change in legal name of business, Change in address
of place of business, Addition, deletion or retirement of partners, directors, karta, board of
trustees, CEO or equivalent, responsible for day to day affairs of the company], whereas for the
other fields, the certificate of registration shall stand amended upon submission of application
 CA Jasmeet Singh 119

in the GST common portal.

30. 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."

Solution:
No. If PAN number changes, fresh registration is required under GST Law (Rule 19 of CGST Rules).

31. Discuss the circumstances where registration is liable to be cancelled

Solution:
Section 29(1) of the CGST Act, 2017 provides that the proper officer may, either on his own
motion or on an application filed by the registered person or by his legal heirs, in case of death of
such person, cancel the registration, in such manner and within such period as may be
prescribed, having regard to the circumstances where:
a. the business has been discontinued, transferred fully for any reason including death of the
proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
b. there is any change in the constitution of the business; or
c. the taxable person, other than the person voluntarily registered u/Sec 25(3), is no longer
liable to be registered under section 22 or section 24

Further, section 29(2) of the CGST Act, 2017 provides that the proper officer can cancel the
registration on his own. Such circumstances include following:
1. contravention of any of the following prescribed provisions of the CGST Act or the rules made
there under;
(a) the registered person did not conduct any business from the declared place of business;
or
(b) the registered person issued invoice or bill without supply of goods or services in
violation of the provisions of this Act, or the rules made thereunder; or
(c) the registered person violated the provisions of section 171 of the Act or the rules made
thereunder (Anti-profiteering measures)
(d) the RP violates the provisions of rule 10A.

2. Composition Supplier becoming a consistent non-return filer for 3 consecutive tax periods;
3. Regular Supplier becoming a consistent non-return filer for 6 consecutive tax periods;
4. Voluntarily registered person failed to commence business within 6 months from the date of
registration;
5. Registered person who has obtained registration fraudulently.
However, before cancelling the registration, the proper officer has to follow the principles of
 CA Jasmeet Singh 120

natural justice (i.e., after grant of opportunity of being heard).

32. Can cancellation of registration order be revoked?

Solution:
Yes, but only in cases where the initial cancellation has been done by the proper officer Suo
moto, and not on the request of the taxable person or his legal heirs.A person whose registration
has been cancelled ‘Suo moto’ can apply to the proper officer for revocation of cancellation of
registration within 30 days from the date of communication of the cancellation order. The proper
officer may within a period of 30 days from the date of receipt of application for revocation of
cancellation or receipt of information/clarification, either revoke the cancellation or reject the
application for revocation of cancellation of registration.

33. Solution the following questions with respect to casual taxable person under the CGST Act, 2017 :
a) Who is a casual taxable person?
b) Can a casual taxable person opt for the composition scheme?
c) When is the casual taxable person liable to get registered?
d) What is the validity period of the registration certificate issued to a casual taxable person?
e) Can the validity of registration certificate issued to a casual taxable person be extended? If
yes, what will be the period of extension.

Solution:
a) Casual taxable person means a person who occasionally undertakes transactions involving supply
of goods and/or services in the course or furtherance of business, whether as principal, agent or
in any other capacity, in a State/UT where he has no fixed place of business.
b) No, a casual taxable person cannot opt for the composition scheme.
c) A casual taxable person (CTP) is liable to obtain registration compulsorily under GST laws, at least
5 days prior to commencement of business.
However, threshold limit of ` 20 lakh (` 10 lakh in case of Special Category States other than
Jammu & Kashmir) is available in case of CTP making taxable supplies of specified handicraft
goods.
The registration certificate issued to a casual taxable person will be valid for:
(i) the period specified in the registration application, or
(ii) 90 days from the effective date of registration whichever is earlier.

(i) Yes, the validity of registration certificate issued to a casual taxable person can be extended. It
can be extended by a further period not exceeding 90 days.

34. State with brief reason, whether following suppliers of taxable goods are required to register
under the GST Law:
 CA Jasmeet Singh 121

(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 Rs 9,00,000 which consists of Rs 8,00,000 as
Intra-State supply and Rs 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 preceeding financial year is Rs
12 lakhs on his own account and Rs 9 lakhs on behalf of principal. Both turnovers are Intra-
State supply.

Solution:
(i) Person making any inter-State taxable supply of goods is required to obtain registration
compulsorily under GST laws irrespective of the quantum of aggregate turnover.
Thus, in the given case Mr. Raghav is required to obtain registration compulsorily under GST
laws even though his aggregate turnover does not exceed the threshold limit in the financial
year.

(ii) Persons who make taxable supply of goods on behalf of other taxable persons whether as an
agent or otherwise are required to obtain registration compulsorily under GST laws
irrespective of the quantum of aggregate turnover.
Aggregate turnover includes all supplies made by the taxable person, whether on his own
account or made on behalf of all his principals.
Since Mr. S.N Gupta is also acting as an agent of Mr. Rishi of Delhi, he is required to obtain
registration compulsorily under GST laws.

35. M/s Siya Ram is a trader of decorative items in Hauz Khas, Delhi. His aggregate turnover exceeded
Rs 20 lakh in the month of October, 20XX. He applied for registration on GST portal, but missed to
submit the details of his bank account. His tax consultant advised him that prior submission of
bank details is mandatory to obtain registration. Examine whether the advice of Mr. Siya Ram’s tax
consultant is correct.

Solution:
The advice of Mr. Siya Ram’s consultant that prior submission of bank details is mandatory to
obtain registration is no more valid in law.

A new rule 10A has been inserted in the CGST Rules, 2017 vide Notification No. 31/2019 CT dated
28.06.2019 which allows the registered person to 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, soon after obtaining certificate of registration and a GSTIN, but
not later than 45 days from the date of grant of registration or the date on which the return
 CA Jasmeet Singh 122

required under section 39 is due to be furnished, whichever is earlier.

This relaxation is however not available for those who have been granted registration as TDS
deductor/ TCS collector under rule 12 or who have obtained suo-motu registration under rule 16.

36. Examine whether the liability to register compulsorily under section 24 of the CGST Act, 2017
arises in each of the independent cases mentioned below:
a) Heera, a supplier in Haryana, is exclusively engaged in supply of potatoes produced out of
cultivation of his own land, within Haryana and also outside Haryana.
b) Aanya of Telangana is exclusively engaged in intra-State supply of toys. Its aggregate
turnover in the current financial year is Rs. 22 lakh.

Solution:
a) Section 24 of the CGST Act, 2017 provides that persons making any inter -State taxable
supply of goods are required to obtain registration compulsorily under GST laws
irrespective of the quantum of aggregate turnover.
However, as per section 23 of the CGST Act, 2017, an agriculturist, to the extent of supply of
produce out of cultivation of land, is not liable to registration.
Heera is exclusively engaged in cultivation and supply of potatoes. Thus, he is not liable to
registration irrespective of the fact that he is engaged in making inter -State supply of
goods. Further, Heera will not be liable to registration, in the given case, even if his turnover
exceeds the threshold limit.
b) As per section 22 of the CGST Act, 2017 read with Notification No. 10/2019 CT dated
07.03.2019, a supplier is liable to be registered in the State/Union territory from where he
makes a taxable supply of goods and/or services, if his aggregate turnover in a financial year
exceeds the threshold limit. The threshold limit for a person making exclusive intra-State
taxable supplies of goods is as under:-
(a) Rs. 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs. 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry,
Sikkim, Telangana and Uttarakhand.
(c) Rs. 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.
Since Aanya is making taxable supplies from Telangana, she will not be eligible for higher
threshold limit available in case of exclusive supply of goods. The applicable threshold limit
for registration for Aanya in the given case is Rs. 20 lakh. Thus, she is liable to get registered
under GST.

37. Explain the registration requirements under GST law in the following independent cases:
 CA Jasmeet Singh 123

a. Mr. Ahmad of Jammu engaged in the business of supplying tobacco based Pan Masala with
an aggregate turnover of Rs. 24 lacs.
b. Mr. Lepcha of Mizoram is engaged in the supply of papers with an aggregate turnover of
Rs. 13 lacs.
Will your answer be different if Mr. Lepcha is located in Meghalaya ?
Solution:
a) A person is eligible for enhanced threshold limit of Rs. 40 lakh in the State of Jammu and
Kashmir if he is engaged exclusively in intra-State supply of goods.
However, the enhanced threshold limit is not applicable if the person is engaged, inter alia,
in the supply of pan masala and all goods of chapter 24 i.e. Tobacco and manufactured
tobacco substitutes. In that case, the normal threshold limit of Rs. 20 lakh will be applicable.
In view of said provisions, in the given case, Mr. Ahmad is liable to register since his
aggregate turnover (Rs. 24 lakh) exceeds the applicable threshold limit for registration of
Rs. 20 lakh.
b) The enhanced threshold limit of Rs. 40 lakh as applicable to a person engaged exclusively in
intra-State supply of goods, is not applicable to Mizoram [a specified Special Category
State]. Instead, a lower threshold limit of Rs. 10 lakh for registration is applicable for
Mizoram.
Thus, in the given case, Mr. Lepcha of Mizoram is liable to register since his aggregate
turnover (Rs. 13 lakh) exceeds the applicable threshold limit for registration of Rs. 10 lakh.
The enhanced threshold limit of Rs. 40 lakh is also specifically not applicable in the State of
Meghalaya. Instead, the normal threshold limit of Rs. 20 lakh for registration is applicable to
it.
Therefore, if Mr. Lepcha is located in Meghalaya, he is not liable to register since his
aggregate turnover (Rs. 13 lakh) does not exceed the applicable threshold limit for
registration of Rs. 20 lakh.

38. 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
2018-19 was Rs. 50 lakh. The company expects the sales to grow by 10% in the current year 2019-
20.
However, effective 01.01.2020, 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 31.12.2019 was Rs. 42 lakh.
BBD Pvt. Ltd. is of the opinion that it is not required to get registered under GST for current
financial year 2019-20.
Examine the above scenario and advise BBD Pvt. Ltd. whether it needs to get registered under
GST or not.
Solution
 CA Jasmeet Singh 124

For a supplier exclusively engaged in intra-State supply of goods, the threshold limit of
turnover to obtain registration in the State of Gujarat is Rs. 40 lakh. However, a person
exclusively engaged in the business of supplying goods and/or services that are not liable to tax
or are wholly exempt from tax is not liable to registration.
Therefore, since BBD Pvt. Ltd. was engaged exclusively in supplying exempted goods till
31.12.2019, it was not required to be registered till that day; though voluntary registration was
allowed.
The position, however, will change from 01.01.2020 as the supply of goods become taxable
from that day and the turnover of BBD Pvt. Ltd. is more than Rs. 40 lakh. Since the aggregate
turnover limit of Rs. 40 lakh includes exempt turnover also, turnover of ‘Z’ till 31.12.2019 will be
considered for determining the threshold limit even though the same was exempt from GST.
Therefore, BBD Pvt. Ltd. needs to register within 30 days from 01.01.2020.

39. P Ltd, a registered person provided following information for the month of October, 2020:

Particulars Amount (Rs.)

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 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 on Reverse Charge for GTA services.
Explain the meaning of aggregate turnover u/s 2(6) of the CGST Act and compute the aggregate
turnover of P Ltd. for the month of October, 2020. All amounts are exclusive of GST.
Solution :
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
a. central tax, State tax, Union territory tax, integrated tax and cess.
b. 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, 2020

 CA Jasmeet Singh 125

Particulars Amount (Rs.)

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

40. Examine the following cases and explain with reasons whether the supplier of goods is liable
to get registered in GST:
a. Krishna of Himachal Pradesh is exclusively engaged in intra-State taxable supply of
readymade suits. His turnover in the current financial year from Himachal Pradesh showroom
is Rs. 25 lakh. He has two more showrooms one in Manipur & another in Sikkim with a
turnover of Rs. 15 lakh and Rs. 18 lakh respectively in the current financial year.
b. Ankit of Telangana is exclusively engaged in intra-State taxable supply of footwears. His
aggregate turnover in the current financial year is Rs. 25 lakh:
c. Aakash of Uttar Pradesh is exclusively engaged in intra-State supply of pan masala. His
aggregate turnover in the current financial year is Rs. 30 lakh.

Solution
Every person engaged in making a taxable supply is required to obtain registration if his
aggregate turnover exceeds Rs. 20 lakh in a financial year. An enhanced threshold limit for
registration of Rs. 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 Rs. 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 Rs. 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 Rs. 20 lakh.
Thus, Ankit is liable to be registered under GST as its aggregate turnover exceeds the said
threshold limit.
 CA Jasmeet Singh 126

(iii) Though the enhanced threshold limit for registration of Rs. 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 Rs. 20 lakh. Thus, it is
liable to be registered under GST as its aggregate turnover exceeds the said threshold
limit.
41. 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 registrati on ?
Solution:
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.
42. Explain the circumstances under which proper officer can cancel the registration on his own of
a registered person under CGST Act, 2017.
Solution
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:-
(i) A registered person has contravened any of the following prescribed provisions of the
GST law:
(a) he does not conduct any business from the declared place of business.
(b) he issues invoice/bill without supply of goods/services in violation of the provisions of
GST law.
(c) he violates the provisions of anti-profiteering.
(d) he violates the provisions relating to furnishing of bank details.
(ii) A person paying tax under composition levy has not furnished returns for 3 consecutive
tax periods.
(iii) A registered person paying tax under regular scheme has not furnished returns for
continuous period of 6 months.
(iv) Voluntarily registered person has not commenced the business within 6 months from the
date of registration.
 CA Jasmeet Singh 127

(v) Registration was obtained by means of fraud, wilful misstatement or suppression of

facts.
[Note: Any 5 points out of the above 8 points may be mentioned]
 CA Jasmeet Singh 128

Chapter 8: Tax Invoice, Credit note, Debit note

& E-way Bill

2. Jain & Sons 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 (Rs)
1. Raghav Traders - a registered retail dealer 190
2. Dhruv Enterprise – an unregistered trader 358
3. Gaurav – a Painter [unregistered] 500
4. Oberoi Orphanage – an unregistered entity 188
5. Aaradhya – a Student [unregistered] 158
None of the recipients require a tax invoice [Raghav Traders being a composition dealer].
Determine in respect of which of the above supplies, Jain & Sons may issue a Consolidated Tax
Invoice instead of Tax Invoice, at the end of the day?

Solution:
In the given illustration, Jain & Sons can issue a Consolidated Tax Invoice only with respect to
supplies made to Oberoi Orphanage [worth Rs 188] and Aaradhya [worth Rs 158] as the value of
goods supplied to these recipients is less than Rs 200 as also these recipients are unregistered
and don’t require a tax invoice.
As regards the supply made to Raghav Traders, although the value of goods supplied to it is less
than Rs 200, Raghav 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 Dhruv Enterprises
and Gaurav although both of them are unregistered. The reason for the same is that the value of
goods supplied is not less than Rs 200.

3. 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.

Solution:
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.
 CA Jasmeet Singh 129

4. MBM 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 P 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
MBM Caretakers issue the invoice for the services rendered?

Solution:
Continuous supply of service means, inter alia, supply of any service which is provided, or agreed
to be provided continuously or on recurrent basis, under a contract, for a period exceeding 3
months with the periodic payment obligations.

Therefore, the given situation is a case of continuous supply of service as repair and
maintenance services have been provided by MBM 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, MBM Caretakers should issue quarterly invoices on or before April
1, July 1, October 1, and January 1.

5. The aggregate turnover of Sangri Services Ltd. exceeded Rs 20 lakh on 12th August. He applied for
registration on 3rd September and was granted the registration certificate on 6th September.
You are required to advice Sangri Services Ltd. as to what is the effective date of registration in its
case. It has also sought your advice regarding period for issuance of Revised Tax Invoices.

Solution:
As per section 25 read with CGST Rules, 2017, where an applicant submits application for
registration within 30 days from the date he becomes liable to registration, effective date of
registration is the date on which he becomes liable to registration. Since, Sangri Services Ltd.’s
turnover exceeded Rs 20 lakh on 12th August; it became liable to registration on same day.
Further, it applied for registration within 30 days of so becoming liable to registration, the
effective date of registration is the date on which he becomes liable to registration, i.e. 12th
August.
As per section 31 read with CGST Rules, 2017, every registered person who has been granted
 CA Jasmeet Singh 130

registration with effect from a date earlier than the date of issuance of certificate of
registration to him, may issue Revised Tax Invoices. Revised Tax Invoices shall be issued within
1 month from the date of issuance of certificate of registration. Revised Tax Invoices shall be
issued within 1 month from the date of issuance of registration in respect of taxable supplies
effected during the period starting from the effective date of registration till the date of
issuance of certificate of registration.

Therefore, in the given case, Sangri Services Ltd. has to issue the Revised Tax Invoices in respect
of taxable supplies effected during the period starting from the effective date of registration
(12th August) till the date of issuance of certificate of registration (6th September) within 1
month from the date of issuance of certificate of registration, i.e. on or before 6th October.

6. 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.

Solution:
A registered person paying tax under the provisions of section 10 [composition levy] shall issue,
instead of a tax invoice, a bill of supply containing such particulars and, in such manner, as may
be prescribed [Section 31(3) (c) read with CGST Rules, 2017].

Therefore, in the given case, Shyam Fabrics cannot issue tax invoice. Instead, it shall issue a Bill
of Supply.

7. Royal Fashions, a registered supplier of designer outfits in Delhi, decides to exhibit its products in
a Fashion Show being organised at Hotel Park Royal, Delhi on 4th January, 20XX. For the
occasion, it gets the makeover of its models done by Aura Beauty
Services Ltd., Ashok Vihar, for which a consideration is Rs 5,00,000 (excluding GST) has been
charged. Aura Beauty Services Ltd. issued a duly signed tax invoice on 10th February, 20XX
showing the lump sum amount of Rs 5,90,000 inclusive of CGST and SGST @ 9% each. Royal
Fashions made the payment the very next day. Solution 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?
 CA Jasmeet Singh 131

Solution:
(i) As per section 31 of the CGST Act, 2017 read with the CGST Rules, 2017, in case of taxable
supply of services, invoices should be issued before or after the provision of service, but
within a period of 30 days [45 days in case of insurer/ banking company or financial
institutions including NBFCs] from the date of supply of service.

In view of said provisions, in the present case, the tax invoice should have been issued in the
prescribed time limit of 30 days from the date of supply of service i.e. upto 03.02.20XX.
However, the invoice has been issued on 10.02.20XX.

In such a case, the time of supply as per section 13 of the CGST Act, 2017 would be 04.01.20XX
i.e. earliest of the following:
(a) Date of provision of service (04.01.20XX)
(b) Date of receipt of payment (11.02.20XX)

(ii) Section 31 of the CGST Act, 2017 read with the CGST Rules, 2017, inter alia, provides that tax
invoice shall contain the following particulars-
(a) Total value of supply of goods or services or both;
(b) Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(c) Amount of tax charged in respect of taxable goods or services (central tax, State tax,
integrated tax, Union territory tax or cess);

The objection raised by the tax consultant of Royal Fashions suggesting that the amount of tax
charged in respect of the taxable supply should be shown separately in the invoice raised by Aura
Beauty Services Ltd., is valid in law. In the present case, the tax amount has not been shown
separately in the invoice.

8. Luv & Kush Pvt. Ltd. of Srinagar, Jammu & Kashmir engaged in the supply of gifts items provides
you the following details:-
S. No. Particulars Date
1. Commencement of the business of supplying goods 01.08.20XX
2. Turnover exceeds Rs 10,00,000 on 15.08.20XX
3. Turnover exceeds Rs 20,00,000 on 05.09.20XX
4. Application for registration made on 28.09.20XX
5. Registration certificate granted on 06.10.20XX
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.
 CA Jasmeet Singh 132

Solution:
A supplier whose aggregate turnover in a financial year exceeds Rs 20 lakh in a State/UT [ Rs 10
lakh in special category states except Jammu & Kashmir and Uttarakhand] is liable to apply for
registration within 30 days from the date of becoming liable to registration (i.e., the date of
crossing the threshold limit of Rs 20 lakh/ Rs 10 lakh) vide section 22 of CGST Act, 2017.

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 in respect of
taxable supplies effected during this period within 1 month from the date of issuance of
registration certificate.

In the given case, Luv & Kush Pvt. Ltd is located in Jammu & Kashmir, a special category state.
Though the turnover limit for special category states is Rs 10 lakh, Jammu & Kashmir has opted
for turnover limit of Rs 20 lakh for the purpose of registration. Thus, 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. 05.09.20XX.

Thus, Luv & Kush Pvt. Ltd. may issue revised tax invoices against the invoices already issued
during the period between effective date of registration (05.09.20XX) and the date of issuance of
registration certificate (06.10.20XX), within 1 month from 06.10.20XX.

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 if the
value of a supply exceeds Rs 2,50,000.

9. Under what circumstances does the need of issuance of debit note and credit note arise under
section 34 of CGST Act, 2017?

Solution:
Debit note is required to be issued
(i) if taxable value charged in the tax invoice is found to be less than the taxable value in respect
of supply of goods and/or services or
(ii) if tax charged in the tax invoice is found to be less than the tax payable in respect of supply
 CA Jasmeet Singh 133

of goods and/or services

Credit note is required to be issued:-
(i) If taxable value charged in the tax invoice is found to exceed the taxable value in respect of
supply of goods and/or services, or
(ii) If tax charged in the tax invoice is found to exceed the tax payable in respect of supply of
goods and/or services, or
(iii) if goods supplied are returned by the recipient, or
(iv) if goods and/or services supplied are found to be deficient.

10. Determine with reason whether the following statements are true or false:
(i) A registered person shall issue separate invoices for taxable and exempted goods when
supplying both taxable as well as exempted goods to an unregistered person.
(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.
(Mock Test Paper October 2018 4 Marks) & (CA Intermediate May 2018 3 Marks)

Solution:
(i) The given statement is false.
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.

(ii) The said statement is true.

By virtue of an amendment, a non-banking financial company has been allowed to issue a
consolidated tax invoice or any other document in lieu thereof for the supply of services
made during a month at the end of the month.

11. Jai, a registered supplier, runs a general store in Ludhiana, Punjab. Some of the goods sold by him
are exempt whereas some are taxable. You are required to advise him on the following issues:
(i) Whether Jai is required to issue a tax invoices in all cases, even if he is selling the goods to
the end consumers?
(ii) Jai sells some exempted as well as taxable goods valuing Rs 5,000 to a school student. Is he
mandatorily required to issue two separate GST documents?
(iii) Jai wishes to know whether it's necessary to show tax amount separately in the tax
invoices issued to the customers. You are required to advise him.

Solution:
(i) No, he is not required to issue tax invoice in all cases. As per section 31(1) of the CGST Act,
2017, every registered person supplying taxable goods is required to issue a ‘tax invoice’.
Section 31(3)(c) of the CGST Act, 2017 stipulates that every registered person supplying
 CA Jasmeet Singh 134

exempted goods is required to issue a bill of supply instead of tax invoice.

Further, rule 46A of the CGST Rules, 2017 provides that a registered person supplying taxable
as well as exempted goods or services or both to an un-registered person may issue a single
‘invoice-cum-bill of supply’ for all such supplies.

However, as per section 31(3)(b) of the CGST Act, 2017 read with rule 46 of the CGST Rules,
2017, a registered person may not issue a tax invoice if:
(i) value of the goods supplied < Rs 200,
(ii) the recipient is unregistered; and
(iii) the recipient does not require such invoice.

Instead, such registered person shall issue a Consolidated Tax Invoice for such supplies at the
close of each day in respect of all such supplies.

(ii) As per rule 46A of the CGST Rules, 2017, where a registered person is supplying taxable as
well as exempted goods or services or both to an unregistered person, a single “invoice-
cum-bill of supply” may be issued for all such supplies. Thus, there is no need to issue a tax
invoice and a bill of supply separately to the school student in respect of supply of the
taxable and exempted goods respectively.

(iii) As per section 33 of the CGST Act, 2017, where any supply is made for a consideration, every
person who is liable to pay tax for such supply shall prominently indicate in all documents
relating to assessment, tax invoice and other like documents, the amount of tax which shall
form part of the price at which such supply is made. Hence, Jai has to show the tax amount
separately in the tax invoices issued to customers.

12. Discuss the provisions relating to issue of an invoice/document in the following circumstances:
(i) Advance payment is received against a supply, but subsequently no supplies are made.
(ii) Goods are sent on approval for sale or return and are removed before the supply takes place.
(iii) Malcolm provides continuous supply of services to his client, where the due date of payment
for such services is not ascertainable. No advance has been received in this behalf.

Solution:
(i) As per section 31(3)(e) of CGST Act, 2017, where advance payment is received against a
supply for which receipt voucher has been issued, but subsequently no supplies are made
and no tax invoice is issued in pursuance thereof, a refund voucher has to be issued to the
person who had made the advance payment.
 CA Jasmeet Singh 135

(ii) As per section 31(7) of CGST Act, 2017, where the goods are sent on approval for sale or
return and are removed before the supply takes place, the invoice shall be issued before or
at the time of supply or 6 months from the date of removal, whichever is earlier.

(iii) As per section 31(5)(b) of CGST Act, 2017, in case of continuous supply of services, where
the due date of payment is not ascertainable from the contract, the invoice shall be issued
before or at the time when the supplier of service receives the payment.

13. When should a Tax Invoice be issued for supply of Goods?

Solution:
 If movement of goods is involved, then the tax invoice has to be issued before or at the time
of removal of the goods for supply to the recipient.
 If movement of goods is not involved, then the tax invoice has to be issued before or at the
time of the goods are delivered to the recipient or when the goods are made available to the
recipient.

14. 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 31st October, 2018. The goods were removed from the factory at Kolkata on 11th
October, 2018. As per the agreement, the goods were to be delivered by 31st October, 2018.
Suraj Enterprises has received the goods on 14th October, 2018.
(ii) Trust and Fun Ltd, an event management company, has provided its services for an event at
Kapoor Film Agencies, Mumbai on 5th June, 2018. Payment for the event was made on 19th
June, 2018.

Solution:
a) 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 2018 (the
time of removal of goods).
b) 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 2018 (date of
supply of service), i.e. on or before, 5th July 2018.
 CA Jasmeet Singh 136

15. ABC Ltd., a registered supplier has made following taxable supplies to its customer Mr. P in the
quarter ending 30th June, 20XX.
Date Bill No. Particulars Invoice Value
(including GST)
5th April, 20XX 102 Notebooks [10 in numbers] 1200
10th May, 20XX 197 Chart Paper [4 in number] 600
20th May, 20XX 230 Crayon colors [2 packets] 500
2nd June, 20XX 254 Poster colors [5 packets] 900
22nd June, 20XX 304 Pencil box [4 sets] 700
Goods in respect of bill no. 102, 230 and 254 have been returned by Mr. P. You are required to
advise ABC Ltd. whether it can issue consolidated credit note against all the three invoices?
(
Solution:
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.
Hence, in view of the above-mentioned provisions, M/s ABC Ltd. can issue a consolidated credit
note for the goods returned in respect of all the three invoices.

16. With reference to the provisions relating to the electronic way bill (E-way bill) as prescribed under
the GST laws, Solution the following questions:
(i) Sindhi Toys Manufacturers, registered in Punjab, sold electronic toys to a retail seller in
Gujarat, at a value of Rs 48,000 (excluding GST leviable @ 18%). Now, it wants to send the
consignment of such toys to the retail seller in Gujarat.
You are required to advise Sindhi Toys Manufacturers on the following issues:
a) Whether e-way bill is mandatorily required to be generated in respect of such movement of
goods?
b) If yes, who is required to generate the e-way bill?
c) What will be the consequences for non-issuance of e-way bill?

(ii) Power Electricals Ltd., a registered supplier of air-conditioners, is required to send from
Mumbai (Maharashtra), a consignment of parts of air-conditioner to be replaced under
warranty at various client locations in Gujarat. The value of consignment declared in delivery
challan accompanying the goods is Rs 70,000. Power Electricals Ltd. claims that since
 CA Jasmeet Singh 137

movement of goods to Gujarat is caused due to reasons other than supply, e-way bill is not
mandatorily required to be generated in this case.
You are required to examine the technical veracity of the claim made by Power Electricals
Ltd.

(iii) Beauty Cosmetics Ltd. has multiple wholesale outlets of cosmetic products in Mumbai,
Maharashtra. It receives an order for cosmetics worth RS 1,20,000 (inclusive of GST leviable
@ 18%) from Prasannaa, owner of a retail cosmetic store in Delhi. While checking the stock, it
is found that order worth Rs 55,000 can be fulfilled from the company’s Dadar (Mumbai)
store and remaining goods worth Rs 65,000 can be sent from its Malad (Mumbai) store. Both
the stores are instructed to issue separate invoices for the goods sent to Prasannaa. The
goods are transported to Prasanna in Delhi, in a single conveyance owned by Radhey
Transporters.
You are required to advise Beauty Cosmetics Ltd. with regard to issuance of e-way bill(s).

Solution: (i)
(a) Rule 138(1) of the CGST Rules, 2017 provides that e-way Bill is mandatorily required to be
generated if the goods are moved, inter alia, in relation to supply and the consignment value
exceeds Rs 50,000. Further, explanation 2 to rule 138(1) stipulates that the consignment value
of goods shall be the value, determined in accordance with the provisions of section 15,
declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in
respect of the said consignment and also includes CGST, SGST/UTGST, IGST and cess charged,
if any, in the document and shall exclude the value of exempt supply of goods where the
invoice is issued in respect of both exempt and taxable supply of goods.

Accordingly, in the given case, the consignment value will be as follows:

= Rs 48,000 × 118%
= Rs 56,640.

Since the movement of goods is in relation to supply of goods and the consignment value
exceeds Rs 50,000, e-way bill is mandatorily required to be issued in the given case.

(b) An e-way bill contains two parts namely, Part A to be furnished by the registered person who
is causing movement of goods of consignment value exceeding Rs 50,000/- and part B
(transport details) is to be furnished by the person who is transporting the goods.

Where the goods are transported by the registered person as a consignor or the recipient of
supply as the consignee, whether in his own conveyance or a hired one or a public
conveyance, by road, the said person shall generate the e-way bill on the common portal
 CA Jasmeet Singh 138

after furnishing information in Part B [Rule 138(2)].

Where the goods are transported by railways or by air or vessel, the e-way bill shall be
generated by the registered person, being the supplier or the recipient, who shall, either
before or after the commencement of movement, furnish, on the common portal, the
information in Part B [Rule 138(2A)].

Where the goods are handed over to a transporter for transportation by road, the registered
person shall furnish the information relating to the transporter on the common portal and
the e-way bill shall be generated by the transporter on the said portal on the basis of the
information furnished by the registered person in Part A [Rule 138(3)].

Where the consignor or the consignee has not generated the e-way bill and the
aggregate of the consignment value of goods carried in the conveyance is more than Rs
50,000/, the transporter, except in case of transportation of goods by railways, air and vessel,
shall, in respect of inter-State supply, generate the e-way bill on the basis of invoice or bill of
supply or delivery challan, as the case may be, and may also generate a consolidated e-way
bill on the common portal prior to the movement of goods [Rule 138(7)].

(c) It is mandatory to generate e-way bill in all cases where the value of consignment of goods
being transported is more than Rs 50,000/- and it is not otherwise exempted in terms of rule
138(14) of CGST Rules, 2017.
If e-way bills, wherever required, are not issued in accordance with the provisions contained
in rule 138, the same will be considered as contravention of rules. All such goods and
conveyance used as a means of transport for carrying the said goods and documents relating
to such goods and conveyance shall be liable to detention or seizure.

(ii) The goods to be moved to another State for replacement under warranty is not a ‘supply’.
However, rule 138(1) of the CGST Act, 2017, inter alia, stipulates that every registered person
who causes movement of goods of consignment value exceeding Rs 50,000:
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person,
shall, generate an electronic way bill (E-way Bill) before commencement of such movement.

CBIC via FAQs on E-way Bill has also clarified that even if the movement of goods is caused
due to reasons others than supply [including replacement of goods under warranty], e-way
bill is required to be issued.

Thus, in the given case, since the consignment value exceeds Rs 50,000, e-way bill is required
 CA Jasmeet Singh 139

to be mandatorily generated. Therefore, the claim of Power Electricals Ltd. that e- way bill is
not mandatorily required to be generated as the movement of goods is caused due to
reasons other than supply, is not correct.

(iii) Beauty Cosmetics Ltd. would be required to prepare two separate e-way bills since each
invoice value exceeds Rs 50,000 and each invoice is considered as one consignment for the
purpose of generating e-way bills.

The FAQs on E-way Bill issued by CBIC clarify that if multiple invoices are issued by the
supplier to one recipient, that is, for movement of goods of more than one invoice of same
consignor and consignee, multiple e-way bills have to be generated. In other words, for each
invoice, one e-way bill has to be generated, irrespective of the fact whether same or
different consignors or consignees are involved. Multiple invoices cannot be clubbed to
generate one e-way bill. However, after generating all these e-way bills, one consolidated e-
way bill can be prepared for transportation purpose, if goods are going in one vehicle.

17. Happy Company is a registered supplier of electric goods. It has three stores for electric goods in
Jodhpur (Rajasthan) namely Ram Store, Shyam Store, Mohan Store. It receives an order for supply
of electric goods worth Rs 1,40,000 (exclusive of GST @ 18%) from Kishan Sons of Bhopal
(Madhya Pradesh). Happy Company found that order worth Rs 43,000 can be fulfilled from the
company's Ram Store, order worth Rs 45,000 can be fulfilled from its Shyam Store and remaining
goods worth Rs 52,000 can be sent from its Mohan Store. All three stores are instructed to issue
separate invoices for the goods sent to Kishan Sons. The goods are transported to Kishan Sons in
Bhopal in a single conveyance owned by Shiv Transporters.

You are required to advise Happy Company with regard to issuance of e-way bills as per the
provisions of the CGST Act, 2017.

Solution:
Rule 138 of the CGST Rules, 2018 stipulates that e-way Bill is mandatorily required to be
generated if the goods are moved, inter alia, in relation to a supply and the consignment value
[including CGST, SGST/UTGST, IGST and cess charged] exceeds Rs 50,000.

Further, the FAQs on E-way Bill issued by CBIC clarify that if multiple invoices are issued by the
supplier to one recipient, multiple e-way bills have to be generated - one e-way bill for each
invoice. Each invoice is considered as separate consignment for the purpose of generating e- way
bills.
In the given case, consignment value of goods supplied against separate invoices from Ram
Store, Shyam Store and Mohan Store is Rs 50,740 [Rs 43,000 × 118%], Rs 53,100 [Rs 45,000
 CA Jasmeet Singh 140

× 118%] and Rs 61,360 [Rs 52,000 × 118%] respectively.

Thus, Happy Company is required to prepare 3 separate e-way bills since value of each invoice
exceeds Rs 50,000.

18. Discuss the correctness of the following statements:-

(i) Once generated, an e-way bill cannot be cancelled.
(ii) E-way bill generated in one State is valid in another State.

Solution:
(i) The said statement is partially correct. Where an e-way bill has been generated, but goods
are either not transported at all 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 24 hours
of generation of the e-way bill.
However, an e-way bill cannot be cancelled if it has been verified in transit in accordance
with the provisions of rule 138B of the CGST Rules, 2017.

(ii) The said statement is correct. The e-way bill generated under Goods and Services Tax Rules
of any State or Union territory shall be valid in every State and Union territory.

19. Bali Limited, a registered taxpayer, provides security services to registered persons from
Mumbai office and Delhi office. The aggregate turnover of Mumbai office and Delhi office in the
preceding financial year is Rs. 30 crore and Rs. 25 crore respectively. For the month of
November in the current financial year, Bali Limited prepares duplicate invoices and does not
issue e-invoice as it is of the view that it’s aggregate turnover does not cross the threshold limit
to make it liable for issuing e- invoices.
Briefly explain whether the view taken by Bali Limited is correct in law? Also explain the
advantages of e-invoicing, if any.
Solution.
The view taken by Bali Limited is not correct in law.
All notified registered businesses (except specified class of persons) with an aggregate
turnover (based on PAN) in the preceding financial year greater than Rs. 50 crore are required
to issue e-invoices.
The eligibility is based on aggregate annual turnover on the common PAN. Thus, the aggregate
total turnover of Bali Limited is more than Rs. 50 crores (considering both the GSTINs) and is
required to issue e-invoices.
Further, where e-invoicing is applicable, there is no need of issuing invoice copies in
triplicate/duplicate.
 CA Jasmeet Singh 141

E-invoice has many advantages for businesses, which have been given as under:-
1. Auto-reporting of invoices into GST return and auto-generation of e-way bill (wherever
required). Under e-invoicing, business has to report the B2B invoice data only once in the e-
invoice form and the same is reported in multiple forms (GSTR-1, e-way bill etc.). E-way bill
can be auto-generated using e- invoice data. GSTR-1 can also be auto-populated with the e-
invoice data. It will become part of the business process of the taxpayer.
2. Accuracy/Reconciliation. Since same data is reported to tax department as well as to the
buyer to prepare his inward supplies (purchase) register, transcription errors are reduced.
On receipt of information through GST System, buyer can do reconciliation with his
Purchase Order.
3. Early payment. E-invoicing facilitates standardisation and inter-operability leading to
reduction of disputes among transacting parties and thus, improving payment cycles.
4. Cost reduction. E-invoicing helps in reducing processing costs and thus, leads to
improvement of overall business efficiency.
5. Reduction of tax evasion. Since a complete trail of B2B invoices is available with the
Department, it will enable the system-level matching of input tax credit and output tax
thereby reducing the tax evasion.
6. Elimination of fake invoices. E-invoicing eliminates the fake invoices. Claiming fictitious
input tax credit (ITC) by raising fake invoices is also one of the biggest challenges currently
faced by tax-authorities. The e-invoice system helps to curb the actions of unscrupulous
taxpayers and reduce the number of fraud cases as the tax authorities have access to data in
real-time.
7. Paper Elimination. E-invoicing helps in paper elimination and thereby it is eco- friendly.

20. Determine in which of the following independent cases, e-invoicing is applicable?

(i) Harnam & Co., dealing in interior decoration products made supplies to various registered
and unregistered persons in the preceding financial year. The aggregate turnover of Harnam
& Co. in the preceding financial year is Rs. 60 crore.
(ii) Rich & Poor Bank, registered under GST has an aggregate turnover of Rs. 75 crore in the
preceding financial year.
Solution:
All registered businesses with an aggregate turnover (based on PAN) in any preceding financial
year from 2017-18 onwards greater than Rs. 50 crore are required to issue e- invoices in respect
of B2B supplies (supply of goods and/or services to a registered person).
Further, following entities are exempt from the mandatory requirement of e-invoicing:-
(a) Special Economic Zone units
(b) Insurer or banking company or financial institution including NBFC
 CA Jasmeet Singh 142

(c) GTA supplying services in relation to transportation of goods by road in a goods carriage
(d) Supplier of passenger transportation service
(e) Person supplying services by way of admission to exhibition of cinematograph films in
multiplex screens
(f) A government department and Local authority

Thus, above mentioned entities are not required to issue e-invoices even if their turnover
exceeds Rs. 50 crore in the preceding financial year from 2017-18 onwards.
In view of the above mentioned provisions, the answer to the independent cases are as under:-
(i) The aggregate turnover of Harnam & Co. exceeds the threshold limit of aggregate turnover
applicable for e-invoicing. Thus, Harnam & Co. is mandatorily required to issue e-invoices in
respect of supplies made to registered persons.
(ii) Banking company is specifically exempt from mandatory requirement of e-invoicing even if
the turnover exceeds Rs. 50 crore in the preceding financial year. Thus, e- invoicing is not
applicable to Rich & Poor Bank

21. 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 there under.

Solution:
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.

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
 CA Jasmeet Singh 143

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.

22. Answer the Following Questions

(a) 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, 2019, 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.
(b) 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.
Solution:
(a) 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.
(b) 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
 CA Jasmeet Singh 144

= 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 day
= 2 days
23. "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.
Solution
The given statement is partially valid.
An e-way bill is valid for movement of goods by road only when the information in Part-B
– which includes details of conveyance - is furnished.
However, the details of conveyance may not be furnished in Part-B of the e-way bill where the
goods are transported for a distance of upto 50 km within the State/Union territory:
(i) from the place of business of the consignor to the place of business of the transporter for
further transportation or
(ii) from the place of business of the transporter finally to the place of business of the
consignee.

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
 CA Jasmeet Singh 145

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. Avtaar Enterprises, Kanpur started trading in medicines from July 1, 20XX. Its turnover exceeded
Rs 40 lakh on October 3, 20XX. The firm applied for registration on October 31, 20XX and was
issued registration certificate on November 5, 20XX.
Can any revised invoice be issued in the given scenario? If the Solution to the first question is in
affirmative, determine the period for which the revised invoices can be issued as also the last
date upto which the same can be issued.
(a) Revised invoice cannot be issued in the given case.
(b) Revised invoices can be issued for supplies made between October 3, 20XX and November 5,
20XX. Further, the revised invoices can be issued for the said period till December 5, 20XX.
(c) Revised invoices can be issued for supplies made between October 31, 20XX and November 5,
20XX. Further, the revised invoices can be issued for the said period till December 31, 20XX.
(d) Revised invoices can be issued for supplies made between July 1, 20XX and November 5, 20XX.
Further, the revised invoices can be issued for the said period till December 31, 20XX.

7. Kutch Refineries supplies LPG to XYZ Ltd. by a pipeline under a contract. The terms of contract
are:
(i) Monthly payment of Rs 2 lakh to be made by the recipient on fifth day of the month.
(ii) A quarterly statement of the goods dispatched and payments made will be issued by seventh
day of the month succeeding the relevant quarter.
August 5, September 5, October 5 Payments of Rs 2 lakh made in each month
 CA Jasmeet Singh 146

October 7 Statement of accounts issued by supplier for

the quarter July – September
October 17 Differential payment of Rs 56,000 received
by supplier for the quarter July – September as
per statement of accounts
Which of the following statements is true?
(a) Invoice will be issued on August 5, September 5, October 5 and October 7.
(b) Invoice will be issued on August 5, September 5 and October 5.
(c) Invoice will be issued on August 5, September 5, October 5, October 7 and October 17
(d) None of the above

8. Which of the following statements is correct while issuing a tax invoice?

(i) Place of supply in case of inter-State supply is not required to be mentioned
(ii) The power of attorney holder can sign the tax invoice in case the taxpayer or his authorised
representative has been travelling abroad
(iii) Quantity is not required to be mentioned in case of goods when goods are sold on
“as is where is basis”
(iv) Description of goods is not required to be given in case of mixed supply of goods
(a) (ii), (iii)
(b) (i), (ii), (iii)
(c) None of the above
(d) All of the above

9. What will be the rate of tax and nature of supply of a service, if the same is not determinable at
the time of receipt of advance?
(a) 12%, Inter-State supply
(b) 12%, Intra-State supply
(c) 18%, Inter-State supply
(d) 18%, Intra-State supply

10. ASC, a registered person supplied goods amounting to Rs. 1,18,000/- (inclusive of GST, taxable @
18%) to BSC, a registered person on 30-9-2018. BSC further sold such goods to CSC, a consumer
who came to his shop on 30-10-2018 in cash for Rs. 2,36,000/- (inclusive of GST, taxable @ 18%).
ASC, issued a credit note of Rs.11,800/- (10000+1800/-GST) for rate difference on 2-11-2018 to BSC.
BSC, then entered a credit note in its books for the same amount in the name of CSC, without
intimating CSC on 2-11-2018 and reduced its output tax liability accordingly. As per the provisions
of GST law, which of the above-mentioned suppliers are allowed to reduce
their output tax liability?
(a) ASC
(b) BSC
(c) Both ASC and BSC
 CA Jasmeet Singh 147

(d) None of the above, since incidence of tax has been passed on to another person.

11. Can a registered person issue one (consolidated) or more debit/Credit notes in respect of multiple
invoices issued in a financial year without linking the same to individual invoices.
(a) Yes
(b) No

12. Signature or digital signature of supplier/ authorised representative not required on following
documents:
(a) Electronic tax invoice/Bill of supply
(b) Electronic consolidated tax invoice in case of Insurance/Banking companies, financial
institutions including NBFCs
(c) Electronic ticket issued for passenger transportation service
(d) All of the above

13. Bill of supply is issued in case of:

(a) Exempted supplies
(b) Supplies by composition dealer
(c) Both of above
(d) None of the above.

14. The name of the State of recipient along with State code are required in invoice when:
(a) Supplies are made to registered persons
(b) Supplies are made to unregistered persons where the value of supply is Rs. 50,000 or more
(c) Supplies are made to unregistered persons for any value.
(d) None of the above

15. When goods sent on sale on approval basis, invoice has to be issued:
(a) while sending the goods;
(b) when the recipient accepts the goods/six months from date of removal, whichever is earlier
(c) when the recipient accepts the goods or one months from the date of removal, whichever is
earlier
(d) None of the above

16. Kidzee Ltd., a wholesaler of toys registered in Chandigarh, is renowned in the local market for the
varieties of toys and their reasonable prices. Kidzee Ltd. makes supply of 100 pieces of baby’s
learning laptops and chat learning phones to Nancy General Store on 25th September, 20XX by
issuing a tax invoice amounting to Rs. 1,00,000.
However, the said toys were returned by Nancy General Store on 30th September, 20XX. Which
document Kidzee Ltd. is required to issue in such a case?
(a) Debit Note
 CA Jasmeet Singh 148

(b) Refund voucher

(c) Credit note
(d) Payment voucher

17. Ise-way bill mandatory in case of transport of the handicraft goods from one State to another
State by a person who has been exempted from the requirement of obtaining registration?
(a) E-way Bill is not required as the supplier is exempt from the requirement of obtaining
registration.
(b) E-way Bill is mandatory only if the value of consignment is more than Rs. 50,000
(c) E-way Bill is mandatory even if the value of consignment does not exceed Rs. 50,000
(d) None of the above.

18. M/s Gyaan Publishing House, registered under GST in Delhi is engaged in printing and selling of
books as well as trading of stationery items. He has provided following information of a
consignment which is to be supplied to Mumbai: -
(i) Taxable value of supplies indicated on tax invoice: Rs. 35,000/-
(ii) Value of exempted supplies: Rs. 8,000/-
(iii) Value of goods to be sent to job worker on delivery challan: Rs. 15,000/- Calculate the
consignment value for the purpose of generating e-way bill for inter- State supply of goods.
Assume rate of tax on taxable goods to be 18%.
(a) Rs. 35,000/-
(b) Rs. 50,000/-
(c) Rs. 56,300/-
(d) Rs. 64,300/-

19. What is a valid tenure for an e-way bill for a distance upto 100 km?
(a) One day in cases other than Over Dimensional Cargo
(b) One additional day in case of Over Dimensional Cargo
(c) One additional day in cases other than Over Dimensional Cargo
(d) One day in case of Over Dimensional Cargo

Solution: -
1) A 2) b 3) b 4) a 5) c 6) b7) a 8) c 9) c 10) a
11) a 12) d 13) c 14) 15) b 16) c17) c 18) c 19) a
 CA Jasmeet Singh 149

Chapter 9: Returns Under GST

1. Mr. X, a regular tax payer, did not make any taxable supply during the month of July. Is he
required to file any goods and service tax return?

Answer:
A regular tax payer is required to furnish a return u/s 39 for every month even if no supplies
have been effected during such period. In other words, filing of Nil return is also mandatory.
Therefore, Mr. X is required to file monthly return even if he did not make any taxable
supply during the month of July.

2. If a return has been filed, how can it be revised if some changes are required to be made?

Answer:
In GST since the returns are built from details of individual transactions, there is no
requirement for having a revised return. Any need to revise a return may arise due to the
need to change a set of invoices or debit/ credit notes. Instead of revising the return already
submitted, the system allows changing the details of those transactions (invoices or
debit/credit notes) that are required to be amended. They can be amended in any of the
future GSTR- 1 in the tables specifically provided for the purposes of amending previously
declared details.
As per section 39(9), omission or incorrect particulars discovered in the returns filed u/s 39
can be rectified in the return to be filed for the month during which such omission or
incorrect particulars are noticed. Any tax payable as a result of such error or omission will
be required to be paid along with interest. The rectification of errors/omissions is carried
out by entering appropriate particulars in “Amendment Tables” contained in GSTR-1.

3. M/s Cavenon Enterprises, a registered supplier of designer wedding dresses under regular
scheme, has aggregate annual turnover of Rs 30 lakh in the preceding financial year. It is of
the view that in the current financial year, it is permitted to file its monthly statement of
outward supplies – GSTR-1 - on a quarterly basis while its accountant advises it to file the
same on a monthly basis. You are required to advise M/s Cavenon Enterprises on the same.
During a given tax period in the current financial year, owing to an off-season, M/s Cavenon
Enterprises has not made any taxable supply. Therefore, M/s Cavenon Enterprises opines
that no return under GST is required to be filed for the said period. You are required to
examine the technical veracity of the opinion of M/s Cavenon Enterprises.

Answer:
 CA Jasmeet Singh 150

Section 37 of the CGST Act, 2017 stipulates that GSTR-1 for a particular month is required to
be filed on or before the 10th day of the immediately succeeding month, i.e. on a monthly
basis.
However, presently, as a measure of easing the compliance requirement for small tax
payers, GSTR-1 has been allowed to be filed quarterly by small tax payers with aggregate
annual turnover up to Rs 1.5 crore in the preceding financial year or the current financial
year. Tax payers with annual aggregate turnover above Rs 1.5 crore will however continue
to file GSTR- 1 on a monthly basis.
In view of the same, M/s Cavenon Enterprises can file its GSTR-1 on quarterly basis as its
aggregate turnover does not excced Rs 1.5 crore in the preceding financial year.

Further, GSTR-1 needs to be filed even if there is no business activity in a tax period. Thus, in
the present case, even if no supply has been made by M/s Cavenon Enterprises, a nil return is
required to be filed for the relevant tax period.

4. Who is required to furnish Final Return under CGST Act, 2017 and what is the time limit for the
same? Discuss.

Answer:
Every registered person who is required to furnish a return under section 39(1) of the CGST
Act, 2017 and whose registration has been surrendered or cancelled shall file a Final Return
electronically in the prescribed form through the common portal.
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.

5. Which type of taxpayers need to file annual return under section 44?

Answer:
Every registered person whose turnover is 2 crore or above, other than ISD’s, casual/non-
resident taxpayers, tax deductors at source, tax collector at source are required to file an
annual return in Form GSTR-9. Taxpayer under composition scheme are required to file
annual return in Form GSTR-9A. Casual tax payers, non-resident taxpayers, ISDs and persons
authorized to deduct/collect tax at source are not required to file annual return.

6. Is an annual return under section 44 and a final return one and the same?

Answer:
No. Annual return has to be filed by every registered person paying tax as a normal taxpayer,
 CA Jasmeet Singh 151

with certain exceptions. Final return has to be filed only by those registered persons who
have applied for cancellation of registration. The final return has to be filed within three
months of the date of cancellation or the date of cancellation order, whichever is later.

7. Is it compulsory for a taxpayer to file return by himself?

Answer:
No. A registered taxpayer can also get his return filed through a Goods and Services Tax
Practitioner.

8. Mr. Ram supplying goods and services wants to avail composition scheme or any other
beneficial scheme available, He wants to know about the payment and return under
such scheme.

Answer:
A special procedure for furnishing of return and payment of tax has been prescribed for the
following persons:
(i) registered persons paying composition tax
(ii) registered person paying tax by availing the benefit of section 10(2A)
Such persons will:
(i) furnish a statement in form GST CMP 08 containing details of payment of self - assessed
tax, for every quarter (or part of the quarter), by 18th day of the month succeeding such
quarter.
(ii) furnish a return (GSTR 4) for every financial year (or part of the financial year), on or
before 30th day of April following the end of such financial year.

9. Do taxpayers with an aggregate turnover less than Rs.1.5 Crores also need to file GSTR-1 on a
monthly basis?

Answer:
No. A special procedure has been prescribed for such taxpayers vide notification no.
57/2017- Central Tax dated 15.11.2017. Such taxpayers need to file GSTR-1 on a quarterly basis.
The last date for filing GSTR-1 for such taxpayers for the period Oct-Dec 18 is 31.01.2018. It is
also clarified that the registered person may opt to file FORM GSTR-1 on monthly basis if he
so wishes even though his aggregate turnover is up to Rs. 1.5 Crore.

10. Is the scanned copy of invoices to be uploaded along with GSTR-1?

Answer:
 CA Jasmeet Singh 152

No scanned copy of invoices is to be uploaded. Only certain prescribed fields of information

from invoices need to be uploaded.

11. Whether all invoices have to be uploaded in the returns?

Answer:
No. It depends on whether the invoice is B2B or B2C plus whether Intra-state or Inter-state
supplies.
For B2B supplies, all invoices, whether Intra-state or Inter- state supplies, will have to be
uploaded. Why So? Because ITC will be taken by the recipients.
In B2C supplies, uploading in general may not be required as the buyer will not be taking
ITC. However still in order to implement the destination-based principle, invoices of value
more than Rs.2.5 lacs in inter-state B2C supplies will have to be uploaded. For inter-state
invoices below Rs. 2.5 lacs and all intra-state invoices, state wise summary will be
sufficient.

12. Mr. Gauri Shiva, a registered person in Punjab, supplies goods taxable @ 12% [CGST @ 6%,
SGST @ 6% & IGST @ 12%] in the States of Punjab & Haryana. He has furnished the following
details in relation to independent supplies made by him in the quarter ending June, 20XX:-
Sup Recipient Nature of Value
ply Supply
1 Mr. A, a registered person Inter-State 2,20,000
2 Mr. B, a registered person Inter-State 2,55,000
3 Mr. C, an unregistered person Intra -State 1,80,000
4 Mr. D, an unregistered person Intra -State 2,60,000
5 Mr. M, an unregistered person Inter-State 3,00,000
6 Mr. N, an unregistered person Inter-State 50,000
7 Mr. O, an unregistered person Inter-State 2,50,000
8 Mr. P, an unregistered person Inter-State 2,80,000
9 Mr. Q, a registered person Intra -State 1,50,000
1 Mr. R, a registered person Intra -State 4,10,000
0
The aggregate annual turnover of Mr. Gauri Shiva in the preceding financial year was Rs 1.20
crore. With reference to rule 59 of the CGST Rules, 2017, discuss the manner in which the
details of above supplies are required to be furnished in GSTR-1.

Answer:
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
 CA Jasmeet Singh 153

(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;
Thus, in view of the above-mentioned provisions, Mr. Gauri Shiva should furnish the details
of outward supplies of goods made by him during the quarter ending June 20XX in the
following manner:-

Supply Recipient Nature of Value Manner of

Supply furnishing
details
1 Mr. A, a registered Inter- 2,20,000 Invoice-wise details
person State
2 Mr. B, a registered Inter- 2,55,000 Invoice-wise details
person State
3 Mr. C, an unregistered Intra - 1,80,000 Consolidated
person State details of
4 Mr. D, an unregistered Intra - 2,60,000 supplies 3 and 4
person State
5 Mr. M, an unregistered Inter- 3,00,000 Invoice-wise details
person State
6 Mr. N, an unregistered Inter- 50,000 Consolidated
person State details of
7 Mr. O, an unregistered Inter- 2,50,000 supplies 6 and 7
person State
8 Mr. P, an unregistered Inter- 2,80,000 Invoice-wise details
person State
9 Mr. Q, a registered Intra - 1,50,000 Invoice-wise details
person State
10 Mr. R, a registered Intra - 4,10,000 Invoice-wise details
person State

13. Answe the following questions

(A) Miss Kashi is a registered intra-State supplier of goods in Haryana. During the months of
August and September, she was out of station on a religious pilgrimage with her family for
55 days. Thus, no business transaction was made during August. Miss Kashi is of the opinion
that as there is no transaction, there is no need to file monthly return [GSTR-3B] for the
month of August. However, her tax consultant has advised her to file nil GSTR-3B. Whether
the advice given by tax consultant is correct? Explain.
 CA Jasmeet Singh 154

(B) Will your answer in (a) change, if Miss Kashi has placed an order for some purchases during
August over her mobile phone, which has been received in her premises and she intends to
take input tax credit on the same?
(C) Assuming in (a) above, Miss Kashi does not have internet facility in her mobile and there is
no facilitation centre notified by the Commissioner, whether no return is required to be filed
in the absence of means to file return? Explain.
Solution.
A) The advice given by tax consultant is correct.
Under GST law, filing of GSTR-3B is mandatory for all normal and casual taxpayers, even if
there is no business activity in any particular tax period. For such tax period(s), a Nil GSTR-
3B is required to be filed.
Therefore, in the given case, even though Miss Kashi was out of station on a religious
pilgrimage with her family for 55 days and thus, could not do any business transaction
during the month of August, she is still required to file Nil GSTR-3B for that month.
B) Nil GSTR-3B means that the return has nil or no entry in all its Tables. Since in the present
case, Miss Kashi has received certain purchases, she cannot file Nil GSTR-3B, as the said
purchases will need to be disclosed in the “Table for Eligible ITC” in GSTR-3B.
Thus, Miss Kashi is required to file monthly return, GSTR-3B for the month of August.
C) GSTR-3B can be submitted electronically on the common portal, either directly or through a
Facilitation Centre notified by the Commissioner. Further, a Nil GSTR-3B can be filed
through an SMS using the registered mobile number of the taxpayer.
Thus, Miss Kashi is required to file Nil GSTR-3B for the month of August through an SMS
using her registered mobile number even though there is no internet facility in her mobile
and no Facilitation Centre notified by the Commissioner.

14. Explain the consequences, 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.

Solution

If the taxable person under GST law files the GST return under section 39(1) of the CGST Act, 2017,
but does not pay the self-assessment tax, the return is not considered as a valid return.
Since the input tax credit can be availed only on the basis of a valid return, the taxable person, in
the given case, will not be able to claim any input tax credit.
He shall pay interest, penalty, fees or any other amount payable under the CGST Act for filing
return without payment of tax.

15. 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.
 CA Jasmeet Singh 155

Solution

Omission or incorrect particulars discovered in the returns filed under section 39 can be rectified
in the return to be filed for the month/quarter during which such omission or incorrect
particulars are noticed.
Any tax payable as a result of such error or omission will be required to be paid along with
interest.

Exception
Section 39(9) of the CGST Act does not permit rectification of error/omission discovered on
account of scrutiny, audit, inspection or enforcement activities by tax authorities.

The time limit for making such rectification is earlier of the following dates:
(x) Due date for filing return for September month of next financial year or
(xi) Actual date of filing annual return

16. Explain who is required to furnish final return, time limit for filing of final return and late fee for
delay in filing final return.

Solution

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:
(iv) date of cancellation or
(v) date of order of cancellation whichever is later.
In case of delayed filing of GSTR-10, LOWER of the following two amounts is required to be paid
as late fee u/s 47 of the CGST Act:
a) Rs 100 for every day during which such failure continues; or
b) Rs 5,000.

17. Who can be registered as Goods and Service Tax Practitioners under Section 48 of the CGST
Act?
Solution
Following persons can be registered as Goods and Service Tax Practitioners:
Any person who, (i) is a citizen of India; (ii) is a person of sound mind; (iii) is not adjudicated
as insolvent; (iv) has not been convicted by a competent court; and satisfies any of the
following conditions, namely that he:
 CA Jasmeet Singh 156

1. is a retired officer of Commercial Tax Department of any State Govt./CBIC who, during
service under Government had worked in a post not lower than the rank of a Group-B
gazetted officer for a period ≥ 2 years, or
2. is enrolled as a Sales Tax Practitioner or Tax Return Preparer under the erstwhile indirect
tax laws for a period of not less than 5 years, or
3. acquired any of the prescribed qualifications
4. has passed Graduate/postgraduate degree or its equivalent examination having a degree
in specified disciplines, from any Indian University or a degree examination of any Foreign
University recognised by any Indian University as equivalent to degree examination
5. has passed any other notified examination
6. has passed final examination of ICAI/ ICSI/ Institute of Cost Accountants of India
Note: Any 3 points may be mentioned.

18. "In Form GSTR-1, 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.
Solution:
The said statement is not valid.
In respect of following outward supplies, consolidated details and not invoice-wise details are
required to be uploaded in the GSTR-1:
(a) Intra-State supplies made to unregistered persons for each rate of tax

(b) Inter-State supplies made to unregistered persons with invoice value upto Rs. 2,50,000 for
each rate of tax separately for each State.

19. The aggregate turnover of Mr. Prithvi, a registered person for the FY 2020-21 and 2021-22 were
Rs. 340 lakh and Rs. 370 lakh respectively. He has not filed the annual return (GSTR-9) under
section 44(1) of CGST Act, 2017 before the due date.
Discuss the penal provisions, if any, for not filing the returns before the due date.
The penal provisions for not filing the annual return (GSTR-9) under section 44(1) of the CGST
Act, 2017 before the due date are as under:-
(a) Rs. 100 for every day during which such failure continues,
or
(b) 0.25% of the turnover of the registered person in the State/Union Territory
whichever is lower1.

Multiple Choice Questions

 CA Jasmeet Singh 157

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. What is the due date for submission of monthly GSTR-1?

(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

5. Composition tax payer is required to file return in Form no. .

(a) GSTR-2
(b) GSTR-3
(c) GSTR-4
(d) GSTR-5

6. 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

7. The maximum amount of late fee payable under the CGST Act for delay in furnishing
returns under section 39 is Rs .
(a) 1,000
(b) 5,000
 CA Jasmeet Singh 158

(c) 20,000
(d) 25,000

8. 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

9. What is the time period available to a sales tax practitioner/ tax return preparer
enrolled as a GSTP to pass the examination conducted by NACIN?
(a) 12 months
(b) 18 months
(c) 6 months
(d) 30 months

10. What are the functions of a GSTP.

(a) furnish information for generation of e-way bill;
(b) file an application for amendment or cancellation of enrolment under rule 58
(c) file an intimation to pay tax under the composition scheme or withdraw from the said
scheme
(d) All of the above.

11. Composition taxpayers and tax payers paying tax under Notification No. 2/2019 CT dated
01.03.2019 are required to
(a) Furnish return in GSTR 4 and a statement containing details of payment of self-assessed
tax in GST CMP 08
(b) Only Furnish return in GSTR 4 annually.
(c) Only furnish a statement containing details of payment of self-assessed tax in GST CMP
08
(d) None of the above

12. The First return shall be filed by every registeredtaxable person for the period from
(a) The date on which he became liable for registration till the date of grant of registration
(b) The date of registration to the last day of that month
(c) The date on which he became liable for registration till the last day of that month
(d) All of the above

goods and service tax practitioner can undertake the following activities if authorized by the
taxable person
 CA Jasmeet Singh 159

(a) Furnish details inward and outward supplies

(b) Furnish monthly / quarterly return
(c) Furnish Annual and Final return
(d) All of the above

Answer: -
1) d 2) c 3) a 4) a 5) c 6) d 7) b 8) c 9) d 10) d
11) a 12) a 13) d
 CA Jasmeet Singh 160

Chapter 10: Payment Of Tax & Computation Of

GST Liability
1. How many types of electronic ledger are there?

Solution:
a) Electronic cash ledger
b) Electronic credit ledger
c) Electronic liability register

2. What are the main features of GST payment process?

Solution:
The payment processes under GST Act(s) have the following features:
 Electronically generated challan from GSTN Common Portal in all modes of payment and no
use of manually prepared challan;
 Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of payment
of tax;
 Convenience of making payment online;
 Logical tax collection data in electronic format;
 Faster remittance of tax revenue to the Government Account;
 Paperless transactions;
 Speedy Accounting and reporting;
 Electronic reconciliation of all receipts;
 Simplified procedure for bank
 Warehousing of challan

3. What is a CPIN?

Solution:
CPIN stands for Common Portal Identification Number (CPIN) given at the time of generation of
challan. It is a 14-digit unique number to identify the challan. As stated above, the CPIN remains
valid for a period of 15 days.

4. What is a CIN and what is its relevance?

Solution:
CIN stands for Challan Identification Number. CIN is generated by the authorized banks/ Reserve
 CA Jasmeet Singh 161

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.
5. What is an E-FPB?

Solution:
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 Transactions. The E-FPB will have to open accounts under each major
head for all governments. Total 38 accounts (one each for CGST, IGST and one each for SGST for
each State/UT Govt.) will have to be opened. Any amount received by such E-FPB towards GST
will be credited to the appropriate account held by such EFPB. For NEFT/RTGS Transactions, RBI
will act as E-FPB.

6. State the name of output tax under GST, where any of the input tax credit under GST can be
availed?

Solution:
IGST. IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output tax liability
known as IGST.

7. You are required to determine the time of supply of the readymade garments supplied by Gupta
& Sons to Mohini elaborating the relevant provisions under the GST law.

Solution:
As per section 50 of the CGST Act, 2017, interest is payable in the following cases:-
 failure to pay tax, in full or in part within the prescribed period,
 undue or excess claim of input tax credit,
 undue or excess reduction in output tax liability.
The maximum rate of interest chargeable for the same is as under-
(i) 18% p.a. in case of failure to pay full/part tax within the prescribed period.
(ii) 24% p.a. in case of undue or excess claim of input tax credit or undue or excess reduction in
output tax liability.

8. Sangam Ltd., obtains registration for paying taxes under section 9 of CGST Act. He asked his tax
manager to pay taxes on quarterly basis. However, Sangam Ltd.’s tax manager advised the
Company to pay taxes on monthly basis. You are required to examine the validity of the advice
 CA Jasmeet Singh 162

given by tax manager?

Solution:
The advice given by tax manager is valid in law. Payment of taxes by the normal tax payer is to be
done on monthly basis by the 20th of the succeeding month. Cash payments will be first
deposited in the Cash Ledger and the tax payer shall debit the ledger while making payment in
the monthly returns and shall reflect the relevant debit entry number in his return. However,
payment can also be debited from the Credit Ledger. Payment of taxes for the month of March
shall be paid by the 20th of April. Composition tax payers will need to pay tax on quarterly basis.

9. How does the new payment system benefit the taxpayer & the Commercial Tax Department?

Solution:
The new payment system benefits the taxpayer and the commercial tax department in the
following ways:-

Benefits to Taxpayer: -
 No more queues and waiting for making payments as payments can be made online 24 X 7.
 Electronically generated challan from GSTN common portal in all modes of payment and no
use of manually prepared challan. Paperless transactions.
 Instant online receipts for payments made online.
 Tax consultants can make payments on behalf of the clients.
 Single challan form to be created online, replacing the three or four copy Challan.
 Greater transparency.

Benefits to the Commercial Tax Department:-

 Revenue will come earlier into the Government Treasury as compared to the old system.
 Logical tax collection data in electronic format.

 Speedy accounting and reporting.

 Electronic reconciliation of all receipts.
 Warehousing of digital challan.

10. Sahil is a supplier of taxable goods in Karnataka. He got registered under GST in the month of
September, 20XX and wishes to pay his IGST liability for the month. Since he’s making the GST
payment for the first time, he is of the view that he needs to mandatorily have the online banking
facility to make payment of GST; offline payment is not permitted under GST. You are required to
apprise Sahil regarding the various modes of deposit in the electronic cash ledger. Further, advise
him with regard to following issues:
(a) Are manual challans allowed under GST?
(b) What is the validity period of the challan?
(c) Is cross utilization among Major and Minor heads of the electronic cash ledger permitted?
 CA Jasmeet Singh 163

Solution:
Section 49(1) of CGST Act, 2017 read with rule 87 of CGST Rules, 2017 provides that the deposit in
electronic cash ledger can be made through any of the following modes, namely:-
a) Internet Banking through authorised banks;
b) Credit card or Debit card through the authorised bank;
c) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or (iv)Over
the Counter payment through authorised banks.
Thus, offline mode is also permitted under GST.
a. Manual or physical Challans are not allowed under the GST regime. It is mandatory to
generate Challans online on the GST Portal.
b. E-challan is valid for a period of 15 days.
c. Amount entered under any Minor head (T ax, Interest, Penalty, etc.) and Major Head
(CGST, IGST, SGST/UTGST) of the Electronic Cash Ledger can be utilized for payment of any
other amount. Hence cross utilization is allowed.

11. ABC limited filed the return for GST under section 39(1) for the month of November on 20th,
December showing self-assessed tax of Rs 2,50,000 which was not paid.
Explain what are the implications for ABC limited as per relevant provisions?

Solution:
As per section 2(117) of CGST Act, “valid return” means a return furnished under sub-section
(1) of section 39 on which self-assessed tax has been paid in full.
Hence, in such a case, the return is not considered as a valid return and also input tax credit will
not be allowed to the recipient of supplies.

12. Can one use input tax credit for payment of interest, penalty, and payment under reverse charge?

Solution:
No, as per Section 49 (4) 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) of the CGST Act, 2017, output tax means, the CGST/SGST chargeable under
this Act on taxable supply of goods and/or services made by him or by his agent and excludes tax
payable by him on reverse charge basis. Therefore, input tax credit cannot be used for payment
of interest, penalty, and payment under reverse charge.

13. What happens if the taxable person files the return but does not make payment of tax?

Solution:
In such cases, the return is not considered as a valid return. Section 2(117) defines a valid return
 CA Jasmeet Singh 164

to mean a return furnished under sub-section (1) of section 39 on which self-assessed tax has
been paid in full. It is only the valid return that would be used for allowing input tax credit (ITC)
to the recipient. In other words, unless the supplier has paid the entire self- assessed tax and
filed his return and the recipient has filed his return, the ITC of the recipient would not be
confirmed.

14. Which date is considered as date of deposit of the tax dues – Date of presentation of cheque or
Date of payment or Date of credit of amount in the account of government?

Solution:
It is the date of credit to the Government account.

15. What is a Cash Ledger?

Solution
The cash ledger will reflect all deposits made in cash, and TDS/TCS made on account of the
taxpayer. The information will be reflected on real time basis. This ledger can be used for
making any payment on account of GST.

16. What is an ITC Ledger?

Solution:
Input Tax Credit as self-assessed in monthly returns will be reflected in the ITC Ledger. The
credit in this ledger can be used to make payment of TAX ONLY and no other amounts such as
interest, penalty, fees etc.

17. What is the linkage between GSTN and the authorized Banks?
Solution:

There will be real time two-way linkage between the GSTN and the Core Banking Solution (CBS)
of the Bank. CPIN is automatically routed to the Bank via electronic string for verification and
receiving payment and a challan identification number (CIN) is automatically sent by the Bank
to the Common Portal confirming payment receipt. No manual intervention will be involved in
the process by anyone including bank cashier or teller or the tax payer.

18. Is there a validity period of challan?

Solution:
Yes, a challan will be valid for fifteen days after its generation and thereafter it will be purged
from the System. However, the tax payer can generate another challan at his convenience.
 CA Jasmeet Singh 165

19. What is the sequence of payment of tax where that taxpayer has liabilities for previous months
also?
Solution:
Section 49(8) prescribes an order of payment where the taxpayer has tax liability beyond the
current return period. In such a situation, the order of payment to be followed is: First self-
assessed tax and other dues for the previous period; thereafter self-assessed tax and other dues
for the current period; and thereafter any other amounts payable including any confirmed
demands under section 73 or 74. This sequence has to be mandatorily followed.

20. What should be done in case the registered person notices some discrepancies in his electronic
cash ledger?

Ans. A registered person shall, upon noticing any discrepancy in his electronic cash ledger,
communicate the same to the officer exercising jurisdiction in the matter, through the Common
Portal in FORM GST PMT-04.

21. To whom the restriction of deposits upto Rs.10,000/- per challan per tax period, by cash, cheque
or demand draft is not applicable?

Solution.
The restriction of deposits upto Rs.10,000/- per challan per tax period, by cash, cheque or
demand draft is not applicable to the deposit made by:
(a) Government Departments or any other deposit to be made by persons as may be notified
by the Commissioner in this behalf;
(b) Proper officer or any other officer authorized to recover outstanding dues from any
person, whether registered or not, including recovery made through attachment or sale of
movable or immovable properties;
(c) Proper officer or any other officer authorized for the amounts collected by way of cash or
cheque, demand draft during any investigation or enforcement activity or any ad hoc
deposit:

22. What is the manner/order of utilization of input tax credit?

Solution:
The manner/order of utilization of input tax credit is as follows:
 IGST credit should first be utilized towards payment of IGST.
 Remaining IGST credit, if any, can be utilized towards payment of CGST and SGST/UTGST in
any order and in any proportion.
 CA Jasmeet Singh 166

 Entire ITC of IGST should be fully utilized before utilizing the ITC of CGST or SGST/UTGST.
 ITC of CGST should be utilized for payment of CGST and IGST in that order.
 ITC of SGST /UTGST should be utilized for payment of SGST/UTGST and IGST in that order.
However, ITC of SGST/UTGST should be utilized for payment of IGST, only after ITC of CGST
has been utilized fully.

23. Where tax is paid at 11:00 P.M. on 20th October 2020 and filed returns on the same day. If for
any reason the amount is credited to the account of the appropriate Government on 21 st
October 2020, will it amount to default? (without considering actual extension dates)

Solution:
The date of credit to the account of the appropriate Government in the authorized bank shall be
deemed to be the date of deposit in the electronic cash ledger. Therefore, in this case the date
of payment/deposit of tax shall be 21st October 2017, which means a delay of one day in
payment of tax.

24. Mr. X, a supplier of goods, pays GST under regular scheme. The amount of input tax credit (ITC)
available and output tax liability under different tax heads is as under: -

Head Output tax liability ITC

IGST 2,000 4,000
CGST 800 2,000
SGST/ UTGST 2,500 500

Compute the minimum GST payable in cash by Mr. X. Make suitable assumptions as required.

Solution:
Mr. X can use the ITC to pay his output tax liability. The order of utilisation of ITC is as under: -
(i) IGST credit should first be utilized towards payment of IGST.
(ii) Remaining IGST credit, if any, can be utilized towards payment of CGST and SGST/ UTGST in
any order and in any proportion.
(iii) Entire ITC of IGST should be fully utilized before utilizing the ITC of CGST or SGST/ UTGST.
(iv) ITC of CGST should be utilized for payment of CGST and IGST in that order.

(v) ITC of SGST /UTGST should be utilized for payment of SGST/UTGST and IGST in that order.
However, ITC of SGST/UTGST should be utilized for payment of IGST, only after ITC of CGST
has been utilized fully. CGST credit cannot be utilized for payment of SGST/UTGST and
SGST/UTGST credit cannot be utilized for payment of CGST.

Computation of minimum GST payable in cash

 CA Jasmeet Singh 167

Particulars CGST SGST IGST

GST payable 800 2,500 (2,000)- 2,000
Less: ITC - IGST (2,000)-IGST
(800)-CGST (500) – SGST
Net GST payable in cash Nil
Nil Nil
Since sufficient balance of ITC of CGST is available for paying CGST liability and cross utilization
of ITC of CGST and SGST is not allowed, it is beneficial to use ITC of IGST to pay SGST (after
paying IGST liability) to minimize cash outflow

25. M/s. Daksha Enterprises has made a cash deposit of Rs. 10,000 under minor head 'tax' of major
head 'SGST’. It has a liability of Rs. 2,000 for minor head "Interest" under the major head "SGST".
State whether M/s. Daksha Enterprises can utilise the amount available for payment of interest.

Solution:
The cash available in any minor head of a major head can be utilised for any other minor head of
the same major head.
Therefore, in the given case, amount of Rs. 10,000 available under minor head ‘tax’ of major head
‘SGST’ can be utilised for payment of liability of Rs.2,000 under minor head ‘interest’ of the same
major head.

26. Mr. Ram Narayan, a registered supplier under GST, wants to first discharge his self- assessed tax
liability for the current period before settling the dues for the previous tax period. Examine
briefly whether he can do so?

Solution:
As per section 49(8) of the CGST Act, 2017, the liability of a taxable person has to be discharged in
a chronological order as under:-
(a) self -assessed tax and other dues for the previous tax periods have to be discharged first;
(b) the self -assessed tax and other dues for the current period have to be discharged next;
(c) Once these two steps are exhausted, thereafter any other amount payable including demand
determined under section 73 or section 74 of the CGST Act, 2017 to be discharged. In other
words, the liability if any, arising out of demand notice and adjudication proceedings comes
last. This sequence has to be mandatorily followed.
Thus, in view of the above-mentioned provisions, Mr. Ram Narayan cannot discharge his self-
assessed tax liability for the current period before settling the dues for the previous tax period.

27. R Ltd., a registered supplier in Mumbai (Maharashtra), has supplied goods to Sahil Traders and
Jaggi Motors Ltd. located in Ahmedabad (Gujarat) and Pune (Maharashtra) respectively. Raman
 CA Jasmeet Singh 168

Ltd. has furnished the following details for the current month:

S. No. Particulars Sahil Traders (Rs) Jaggi Motors Ltd.

(Rs)
(i) Price of the goods (excluding GST) 20,000 15,000
(ii) Packing charges 600
(iii) Commission 400
(iv) Weighment charges 1,000
(v) Discount for prompt payment 500
(recorded in the invoice)
Items given in points (ii) to (v) have not been considered while arriving at price of the goods
given in point (i) above.
Compute the GST liability [CGST & SGST or IGST, as the case may be] of Raman Ltd. for the
given month. Assume the rates of taxes to be as under:
Particulars Rate of tax
Central tax (CGST) 9%
State Tax (SGST) 9%
Integrated tax (IGST) 18%
Make suitable assumptions, wherever necessary.
Note: The supply made to Sahil Traders is an inter-State supply.

Solution:
Computation of GST liability
S. No. Particulars Sahil Traders (Rs) Jaggi Motors Ltd.
(Rs)
(i) Price of goods 20,000 15,000
(ii) Add: Packing charges (Note-1) 600
(iii) Add: Commission (Note-1) 400
(iv) Add: Weighment charges (Note-1) - 1,000
(v) Less: Discount for prompt
payment (Note-2) - 500
Value of taxable supply 21,000 15,500
IGST payable @ 18% (Note-3) 3,780
CGST payable @ 9% (Note-4) 1,395
SGST payable @ 9% (Note-4) 1,395

Notes:
a) Incidental expenses, including commission and packing, charged by supplier to recipient of
supply is includible in the value of supply. Weighment charges are also incidental expenses,
 CA Jasmeet Singh 169

hence includible in the value of supply [Section 15 of the CGST Act, 2017].
b) Since discount is known at the time of supply, it is deductible from the value in terms of
section 15 of the CGST Act, 2017.
c) Since supply made to Sahil Traders is an inter-State supply, IGST is payable in terms of
section 5 of the IGST Act, 2017.
d) Since supply made to Jaggi Motors Ltd. is an intra-State supply, CGST & SGST is payable on
the same.
28.
(i) Tirupati Traders, a registered supplier of goods, pays GST [CGST & SGST or IGST, as the case
may be] under regular scheme. It has furnished the following particulars for a tax period:-
Particulars Rs
Value of intra-State supply of goods 12,000
Value of intra-State purchase of goods 10,000
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 the input tax credit have been fulfilled.

Compute the net GST payable by Tirupati Traders during the given tax period assuming that
there is no opening balance of input tax credit (ITC). Make suitable assumptions wherever
required.

(ii) Govind, a registered supplier, is engaged in providing services in the neighbouring States from
his registered office located in Mumbai. He has furnished the following details in respect of
the inward and outward supplies made during a tax period:-
Particulars (Rs)
Inter-State supply of services 1,80,000
Receipt of goods and services within the State 1,00,000

Assume the rates of taxes to be as under:-

Particulars Rate
CGST 9%
SGST 9%
IGST 18%
Note:
(i) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(ii) All the conditions necessary for availing the input tax credit have been fulfilled. Compute
the net GST payable by Govind during the given tax period. Make suitable assumptions if
required.
 CA Jasmeet Singh 170

Solution:
(i) Computation of Net GST payable
Particulars CGST (Rs) SGST (Rs)
GST payable on intra-State supply of goods 1,080 1,080
[Being an intra-State supply, CGST and SGST is payable on (Rs 12,000 × (Rs 12,000 ×
the same] 9%) 9%)
Less: Input tax credit (ITC) on intra-State purchase of goods 900 900
[CGST and SGST paid on the intra-State purchases of goods] (Rs 10,000 × (Rs 10,000 ×
9%) 9%)
Net GST payable 180 180
(ii) Computation of net GST payable by Govind
Particulars Rs
IGST @ 18% payable on inter-State supply of services [Being an inter- 32,400
State supply, IGST is payable on the same in terms of section 5 of the [1,80,000 ×
IGST Act, 2017] 18%]
Less: ITC of CGST @ 9% paid on intra-State receipt of goods and services 9,000
[Cross utilisation of CGST towards IGST] [1,00,000 × 9%]
Less: ITC of SGST @ 9% paid on intra-State receipt of 9,000
goods and services [1,00,000 × 9%]
[Cross utilisation of SGST towards IGST]
Net GST payable in cash 14,400

Note:
1. CGST shall first be utilised towards payment of CGST and the amount remaining, if any, be
utilised towards the payment of IGST [Section 49 of the CGST Act, 2017].
2. SGST shall first be utilised towards payment of SGST and the amount remaining, if any, may
be utilised towards the payment of IGST [Section 49 of the CGST Act, 2017].

29. Royal Sweet Co., Delhi, a registered supplier, has furnished the details of the following few
transactions which took place in November, 20XX:
S. No. Date Particulars Date of Amount
invoice (Rs)
(i) 11.11.20XX Payment made to an advocate in 07.07.20XX 1,25,000
Delhi
(ii) 20.11.20XX Paid sitting fee to Director from 15.10.20XX 75,000
Haryana for meeting held in Delhi on
15.10.20XX
[Inter-State supply]

Assume the rates of taxes to be as under:-

 CA Jasmeet Singh 171

Particulars Rate
CGST 9%
SGST 9%
IGST 18%
You are required to compute GST [CGST & SGST/IGST, as the case may be] payable for the
month of November, 20XX along with time of supply of the aforementioned activities.

Solution:
Computation of GST payable for the month of November, 20XX
S. No. Particulars Time of CGST SGST IGST Interest
supply of (Rs) (Rs) (Rs) (Rs)
services
(i) Services from an 06.09.20XX 11,250 11,250 - 244
advocate in Delhi [Note-1 & 3] [Note-4]
(ii) Director’s Sitting 20.11.20XX - - 13,500
fee [Note-2 & 3]

Notes:-
1. Services supplied by an individual advocate to any business entity located in the taxable
territory is a notified service on which tax is payable on reverse charge basis by the
recipient of services.

2. Services supplied by a director of a company to the said company is a notified service on

which tax is payable on reverse charge basis by the recipient of services.

3. As per section 13 of the CGST Act, 2017, the time of supply of services in case of reverse
charge is earliest of the following:-
(a) Date of payment as entered in the books of account of the recipient or the date on
which the payment is debited to his bank account, whichever is earlier, or
(b) Date immediately following 60 days since the date of issue of invoice.

Provisions of time of supply as provided under section 13 of the CGST Act are also
applicable for inter-State supply vide section 20 of the IGST Act.
In view of the aforesaid provisions, the time of supply and due date for payment of tax in
the given cases would be determined as under:
(i) Time of supply of the services is the date immediately following 60 days since the date
of issue of invoice, i.e. 06.09.20XX. The due date for payment of tax is 20.10.20XX with
return of September, 20XX.
(ii) Time of supply of service is 20.11.20XX and due date for payment of tax is 20.12.20XX
 CA Jasmeet Singh 172

with return of December, 20XX.

4. The due date for payment of tax in case (i) is 20.10.20XX with return of September, 20XX.
However, the payment of tax is actually made on 11.11.20XX. Thus, payment of tax is
delayed by 22 days.
In case of delayed payment of tax, interest @ 18% per annum is payable for the period for
which the tax remains unpaid starting from the day succeeding the day on which such tax
was due to be paid [Section 50 of the CGST Act, 2017 read with Notification No. 13/2017 CT
dated 28.06.2017]. In view of the same, in the given case, interest payable would be as
follows:
Amount of interest payable = Rs 22,500 × 18% × 22/365 = Rs 244 (rounded off).

30. M/s. Shri Durga Corporation Pvt. Ltd. is a supplier of goods and services at Kolkata. It has
furnished the following information for the month of February, 20XX:
SN Particulars Amount
(Rs)
(i) Intra-State sale of taxable goods including Rs 1,00,000 received as 4,00,000
advance in January, 20XX, the invoice for the entire sale value is
issued on 15th February, 20XX
(ii) Goods purchased from unregistered dealer on 20th February, 20XX 1,00,000
(Inter-State purchases are worth Rs 30,000 and balance purchases are
intra-State)
(iii) Services provided by way of labour contracts for repairing a single 1,00,000
residential unit otherwise than as a part of residential complex (It is
an intra-State transaction)
(iv) Goods transport services received from a GTA. GTA is paying tax @12% (It 2,00,000
is an inter-State transaction)
Compute net GST liability (CGST, SGST or IGST, as the case may be) of M/s Shri Durga
Corporation Pvt. Ltd. for the month of February, 20XX.
Assume the rates of GST, unless otherwise specified, as under:
CGST 9%
SGST 9%
lGST 18%

Note:-
(i) The turnover of M/s. Shri Durga Corporation Pvt. Ltd. was Rs 2.5 crore in the previous
financial year.
(ii) All the amounts given above are exclusive of taxes.

Solution:
Computation of GST liability of M/s. Shri Durga Corporation Pvt. Ltd. for the month of
 CA Jasmeet Singh 173

February, 20XX
Particulars Value of CGST SGST IGST
Supply (Rs) (Rs) (Rs)
Intra -State sale of taxable goods [Note-1] 4,00,000 36,000 36,000
Goods purchased from unregistered dealer on Nil Nil Nil
20th February, 20XX [Note-2]
Services rendered by way of labour contracts for 1,00,000 9,000 9,000
repairing a single residential unit otherwise than
as a part of residential complex [Note-3]
Goods transport services received from GTA 2,00,000 Nil
[Note-4]
Total GST liability for the month of February, 20XX 45,000 45,000 Nil
Less: Input tax credit available [Note-5] (Rs 2,00,000 x 12%) 24,000
Net GST liability for the month of February, 20XX 21,000 45,000 Nil

Notes:
1. Section 12 of CGST Act, 2017 read with Notification No. 66/2017 CT dated 15.11.2017 provides
that the time of supply for all suppliers of goods (excluding composition suppliers) is the
time of issue of invoice, without any turnover limit. Thus, liability to pay tax on the advance
received in January, 20XX will also arise in the month of February, when the invoice for the
supply is issued.

2. All intra-State and inter-State procurements made by a registered person from

unregistered person have been exempted from reverse charge liability, without any upper
limit for daily procurements upto 30.06.2018. [Notification No. 8/2017 CT (R) dated
28.06.2017 as amended and Notification No. 32/2017 IT(R) dated 13.10.2017 as amended]

3. 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 are exempt vide Notification No. 12/2017 CT(R) dated 28.06.2017.
Labour contracts for repairing are thus, taxable.

4. As per Notification No. 13/2017 CT(R) dated 28.06.2017, GST is payable by the recipient on
reverse charge basis on the receipt of services of transportation of goods by road from a
goods transport agency (GTA) provided such GTA has not paid GST @ 12%. Since in the
given case, services have been received from a GTA who has paid GST @ 12%, reverse
charge provisions will not be applicable.

Input tax credit is available for the services received from GTA. The input tax credit of IGST shall be
used against IGST and then against CGST and SGST in the any order any propotion.
 CA Jasmeet Singh 174

31. Kamal Book Depot, a wholesaler of stationery items, registered in Mumbai, has received order
for supply of stationery items worth Rs 2,00,000/- on 12th November, 20XX from another local
registered dealer, Mr. Mehta, Mumbai. Kamal Book Depot charged the following additional
expenses from Mr. Mehta:-
SN. Particulars Amount (Rs)
(i) Packing charges 5,000
(ii) Freight & Cartage 2,000
(iii) Transit insurance 1,500
(iv) Extra designing charges 6,000
(v) Taxes by Municipal Authority 500
The goods were delivered to Mr. Mehta on 14th November, 20XX. Since Mr. Mehta was
satisfied with the quality of the goods, he made the payment of goods the same day and
simultaneously placed another order on Kamal Book Depot of stationery items amounting to
Rs 10,00,000 to be delivered in the month of December, 20XX**. On receipt of second order,
Kamal Book Depot allowed a discount of Rs 20,000 on the first order placed by Mr. Mehta.

Compute the GST liability of Kamal Book Depot for the month of November, 20XX assuming
the rates of GST on the goods supplied as under:
CGST 9% & SGST 9%
Would your Solution be different if expenses (i) to (v) given in above table are already
included in the price of Rs 2,00,000?

Note:-
a) All the amounts given above are exclusive of GST.
b) Kamal Book Depot and Mr. Mehta are not related persons and price is the sole
consideration of the supply.
Payment and invoice for the second order will also be made in the month of December, 20XX
only.

Solution:
Computation of value of taxable supply and tax liability

SN Particular Amount (Rs)

s
Price of the goods [Note-1] 2,00,000
(i) Packing charges [Note-2] 5,000
(ii) Freight & Cartage [Note-3] 2,000
(iii) Transit Insurance [Note-3] 1,500
 CA Jasmeet Singh 175

(iv) Extra Designing charges [Note-4] 6,000

(v) Taxes by Municipal Authority [Note-5] 500
Value of taxable supply 2,15,000
CGST @ 9% 19,350
SGST @ 9% 19,350

Notes
1. As per section 15(1) of the CGST Act, 2017, the value of a supply is the transaction value i.e.
the price actually paid or payable for the said supply.
2. All incidental expenses including packing charged by the supplier to the recipient are
includible in the value of supply in terms of section 15(2) of the CGST Act, 2017.
3. The given supply is a composite supply involving supply of goods (stationery items) and
services (transit insurance and freight) where the principal supply is the supply of goods.
As per section 8(a) of the CGST Act, 2017, a composite supply is treated as a supply of the
principal supply involved therein and charged to tax accordingly.
4. 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; is
includible in the value of supply vide section 15(2) of the CGST Act, 2017. Thus, extra
designing charges are to be included in the value of supply.
5. The taxes by Municipal Authorities are includible in the value of supply in terms of section
15(2) of the CGST Act, 2017.
6. In the given case, Mr. Mehta is allowed a discount of Rs 20,000 on the goods supplied to
him in the month of November, 20XX. Since the said goods have already been delivered by
Kamal Book Depot, this discount will be a post-supply discount.

Further, value of supply shall not include any discount which is given after the supply has been
effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time
of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the
supplier has been reversed by the recipient of the supply [Section 15(3) of the CGST Act,
2017].

However, in the given case, post-supply discount given to Mr. Mehta will not be allowed as a
deduction from the value of supply since the discount policy was not known before the time
of such supply although the discount can be specifically linked to relevant invoice (invoice
pertaining to stationery items supplied to Mr. Mehta in November, 20XX).

In case the expenses (i) to (v) given in above table are already included in the price of Rs
 CA Jasmeet Singh 176

2,00,000: Since these expenses are includible in the value of supply by virtue of the reasons
mentioned in explanatory Notes above, no further addition will be required. Resultantly, the
value of taxable supply will be Rs 2,00,000 and CGST and SGST will be Rs 18,000 and Rs 18,000
respectively.

32. Mr. Ekaant, a supplier registered in Delhi, is engaged in the business of sale and purchase of
plastic raincoats. He furnishes the following information pertaining to inward/outward supply
made by him for the month of July, 20XX:
Particulars Amount
(Rs in lakh)
Value of inter-State outward supply to registered persons 30
Value of intra-State outward supply to registered persons 50
Value of intra-State outward supply to unregistered persons 15
Value of intra-State inward supply from registered persons 10
Value of inter-State inward supply from registered persons 5
Value of intra-State inward supply from unregistered persons 2

Following additional information is also provided by Mr. Ekaant:-

Particulars Amount (Rs in
lakh)
IGST credit on capital goods purchased in the month of July 1.5
CGST/ SGST credit on other inward supplies [including credit of 0.5
Rs 5,000 (CGST and SGST each) on account of membership of a club] (CGST and SGST
each)
Availed consultancy services from Mr. Sujit, lawyer located in 1
Delhi [Intra-State services]
the amount of ITC brought forward in the month of July, 20XX is as under:-
CGST: Rs 2 lakh
SGST: Rs 2 lakh
IGST: Rs 5 lakh

Calculate the net GST liability (CGST and SGST or IGST, as the case may be) to be paid in cash
for the month of July, 20XX by assuming the rates of GST as under:
CGST 9%
SGST 9%
IGST 18%

Notes: -
a) All the amounts given above are exclusive of taxes.
 CA Jasmeet Singh 177

b) All the conditions necessary for availing the ITC have been fulfilled.

Solution:
Computation of net GST liability of Mr. Ekaant
Particulars Value CGST (Rs) SGST (Rs) IGST (Rs)
(Rs)
Total tax liability
Value of intra-State legal consultancy 1,00,000 9,000 9,000 -
services i.e. inward supplies liable to
reverse charge mechanism (to be
paid in cash) (A)
[Note-1]
Value of inter-State outward 30,00,000 - - 5,40,000
supplies (B1)
Value of intra-State outward supplies 65,00,000 5,85,000 5,85,000 -
to registered as well as unregistered
persons (B2) (Rs
50,00,000+ Rs 15,00,000)
Total (B) = (B1) +(B2) 5,85,000 5,85,000 5,40,000
Input tax Credit
Brought forward ITC 2,00,000 2,00,000 5,00,000
Value of intra-State inward supplies 10,00,000 90,000 90,000
from registered person [Note-2]
Value of inter-State inward supplies 5,00,000 - - 90,000
from registered person [Note-2]
Value of intra-State inward supplies 2,00,000 - - -
from unregistered person [Note-3]
IGST credit of capital goods [Note- 1,50,000
2]
Credit on other inward supplies 45,000 45,000 -
purchased in the month of July less
credit on membership of a club
[Note-2 & 4]
Credit of legal consultancy services 9,000 9,000 -
[Note-2]
Total ITC 3,44,000 3,44,000 7,40,000
Set off and Computation of Net GST Liability
Particulars IGST CGST SGST
Output Tax Liability 540000 585000 585000
Less: ITC of IGST (540000) (200000) 0
 CA Jasmeet Singh 178

Less: ITC of CGST (344000)

Less: ITC of SGST (344000)
Liability after set off Nil 41000 241000
RCM liability payable in cash 9000 9000
Net GST liability to be paid in cash Nil 50000 250000

Notes:-
1. Services supplied by an individual advocate to any business entity located in the taxable
territory by way of legal services, directly or indirectly are taxable under reverse charge
mechanism. Thus, tax is payable by the recipient (Mr. Ekaant) on said services to the
Government.

Further, as per section 49(4) of the CGST Act, 2017, amount available in the electronic
credit ledger [ITC amount] may be used for making payment towards output tax.
However, tax payable under reverse charge is not an output tax in terms of section 2(82)
of the CGST Act, 2017. Therefore, tax payable under reverse charge cannot be set off
against the input tax credit and thus, will have to be paid in cash.

2. Every registered person is entitled to take credit of input tax charged on any inward
supply of goods and/or services which are used or intended to be used in the course or
furtherance of his business in terms of section 16 of CGST Act, 2017. Further “input tax” in
relation to a registered person includes the tax payable under reverse charge mechanism
in terms of section 2(62) of the CGST Act, 2017.

3. Intra-State supplies received by a registered person from any unregistered supplier, are
exempt from the whole of the central tax leviable thereon under section 9(4) till
30.09.2019 [Notification No.8/2017 CT (R) dated 28.06.2017]. Since no tax has been paid, so
no credit is available.

4. Input tax credit is not allowed in respect of membership of a club in terms of section 17(5)
of CGST Act, 2017.

33. Mr. Bholenath, a registered supplier of goods, pays GST under regular scheme and provides the
following information for the month of January, 20XX:
Particulars (Rs.)
(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 January 20XX:
 CA Jasmeet Singh 179

Nature ITC Amount in (Rs.)

CGST 20,000
SGST 30,000
lGST 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. Bholenath for the month of January, 20XX.

Solution:
Computation of net GST payable by Mr. Bholenath for the month of January, 20XX Working of
GST payable on Outward supplies
S. No. Particulars (Rs.) GST (Rs.)
(i) Inter-State taxable supply of goods IGST @ 18% on
Rs. 10,00,000 1,80,000
(ii)
Intra-State taxable supply of goods CGST @ 9% on
18,000
Rs. 2,00,000
18,000 36,000
SGST @ 9% on Rs. 2,00,000

Computation of total ITC

Particulars CGST @ 9% SGST @ 9% IGST @ 18%
(Rs.) (Rs.) (Rs.)
Opening ITC 20,000 30,000 25,000
Add: ITC on Intra-State purchases of
taxable goods valuing Rs. 45,000 45,000
5,00,000
Total ITC 65,000 75,000 25,000

Computation of GST payable from cash ledger

Particulars IGST @ 18% CGST @ 9% SGST @ 9%
(Rs.) (Rs.)
GST payable 1,80,000 18,000 18,000
Less: ITC of IGST (25000)
Less: ITC of CGST (47000) (18000)
Less: ITC of SGST (57000) (18000)
Net GST Payable 51000 Nil Nil

34. Mr. Kanhaiya, 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
January, 2018:-
 CA Jasmeet Singh 180

Particulars Amount
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 January, 2018:-
Particulars Amount
Intra-state purchase of goods 4,00,000
Inter-state purchase of goods 50,000

Balance of ITC available at the beginning of the January 2018:-

CGST 15000
SGST 35000
IGST 20000

Note:
a) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and
outward supplies.
b) Both inward and outward supplies given above are exclusive of taxes, wherever
applicable.
c) All the conditions necessary for availing the ITC have been fulfilled. Compute the net GST
payable by Mr. Kanhaiya for the month of January, 2018.

Solution:
Computation of net GST payable by Mr. Kanhaiya for the month of January, 2018
S.No. Particulars (Rs.) GST (Rs.)
(i) Intra-State supply of goods CGST @ 9% on Rs.
6,00,000 54,000
54,000 1,08,000
SGST @ 9% on Rs. 6,00,000
(ii) Inter-State supply of goods IGST @ 18% on Rs.
36,000
2,00,000

Computation of total ITC

Particulars CGST @ 9% SGST @ 9% IGST@18%
(Rs.) (Rs.) (Rs.)
Opening ITC 15,000 35,000 20,000
Add: ITC on Intra-State purchases of goods 36,000 36,000
valuing Rs. 4,00,000
Add: ITC on Inter-State purchases of goods
valuing Rs. 50,000 9,000
 CA Jasmeet Singh 181

Total ITC 51,000 71,000 29,000

Computation of GST payable from cash ledger

Particulars IGST @ 18% CGST @ 9% SGST @ 9%
GST payable 36000 54,000 54,000
Less: ITC of IGST (29000)
Less: ITC of CGST (51,000)
Less: ITC of SGST (7000) (54,000)

Net GST payable Nil 3,000 Nil

35. Namo Shankar Ltd., a registered supplier in Mumbai (Maharashtra), has supplied goods to
Narad Traders and Nandi Motors Ltd. located in Ahmedabad (Gujarat) and Pune
(Maharashtra) respectively. Namo Shankar Ltd. has furnished the following details for the
current month:

S. Particulars Narad Traders Nandi Motors

No. (Rs.) Ltd. (Rs.)
(i) Price of the goods (excluding GST) 10,000 30,000
(ii) Packing charges 500
(iii) Commission 500
(iv) Weighment charges 2,000
(v) Discount for prompt payment (recorded in 1,000
the invoice
Items given in points (ii) to (v) have not been considered while arriving at price of the goods
given in point (i) above.
Compute the GST liability [CGST & SGST or IGST, as the case may be] of Namo Shankar Ltd. for
the given month. Assume the rates of taxes to be as under:

Particulars Rate of tax

Central tax (CGST) 9%
State Tax (SGST) 9%
Integrated tax (IGST) 18%

Make suitable assumptions, wherever necessary.

Note: The supply made to Narad Traders is an inter-State supply.
Solution:
Computation of GST liability
S. Particulars Narad Traders Nandi Motors
No. (Rs.) Ltd. (Rs.)
 CA Jasmeet Singh 182

(i) Price of goods 10,000 30,000

(ii) Add: Packing charges (Note-1) 500
(iii) Add: Commission (Note-1) 500
(iv) Add: Weighment charges (Note-1) - 2,000
(v) Less: Discount for prompt payment (Note-2) - 1,000
Value of taxable supply 11,000 31,000
IGST payable @ 18% (Note-3) 1,980
CGST payable @ 9% (Note-4) 2,790
SGST payable @ 9% (Note-4) 2,790

Notes:

1. Incidental expenses, including commission and packing, charged by supplier to recipient of

supply is includible in the value of supply. Weighment charges are also incidental expenses,
hence includible in the value of supply [Section 15 of the CGST Act, 2017].

2. Since discount is known at the time of supply, it is deductible from the value in terms of
section 15 of the CGST Act, 2017.

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

4. Since supply made to Nandi Motors Ltd. is an intra-State supply, CGST & SGST is payable on
the same.

36. M/s. Grey, a registered taxable person under regular scheme provides following information in respect of
supplies made by it during the month of April, 2019:

Particulars (All amount

in rupees)
(i) Inter-state supply of goods 1,00,000
(ii) Intra-state supply of 500 packets of detergent @ Rs. 400 each alongwith a
plastic bucket worth Rs. 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 50,000
centre 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 Rs. 70,000
20,000 is missing and no other tax paying document is available)
(v) Repairing of bus with seating capacity of 20 passengers used to transport its
employees from their residence, being intra-state supply. 50,000

Details of opening balances of ITC as on 1-·4-2019 are as follows:

 CA Jasmeet Singh 183

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.

Solution :

Computation of minimum net GST payable in cash by M/s. Grey for the month of April, 2019

Particulars Value (Rs.) CGST (Rs.) SGST (Rs.) IGST (Rs.)

Total tax liability

Inter-State supply of goods 1,00,000 18,000
Intra-State supply of 500 packets of 2,00,000 28,000 28,000
detergents along with a plastic bucket (500 x 400) (2,00,000 (2,00,000
[Note-1] x 14%) x 14%)
Supply of online educational journal to 50,000 4,500 4,500
private coaching centre [Note-2] (50,000 x (50,000 x
9%) 9%)
Total tax liability (A) 32,500 32,500 18,000
Input tax credit (ITC)
Brought forward ITC 5,000 5,000 40,000
Inter-State purchase of goods [Note-3] 50,000 9,000
Repairing of bus with seating capacity of 20 50,000 4,500 4,500
passengers [Note-4]
Total ITC (B) 9,500 9,500 49,000
Minimum net GST payable in cash
Total tax liability 32,500 32,500 18,000
Less: Set off of IGST liability from IGST (18,000)
credit
Set off IGST credit against CGST and SGST (23,000) (8,000)
liability in any order and in any proportion
 CA Jasmeet Singh 184

Set off of CGST and SGST credit against CGST (9,500) (9,500)
and SGST liability respectively CGST SGST
Minimum net GST payable in cash Nil 15,000 Nil
Notes:-
1. Supply of detergent and bucket together with a single price of Rs. 400 is a mixed supply. Being a mixed
supply comprising of two supplies, it shall be treated as supply of that particular supply that attracts
highest rate of tax (28%).
2. Supply of online educational journal is exempt only when the same is provided to an educational
institution which provides a qualification recognised by law. Since, the private coaching centre does not
provide any recognised qualification, the supply of online educational journals to the same will be
taxable.
3. ITC can be taken only on the basis of a valid tax paying document. Thus, ITC will not be available on
goods for which the invoice is missing.
4. ITC on motor vehicles for transportation of persons with seating capacity > 13 persons (including the
driver) used for any purpose is allowed. Further, ITC is allowed on repair and maintenance services
relating to motor vehicles, ITC on which is allowed.
Note: Under the amended position of law, the IGST credit, after being set off against IGST liability, can
be utilised against CGST and SGST liability in any order and in any proportion. Thus, there cannot be one
answer for the minimum net CGST and SGST payable in cash [i.e. GST liability] as the amount of CGST
and SGST liabilities are the same as also the amount of ITC for CGST and SGST is also the same.

37. KNK Ltd., a registered supplier of Mumbai is a manufacturer of heavy machines. Its outward
supplies (exclusive of GST) for the month of January, 2020 are as follows:

S. No. Particulars Amount

(Rs.)
(i) Inter-State 85,00,00
0
(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, 2020 are as follows:

S. No. Particulars CGST SGST

paid (Rs.) paid (Rs.)
(i) Raw material A 60,000 60,000
(of which 70% of inputs procured were used and
30% were in stock at the end of the January, 2020)
 CA Jasmeet Singh 185

(ii) Raw material 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 factory 30,000 30,000
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-2A except for item (i) i.e. Raw
Material A, for which supplier has not filed its GSTR-1 for the month of January 2020,
hence corresponding input tax credit (ITC) is not reflecting in GSTR-2A of KNK Ltd. in
January, 2020.
Compute the following:
(i) Amount of eligible input tax credit (ITC) available for the month of January, 2020.
(ii) Minimum net GST payable in cash, for the month of January, 2020 after using available
input tax credit.
Working notes should form part of your answer.

Solution:
(i) Computation of amount of eligible ITC available for the month of January, 2020

S. No. Particulars CGST (Rs.) SGST (Rs.)

(i) Raw materials B (90%) [Note-1] 45,000 45,000
(ii) Construction of pipelines laid outside the factory Nil Nil
premises [Note-2]
(iii) Insurance charges paid for trucks used for 55,000 55,000
transportation of goods [Note-3]
(iv) Raw materials A [Note-4] Nil Nil
(v) Eligible ITC on invoices the details of which are 1,00,000 1,00,000
available in GSTR-2A (45,000 + (45,000 +
55,000) 55,000)
 CA Jasmeet Singh 186

(vi) ITC on invoices the details of which are not available 10,000 10,000
in GSTR-2A, i.e. the invoices which have not been
uploaded by the suppliers in their GSTR-1 [Note-4]

Total eligible ITC 1,10,000 1,10,000

Notes:
a) ITC on goods destroyed is blocked under section 17 of the CGST Act, 2017.
b) ITC on works contract services availed for construction of plant and machinery is allowed
but pipelines laid outside the factory premises are excluded from the definition of plant and
machinery and hence, ITC thereon is blocked.
c) ITC on motor vehicles used for transportation of goods is allowed. Further, ITC is also
allowed on insurance services relating to motor vehicles, ITC on which is allowed.
d) Where invoice has not been uploaded by the supplier in its GSTR-1, 10% of the eligible ITC
available in respect of the uploaded invoices can be claimed by the recipient, i.e. 10% of Rs.
1,00,000.

ii. Computation of minimum net GST payable in cash for the month of January, 2020

Particulars Value CGST @ 9% SGST @ IGST @

(Rs.) (Rs.) 9% (Rs.) 18% (Rs.)
Inter-State outward supplies 85,00,000 15,30,000
Intra-State outward supplies 15,00,000 1,35,000 1,35,000
Total output tax payable 1,35,000 1,35,000 15,30,000
Less: Set off of CGST and SGST credit (1,10,000) (1,10,000)
against CGST and SGST liability
respectively
Minimum net GST payable in cash 25,000 25,000 15,30,000

38. 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, 2020 of quantity of more than 50 units will entitle them for 10% discount. Inter-State
supply made during the month of October 2020 is Rs. 50,00,000 Details of Intra-State supply:

Particulars Amount (Rs.)

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
 CA Jasmeet Singh 187

& 9% SGST)

Supply of Air Conditioners of capacity 1.5 Ton @ Rs. 50,000 per AirConditioner 50,00,000

Intra-State inward supplies are :

Particulars Amount (Rs.)

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: Rs. 58,000
SGST: Rs. 70,000
IGST: Rs. 10,00,000
Note:
(i) Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively for both inward andoutward 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, 2020.
Solution:
Computation of net GST payable in cash by X Electronics for October 2020

S. No. Particulars Amount (Rs.) CGST SGST IGST

(Rs.) (Rs.) (Rs.)
I Intra-State supply
Supply of microwave oven 15,00,000 1,35,000 1,35,000
Supply of refrigerators with 40,00,000 5,60,000 5,60,000
stabilizers
[Being mixed supply, the
supply shall be treated as a
supply of that particular
supply which attracts the
highest rate of tax and taxed
 CA Jasmeet Singh 188

accordingly. Thus, it will be

taxed @ 14% CGST and 14%
SGST.]
Supply of 100 (Rs. 50 lakh/ Rs. 45,00,000 4,05,000 4,05,00
50,000) air conditioners 0
[Since 100 air conditioners [Rs. 50,00,000 x 90%]
have been supplied,
discount @ 10% will be
available.]1
II Inter-State supply @ 18% 50,00,000 9,00,00
0
Total outward tax liability 11,00,000 11,00,000 9,00,00
0
Less: Input Tax Credit (Refer
Working Note below)
IGST credit first utilized 1,00,000 9,00,000
towards payment of IGST. (IGST) (IGST)
Remaining amount can be
utilized towards CGST and
SGST in any order and in any
proportion
CGST credit set off against 5,08,000 5,20,000
CGST liability and SGST (CGST) (SGST)
credit set off against SGST
liability as CGST credit
cannot be utilized towards
payment of SGST and vice
versa.
Net GST liability payable in 4,92,000 5,80,00 Nil
cash 0

Working Note
Computation of ITC available with X Electronics

Particulars CGST SGST IGST

(Rs.) (Rs.) (Rs.)
Opening balance of ITC 58,000 70,000 10,00,000
Intra-State inward supplies
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.]
 CA Jasmeet Singh 189

Truck purchased for transportation of 30,00,000 2,70,000 2,70,000

goods
[ITC on motor vehicles used for
transportation of goods is not blocked2.]
Total ITC 5,08,000 5,20,000 10,00,000
Note: 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 (Rs. 10,72,000) in cash will remain the same.

39. Star Ltd., a registered supplier in Karnataka has provided the following details for supply of one machine·:

Particulars Amount in
(Rs.)
(1) List price of machine supplied [exclusive of items given below from (2) to (4)] 80,000
(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 Rs. 5,000 as subsidy from a NGO on sale of each such machine, The Price of Rs. 80,000
of the machine is after considering such subsidy.
During the month of February, 2020, Star Ltd. supplied three machines to Intra-State customers and one
machine to Inter-State customer.
Star Ltd. purchased inputs (intra-State) for Rs. 1,20,000 exclusive of GST for supplying the above four
machines during the month.
The Balance of ITC at the beginning of February, 2020 was:

CGST SGST IGST

Rs. 18,000 Rs. 4,000 Rs. 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, 2020.
Solution:
 CA Jasmeet Singh 190

Computation of value of taxable supply

Particulars Amount (Rs.)
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.]
Total 95,000
Less: Discount @ 2% on Rs. 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 (Rs.) SGST (Rs.) IGST (Rs.)
Sale of machine 25,218 25,218 16,812
[Intra-State sales = Rs. 93,400 × 3 machines = Rs. 2,80,200
Inter-State sales = Rs. 93,400 × 1 machine = Rs. 93,400] 2,80,200 2,80,200 93,400×1
×9%] ×9%] 8%]
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 (Rs.) SGST (Rs.) IGST (Rs.)

Opening balance of ITC 18,000 4,000 26,000
Add: Inputs purchased during the month 10,800 10,800
[Rs. 1,20,000 ×9%] [Rs. 1,20,000 ×9%]
 CA Jasmeet Singh 191

Total ITC available 28,800 14,800 26,000

40. Namo Shankar Ltd., a registered supplier in Mumbai (Maharashtra), has supplied goods to
Narad Traders and Nandi Motors Ltd. located in Ahmedabad (Gujarat) and Pune
(Maharashtra) respectively. Namo Shankar Ltd. has furnished the following details for the
current month:

S. Particulars Narad Traders Nandi Motors

No. (Rs.) Ltd. (Rs.)
(i) Price of the goods (excluding GST) 10,000 30,000
(ii) Packing charges 500
(iii) Commission 500
(iv) Weighment charges 2,000
(v) Discount for prompt payment (recorded in the 1,000
invoice
Items given in points (ii) to (v) have not been considered while arriving at price of the goods
given in point (i) above.
Compute the GST liability [CGST & SGST or IGST, as the case may be] of Namo Shankar Ltd. for the
given month. Assume the rates of taxes to be as under:

Particulars Rate of tax

Central tax (CGST) 9%
State Tax (SGST) 9%
Integrated tax (IGST) 18%

Make suitable assumptions, wherever necessary.

Note: The supply made to Narad Traders is an inter-State supply.
Solution:
Computation of GST liability

S. No. Particulars Narad Traders Nandi Motors

(Rs.) Ltd. (Rs.)
(i) Price of goods 10,000 30,000
(ii) Add: Packing charges (Note-1) 500
(iii) Add: Commission (Note-1) 500
(iv) Add: Weighment charges (Note-1) - 2,000
(v) Less: Discount for prompt payment (Note-2) - 1,000
Value of taxable supply 11,000 31,000
 CA Jasmeet Singh 192

IGST payable @ 18% (Note-3) 1,980

CGST payable @ 9% (Note-4) 2,790
SGST payable @ 9% (Note-4) 2,790

Notes:

1. Incidental expenses, including commission and packing, charged by supplier to recipient of

supply is includible in the value of supply. Weighment charges are also incidental expenses,
hence includible in the value of supply [Section 15 of the CGST Act, 2017].

2. Since discount is known at the time of supply, it is deductible from the value in terms of
section 15 of the CGST Act, 2017.

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

4. Since supply made to Nandi Motors Ltd. is an intra-State supply, CGST & SGST is payable on
the same.

41. M/s. Grey, a registered taxable person under regular scheme provides following information in respect of
supplies made by it during the month of April, 2019:

Particulars (All amount

in rupees)
(i) Inter-state supply of goods 1,00,000
(ii) Intra-state supply of 500 packets of detergent @ Rs. 400 each alongwith a plastic
bucket worth Rs. 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 Rs. 20,000 70,000
is missing and no other tax paying document is available)
(v) Repairing of bus with seating capacity of 20 passengers used to transport its
employees from their residence, being intra-state supply. 50,000

Details of opening balances of ITC as on 1-·4-2019 are as follows:

CGST 5,000
SGST 5,000
IGST 40,000

Following additional information is provided :

 CA Jasmeet Singh 193

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.

Solution :

Computation of minimum net GST payable in cash by M/s. Grey for the month of April, 2019

Particulars Value (Rs.) CGST (Rs.) SGST (Rs.) IGST (Rs.)

Total tax liability

Inter-State supply of goods 1,00,000 18,000
Intra-State supply of 500 packets of detergents 2,00,000 28,000 28,000
along with a plastic bucket [Note-1] (500 x 400) (2,00,000 (2,00,000
x 14%) x 14%)
Supply of online educational journal to private 50,000 4,500 4,500
coaching centre [Note-2] (50,000 x (50,000 x
9%) 9%)
Total tax liability (A) 32,500 32,500 18,000
Input tax credit (ITC)
Brought forward ITC 5,000 5,000 40,000
Inter-State purchase of goods [Note-3] 50,000 9,000
Repairing of bus with seating capacity of 20 50,000 4,500 4,500
passengers [Note-4]
Total ITC (B) 9,500 9,500 49,000
Minimum net GST payable in cash
Total tax liability 32,500 32,500 18,000
Less: Set off of IGST liability from IGST credit (18,000)
Set off IGST credit against CGST and SGST liability (23,000) (8,000)
in any order and in any proportion
Set off of CGST and SGST credit against CGST and (9,500) (9,500)
SGST liability respectively CGST SGST
Minimum net GST payable in cash Nil 15,000 Nil
Notes:-
1. Supply of detergent and bucket together with a single price of Rs. 400 is a mixed supply. Being a mixed
supply comprising of two supplies, it shall be treated as supply of that particular supply that attracts
 CA Jasmeet Singh 194

highest rate of tax (28%).

2. Supply of online educational journal is exempt only when the same is provided to an educational
institution which provides a qualification recognised by law. Since, the private coaching centre does not
provide any recognised qualification, the supply of online educational journals to the same will be
taxable.
3. ITC can be taken only on the basis of a valid tax paying document. Thus, ITC will not be available on
goods for which the invoice is missing.
4. ITC on motor vehicles for transportation of persons with seating capacity > 13 persons (including the
driver) used for any purpose is allowed. Further, ITC is allowed on repair and maintenance services
relating to motor vehicles, ITC on which is allowed.
Note: Under the amended position of law, the IGST credit, after being set off against IGST liability, can be
utilised against CGST and SGST liability in any order and in any proportion. Thus, there cannot be one
answer for the minimum net CGST and SGST payable in cash [i.e. GST liability] as the amount of CGST and
SGST liabilities are the same as also the amount of ITC for CGST and SGST is also the same.

42. KNK Ltd., a registered supplier of Mumbai is a manufacturer of heavy machines. Its outward
supplies (exclusive of GST) for the month of January, 2020 are as follows:

S. No. Particulars Amount (Rs.)

(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, 2020 are as follows:

S. No. Particulars CGST SGST

paid (Rs.) paid (Rs.)
(i) Raw material A 60,000 60,000
(of which 70% of inputs procured were used and 30%
were in stock at the end of the January, 2020)
(ii) Raw material 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 factory 30,000 30,000
premises
 CA Jasmeet Singh 195

(iv) Insurance charges paid for trucks used for transportation 55,000 55,000
of goods.

Additional Information:
(iii) 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.
(iv) Details of GST paid on inward supplies are available in GSTR-2A except for item (i) i.e. Raw
Material A, for which supplier has not filed its GSTR-1 for the month of January 2020, hence
corresponding input tax credit (ITC) is not reflecting in GSTR-2A of KNK Ltd. in January, 2020.
Compute the following:
(iii) Amount of eligible input tax credit (ITC) available for the month of January, 2020.
(iv) Minimum net GST payable in cash, for the month of January, 2020 after using available input
tax credit.
Working notes should form part of your answer.

Solution:
(i) Computation of amount of eligible ITC available for the month of January, 2020

S. No. Particulars CGST (Rs.) SGST (Rs.)

(i) Raw materials B (90%) [Note-1] 45,000 45,000
(ii) Construction of pipelines laid outside the factory premises Nil Nil
[Note-2]
(iii) Insurance charges paid for trucks used for transportation of 55,000 55,000
goods [Note-3]
(iv) Raw materials A [Note-4] Nil Nil
(v) Eligible ITC on invoices the details of which are available in 1,00,000 1,00,000
GSTR-2A (45,000 + (45,000 +
55,000) 55,000)
(vi) ITC on invoices the details of which are not available in 5,000 5,000
GSTR-2A, i.e. the invoices which have not been uploaded by
the suppliers in their GSTR-1 [Note-4]

Total eligible ITC 1,05,000 1,05,000

Notes:
1. ITC on goods destroyed is blocked under section 17 of the CGST Act, 2017.
2. ITC on works contract services availed for construction of plant and machinery is allowed but
pipelines laid outside the factory premises are excluded from the definition of plant and
machinery and hence, ITC thereon is blocked.
 CA Jasmeet Singh 196

3. ITC on motor vehicles used for transportation of goods is allowed. Further, ITC is also allowed
on insurance services relating to motor vehicles, ITC on which is allowed.
4. Where invoice has not been uploaded by the supplier in its GSTR-1, 10% of the eligible ITC
available in respect of the uploaded invoices can be claimed by the recipient, i.e. 10% of Rs.
1,00,000.
(ii) Computation of minimum net GST payable in cash for the month of January, 2020

Particulars Value CGST @ 9% SGST @ IGST @

(Rs.) (Rs.) 9% (Rs.) 18% (Rs.)
Inter-State outward supplies 85,00,000 15,30,000
Intra-State outward supplies 15,00,000 1,35,000 1,35,000
Total output tax payable 1,35,000 1,35,000 15,30,000
Less: Set off of CGST and SGST credit (1,10,000) (1,10,000)
against CGST and SGST liability
respectively
Minimum net GST payable in cash 25,000 25,000 15,30,000

43. 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, 2020 of quantity of more than 50 units will entitle them for 10% discount.
Inter-State supply made during the month of October 2020 is Rs. 50,00,000 Details of Intra-State
supply:

Particulars Amount
(Rs.)
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 @ Rs. 50,000 per Air 50,00,000
Conditioner
Intra-State inward supplies are :

Particulars Amount
(Rs.)
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.
 CA Jasmeet Singh 197

Opening Balance of ITC is as under:

CGST: Rs. 58,000
SGST: Rs. 70,000
IGST: Rs. 10,00,000
Note:
i. Rate of CGST, SGST and 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, 2020.

Solution:
Computation of net GST payable in cash by X Electronics for October 2020

S. No. Particulars Amount (Rs.) CGST SGST IGST

(Rs.) (Rs.) (Rs.)
I Intra-State supply
Supply of microwave oven 15,00,000 1,35,000 1,35,000
Supply of refrigerators with 40,00,000 5,60,000 5,60,000
stabilizers
[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 (Rs. 50 lakh/ Rs. 45,00,000 4,05,000 4,05,00
50,000) air conditioners 0
[Since 100 air conditioners [Rs.
have been supplied, discount 50,00,000 x
@ 10% will be available.]1 90%]
II Inter-State supply @ 18% 50,00,000 9,00,00
0
Total outward tax liability 11,00,000 11,00,000 9,00,00
0
Less: Input Tax Credit (Refer
Working Note below)
IGST credit first utilized 1,00,000 9,00,000
towards payment of IGST. (IGST) (IGST)
Remaining amount can be
utilized towards CGST and SGST
in any order and in any
 CA Jasmeet Singh 198

proportion
CGST credit set off against 5,08,000 5,20,000
CGST liability and SGST credit (CGST) (SGST)
set off against SGST liability as
CGST credit cannot be utilized
towards payment of SGST and
vice versa.
Net GST liability payable in 4,92,000 5,80,00 Nil
cash 0

Working Note
Computation of ITC available with X Electronics

Particulars CGST SGST IGST

(Rs.) (Rs.) (Rs.)
Opening balance of ITC 58,000 70,000 10,00,000
Intra-State inward supplies
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 30,00,000 2,70,000 2,70,000
goods
[ITC on motor vehicles used for
transportation of goods is not blocked2.]
Total ITC 5,08,000 5,20,000 10,00,000
Note: 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 (Rs. 10,72,000) in cash will remain the same.

44. Star Ltd., a registered supplier in Karnataka has provided the following details for supply of one
machine·:

Particulars Amount in
(Rs.)
 CA Jasmeet Singh 199

(1) List price of machine supplied [exclusive of items given below from (2) to 80,000
(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 Rs. 5,000 as subsidy from a NGO on sale of each such machine, The Price of Rs.
80,000 of the machine is after considering such subsidy.
During the month of February, 2020, Star Ltd. supplied three machines to Intra-State customers
and one machine to Inter-State customer.
Star Ltd. purchased inputs (intra-State) for Rs. 1,20,000 exclusive of GST for supplying the above
four machines during the month
The Balance of ITC at the beginning of February, 2020 was:

CGST SGST IGST

Rs. 18,000 Rs. 4,000 Rs. 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, 2020.
Solution:
Computation of value of taxable supply
Particulars Amount
(Rs.)
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
 CA Jasmeet Singh 200

Act, 2017.]

Total 95,000
Less: Discount @ 2% on Rs. 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 (Rs.) SGST (Rs.) IGST (Rs.)

Sale of machine 25,218 25,218 16,812
[Intra-State sales = Rs. 93,400 × 3 machines = Rs. 2,80,200
2,80,200 2,80,200 93,400×1
Inter-State sales = Rs. 93,400 × 1 machine = Rs. 93,400]
×9%] ×9%] 8%]
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 (Rs.) SGST (Rs.) IGST (Rs.)

Opening balance of ITC 18,000 4,000 26,000
Add: Inputs purchased during the month 10,800 10,800
[Rs. 1,20,000 [Rs. 1,20,000 ×9%]
×9%]
Total ITC available 28,800 14,800 26,000

45. XY’ of Kolkata is engaged in supply of various goods and services. It pays GST under regular
scheme. The following information is provided by it for the month of July:

Payments Amount Receipts Amount

 CA Jasmeet Singh 201

(Rs.) (Rs.)
Inter-State purchases of office 1,40,000 Inter-State supply of office 2,00,000
stationery stationery
Repairing of lorry used to 1,00,000 Intra-State supply of 500 combi 4,00,000
transport goods from warehouse packs containing one
to clients’ location [Intra-State calculator and one diary
supply]
Intra-State supply of services 1,00,000
of business correspondent to
Shubhvidhi Bank with respect
to accounts in its urban area
branch
The following additional information is provided by ‘XY’ in relation to the above receipts and
payments:
a) 10% of the inter-State supply of office stationery are made to unregistered persons.
b) Each combi pack (containing a calculator and a diary) is priced at Rs. 800. The calculator
and the diary are individually priced at Rs. 700 and Rs. 200 respectively.
c) An invoice of Rs. 40,000 towards purchase of office stationery is missing and no other
tax paying document is available in respect of such goods.
d) All the figures mentioned above are exclusive of taxes, wherever applicable.

e) Rates of CGST, SGST and IGST for all services, office stationery and calculator are 9%, 9%
and 18% respectively. Rates of CGST, SGST and IGST for diary are 14%, 14% and 28%
respectively.
f) Subject to the information given above, all the necessary con ditions for availing input
tax credit have been fulfilled.
Details of opening balances of input tax credit as on 1st July is given here under:

Tax Amount
(Rs.)
CGST 5,000
SGST 5,000
IGST 80,000

Compute the minimum net GST [CGST, SGST or IGST, as the case may be] payable in cash by
‘XY’ for the month of July.
Solution:
Computation of minimum net GST payable in cash by ‘XY’ for the month of July

Particulars Value CGST SGST IGST

(Rs.) (Rs.) (Rs.) (Rs.)
 CA Jasmeet Singh 202

Total tax liability

Inter-State supply of stationery [Note1] 2,00,000 36,000
Intra-State supply of 500 combi packs of 4,00,000 56,000 56,000
calculators and diaries [Note-2] (500 x (4,00,000 (4,00,000
800) x 14%) x 14%)
Intra-State supply of services of business 1,00,000 9,000 9,000
correspondent to a Shubhvidhi Bank with respect (1,00,000 (1,00,000
to accounts in its urban area branch [Note-3] x 9%) x 9%)
Total tax liability 65,000 65,000 36,000
Input tax credit (ITC)
Brought forward ITC 5,000 5,000 80,000
Inter-State purchase of office stationery [Note-4] 1,00,000 18,000
Intra-State repairing of lorry used for 1,00,000 9,000 9,000
transportation of goods [Note-5]
Total ITC 14,000 14,000 98,000
Minimum net GST payable in cash
Total tax liability 65,000 65,000 36,000
IGST credit being set off against IGST liability (36,000)
IGST credit being used to pay CGST and SGST (11,000) (51,000)
liability in any order and in any proportion
CGST and SGST credit being used to pay CGST and (14,000) (14,000)
SGST liability respectively CGST SGST
Minimum net GST payable in cash 40,000 Nil Nil
Notes:-
1. Taxable supplies made by a registered person are liable to tax irrespective of whether
they are made to a registered person or to an unregistered person.
2. Supply of calculator and diary as a combi pack with a single price of Rs. 800 is a mixed
supply. Being a mixed supply comprising of two supplies, it shall be treated as supply of
that particular supply which attracts highest rate of tax.
3. Services provided by a business facilitator/ business correspondent to a banking
company only with respect to accounts in its rural area branch are exempt and not with
respect to accounts in its urban area branch .
4. ITC can be taken only on the basis of a valid tax paying document. Thus, ITC will not be
available on goods for which the invoice is missing.
5. ITC on motor vehicles used for transportation of goods is allowed. Further, ITC is
allowed on repair and maintenance services relating to motor vehicles, ITC on which is
allowed.
Note: IGST credit, after being set off against IGST liability, can be utilised against CGST and
 CA Jasmeet Singh 203

SGST liability in any order and in any proportion. Thus, there cannot be one answer for the
minimum net CGST and SGST payable in cash as the amount of CGST and SGST liabilities are
the same as also the amount of ITC for CGST and SGST is also the same.

Multiple Choice Questions

1. Which of these electronic ledgers/registers 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
 CA Jasmeet Singh 204

(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. Mr. X, a supplier of goods, pays GST under regular scheme. The amount of input tax credit (ITC)
available and output tax liability under different tax heads is as under: -
Head Output tax liability ITC
IGST 2000 4000
CGST 800 2000
SGST/UTGST 2500 500
Compute the minimum GST payable in cash by Mr. X.
(a) 2000
 CA Jasmeet Singh 205

(b) 500
(c) Nil
(d) 1200

Solution: -
1) d 2) c 3) b 4) a 5) b 6) d 7) d 8) b 9) a 10)
11) 12)
 CA Jasmeet Singh 206

Chapter 11: Exemption under GST

1. An individual act as a referee in a football match organized by Sports Authority of India. He has
also acted as a referee in another charity football match organized by a local sports club, in lieu of
a lump sum payment. Discuss whether he is required to pay any GST?

Solution:
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.

2. RXL Pvt. Ltd. manufactures beauty soap with the brand name ‘Forever Young’. RXL Pvt. Ltd. has
organized a concert to promote its brand. Ms. Ahana Kapoor, its brand ambassador, who is a
leading film actress, has given a classical dance performance in the said concert. The proceeds of
the concert worth Rs 1,20,000 will be donated to a charitable organization.
Whether Ms. Ahana Kapoor will be required to pay any GST?

Solution:
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 Rs 1,50,000. However, such exemption is not available in respect of service
provided by such artist as a brand ambassador.

Since Ms. Ahana Kapoor is the brand ambassador of ‘Forever Young’ soap manufactured by RXL
Pvt. Ltd., the services rendered by her by way of a classical dance performance in the concert
organized by RXL Pvt. Ltd. to 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
 CA Jasmeet Singh 207

3. 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
Fee charged for yoga camp conducted by a charitable trust 50000
Amount charged by business correspondent for the services provided 100000
to the rural branch of a bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem cells 500000
Amount charged for service provided by commentator to a recognized 520000
sports body

Solution:
Computation of value of taxable
Particulars Amount
Fees charged for yoga camp conducted by a charitable trust [Note-1] NIL
Amount charged by business correspondent for the services provided to the NIL
rural branch of a bank with respect to Savings Bank Accounts [Note-2]
Amount charged by cord blood bank for preservation of stem cells [Note-3] NIL
Service provided by commentator to a recognized sports body [Note-4] 520000

Notes:
1. Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of
charitable activities are exempt from GST. The activities relating to advancement of yoga
are included in the definition of charitable activities. So, such activities are exempt from
GST.
2. Services by business facilitator or a business correspondent to a banking company with
respect to accounts in its rural area branch have been exempted from GST.
3. Services provided by cord blood banks by way of preservation of stem cells or any other
service in relation to such preservation are exempt from GST.
4. Services provided to a recognized sports body only by an individual as a player, referee,
umpire, coach or team manager for participation in a sporting event organized by a
recognized sports body are exempt from GST. Thus, services provided by commentators are
liable to GST.

4. 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.
 CA Jasmeet Singh 208

Solution:
(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.

5. 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 service Provided Amount
Charged
A Transportation of milk 20000
B Transportation of books on a consignment transported in a 3000
single goods carriage
C Transportation of chairs for a single consignee in the goods 600
carriage

Solution:
Customer Nature of service Amount Taxability
Provided Charged
A Transportation of milk 20000 Exempt. Transportation of milk by goods
transport agency is exempt.
B Transportation of 3000 GST is payable. Exemption is available for
books on a transportation of goods only where the
Consignment consideration for transportation of goods on
transported in a single a consignment transported in a single goods
goods carriage carriage does not exceed Rs 1,500.
C Transportation of 600 Exempt. Transportation of goods where
chairs for a single consideration for transportation of all goods
consignee in the for a single consignee does not exceed
goods carriage Rs.750 is exempt.

6. Examine whether GST is payable in the following independent supply of services:

(i) 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.
(ii) Ramfal Lalaji, an agriculturist, has stored sugarcane in a warehouse. He has taken fumigation
services in the said warehouse from Gupta Pest Control Co. for which he paid the
consideration of Rs 6,000.

Solution:
 CA Jasmeet Singh 209

(i) Services provided by an educational institution by way of conduct of entrance examination

against consideration in the form of entrance fee is exempt from GST vide Notification No.
12/2017 CT (R) dated 28.06.2017 as amended.
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.

(ii) Services by way of fumigation in a warehouse of agricultural produce are exempt from GST
vide Notification No. 12/2017 CT (R) dated 28.06.2017 as amended. In the present case, since
Gupta Pest Control Co. provides services by way of fumigation in the warehouse of
sugarcane [being an agricultural produce], said services are exempt and GST is not payable
on the same.

7. Examine whether supply of food and drink in the following independent cases is exempt from
GST:-
(i) “Smart Kids” is a Play School located in Delhi. Smart Kids has outsourced the catering
services for supply of food and drink in the canteen of Play School to BTV Caterers, Delhi for
a consideration of Rs 8,00,000 per annum.
(ii) Wellness Hospital, a clinical establishment located in Tirupati, is specialised in diabetic
treatment. The hospital has its own canteen – Tasty Foods. The canteen serves the food and
drink to the in-patients as advised by the doctors/nutritionists of the hospital. Apart from
this, other patients (who are not admitted) or attendants or visitors of the in-patients also
take food and drink from the canteen.

Solution:
(i) Services provided to an educational institution providing services by way of pre-school
education and education up to higher secondary school or equivalent, by way of catering is
exempt from GST vide Notification No. 12/2017 CT (R) dated 28.06.2017 as amended. Thus, in
the given case, services provided by BTV Caterers to Smart Kids are exempt from GST.

(ii) Services by way of health care services provided by a clinical establishment, an authorised
medical practitioner or para-medics are exempt from GST vide Notification No. 12/2017 CT
(R) dated 28.06.2017 as amended.
In this regard, CBIC has clarified that food supplied by the hospital canteen to the in-
patients as advised by the doctor/nutritionists is a part of composite supply of healthcare
services and is not separately taxable. Thus, it is exempt from GST. However, other supplies
of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.
In view of the same, GST is exempt on the food supplied by Tasty Foods to the in- patients as
 CA Jasmeet Singh 210

advised by doctors/nutritionists while other supplies of food by it to patients (not admitted)

or attendants/visitors of the in-patients is taxable.

8. Examine whether GST is exempted on the following independent supply of services:

(i) Relax & Co, a tour operator, provides services to a foreign tourist for tour conducted in Kerala
and receives a sum of Rs. 1,50,000.
(ii) Ms. Sneha acts as a Coach for Indian Sports League (ISL), a recognised sports body, for Tennis
tournament organised by Superb retail company and received a remuneration of Rs.
4,00,000.

Solution:
(i) Services provided by a tour operator to a foreign tourist are exempt from GST provided such
services are in relation to a tour conducted wholly outside India. Thus, since in the given case,
services provided by Relax & Co. are in relation to a tour conducted within India, the same
are not exempt from GST.
(ii) Services provided by a coach 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.
Thus, since in the given case, the sporting event is not organised by a recognised sports
body, the services provided by Ms. Sneha are not exempt from GST.

9. Examine whether GST is exempted on the following independent supply of services:

(i) Teja & Co, a tour operator, provides services to a foreign tourist for tour conducted in
Jammu & Kashmir and receives a sum of Rs 3,00,000.
(ii) Ms. Poorva acts as a Team Manager for Indian Sports League (ISL), a recognised sports body,
for a Tennis tournament organised by Multi brand retail company and received a
remuneration of Rs 2,00,000.

Solution:
(i) Services provided by a tour operator to a foreign tourist are exempt from GST provided such
services are in relation to a tour conducted wholly outside India. Thus, since in the given case,
services provided by Teja & Co. are in relation to a tour conducted within India, the same are
not exempt from GST.

(ii) 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. Thus, since in the given case, the sporting event is not organised by
a recognised sports body, the services provided by Ms. Poorva are not exempt from GST.

10. Shiva Medical Centre, a Multi-specialty hospital, is a registered supplier in Mumbai. It hires senior
 CA Jasmeet Singh 211

doctors and consultants independently, without entering into any employer- employee
agreement with them. These doctors and consultants provide consultancy to the in-patients -
patients who are admitted to the hospital for treatment - without there being any contract with
such patients. In return, they are paid the consultancy charges by Shiva Medical Centre.

However, the money actually charged by Shiva Medical Centre from the in-patients is higher than
the consultancy charges paid to the hired doctors and consultants. The difference amount
retained by the hospital, i.e. retention money, includes charges for providing ancillary services
like nursing care, infrastructure facilities, paramedic care, emergency services, checking of
temperature, weight, blood pressure, etc.

Further, Shiva Medical Centre has its own canteen - Annapurna Bhawan - which supplies food to
the in-patients as advised by the doctor/nutritionists as also to other patients (who are not
admitted) or their attendants or visitors.
The Department took a stand that senior doctors and consultants are providing services to Shiva
Medical Centre and not to the patients. Hence, their services are not the health care services and
must be subject to GST. Further, GST is applicable on the retention money kept by Shiva Medical
Centre as well as on the services provided by its canteen - Annapurna Bhawan alleging that such
services are not the health care services.

You are required to examine whether the stand taken by the Department is correct provided the
services provided by Shiva Medical Centre are intra-State services.

Solution:
As per Notification No. 12/2017 CT (R) dated 28.06.2017, services by way of health care services by
a clinical establishment, an authorised medical practitioner or para-medics are exempt from GST.
Health care services have been defined to mean any service by way of diagnosis or treatment or
care for illness, injury, deformity, abnormality or pregnancy in any recognised system of
medicines in India and includes services by way of transportation of the patient to and from a
clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except
when undertaken to restore or to reconstruct anatomy or functions of body affected due to
congenital defects, developmental abnormalities, injury or trauma.

Circular No. 32/06/2018 GST dated 12.02.2018 has clarified that in view of the above definition, it
can be inferred that hospitals also provide healthcare services. The entire amount charged by
them from the patients including the retention money and the fee/payments made to the doctors
etc., is towards the healthcare services provided by the hospitals to the patients and is exempt
from GST. In view of the same, GST is not applicable on the retention money kept by Shiva
Medical Centre.
 CA Jasmeet Singh 212

The circular also clarified that services provided by senior doctors/ consultants/ technicians hired
by the hospitals, whether employees or not, are also healthcare services exempt from GST.
Hence, services provided by the senior doctors and consultants hired by Shiva Medical Centre,
being healthcare services, are also exempt from GST.

The circular further explained that food supplied by the hospital canteen to the in -patients as
advised by the doctor/nutritionists is a part of composite supply of healthcare services and is not
separately taxable. Thus, it is exempt from GST. However, other supplies of food by a hospital to
patients (not admitted) or their attendants or visitors are taxable. In view of the same, GST is not
applicable on the food supplied by Annapurna Bhawan to in-patients as advised by
doctors/nutritionists while other supplies of food by it to patients (not admitted) or their
attendants/visitors are taxable.

11. Wisdom Public School, a higher secondary school in Delhi, is of the view that no tax is payable on
the education provided by it to its students as education plays a significant and remedial role in
balancing the socio-economic fabric of the country.
Examine whether GST law provides any scope of exemption to supply of goods or services with
particular reference to the contention raised by school?

Solution:
Yes, GST law provides the scope of exemption to supply of goods and services. Section 11 of CGST
Act, 2017 provides that in the public interest, the Central or the State Government can exempt
either wholly or partly, on the recommendations of the GST council, the supplies of goods or
services or both from the levy of GST either absolutely or subject to conditions.
Further, the Government can exempt, under circumstances of an exceptional nature, by special
order any goods or services or both.
As regards the contention raised by Wisdom Public School, the same is valid in law since
Notification No. 12/2017 CT (R) dated 28.06.2017 specifically wholly exempts services provided by
an educational institution to its students, faculty and staff.

12. Examine whether GST is payable in the following independent cases: -

(i) Amar Jyoti Charitable trust, registered under section 10(23C) (v) of the Income- tax Act
manages a temple in Shahdara, Delhi. It has given on rent a community hall, located within
temple premises, to public for celebration of New Year evening. Rent charged is Rs 9,500.
(ii) Speed post services by Department of Post to Union Territory of Lakshadweep.
(iii) XY Ltd. has given on hire 7 trucks to Jaggi Transporters of Delhi (a goods transport agency)
for transporting goods in Central and West Delhi. The hiring charges for the trucks are Rs
6,200 per truck per day.
 CA Jasmeet Singh 213

Solution:
(i) Renting of community hall by Amar Jyoti charitable trust is exempt from GST, as rent is less
than Rs. 10,000 per day. The Exemption Notification No. 12/2017 CT (R) dated 28.06.2017/
Notification No. 9/2017 IT (R) dated 28.06.2017 has exempted the said service wholly from
GST.
The said notification provides exemption to services by a person inter alia by way of renting
of precincts of a religious place meant for general public, owned or managed by an entity
registered as a trust or an institution under section 10(23C)(v) of the Income-tax Act.
However, this exemption does not apply where renting charges of premises, community
halls, Kalyan mandapam or open area are Rs 10,000 or more per day.

(ii) GST is not payable in case of speed post services by Department of Post to Union territory of
Lakshadweep. The Exemption Notification No. 12/2017 CT (R) dated 28.06.2017/ Notification
No. 9/2017 IT (R) dated 28.06.2017 has exempted the said service wholly from GST.
Exemption Notification inter alia provides exemption to services by the Department of Posts
by way of speed post, express parcel post, life insurance, and agency services provided to the
Central Government, State Government, Union territory. Therefore, GST is payable, if such
service is provided to a person other than Central Government/State Government/Union
Territory.

(iii) GST is not payable in case of hiring of trucks to Jaggi Transporters. The Exemption
Notification No. 12/2017 CT (R) dated 28.06.2017/ Notification No. 9/2017 IT (R) dated
28.06.2017 provides exemption to services by way of giving on hire inter alia to a goods
transport agency, a means of transportation of goods.

13. Sarva Sugam Charitable Trust, a trust registered under section 12AA of the Income Tax Act, 1961
provides the following information relating to supply of its services for the month of August
2017:

Particulars Amount
Renting of residential dwelling for use as a residence 18,00,000
Renting of rooms for pilgrims (Charges per day Rs 1,200) 8,00,000
Renting of rooms for devotees (Charges per day Rs 750) 6,00,000
Renting of kalyana mandapam (Charges per day Rs 15,000) 12,00,000
Renting of halls and open space (Charges per day Rs 7,500) 10,75,000
Renting of shops for business (Charges per month Rs 9,500) 4,75,000
Renting of shops for business (Charges per month Rs 12,000) 7,50,000
Compute the total taxable value of supply for the month of August 2017 assuming that the above
 CA Jasmeet Singh 214

amounts are exclusive of GST.

Solution:
Notification No. 12/2017 CT (R) dated 28.06.2017 /Notification No. 9/2017 IT (R) dated
28.06.2017[exemption notification] provides exemption to renting of precincts of a religious
place meant for general public, owned/managed by, inter alia, an entity registered as a charitable
trust under section 12AA of the Income-tax Act are exempt. However, exemption is not available
if:
(i) Charges for rented rooms are Rs 1,000 per day or more;
(ii) Charges for rented community halls, Kalyan mandapam, open area are Rs 10,000 per day or
more;
(iii) Charges for rented shops are Rs 10,000 per month or more.
In view of the aforesaid provisions, value of supply of Sarva Sugam Charitable Trust for August,
2017 has been computed as under:

Computation of value of supply of Sarva Sugam Charitable Trust for August, 2017
Particulars Amount
(Rs)
Renting of residential dwelling for use as residence [Exempt] Nil
Renting of rooms for pilgrims 8,00,000
[Since charges per day are not below Rs 1,000]
Renting of rooms for devotees Nil
[Since charges per day are below Rs 1,000]
Renting of Kalyana Mandapam 12,00,000
[Since charges per day are not below Rs 10,000]
Renting of halls and open spaces Nil
[Since charges per day are below Rs 10,000]
Renting of shops for business Nil
[Since charges per month are below Rs 10,000]
Renting of shops for business 7,50,000
[Since charges per month are not below Rs 10,000]
Value of taxable supply 27,50,000

Note: The question does not specify whether the rooms/Kalyan Mandapam/Halls/Open
space/shops owned by a trust registered under section 12AA of the Income-tax Act, 1961 are
located within the precincts of the religious place meant for general public or not. In the above
Solution, it has been assumed that the immovable properties are situated inside the precincts of
the religious place meant for general public.
However, the question can also be Solutioned by assuming the various immovable properties to
be situated outside the precincts of the religious place meant for general public.
 CA Jasmeet Singh 215

14. RSS ProCorp Registered under section 12 AA of income tax 1961, conducted educational
programme for homeless children in Pune. Will it fall under exemption notification?

Solution:
Yes, GST is exempt on services provided by registered person under Section 12 AA of Income tax
Act 1961 by way of educational programme conducted for homeless children.

15. Examine whether GST is exempted on the following independent supplies of services:
(i) Ramesh travelled by Air India for the purpose of business to USA.
(ii) Misbah who is an article assistant in RS and Associates during the audit period he visited the
client place by A/C Volvo bus.
(iii) Suraj is working in Bangalore, during the Christmas vacation he booked one sleeper ticket
for travelling to Bihar.

Solution:
(i) No, Transport of passengers, with or without accompanied belongings, by– air, 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.
Since Ramesh booked for International ticket the exemption shall not be applicable.

(ii) No, Transport of passengers, with or without accompanied belongings, by– Stage carriage
other than air- conditioned stage carriage is exempted under the exemption notification. In
the given case as Misbah has travelled in the A/C Volvo bus the exemption not available to
him.

(iii) Yes, Service of transportation of passengers, with or without accompanied belongings, by—
(a) Railways in a class other than—
(i) First class; or
(ii) An air-conditioned coach;
are exempt. Therefore, Suraj will be allowed the exemption.

16. Determine whether GST is payable in case of each of the following independent services
provided by the registered persons:
1) Fees charged from office staff for in-house personality development course conducted by
Markanday College - Rs. 80,000. Markanday College provides education as a part of a
curriculum for obtaining an engineering degree recognised by law.
2) Bus fees collected from students by Starward College - Rs. 3,500 per month. Starward College
provides education as a part of a curriculum for obtaining an engineering degree recognised
by law.
 CA Jasmeet Singh 216

3) Housekeeping service provided in the Smart Kids school, a play school by M/s. Spick & Span -
Rs. 25,000 per month.
4) Global link supplied ''Tracing Alphabets", an online educational journal, to Kidzee School - Rs.
4,000. The Kidzee School used the same for its students of UKG class.

Solution:
1) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided by an educational
institution to its students, faculty and staff are exempt from GST. Educational Institution has
been defined to mean, inter alia, an institution providing services by way of education as a
part of a curriculum for obtaining a qualification recognised by any law for the time being in
force.
Since Markanday College provides education as a part of a curriculum for obtaining an
engineering degree recognised by law, the services provided by it to its staff by way of
conducting personality development course would be exempt from GST.

2) As Starward College is an educational institution, the transport services provided by it to its

students would be exempt from GST.

3) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an educational
institution, by way of, inter alia, house-keeping services performed in such educational
institution are exempt from GST. However, such an exemption is available only when the said
services are provided to a pre-school education and a higher secondary school or equivalent.
Therefore, house-keeping services provided to Smart Kids Play School would be exempt from
GST.

4) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an educational
institution by way of supply of online educational journals or periodicals is exempt from GST.
However, such an exemption is available only when the said services are provided to an
educational institution providing education as a part of a curriculum for obtaining a
qualification recognised by any law for the time being in force. Therefore, GST is payable in
case of supply of online journal to students of UKG class of Kidzee School.

17. Determine taxable value of supply under the GST law with respect to each of the following
independent services provided by the registered persons:
(1) Fees charged from office staff for in-house personality development course conducted by
M.V. College - Rs 10,000.
(2) Bus fees collected from students by M.V. College - Rs 2,500 per month. (3)Housekeeping
service provided by M/s. Clean well to Himavarsha Montessori
 CA Jasmeet Singh 217

school, a play school - Rs 25,000 per month.

(4)Info link supplied ''Tracing Alphabets", an online educational journal, to students of UKG class
of Sydney Montessori School - Rs 2,000.

Solution:
(1) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided by an educational
institution to its students, faculty and staff are exempt from GST. Educational Institution has
been defined to mean, inter alia, an institution providing services by way of education as a
part of a curriculum for obtaining a qualification recognised by any law for the time being in
force.
Assuming that M. V. College provides education as a part of a curriculum for obtaining a
qualification recognised by a law, the services provided by it to its staff by way of conducting
personality development course would be exempt from GST.

(2) As assumed above that M. V. College provides education as a part of a curriculum for
obtaining a qualification recognised by a law, the transport services provided by it to its
students would be exempt from GST.

(3) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an educational
institution, by way of, inter alia, house-keeping services performed in such educational
institution are exempt from GST. However, such an exemption is available only when the said
services are provided to a pre-school education and a higher secondary school or equivalent.
Therefore, house-keeping services provided to Himavarsha Montessori Play School would be
exempt from GST on the presumption that housekeeping services have been performed in
such play school itself.

(4) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an educational
institution by way of supply of online educational journals or periodicals is exempt from GST.
However, such an exemption is available only when the said services are provided to an
educational institution providing education as a part of a curriculum for obtaining a
qualification recognised by any law for the time being in force.
Therefore, supply of online journal to students of UKG class of Sydney Montessori School will
not be exempt from GST. Hence, the taxable value in this case will be Rs. 2,000.

18.
(a) Holiday Guest House, situated at Shimla, provides boarding & lodging services to tourists at
economical cost. The charges of a single deluxe room per day are Rs. 999. Mr. X has booked one
deluxe room for two days during Christmas holidays. You are required to determine whether GST
is payable by Holiday Guest House on the above booking. If yes, determine the amount of GST so
 CA Jasmeet Singh 218

payable.
Will your Solution change, if the charges of a single deluxe room per day charged by Holiday
Guest House are Rs. 1,000?
(b) M/s Damodar Ltd. provides services by way of storage of seasonal fruits and vegetables in
Bhatinda, Punjab. The monthly rental for a godown is Rs. 15,000. Examine whether GST is payable
by M/s Damodar Ltd.

Solution:
(a) Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential
or lodging purposes, having value of supply of a unit of accommodation below or equal to Rs.
1,000 per day or equivalent have been exempted from GST vide an exemption notification
Thus, in view of the above-mentioned provisions, GST is not payable by Holiday Guest House on
the booking done by Mr. X as the charges for a unit of accommodation per day is less than Rs.
1,000.
The Solution will remain the same even if the charges of a single deluxe room per day is Rs. 1,000
as the exemption is also available in the case where value of supply of a unit of accommodation
per day is Rs. 1,000/ i.e., such services are taxable only where value of supply of a unit of
accommodation per day exceeds Rs. 1,000/-. Thus, no GST is payable by Holiday Guest House on
the booking done by Mr. X even if the charges of a single deluxe room per day is Rs. 1,000.

(b) Services by way of storage/ warehousing of cereals, pulses, fruits, nuts and vegetables, spices,
copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo,
unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea have been exempted from
GST under an exemption notification under GST.
Thus, no GST is payable on the services provided by M/s Damodar Ltd. by way of storage of
seasonal fruits and vegetables in Bhatinda, Punjab.

19. State with reasons, whether GST is payable in the following independent cases:-
(i) Services provided to recognized sports body as curator of national team.
(ii) Services provided by way of transportation of passenger in Metered Cab. (iii)Services by
way of public conveniences such as provision of facilities of
washrooms.
(iv)Services provided by a player to a franchisee which is not a recognized sports body.
Solution:
(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 are exempt from GST vide Notification No. 12/2017 CT(R) dated 28.06.2017. Thus, GST is
payable in case of services provided to a recognized sports body as curator of national team.
(ii) Service of transportation of passengers, with or without accompanied belongings, inter alia,
 CA Jasmeet Singh 219

by metered cabs are specifically exempt from GST vide Notification No. 12/2017 CT(R) dated
28.06.2017. Thus, GST is not payable in this case.
(iii) Services by way of public conveniences such as provision of facilities of bathroom,
washrooms, lavatories, urinal or toilets are not liable to GST as it is specifically exempt as per
Notification No. 12/2017 CT(R) dated 28.06.2017. Thus, GST is not payable in this case.
(iv)Services provided by a player to a franchisee which is not a recognized sports body is taxable
as it is not exempt under Notification No. 12/2017 CT(R) dated 28.06.2017. Thus, GST is payable
in this case.

20. M/s. Apna Bank Limited, a Scheduled Commercial Bank has furnished the following details for
the month of August, 2018:
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 01
account holder
Compute the value of taxable supply. Give reasons with suitable assumptions.

Solution:
Computation of value of taxable supply of M/s. Apna Bank Limited for the month of August, 2018
Particulars Amount
(in Cr)
Extended Housing Loan to its customers Nil
[Since money does not constitute goods, extending housing loan is not a supply.]

Processing fees collected from its customers on sanction of loan 20

[Interest does not include processing fee on sanction of the loan. Hence, the same is
taxable.]
Commission collected from its customers 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 not exempt.]
 CA Jasmeet Singh 220

Interest received on housing loan extended by the bank 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 01
holder
[Any charges collected over and above interest on loan, advance or deposit are
not exempt.]
Value of taxable supply 91

21. Decide with reason whether the following independent services are exempt under CGST Act,
2017:
(i) Gokul Residents' Welfare Association received Rs. 9,000 per month as contribution from each
member for sourcing of goods and services from third persons for common use of its
members.
(ii) Mr. Vikalp, a performing artist, has received Rs. 1,58,000 from performance of classical dance
and Rs. 90,000 from acting in TV Serial during the month of June 2018.

Solution:
(i) Service by an unincorporated body or a registered non-profit entity, to its own members by way
of share of contribution up to an amount of Rs. 7,500 per month per member for sourcing of
goods/services from a third person for the common use of its members in a housing society or
residential complex, is exempt.
In the given case, monthly contribution per month per member received by Gokul Residents’
Welfare Association exceeds Rs. 7,500.
Therefore, exemption will be available up to Rs. 7,500 and GST would be payable on the amount in
excess of Rs. 7,500 (viz. Rs. 1,500 in this case).
(ii) Services by an artist by way of a performance in folk or classical art forms of music, dance, or
theatre, if the consideration charged for such performance is not more than Rs. 1,50,000 are
exempt from GST.
In the given case, since the consideration received by the performing artist - Mr. Vikalp for
performance of classical dance is more than Rs. 1,50,000, said services are not exempt.
Further, consideration received for acting in TV serial is also not exempt since said performance is
not in folk/classical art forms of theatre.

22. 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 a leading film actress, has given a
classical dance performance in the said concert.
The proceeds of the concert is Rs. 1,25,000.
 CA Jasmeet Singh 221

(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?
Solution
(v) 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 Rs. 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.
(vi) Even if the proceeds of the concert will be donated to a charitable organization, she will be liable to GST.

23. Green Agro Services, a registered person provides the following information relating to its activities
during the month of February, 2020:

Gross Receipts from (Rs.)

Services relating to rearing of sheeps 6,00,000
Services by way of artificial insemination of horses 4,00,000
Processing of sugarcane into jaggery 8,00,000
Milling of paddy into rice 7,50,000
Services by way of fumigation in a warehouse of agricultural produce 1,80,000
All the above receipts are exclusive of GST.
Compute the value of taxable supplies under GST laws for the month of February, 2020.

Solution
Computation of value of taxable supplies

Particulars Amount (Rs.)

Services relating to rearing of sheeps Nil
[Exempt since services relating to rearing of all life forms of animals, except horses, for
food etc. are exempt.]
Services by way of artificial insemination of horses 4,00,000
[Not exempt since services of artificial insemination are exempt only of livestock other
than horses.]
Processing of sugarcane into jaggery 8,00,000
[Not exempt, since processes which alter the essential characteristics of agricultural
produce are not exempt and processing of sugarcane into jaggery changes the
essential characteristics of sugarcane.]
 CA Jasmeet Singh 222

Milling of paddy into rice 7,50,000

[Not exempt, since this process, being carried out after cultivation is over, is not an
intermediate production process in relation to cultivation of plants and it also changes
the essential characteristics of paddy.]
Services by way of fumigation in a warehouse of agricultural produce Nil
[Specifically exempt from GST.]
Value of taxable supplies 19,50,000

24. Satya Sai Residents Welfare Association, a registered person under GST has 30 members each paying Rs.
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 Rs. 59,000 (inclusive of GST of Rs. 9,000) and availed input
services for Rs. 23,600 (inclusive of GST of Rs. 3,600) for common use of its members during February
2020.
Compute the total GST payable, if any, by Satya Sai Residents Welfare Association, for February 2020.
GST rate is 18%. All transactions are intra-State.
There is no opening ITC and all conditions for ITC are fulfilled.
Solution:
Computation of total GST payable by Satya Sai Residents Welfare Association

Particulars Value GST@ 18%

(Rs.) (Rs.)
Maintenance charges received 2,40,000
[Rs. 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 Rs. 7,500. Otherwise, entire amount is taxable.]
Total GST payable [It has been logically presumed that maintenance 43,200
charges are exclusive of GST.]

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 Rs. 7,500 per month per
member. Thus, Satya Sai Residents Welfare Association can avail ITC of GST paid on water pump purchased
(Rs. 9,000) and input services availed (Rs. 3,600). Net GST payable in that case will come out Rs. 30,600.

25. Mutiservices Private Ltd., registered in Punjab, is engaged in supplying a variety of services. Its turnover was Rs.
35 lakh in the preceding financial year. It has provided the following information for the month of April:
 CA Jasmeet Singh 223

Particulars Amount(Rs.)
Fee for the coaching provided to students for competitive exams. The coaching 6,24,000
centre is run by Mutiservices Private Ltd. in Punjab (Intra-State transaction)
Receipts for services provided in relation to conduct of examination in Pureit 19,200
University, Delhi (providing education recognized by Indian law), being an inter-State
transaction
Amount received for transportation of students and faculty fromtheir residence to Lotus 24,000
Public School - a higher secondary school – and back (Intra-State transaction)
Amount received for providing the security and housekeeping services in Dhaani Public 36,000
School – a pre-school (Intra-State transaction)
Note: Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively. All the amounts given above are
exclusive of taxes.
Compute the total GST liability of Multiservices Private Ltd. for the month of April .
Solution:
Computation of net GST liability of Multiservices Private Ltd. for the month of April:

Particulars Value of CGST@ 9% SGST @ 9% IGST@ 18%

supply (Rs.) (Rs.) (Rs.)
(Rs.)
Fee for the coaching provided to 6,24,000 56,160 56,160
students for competitive exams[Note-1]
Services towards conduct of examination in 19,200 -
Pureit University, Delhi [Note-2]
Services of transportation of students and 24,000 -
faculty from their residence to Lotus Public
Schooland back [Note-3]
Security and housekeeping services in Dhaani 36,000 - -
Public School[Note-4]
Total GST liability 56,160 56,160
Notes:-
1. Coaching centre run by Mutiservices Private Ltd. is not an educational institution since competitive
exam coaching does not lead to grant of a qualification recognized by law. Therefore, fee received for
coaching provided at such coaching centre is taxable.
2. Since Pureit University provides qualification recognized by law, it is an educational institution and
services provided to an educational institution, in relation to conduct of examination by such
institution are exempt from GST.
3. Since Lotus Public School provides education up to higher secondary school, it is an educational
institution and services of transportation of students, faculty and staff provided to an educational
institution are exempt.
4. Since Dhaani Public School provides pre-school education, it is an educational institution. Security and
 CA Jasmeet Singh 224

housekeeping services provided within the premises of an educational institution are exempt.

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- 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 provided by Department of Posts are exempt from GST?
(a) Speed posts
(b) Life Insurance
(c) Express parcel posts
(d) None of the above

6. Kesar Maharaj, a registered supplier, gave a classical dance performance in an auditorium. The
consideration charged for the said performance is Rs 1,60,000. Such performance is not for
promotion of any product/services. Rate of CGST and SGST on such services is 9% each. Assuming
the services supplied by him to be intra-State supplies, which of the following statements are
true?
(a) GST liability of Kesar Maharaj is Nil as services provided by him are exempt.
 CA Jasmeet Singh 225

(b) Kesar Maharaj is liable to pay CGST and SGST of Rs 14,400 and Rs 14,400 respectively.
(c) Kesar Maharaj is liable to pay CGST and SGST of Rs 900 and Rs 900 respectively.
(d) None of the above.

7. Which of the following services provided by Good Health Care Nursing home are not exempt?
1) Reiki healing treatment.
2) Plastic surgery conducted to repair cleft lip of a new born baby.
3) Air ambulance services to transport critically ill patients from distant locations to Good Health
Care Nursing home.
4) 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).
5) Alternative medical treatments by way of Ayurveda.

(a) (1) and (3)

(b) (2) and (4)
(c) (1)
(d) (1), (4) and (5)

8. Open area in the precincts of a temple has been rented for a marriage for a day.In which of the
following cases, such renting is exempt from GST?

(a) Temple is owned by Sanatan Charitable Trust (registered under section 12AA of the Income-
tax Act, 1961) and consideration charged is Rs 9,000.
(b) Temple is owned by Sanatan Charitable Trust (registered under section 12AA of the Income-
tax Act, 1961) and consideration charged is Rs 11,000.
(c) Both (a) and (b).
(d) None of the above.

9. Which of the following activity is taxable under GST?

(i) Supply of food by a hospital to patients (not admitted) or their attendants or visitors.
(ii) Transportation of passengers by non-air-conditioned railways
(iii) Services by a brand ambassador by way of folk dance performance where
consideration charged is Rs. 1,40,000.
(iv) Transportation of agriculture produce by air from one place to another in India
(v) Services by way of loading, unloading, packing, storage or warehousing of rice (vi)Service
provided by GTA where consideration charged for transportation of goods
for a single carriage is Rs. 900

(a) (i), (v), (vi)

 CA Jasmeet Singh 226

(b) (iii), (iv), (v)

(c) (i), (iii), (iv)
(d) (iv), (v)

10. Which of the following activities are exempt from GST?

(a) Religious pilgrimage organised by Todarmal Charitable Trust.
(b) Loading, packing and warehousing of jaggery and pulses.
(c) Milling of paddy into rice.
(d) None of the above.

11. Mr. Khiladi Kumar, is the Managing Director of Khiladi Equipments (P) Ltd. The Company has
offices and factories in Mumbai and is registered under GST. Mr. Khiladi Kumar, has decided to
send food grains and other relief materials worth Rs 50,00,000/- and Rs 20,00,000 respectively
through railway and airways to the cyclone hit victims in Kerala in the month of November, 20XX.
The Company has contacted Super Airlines and Indian Railways to transport the materials from
Mumbai to Kerala and price for the same has been determined as Rs 10,00,000/- by air and Rs
50,000/- by railways, excluding taxes. Mr. Khiladi Kumar, seeks your help to determine what
amount of GST is to be paid to Super Airlines and Indian Railways if applicable GST rate is 18%.
(a) Super Airlines: Rs 1,80,000/-; Indian Railways: NIL
(b) Super Airlines: Rs 1,80,000/-; Indian Railways: Rs 9,000
(c) Super Airlines: Nil; Indian Railways: Rs 9,000/-
(d) Super Airlines: Nil; Indian Railways: Nil

12. M/s. Dev Bhoomi Rice (P) Ltd., a registered person under GST, is providing services of processing
of milling of paddy into rice, loading, unloading, packing, storage and warehousing of rice in the
State of Chhattisgarh. The company has made following supplies during the tax period of April,
2018 to September, 2018:
(i) Loading and unloading of rice: Rs. 50,00,000/-.
(ii) Packing and warehousing of rice: Rs. 30,00,000/-.
(iii) Processing
services of milling of paddy into rice: Rs. 1,00,00,000/-.
Determine the amount of GST payable on the above supplies assuming rate of tax as 5%. (a) Rs.
32,40,000/-
(b) Rs. 9,00,000/-
(c) Rs. 5,00,000/-
(d) Rs. Nil/-

13. Bombay Municipal Corporation (BMC) has invited online bids for maintenance of bus stops for a
period of one year from 1-Jan-2018 to 31-Dec-2018. The work involves composite supply of goods
and services and supply of services being the principal supply in which the value of goods
 CA Jasmeet Singh 227

constitutes 25% of the total value of composite supply.

Mr. Akshay Kumar, Managing Director of Khiladi Contractors (P) Ltd., located and registered in
GST in Gujarat, wants to bid for the same. He seeks your opinion to determine the taxability of the
above to quote the best price.
(a) Not Taxable
(b) GST payable
(c) Exempt
(d) None of the above

14. Mr. Happy Singh is a resident of Chandigarh. The marriage of his daughter, Khushi Kaur, has been
finalized with Mr. Lovely Singh, an NRI settled in Canada. The marriage is scheduled on 14-Feb-
2019 in Chandigarh. Mr. Happy Singh wants to send 5,000 marriage invitation cards to all his
relatives and friends to attend the marriage. He has to send the invitation by speed post. He is not
sure about the taxability of speed post services under GST regime. He seeks your help in
determining the applicability of GST on speed post.
(a) GST payable
(b) Non-Taxable
(c) Exempt
(d) None of the above

15. Mr. Bulbul Pandey, is an ambulance driver, who lives in the NCT of Delhi. He provides driving
services to Preeti Heart and Lung Institute (PHLI-a super specialty hospital registered in GST in
Delhi) for a consideration of Rs. 25,000/- per month.
Mr. Bulbul Pandey was instructed to pick up a patient in Gurugram to PHLI. While going from
Delhi to Gurugram, he picked up 5 passengers for transportation in the ambulance from Delhi to
Gurugram and charged Rs. 500/- from them.
Being the GST expert, you are required to ascertain the taxability of transport services provided
by Mr. Bulbul Pandey in the ambulance from Delhi to Gurugram under GST Act, 2017:
(a) Taxable supply
(b) Exempt supply
(c) Not a supply
(d) None of the above

16. Which of the following are exempt from GST?

(i) Services provided to recognized sports body as curator of national team.
(ii) Services provided by way of transportation of passenger in Metered Cab.
(iii) Services by way of public conveniences such as provision of facilities of washrooms.
(iv) Services provided by a player to a franchisee which is not a recognized sports body.

(a) (i), (ii), (iii) & (iv)

 CA Jasmeet Singh 228

(b) (ii), (iii)

(c) (iii) & (iv)
(d) (ii), (iii) & (iv)

17. Services supplied by Central/State Government/Union territory to their undertakings or Public-

Sector Undertakings (PSUs) by way of guaranteeing the loanstaken by such undertakings or PSUs
from the banking companies and financial institutions.
(a) Taxable supply
(b) Exempt supply
(c) Not a supply
(d) None of the above

18. Services provided by rehabilitation professionals recognized under the Rehabilitation Council of
India Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered
by the said Act at medical establishments, educational institutions, rehabilitation centers
established by Central/State Government/ Union territory or an entity registered under section
12AA of the Income Tax Act, 1961.
(a) Taxable supply
(b) Exempt supply
(c) Not a supply
(d) None of the above

19. Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders
under Pradhan Mantri Jan Dhan Yojana (PMJDY)
(a) Taxable supply
(b) Exempt supply
(c) Not a supply
(d) None of the above

20. Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer have been
exempted subject to the condition that the constructed flats are soldbefore issuance of
completion certificate and tax is paid on them. Is the statement correct?
(a) Yes
(b) No

21. Services provided by a banking company to Basic current account holders

(a) Taxable supply
(b) Exempt supply
(c) Not a supply
(d) None of the above
 CA Jasmeet Singh 229

22. Supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees
will be:
(a) Exempt services
(b) Export of services
(c) None of the above
(d) Not a service at all

23. Kala Niketan School is an educational institutionproviding pre-school education and education up
to higher secondary school. Which of the following services are exempt if provided to Kala
Niketan School?
(i) Transportation of students, faculty and staff
(ii) Catering services
(iii) Cleaning services performed in such educational institution
(a) (i)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

24. Which of the following service is not exempt under GST?

(a) Loading and unloading of paddy
(b) Loading and unloading of sugarcane
(c) Loading and unloading of tea bags
(d) Loading and unloading of potato

25. Which of the following services is exempt from GST?

(a) Bollywood dance performance by a film actor in a film and consideration charged is Rs
1,45,000.
(b) Carnatic music performance by a classical singer to promote a brand of readymade garments
and consideration charged is Rs 1,30,000.
(c) Carnatic music performance by a classical singer in a music concert and consideration charged
is Rs 1,55,000.
(d) Kathak dance performance by a classical dancer in a cultural programme and consideration
charged is Rs 1,45,000.

Solution: -
1) c 2) d 3) d 4) c 5) d 6) b 7) c 8) a 9) c 10) d
11) a 12) c 13) c 14) a 15) a 16) b 17) b 18) b 19) b 20) a
21) a 22) b 23) d 24) c 25) d