TYB - Practical Questions - Final PDF

CA Final Q-Bank – GST
TRAIN YOUR BRAIN
From the Desk of VJ & PJ about “The TYB Series”
Why TYB Series?

Stage 1: Study (During Classroom Coaching / Online Coaching)
Classes are important for understanding the law – knowing the concepts of law thoroughly
and knowing the reasons behind the provisions of law and interlinking the provisions as any
provision of law cannot be read in isolation.
Stage 2: Revise (After Coaching)

Revision is extremely important for remembering the concepts along with provisions and
interlinking the relevant provisions.
Stage 3: Krack (After Revision)

Cracking the exams is highly and extremely important as that is the only target right from the
beginning for any student. For that before writing the exams, self-evaluation is must to know
if you are prepared for 60+ marks and to know if you are well prepared for “BEST PAPER
AWARD IN INDIRECT TAXES” / “ALL INDIA RANK”. For this sole and whole purpose,
we are launching “The TYB Series” for INDIRECT TAXES.
“TYB Series” is must to know
✓ what type of questions that can be asked in exams,
✓ how to tackle such questions,
✓ how to understand the key words in questions (which will not be more than 2-4 words in
any question),
✓ how to recollect and apply the provisions that you have learned during coaching &
revision and
✓ finally to boost your confidence so much that you are prepared for the toughest paper.
Vishal Jain Praveen Jain

How to effectively use TYB Series?

Stage 1: First, take your material that you have used for studying and revising the subject and
revise that particular chapter(s) for which questions are being asked.
Stage 2: Then attempt to answer each question with the provisions very clear in your mind.
Importantly, mark “key words” (which may be not more than 2-4) in all questions while
attempting them. This is to ensure that that you are training yourself to read the question
correctly and precisely thereby not missing any key words or any hidden words /
understanding – always assuming that there is something tricky / hidden in that question.
Have the text near you if ONLY you are not confident about a particular Chapter and make it
OPEN BOOK EXAM, but do it only for few selected chapters to get confidence in those
chapters.
Stage 3: Finally start evaluating the answers:

Questions that you have answered correctly
✓ Hurray!!! – You are thorough with the question
✓ Hurray!!! – You are not required to read it again
✓ Hurray!!! – You are sure to get full marks for same / similar type of question if asked in
exam
Questions that you have answered wrongly
✓ Analyze??? – Which key word in question you have missed?
✓ Analyze??? – Which provision of law you did not apply inspite of reading the question
correctly?
✓ Analyze??? – Which interlinked provisions you did not apply inspite of reading the
question correctly & applying the main provision?
If mistake was
✓ Due to the fact that you were careless while reading the question and attempting the
answer – Make a note near the question that DO NOT MAKE SILLY MISTAKES. Mark
the key word that you carelessly did not give importance and briefly write in few words
the nature of mistake (only if required).
✓ Due to the fact that question was excellently drafted or was highly tricky or there were
multiple ways to read the question – Make a note of ratings near the question based on
the difficulty level (as given below) and briefly write in few words regarding the nature
of trick or the assumptions which were made.
 - You have to revise only one / two adjustments in an question
 - You have to revise the question just once / twice
 - You have to revise the question multiple times till you achieve confidence.
Result of TYB Series!

✓ 80%+ correct answers – You have done outstandingly for this chapter
✓ 65%+ correct answers – You have done excellently for this chapter
✓ 50%+ correct answers – You have done reasonably good for this chapter
✓ <50% correct answers – You have to work harder, revise the chapter one more time and
then attempt

From our past experience in coaching, one of the major reasons (90%) for students writing
wrong answers is not reading the question correctly. And so after writing exams, you will
hear a lot of students (including you) telling that they made a silly mistake. Make one thing
very clear – you delete this reason by following above tips and you are sure to shine.
It is always understandable excuse (looking at the vast syllabus) to tell that you did not read
a particular provision / a particular chapter and thus, you were not able to crack it. But never
have an excuse telling a reason that you have made a silly mistake inspite of knowing the
provision / chapter thoroughly.
Always remember that you have to talk to each question in exam hall and know the trick to
bring any type of question in your comfort zone. The simple reason is that you know in and
out of question and you know the twist(s) given in the question and then answering it
becomes a cakewalk.
We know that you enjoyed thoroughly in classes while learning the law. Now, we are sure
that you would enjoy thoroughly while applying the law, knowing your mistakes and
correcting them.
Sure to hear good results from you in January 2020.
Happy Learning!!
Connect us @ facebook @ aryan2destiny@gmail.com (Vishal Jain A). Drop your feedback and
suggestions @ ca_va_jain@yahoo.com and praveen.ca88@ymail.com.
Telegram App Link for GST Queries of Students

Link for CA Final Students Link for CA IPCC Students
https://t.me/GST_VJnPJ_CAFinal https://t.me/GST_VJnPJ_CAIPCC
For booking your Multi-Color Module,
See details on Last Pages
CONTENTS

S. Page No. of
Chapter
No. Numbers Questions
1. GST in India 5-8 8
2. Levy of GST & Taxable Event - Supply 9-22 17
3. Value of Supply 23-62 60
4. Classification (including Exemption) 63-105 53
5. Reverse Charge Mechanism 106-113 16
6. Time of Supply 114-137 40
7. Composition Scheme 138-153 19
8. Input Tax Credit 154-238 86
9. Tax Invoice, Credit Notes & Debit Notes 239-246 15
10. Registration 247-259 30
11. Payment of Taxes 260-265 15
12. Returns 266-270 14
13. E-Way Bill 271-279 34
14. Job-Work 280-284 9
15. Electronic Commerce 285-285 2
16. IGST Act, 2017 [Incl. Place of Supply] 286-300 27
17. Accounts & Records 301-302 4
18. Audit & Assessment 303-305 7
19. Inspection, Search & Seizure & Confiscation 306-308 5
20. Demand & Recovery 309-311 6
21. Liability to pay in Certain Cases 312-313 5
22. Refund 314-320 13
23. Advance Ruling 321-322 1
24. Appeals & Revision 323-327 11
25. Offences & Penalties 328-332 8
26. Miscellaneous Provisions 333-333 1
TOTAL – 506 QUESTIONS

GST IN INDIA
(ICAI – IPCC [New Syllabus – 2 Marks] – Nov. 2018 Exam)
Question 1: Direct Taxes and Indirect Taxes
Differentiate between direct and indirect taxes (Give any two points)
Solution:
(i) In case of direct taxes, the person paying the tax to the Government directly bears the incidence of
the tax whereas in case of indirect taxes, the person paying the tax to the Government collects the
same from the ultimate consumer, i.e. incidence of tax is shifted to the other person.
(ii) Direct taxes are progressive in nature – high rate of taxes for people having higher ability to pay.
However, indirect taxes are regressive in nature – All the consumers equally bear the burden,
irrespective of their ability to pay.
Question 2: Deficiencies in Existing Indirect Taxes and Benefits of GST

(1) Enumerate the deficiencies of the existing indirect taxes which led to the need for ushering into
GST regime.
(2) Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws. What
would be the other advantages of GST over previous indirect tax laws?
Solution:
(1) Deficiencies of Existing Indirect Taxes
(a) No credit of CST to Manufacturers, Traders and Service Providers
(b) No credit of Central Taxes (Central Excise Duty, Customs Duty and Service Tax) to Traders
(c) No credit of State Taxes (VAT) to Service Providers
(d) Problems relating to distinguishing between goods and services leading to double taxation at
times
(e) Non-inclusion of several State / Local levies such as entry tax, luxury tax, entertainment tax,
etc. in State VAT
(2) Benefits of GST

GST has included most of the indirect taxes levied in India. The present concepts of manufacture of
goods or sale of goods or rendering of services are no longer applicable since GST is levied on
“supply” of goods or services.
GST would resolve double taxation as follows:
(a) Mitigation of Ill Effects of Cascading: By subsuming most of the Central and State taxes into
a single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire
value chain, it would mitigate the ill effects of cascading, improve competitiveness and improve
liquidity of the businesses.
(b) Elimination of Multiple Taxes and Double Taxation: GST will subsume majority of existing
indirect tax levies both at Central and State level into one tax. This will make doing business
easier and will also tackle the highly disputed issues relating to double taxation of a transaction
as both goods and services.
The other major benefits of GST are as follows:
(a) Creation of Unified National Market: GST aims to make India a common market with
common tax rates and procedures and remove the economic barriers thus paving the way for
an integrated economy at the national level.

(b) Boost to “Make in India” initiative: GST will give a major boost to the ‘Make in India' initiative
of the Government of India by making goods and services produced in India competitive in the
national as well as international market.
(c) Buoyancy to Government Revenue: GST is expected to bring buoyancy to the Government
Revenue by widening the tax base and improving the taxpayer compliance.
GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of
Industry, Government and the Consumer. It will lower the cost of goods and services, give a boost
to the economy and make the products and services globally competitive.
(ICAI – IPCC [Old Syllabus & New Syllabus – 2 Marks] – MTP 1 – May 2018)
Question 3: Benefits of GST
Discuss any two significant benefits of GST.
Solution:
GST is a win-win situation for the entire country. It brings benefits to all stakeholders of industry,
Government and the consumer. It will lower the cost of goods and services, give a boost to the economy
and make the products and services globally competitive.
The significant benefits of GST are discussed hereunder:
(i) Certain of unified national market: GST aims to make India a common market with common tax
rates and procedures and remove the economic barriers thus paving the way for an integrated
economy at the national level.
(ii) Mitigation of ill effects of cascading: By subsuming most of the Central and State taxes into a
single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value
chain, it would mitigate the ill effects of cascading, improve competitiveness and improve liquidity
of the businesses.
(iii) Elimination of multiple taxes and double taxation: GST has subsumed majority of existing
indirect tax levies both at Central and State level into one tax i.e., GST which is leviable uniformly
on goods and services. This will make doing business easier and will also tackle the highly-disputed
issues relating to double taxation of a transaction as both goods and services.
(iv) Boost to ‘Make in India’ initiative: GST will give a major boost to the ‘Make in India’ initiative of
the Government of India by making goods and services produced in India competitive in the
national as well as international market.
(v) Buoyancy to the Government Revenue: GST is expected to bring buoyancy to the Government
Revenue by widening the tax base and improving the taxpayer compliance.
Note: Any two points may be mentioned.
Question 4: Taxable Event in GST and Dual Model of GST in India

What is the taxable event in GST? Discuss the dual GST model introduced in India.
Solution:
Taxable event under GST is supply of goods or services or both. India has adopted Dual GST
Model where both Centre and States will simultaneously tax goods and services. Central Goods and
Service Tax and State Goods and Service Tax will be levied on intra-state supply of goods or services
or both. Integrated Goods and Service Tax will be levied on inter-state supply of goods or services or
both.
(ICAI – IPCC [Old Syllabus – 2 Marks] – Nov. 2018 Exam)
Question 5: Subsuming of Central Taxes
List the central taxes which have been subsumed in GST in India?

Solution:
Central taxes which have been subsumed in GST in India are as follows:
(i) Central Excise Duty & Additional Excise Duties
(ii) Services Tax
(iii) Excise Duty under Medicinal & Toilet Preparation Act
(iv) CVD & Special DVD
(v) Central Sales Tax
(vi) Central surcharges and Cesses in so far as they relate to supply of goods & services
Note: Any four points may be mentioned.
(ICAI – IPCC [Old Syllabus & New Syllabus – 2 Marks] – MTP 2 – Nov 2018)
(ICAI – IPCC [New Syllabus – 3 Marks] – May 2018 Exam)
Question 6: Subsuming of State Taxes
List any four state levies, which are subsumed in GST.
Solution:
State taxes which are subsumed in GST are as under:
(i) Entertainment Tax (except those levied by local bodies)
(ii) Tax on lottery, betting and gambling
(iii) Entry Tax (All Forms) & Purchase Tax
(iv) VAT/ Sales tax
(v) Luxury Tax
(vi) Taxes on advertisements
(vii) State surcharges and cesses in so far as they relate to supply of goods & services
Note: Any of the four points may be mentioned.
Question 7: Constitution and GST

(1) What are the Lists in Schedule VII of the Constitution of India?
(2) Which Article provides for introduction of GST in India?
Solution:
(1) Lists in Schedule VII
Article 246 of Constitution of India governs the subject matter of the laws, which are made by the
Parliament and by the Legislature of States. The matters are listed in the VII Schedule to the
Constitution.
(a) List I – Union List
It contains the matters in respect of which the Parliament has the exclusive right to make laws. Entries
82 to 91 of List I deals with taxation laws where the Central Government has power to levy taxes.
(b) List II – State List
It contains the matters in respect of which the Legislature of State has the exclusive right to make laws.
Entries 45 to 63 of List II deals with taxation laws where the State Government has power to levy taxes.
(c) List III – Concurrent List
It contains the matters in respect of which both the Parliament and the Legislature of State have the
powers to make laws. There is no head of taxation in List III (i.e. Centre and States have no concurrent
power of taxation).
(2) GST in India

Introduction of GST required amendment in Constitution so as to integrate most of the indirect taxes
and so as to empower both Centre and State to levy tax concurrently. Thus, Article 246A was
introduced.
Article 246A of Constitution of India provides for levy of GST in India. Concurrent powers are given
to Parliament and State Legislatures to make laws governing taxation of goods and services. Provisions
of Article 246A are notwithstanding anything contained in Article 246 and Article 254. Article 254 deals
with supremacy of laws made by Parliament.
Question 8: Goods and Services Taxable under GST

Mr. Singh claims that supply of all goods and/or services is taxable under GST. Whether Mr. Singh’s
claim is correct?
Solution:
Mr. Singh is incorrect in his claim.
(a) Supplies of all goods and services are taxable except alcoholic liquor for human consumption.
(b) Supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
gas and aviation turbine fuel shall be taxable with effect from a future date. This date would be
notified by the Government on the recommendations of the GST Council.

LEVY OF GST & SUPPLY

(ICAI – Questions for Practice – May 2018)
Question 1: Supply
“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.

Question 2: Meaning of Supply
Explain the meaning of supply as per provisions of Section 7(1) of Central Goods and Service Tax Act,
2017.
Solution:
As per Section 7(1) of CGST Act, 2017, the term supply includes
(i) All forms of supply of goods or services or both such as sale, transfer, barter, exchange, license,
rental, lease or disposal made or agreed to be made for a consideration by a person, in the course
or furtherance of business;
(ii) Import of services for a consideration whether or not in the course or furtherance of business;
(iii) The activities specified in Schedule I, made or agreed to be made without a consideration; and
(iv) The activities to be treated as supply of goods or supply of services as referred to in Schedule II.
Author’s Note: The scope of Schedule II is not to define supply; it is only to classify supply as supply
of goods or supply of services.

Question 3: Meaning of Actual Supply
State the necessary elements for a supply to be chargeable to GST.
Solution:
The following elements are required to be satisfied for a supply to be chargeable to GST, i.e.-
(a) the activity involves supply of goods or services or both;
(b) the supply is for a consideration unless otherwise specifically provided for;
(c) the supply is made in the course or furtherance of business;
(d) the supply is a taxable supply; and
(e) the supply is made by a taxable person.
(ICAI – IPCC [Old Syllabus – 5 Marks] – May 2018 Exam)

Question 4: Meaning of Deemed Supply
List the activities to be treated as supply under CGST Act, 2017 even if made without consideration.
Solution:

Activities to be treated as supply even if made without consideration in terms of Section 7 of CGST Act,
2017 read with Schedule I:
(1) Permanent transfer or disposal of business assets where input tax credit has been availed on such
assets.
(2) Supply of goods or services or both between related persons or between distinct persons as
specified in section 25 of the CGST Act, 2017, when made in the course or furtherance of business.
However, gifts not exceeding Rs. 50,000 in value in a financial year by an employer to an employee
shall not be treated as supply of goods or services or both.
(3) Supply of goods-
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the
principal.
(4) Import of services by a taxable person from a related or from any of his other establishments outside
India, in the course or furtherance of business.
(ICAI – RTP – IPCC – November 2018)

Question 5: Meaning of Not Supply
List any four activities which shall be neither treated as supply of goods nor a supply of services under
the GST law.
Solution:
Section 7(2)(a) of CGST Act, 2017 read with Schedule III specifies the activities or transactions which
shall be treated neither as a supply of goods nor a supply of services:
(i) Services by an employee to the employer in the course of or in relation to his employment.
(ii) Services by any court or Tribunal established under any law for the time being in force.
(iii)
(a) Functions performed by the Members of Parliament, Members of State Legislature, Members
of Panchayats, Members of Municipalities and Members of other local authorities;
(b) Duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
(c) Duties performed by any person as a Chairperson or a Member or a Director in a body
established by the Central Government or a State Government or local authority and who is
not deemed as an employee before the commencement of this clause.
(iv) Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
(v) Sale of land and, subject to paragraph 5(b) of Schedule II, sale of building.
(vi) Actionable claims, other than lottery, betting and gambling.
Question 6: Actual Supply or Not Supply

(1) Services received from a club against membership fees.
(2) Ms. Anu is a teacher. She bakes cake and sells them only during summer camps organized each
year.
(3) VG Car Dealers are involved in business of exchange of used cars.
(4) Anuradha Electronics sells a refrigerator for Rs.70,000 but the same was purchased for Rs.80,000
and incurs loss.
(5) Mr. AJ buys a jeep for a personal purpose and sells it to a car dealer.
(6) Ms. KJ exchanges her used mobile phone with Mr. VJ. Both are using their mobile phone for
personal purposes.
Solution:

(1) Yes. In case of services received from a club against membership fees, there is a direct link between
the facilities available for use at club (whether or not immediately used) and membership fees.
Thus, such activity will constitute supply. Moreover, in terms of Section 2(17), the term business
includes provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members, as the case may be;
(2) Yes. As per Section 7(1)(a) of CGST Act, 2017, supply shall be made for a consideration by a person
in the course or furtherance of business. Sale of cake by Ms. Anu qualifies as supply even through
it is a one-time occurrence in each year. Thus, such activity will constitute supply. Moreover, in
terms of Section 2(17), the term business includes vocation whether or not there is volume,
frequency, continuity or regularity of such transaction.
(3) Yes. As per Section 7(1)(a) of CGST Act, 2017, supply includes exchange of goods for a
consideration by a person in the course or furtherance of business. Thus, exchange of used cars by
VG Car Dealers would amount to supply.
(4) Yes. As per Section 7(1)(a) of CGST Act, 2017, supply includes all forms of supply of goods or
services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or
agreed to be made for a consideration by a person in the course or furtherance of business. Thus,
sale of refrigerator by Anuradha Electronics would amount to supply even if it is sold for a loss.
(5) No. As per Section 7(1)(a) of CGST Act, 2017, supply shall be made for a consideration by a person
in the course or furtherance of business. When Mr. AJ buys a jeep for personal use and after a year
sells it to a car dealer, the transaction will not be supply as supply is not made by the individual in
the course or furtherance of business. Further, no input tax credit was admissible on such jeep at
the time of its acquisition as it was meant for non-business use. Thus, the said activity will not be
treated as supply.
(6) No. As per Section 7(1)(a) of CGST Act, 2017, supply includes exchange of goods for a consideration
by a person in the course or furtherance of business. However, both Ms. KJ and Mr. VJ are using
the mobile phone for personal purposes and not for business purposes. Thus, exchange of mobile
phones between Ms. KJ and Mr. VJ would not amount to supply.
Question 7: Actual Supply or Not Supply

Decide whether the following activities constitute supply or not:
(1) Gifts received from friends and guests at the time of wedding.
(2) Pocket money given by father (Mr. DK) to his son (Master KD)
(3) Services received from Government against taxes paid.
(4) Free seminar to educate about prudent investment indirectly promoting a mutual fund.
(5) MD & Co. is rendering consultancy services in Srinagar (Jammu & Kashmir).
Solution:
(1) No. As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, supply includes supply of goods
or services or both between related persons or between distinct person as specified in Section 25,
when made in the course of furtherance of business even if it is without consideration. However,
gift received from friends and guests at time of wedding is not between related persons and it is
not made in the course or furtherance of business. Thus, it does not constitute supply.
(2) No. There should be contractual reciprocity between activity and consideration i.e. consideration
given would be in relation to an activity. There should be a direct link and immediate link between
activity and consideration for an activity to amount as supply. In the absence of contractual
reciprocity between activity and consideration, pocket money given by father to his son would not
qualify as supply.
(3) No. A tax payer pays different types of taxes to the government treasury and government performs
welfare activities out of such taxes. There should be a direct link and immediate link; not mere any
casual link between activity and consideration. In the absence of contractual reciprocity between

activity (services by government) and consideration (taxes), such activities would not qualify as
supply.
(4) No. As per Section 7(1)(a) of CGST Act, 2017, supply includes supply of goods and services for a
consideration by a person in the course or furtherance of business. In case of free seminar organized
to educate people about prudent investment, there is no consideration received by the supplier
(though it may indirectly promote mutual fund). Thus, such activity will not constitute supply.
(5) Yes. CGST Act, 2017, SGST Act, 2017 and IGST Act, 2017 is applicable to whole of India including
Jammu & Kashmir. Thus, consultancy services rendered by MD & Co. in Srinagar (Jammu &
Kashmir) would amount to supply of services and would be liable to GST.

Question 8: Deemed Supply or Not Supply
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 service is 5,000
Australian dollar.
(ii) Miss Shriniti Kaushik received vaastu consultancy services for her residence located at Bandra,
Mumbai from her brother, 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 brother, 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 brother – Mr.
Varun (brother, being member of the same family, is a related person) will not be treated as supply
as it is not 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 it is
provided in the course or furtherance of business.
Thus, import of service without consideration by Miss Shriniti from her brother – Mr. Varun
(brother, 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 of furtherance of
business.
Author’s Note: It is assumed by ICAI that Miss Shriniti and Mr. Varun (sister and brother) are
related person on the assumption that Mr. Varun is wholly or mainly dependent on Miss Shriniti.


Mrs. Pragati received legal advice for her personal problems and paid 1,000 pound as a legal fees 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 answer?
Further in the above case if both of them are real sisters & Mrs. Pragati receives legal advice for her
business & she doesn’t pay any consideration then what will be your answer?
Answer
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 Mrs. Pragati is not in course or furtherance
of business, it would amount to supply.
Further, 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 Mrs. Pragati from her real sister – Miss
Unnati [real sister, 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.
However, import of service without consideration by Mrs. Pragati from her sister – Miss Unnati (related
person) will be treated as supply if she receives legal advice for her business, i.e., in course or
furtherance of business.
Author’s Note: It is assumed by ICAI that Mrs. Pragati and Miss Unnati (real sisters) are related person
on the assumption that Miss Unnati is wholly or mainly dependent on Mrs. Pragati.

(1) VK Ltd., a manufacturer of goods donated old furniture and laptops to Charitable Schools on
account of renovation of office. The company has taken input tax credit on the computers so
donated.
(2) Sankara 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.
(3) RJ Lights Ltd. in Jodhpur engages AJ Sunlight Ltd. in Jaipur as an agent to sell laptops on its behalf.
For the purpose, RJ Lights Ltd. has transferred 10,000 electrical items to the showroom of AJ
Sunlight Ltd.
(4) SJ Ltd., a manufacturer of garments sends his goods for further processing to a job-worker.
(5) Interior Decorator service received by Ms. Bhuvana for her house from an Interior Decorator in
USA on payment of US $ 5,000.
(6) DK Manufacturers have a factory in Coimbatore and a depot in Bangalore. Both these
establishments are registered in respective States. Finished goods are sent from factory in
Coimbatore to the Bangalore depot without consideration so that the same can be sold.
Solution:
(1) Yes. As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, permanent transfer or disposal
of business assets where input tax credit has been availed shall be treated as supply even if made
without consideration. Thus, donation of old furniture and laptops to charitable schools shall
qualify as supply since input tax credit has been availed by VK Ltd.
(2) No. As per Section 7 of the CGST Act, 2017, supply must be made for a consideration except the
activities specified in Schedule I and in course or furtherance of business. Since, both these
elements are missing, donation of clothes and toys to children living in slum area would not
amount to supply.

(3) Yes. As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, supply of goods by a principal
to his agent where the agent undertakes to supply such goods on behalf of the principal shall be
treated as supply even if made without consideration. Thu, supply of electrical items by RJ Lights
Ltd. to AJ Sunlight Ltd. will amount to supply.
(4) No / Yes. Supply of goods between principal to job-worker shall not be regarded as supply if the
conditions as specified in Section 143 of CGST Act, 2017 are satisfied. It shall be regarded as supply
only if the conditions as specified in Section 143 of the CGST Act, 2017 are not met. As per Section
143(3), supply of goods sent by the principal to job worker shall be treated as supply of goods only
if is the goods are not received back within the stipulated period.
It is important to note that any treatment or process which is applied to the garments by the job-
worker is a supply of services by job-worker to principal as per Section 7 of CGST Act, 2017.
(5) Yes. As per Section 7(1)(b) of CGST Act, 2017, supply includes importation of services for a
consideration whether or not in the course or furtherance of business. Interior Decorator service
received by Ms. Bhuvana for her house from an Interior Decorator in USA on payment of US $
5,000 would amount to supply. However, in terms of EN 9/2017 – IT (Rate), supply of service from
a provider of service in Non-Taxable Territory to an Individual in relation to any purpose other
than Commerce / Industry / any other Business / Profession is exempted from Integrated GST.
(6) Yes. As per Section 7 read with Schedule I of CGST Act, 2017, 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 as per Section 25 of the CGST Act, 2017. In view of the same,
factory and depot of DK are establishments of two distinct persons. Thus, supply of goods from
Coimbatore factory of DK Manufacturers to Bangalore Depot without consideration, but in
course/furtherance of business, would amount to supply.
Question 11: Deemed Supply

Modest Ltd., registered in Delhi dealing in supply of electronic items transferred some of its stock to its
another unit located in Haryana (inter-state transfer). Whether such self-supplies is taxable under GST?
Solution:
Yes, transfer of stock made by Modest 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.
(ICAI – RTP – IPCC – May 2018)

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 of the CGST Act, 2017 stipulates that in order to qualify as supply:
(a) Supply should be of goods and/or services.
(b) Supply should be made for a consideration.
(c) Supply should be made in the course or furtherance of business.
Further, Schedule I of the CGST Act, 2017 illustrates the activities to be treated as supply even if made
without consideration. One such activity is permanent transfer or disposal of business assets where
input tax credit has been availed on such assets, i.e. said activity is to be treated as supply even if made
without consideration. In view of said provisions, permanent transfer of air conditioners by Sahab Sales
from its stock for personal use at its residence, though without consideration, would amount to supply.
However, sale of air-conditioner by Aakash to Sahab Sales will not qualify as supply under section 7 of
the CGST Act, 2017 as although it is made for a consideration, but its not in the course or furtherance
of business.
Question 13: Actual Supply, Deemed Supply or Not Supply

(1) Sum received from employer on premature termination.
(2) Amount received from employer on termination for not joining competitor in next 3 years.
(3) I-Planet gifts an I-Phone to one of its employee (Mr. Suresh) because he won the title “Best
Employee”. The value of such I-Phone was Rs.90,000.
(4) What would be in your answer in above case, if gift of worth Rs.30,000 was to the employee.
Solution:
(1) No. As per Section 7(2) read with Schedule III of CGST Act, 2017, services by an employee to
employer in course of or in relation to his employment would not be regarded as supply. Sum
received from employer on premature termination of a contract of employment are treated as
amount paid in relation to employment by the employer to the employee. Thus, it does not
constitute supply.
(2) Yes. As per Section 7(2) read with Schedule III of CGST Act, 2017, services by an employee to
employer in course of or in relation to his employment would not be regarded as supply. However,
amount received from employer on termination for not joining competitor in next 3 years is neither
in course of employment nor in relation to employment and thus, would constitute supply. As per
Section 7(1)(d) Schedule II of CGST Act, 2017, refraining from an activity would be treated as
supply of services.
(3) Yes. As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, supply of goods or services
between related person is treated as supply even if its without consideration. As per Explanation
to Section 15 of CGST Act, 2017, persons shall be deemed to be related persons if such persons are
employer and employee. Thus, gift of an I-Phone given by I-Planet to its employee worth Rs.90,000
will qualify as supply.
(4) No. As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, supply of goods or services
between related person is treated as supply even if its without consideration. As per Explanation
to Section 15 of CGST Act, 2017, persons shall be deemed to be related persons if such persons are
employer and employee. However, gifts given by the employer not exceeding Rs.50,000 per
employee in value in a financial year shall not be treated as supply of goods or services or both.
Thus, gift of an I-Phone given by I-Planet to its employee worth Rs.30,000 will not qualify as supply.

(1) Mr. Dwarkesh is a well-known businessman in Mumbai. His son, Mr. Rishikesh, who is settled in
Los Angels is a well-known lawyer. Mr. Dwarkesh has taken legal advice from him free of cost
with regard to his family dispute.
(2) Would your answer be different if in the above case, Mr. Dwarkesh has taken advice in respect of
his business unit in Mumbai?
(3) A foreign holding company gives technical services to its Indian subsidiary without any
consideration.
Solution:
(1) No. As per Section 7 read with Schedule I of CGST Act, 2017, 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. As per Explanation to Section 15 of CGST
Act, 2017, persons shall be deemed to be “related persons” if such persons are member of same
family. As per Section 2(49), “Family” means, the spouse and children of the person, and 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, Mr. Dwarkesh has received legal services from his son free of
cost in a personal matter and not in course or furtherance of business. Thus, services provided by
Mr. Rishikesh (Mr. Dwarkesh’s son) to him would not be treated as supply.
(2) Yes. In the above case, if Mr. Dwarkesh has taken advice with regard to his business unit, services
provided by Mr. Dwarkesh’s son to him would be treated as supply under Section 7 of the CGST
Act, 2017 read with Schedule I as the same are provided without consideration but in course or
furtherance of business and received from a related person.
(3) Yes. As per Section 7 read with Schedule I of CGST Act, 2017, supply of goods or services between
related person or between distinct persons as specified in Section 25, when made in the course or
furtherance of business shall be treated as supply even if made without consideration. As per
Explanation to Section 15 of CGST Act, 2017, a person shall be deemed to be “related person” if one
of them directly or indirectly controls the other. Foreign holding company and Indian subsidiary
company are related persons as the former controls the latter. Thus, technical services from Foreign
holding company to Indian subsidiary company without consideration would also amount to
supply since the same has been received in course or furtherance of business.
(ICAI – IPCC [Old Syllabus – 6 Marks] – MTP 1 – May 2018)

(ICAI – IPCC [Old Syllabus – 4 Marks] – MTP 1 – Nov 2018)
Examine whether the following activities would amount to supply under Section 7 of the CGST Act:
(i) Sudhakar Charitable Trust, a trust that gets the eye treatment of underprivileged children done
free of cost, donates clothes and toys to children living in slum area.
(ii) Daman is an interior decorator in Chennai. His brother who is settled in London is a well-known
lawyer. Daman has taken legal advice from him free of cost with regard to his family dispute.
(iii) Rooplekha Manufactures have a factory in Delhi and a depot in Mumbai. Both these
establishments are registered in respective States. Finished goods are sent from the factory in
Delhi to the Mumbai depot without consideration so that the same can be sold.
Solution:
(i) Section 7 of the CGST Act, inter alia, provides that supply must be made for a consideration except
the activities specified in Schedule I and course or furtherance of business. Since, both these
elements are missing, donation of clothes and toys to children living in slum area would not
amount to supply under Section 7 of the CGST Act, 2017.

(ii) Schedule I of CGST Act, inter alia, stipulates that import of services by a taxable person from a
related person located outside India, without consideration is treated as supply if it is provided in
the course or furtherance of business. In the given case, Daman has received legal services from his
brother free of cost in a personal matter and not in course or furtherance of business. Hence, services
provided by Daman’s brother to him would not be treated as supply under Section 7 of the CGST
Act.
Author’s Note: It is assumed by ICAI that both brothers are related person on the assumption that
one of them is wholly or mainly dependent on the other.
(iii) Schedule I of CGST Act, inter alia, stipulates that supply of goods between distinct persons as
specified in Section 25, is supply even without consideration provided it is made in the course or
furtherance of business. As per Explanation to Section 25 of the CGST Act, 2017, persons registered
in two States is treated as distinct persons in respect of each such registration. In view of the same,
factory and depot of Rooplekha Manufactures are establishments of two distinct persons.
Therefore, supply of goods from Delhi factory of Rooplekha Manufactures to Mumbai Depot
without consideration, but in course/furtherance of business, is supply under Section 7 of the CGST
Act, 2017.

Question 12: Nature of Supply – Supply of Goods or Supply of Services
State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule II of the CGST Act:
(1) Renting of immovable property
(2) Sale of immovable property after completion certificate is received
(3) A local club supplies snacks etc. to its members during its monthly meeting for a nominal payment
(4) Having dinner at Taj Restaurant
(5) 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.
(6) Transfer of right in goods without transfer of title in goods.
(7) Hire Purchase i.e. transfer of title in goods under an agreement which stipulates that property
shall pass at a future date.
(8) Sale of shares
Solution:
(1) Supply of services (Schedule II of CGST Act, 2017)
(2) Neither supply of goods nor supply of services (Schedule III of CGST Act, 2017)
(3) Supply of goods (Schedule II of CGST Act, 2017)
(8) Neither goods nor services (Section 2 of CGST Act, 2017)

(1) Whether transfer of title and/or possession is necessary for a transaction to constitute supply of
goods?
(2) Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of
services? Give reason.
Solution:
(1) Title as well as possession both have to be transferred for a transaction to be considered as a supply
of goods. In case title is not transferred, the transaction would be treated as supply of service in
terms of Schedule II(1)(b) of the CGST Act. In some cases, possession may be transferred
immediately but title may be transferred at a future date like in case of sale on approval basis or
hire purchase arrangement. Such transactions will also be termed as supply of goods.
(2) Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title,
albeit at a future date.
Whether transfer of title and/or possession is necessary for a transaction to constitute supply of goods?
Solution:
Title as well as possession both have to be transferred for a transaction to be considered as a supply of
goods. In case title is not transferred, the transaction would be treated as supply of service in terms of
Schedule II(1)(b) of the CGST Act. In some cases, possession may be transferred immediately but title
may be transferred at a further date like in case of sale on approval basis or hire purchase arrangement.
Such transactions will also be termed as supply of goods.

State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule II of CGST Act.
(i) Renting of immovable property
(ii) Transfer of right in goods without transfer of title in goods.
(iii) Works contract services.
(iv) Temporary transfer of permitting use or enjoyment of any intellectual property right.
(v) Sale of personal car to dealer.
Solution:
(i) Renting of immovable property would be treated as supply of services in terms of Schedule II of
CGST Act, 2017.
(ii) As per Schedule II of CGST Act, 2017, transfer of right in goods without transfer of title in goods
would be treated as supply of services.
(iii) As per Schedule II of CGST Act, 2017, works contract services would be treated as supply od
services.
(iv) As per Schedule II of CGST Act, 2017, temporary transfer of permitting use or enjoyment of any
intellectual property right would be treated as supply of services.
(v) As per Schedule II of CGST Act, 2017, sale of personal car to dealer would be treated as supply of
goods as any transfer of the title in goods is a supply of goods.
Note: However, it is also possible to take view that sale of personal car to dealer is not a supply per
as supply is not made by the individual in the course or furtherance of business – in terms of CBIC
FAQs. The question may be answered on the basis of either of the two views.

A customer ‘A’ who had booked the flat and paid Rs.15 lakhs, subsequently cancelled his booking. The
builder forfeited Rs.0.50 lakh as cancellation charges. Another customer who had booked a flat sold the
flat to a third person and requested builder to transfer the flat in name of the new buyer. The builder
charged Rs.50,000 as transfer charges. Is tax payable on these amounts? Compute tax liability, if any,
assuming the rate as 18%.
Solution:

Both the charges fall within the definition of ‘tolerating an act or situation’, which is treated as supply
of services as per Schedule II of CGST Act, 2017. Hence, these charges will be subject to GST.
Computation of Value of Taxable Supply and GST Payable
Particulars Amount (Rs.)
1. Cancellation charges received from customer on cancellation of flat booking 50,000
2. Transfer charges received from customer 50,000
Taxable Value of supply 1,00,000
GST Payable @ 18% 18,000
(ICAI – RTP – CA Final (Adapted) – May 2018)

Question 17: Actual Supply & Deemed Supply, Mixed Supply & Composite Supply, Place of
Supply and Documentation
Power Engineering Pvt. Ltd., a registered supplier, is engaged in providing expert maintenance and
repair services for large power plants that are in the nature of immovable property, situated all over
India. The company has its Head Office at Bangalore, Karnataka and branch offices in other States. The
work is done in the following manner.
▪ The company has self-contained mobile workshops, which are container trucks fitted out for
carrying out the repairs. The trucks are equipped with items like repair equipments, consumables,
tools, parts etc. to handle a wide variety of repair work.
▪ The truck is sent to the client location for carrying out the repair work. Depending upon the repairs
to be done, the equipment, consumables, tools, parts etc. are used from the stock of such items
carried in the truck.
▪ In some cases, a stand-alone machine is also sent to the client’s premises in such truck for carrying
out the repair work.
▪ The customer is billed after the completion of the repair work depending upon the nature of the
work and the actual quantity of consumables, parts etc. used in the repair work.
▪ Sometimes the truck is sent to the company’s own location in other State(s) from where it is further
sent to client locations for repairs.
Work out the GST liability [CGST & SGST or IGST, as the case may be] of Power Engineering Pvt. Ltd.,
Bangalore on the basis of the facts as described, read with the following data for the month of November
2018.
S. No Particulars Amount (Rs.)
A. Truck sent to own location in Tamil Nadu
(i) Value of items contained in the truck - Rs.3,00,000
(ii) Value of truck – Rs.25,00,000
B. Truck sent to a client location in Tamil Nadu for carrying out
repairs. Stand- alone machine is also sent in the truck to client
location for repairs
(i) Value of items contained in the truck – Rs.2,85,000
(ii) Value of stand-alone machine - Rs.4,00,000
(iii) Value of truck - Rs.20,00,000
(Billing for repairs to be done afterwards depending upon the
actual items used)
C. Truck sent to a client location in Karnataka for carrying out
repairs
(i) Value of items contained in the truck- Rs.1,06,000
(ii) Value of truck – Rs.20,00,000
(Billing for repairs to be done afterwards depending upon the
actual items used)
D. Invoices raised for repair work carried out in Tamil Nadu 70,00,000

[including the invoice for repair work done in ‘B’]
E. Invoices raised for repair work carried out in Karnataka 12,00,000
[including the invoice for repair work done in ‘C’]
Also, specify the document(s), if any, which need to be issued by Power Engineering Pvt. Ltd.,
Bangalore for the above transactions.
All the given amounts are exclusive of GST, wherever applicable. Assume the rates of taxes to be as
under:
Items used for Repairs
CGST – 6% SGST – 6% IGST – 12%
Container Truck and Stand-Alone Machines
CGST – 2.5% SGST – 2.5% IGST – 5%
Works Contract for Repairs and Maintenance of Immovable Property
You are required to make suitable assumptions, wherever necessary.
Solution:
Computation of GST Liability of Power Engineering Pvt. Ltd., Bangalore for November 2018
S.No. Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
A. Items sent in container truck to own location - - -
in Tamil Nadu - IGST @ 12% [Note 1]
Container truck sent to own location in Tamil - - -
Nadu [Note 2]
B. Stand-alone machine sent in container truck - - -
to client location in Tamil Nadu, for carrying
out repairs [Note 3]
Container truck sent to client location in - - -
Tamil Nadu [Note 3]
Items sent in container truck to client location - - -
in Tamil Nadu, for carrying out repairs [Note
4]
C. Container truck sent to client location in - - -
Karnataka [Note 3]
Items sent in container truck to client - - -
location in Karnataka, for carrying out
repairs [Note 4]
D. Invoices raised for repair work carried out - - 12,60,000
in Tamil Nadu: IGST @ 18% [Note 5 and
Note 6]
E. Invoices raised for repair work carried 1,08,000 1,08,000 -
out in Karnataka: CGST 9% + SGST 9%
[Note 5 and Note 7]
Total GST Liability 1,08,000 1,08,000 13,96,000
Notes:
(1) As per Section 25(4) of the CGST Act, 2017, a person who has obtained more than one registration,
whether in one State or Union territory or more than one State or Union territory shall, in respect
of each such registration, be treated as ‘distinct persons’.
Schedule I to the CGST Act, 2017 specifies situations where activities are to be treated as supply

even if made without consideration. Supply of goods and/or services between ‘distinct persons’ as
specified in Section 25 of the CGST Act, 2017, when made in the course or furtherance of business
is one such activity included in Schedule I under para 2.
However, in view of the GST Council’s recommendation, it has been clarified that inter-state
movement of rigs, tools and spares, and all goods on wheels (like cranes), between distinct persons
as specified in Section 25(4) of the CGST Act, 2017, shall not be treated as supply as per Schedule I
of CGST Act, 2017 and consequently IGST shall not be payable on such supply. [CBIC Circular –
21/21/2017 – CGST]
Since the activity is not a supply, tax invoice is not required to be issued by Power Engineering Pvt.
Ltd. However, a delivery challan is to be issued by the company in terms of Rule 55(1)(c) of CGST
Rules, 2017 for sending items sent in container truck to its own location in Tamil Nadu.
(2) As per Section 25(4) of the CGST Act, 2017, a person who has obtained more than one registration,
whether in one State or Union territory or more than one State or Union territory shall, in respect
of each such registration, be treated as ‘distinct persons’.
Schedule I to the CGST Act, 2017 specifies situations where activities are to be treated as supply
even if made without consideration. Supply of goods and/or services between ‘distinct persons’ as
specified in Section 25 of the CGST Act, 2017, when made in the course or furtherance of business
is one such activity included in Schedule I under para 2.
However, in view of the GST Council’s recommendation, it has been clarified that the inter-State
movement of various modes of conveyance between ‘distinct persons’ as specified in Section 25(4),
not involving further supply of such conveyance, including trucks carrying goods or passengers or
both; or for repairs and maintenance, may be treated ‘neither as a supply of goods nor supply of
service’ and therefore, will not be leviable to IGST. Applicable CGST/SGST/IGST, however, shall
be leviable on repairs and maintenance done for such conveyance [Circular No. 1/1/2017 IGST].
Since the activity is not a supply, tax invoice is not required to be issued by Power Engineering Pvt.
Ltd. However, a delivery challan is to be issued by the company in terms of Rule 55(1)(c) of CGST
Rules, 2017 for sending the truck to its own location in Tamil Nadu.
(3) Supply of goods without consideration is deemed to be a supply inter alia when the goods are
supplied to a ‘distinct person’. However, in this case, stand-alone machine and container truck are
moved to client location and not between ‘distinct persons’. Hence, the same will fall outside the
scope of definition of supply and will not be leviable to GST.
Here again, a delivery challan is to be issued in terms of Rule 55(1)(c) of CGST Rules, 2017 for
sending the stand-alone machines and container truck to client location.
(4) As per Section 2(119) of the CGST Act, 2017, ‘works contract’ means a contract for, inter alia, repair,
maintenance of any immovable property wherein transfer of property in goods (whether as goods
or in some other form) is involved in the execution of such contract.
In this case, the supplier provides maintenance and repair services for power plants that are in the
nature of immovable property and uses consumables and parts, wherever necessary, for the
repairs. Hence, the contract is that of a works contract.
Further, as per Section 2(30) of the CGST Act, 2017, a works contract is a ‘composite supply’ as it
consists of taxable supplies of both goods and services which are naturally bundled and supplied
in conjunction with each other. The composite supply of works contract is treated as supply of
service in terms of para 6(a) of Schedule II to the CGST Act, 2017.
The items used in relation to the repair and maintenance work could be consumables or could be
identifiable items/parts. In either case, the transfer of property in goods is incidental to a composite
supply of works contract service. Thus, the value of the items actually used in the repairs will be
included in the invoice raised for the service and will be charged to tax at that point of time.
Here again, a delivery challan is to be issued in terms of Rule 55(1)(c) of CGST Rules, 2017 for
sending the items for carrying out the repairs.
(5) The activity is a composite supply of works contract, which is treated as supply of service. 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.
(6) Since the activity is a supply of service, a tax invoice is to be issued by Power Engineering Pvt. Ltd.
in terms of Section 31(2) of the CGST Act, 2017.
In the given case-
▪ the location of the supplier is in Bangalore (Karnataka); and
▪ the place of supply of works contract services relating to the power plant (immovable property)
is the location at which the immovable property is located i.e., Tamil Nadu in terms of Section
12(3)(a) of the IGST Act, 2017.
Therefore, the given supply is an inter-State supply as the location of the supplier and the place of
supply are in two different States [Section 7(1)(a) of IGST Act, 2017]. Thus, the supply will be
leviable to IGST in terms of Section 5(1) of the IGST Act, 2017.
(7) In the given case, the location of the supplier and the place of supply of works contract services are
within the same State. Therefore, the given supply is an intra- State supply in terms of Section 8(1)
of IGST Act, 2017 and thus, chargeable to CGST and SGST.

VALUE OF SUPPLY
Question 1: Valuation
There are separate valuation provisions for CGST, SGST and IGST and for Goods and Services. Examine
the correctness of the statement.
Solution:
No, the said statement is not correct. Section 15 of CGST Act determines the value of supply of goods
or services or both. Further, Section 15 is applicable for determining value of taxable supply under IGST
as well vide Section 20 of IGST Act. Section 20 of IGST Act inter alia provides that the provisions of
CGST Act relating to time and value of supply shall mutatis mutandis apply in relation to integrated
tax as they apply in relation to central tax. Thus, Section 15 is common for all three taxes and also
common for goods and services.

Question 2: Related Person
Explain the concept of “related persons” as given under CGST Act?
Solution:
The explanation of section 15 of CGST Act, 2017 provides as under:-
(1) persons shall be deemed to be “related persons” if ---
(i) such persons are offers or directors of one another’s businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds twenty-five per cent or more of
outstanding voting stock of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them or directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or they are members of the same
family;
(2) the term “person” also includes legal persons;
(3) persons who are associated in the business of one another in that one is the sole agent or sole
distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.
Question 3: Consideration – Value of Taxable Supply and GST Payable

Rosserie Private Limited, a registered supplier, is engaged in supplying the taxable service leviable to
GST @ 18%. Compute the value of taxable supply and the GST payable by it in the month of July, 2018
from the information furnished below:
Receipts Amount (Rs.)
Advances received from clients for which no service has been rendered so far 8,00,000
Demurrage charges recovered for use of the services beyond the agreed period 89,000
Security deposits forfeited for damages done by service receiver owing to his 5,00,000
negligence in the course of receiving a service (Not due to unforeseen actions)
Besides, the above receipts, one of the clients – SBS Ltd. made a payment of Rs.1,45,000 (out of which
Rs.25,000 were paid extra by mistake). However, Rosserie Private Limited refused to return the excess
payment received.
Solution:
Advances received from clients for which no services has been rendered so far (Note 1) 8,00,000
Demurrage charges recovered for use of the services beyond the agreed period (Note 1) 89,000
Security deposits forfeited for damages done by service receiver owing to his negligence 5,00,000
in the course of receiving a service. (Note 2)
Payment received from SBS Ltd. (Note 3) 1,45,000
Total Receipts 15,34,000
Value of taxable supply (Rs.15,34,000 * 100 / 118) 13,00,000
Total GST Payable 2,34,000
Notes:
(1) Advances received in July, 2018 shall be taxable in the month of receipt of advance only as per
Section 13 of CGST Act, 2017.
(2) As per provisions of Section 15 of CGST Act, 2017, following charges are includible in the value of
taxable supply:
(a) Demurrage charges recovered for use of the services beyond the period agreed upon since it is
in the nature of extra consideration.
(b) Security deposits forfeited for damages done by recipient since it is a service of tolerating an
act.
(3) Excess payment made as a result of a mistake, if not returned and retained by the supplier becomes
a part of the taxable value. Hence, entire Rs.1,45,000 would form part of taxable value.
Question 4: Consideration – Value of Taxable Supply and GST Payable

VJ Coaching Classes, a coaching centre is registered under GST. The details pertaining to the month of
August, 2018 are as under:
Receipts Amount (Rs.)
Free coaching rendered to a batch of 100 students (Value of similar services is Rs.20,000
Nil
per student)
Coaching fees collected from students for the classes to be held in August, 2018 11,80,000
Advance received in August 2018 from a college for teaching their students in December
2018. However, due to some unavoidable reasons, no coaching was conducted and the 5,90,000
advance money (which includes GST) was returned on December 2018.
Security deposit collected from the college mentioned above 1,00,000
Determine the GST liability for the month of August 2018 and indicate the date by which GST has to be
deposited by the assessee.
Assume that rate of GST is 18%.
Solution:
Computation of GST Payable
Free coaching rendered (Note 1) Nil
Coaching fees collected from students (Rs.11,80,000 * 18 / 118) 1,80,000
Advance received from a college (5,90,000 * 18 /118) (Note 2) 90,000
Security deposit collected from the college mentioned above (Note 3) Nil
Total GST Liability 2,70,000
The last date for making the payment of GST by VJ Coaching Classes for the month of August, 2018 is
20th September, 2018.

Notes:
(1) As per Section 7, supply should be made for a consideration. Since, no consideration is involved in
case of free services, GST is not payable thereon.
(2) As per Section 13 of CGST Act, 2017, advance received is taxable at the time when such advance is
received and Receipt Voucher will be issued as per Section 31 of CGST Act, 2017. It is immaterial
that no coaching was conducted and the money was returned on December 2018. The amount of
GST included in the amount refunded in the month December, 2018 would be adjusted against GST
liability of that month as per Section 31 of CGST Act, 2017 by way of issuing Refund Voucher as
the supply is not materialized and the tax invoice was not raised.
(3) Security deposit will not be regarded as consideration for supply. Security deposit will be regarded
as consideration only when the supplier appropriates the same towards value of taxable supply,
which did not happen in the above case.

Question 5: Valuation – Exclusion from Value (Post-Supply Discount)
Whether post-supply discounts or incentives are allowed as admissible deduction under section 15 of
the CGST Act? If yes, what are the necessary conditions to be complied with for availing such
deduction?
Solution:
Yes, post-supply discounts or incentives are allowed as admissible deduction under Section 15 of the
CGST Act. Where the post-supply discount is established as per the agreement which is known at or
before the time of supply and where such discount specifically linked to the relevant invoice and the
recipient has reversed input tax credit attributable to such discount, the discount is allowed as
admissible deduction under Section 15(3)(b) of the CGST Act.
Question 6: Valuation – Exclusions from Value (Post-Supply Discount)

Feather Products Ltd. sells shoes its dealers, to whom it charges the list price minus standard discount
and pays GST accordingly. When such shoes 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 adjustment made?
Solution:
The discounts were not known and agreed at the time of supply of goods to the dealers. Therefore, such
discount cannot be reduce from the price on which tax had been paid in terms of Section 15(3).
Question 7: Valuation – Exclusions from Value (Post-Supply Discount)

Mr. Rohan sold 1000 units of goods to Mr. Sohan for Rs.25,000 and total unit sold during the year to
Mr. Sohan after including these units is 2500 units. As per terms of the agreement if Mr. Sohan is
purchasing more than 2000 unit of goods in a year then Mr. Rohan will give 5% discount on all the
supplies. Assuming IGST rate is 12%. How this discount will be treated?
Solution:
In this case discount is given after sales on the basis of fulfillment of condition related to quantity
purchased during the year. The discount will be given on the supply which has already been made. For
giving this discount, Mr. Rohan will issue a credit note with the amount of discount i.e. Rs.3,125 (Rs.25
/ unit * 2500 units * 5%) and GST on such discount i.e. Rs.375 (Rs.3,125 * 12%).
Question 8: Valuation – Inclusions in Value (Interest on Delayed Payment)

Waterlemon Ltd. gives an interest-free credit period of 30 days for payment by the customer. One of its
customers paid for the supply 50 days after the supply of service. Waterlemon Ltd. waived the interest
payable for delay of 20 days. The department wants to add interest for 20 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 to 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.
Question 9: Valuation – Inclusions in Value (Subsidies from other than Government)

Karan Charitable Institution makes a substantial donation each year to a reputed private management
institution to subsidies the education of low income group students who have gained admission there.
The fee for these individual is reduced thereby, coming to Rs.1 lakh a year compared to Rs.4 lakh 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 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 charitable institution. Therefore, the subsidy is to be added back to the price
to arrive at the taxable value, which comes to Rs.4 lakh a year.
Question 10: Valuation – Inclusions in Value (Incidental Charges)

Spicy Foods (P) Ltd. gets an order for supply of processed food from Tasty Ltd. Tasty Ltd. wants the
consignment tested for gluten for specified chemical residues. Spicy Foods (P) Ltd. does the testing and
charges a testing fee of Rs.15,000 from the Tasty Ltd. Spicy Foods (P) Ltd. argues that such testing fee
should not from part of the consideration for the as it is a separate activity. Is its argument correct in
the light of Section 15?
Solution:
Section 15(2) mandates the addition of certain elements of transaction value to arrive at taxable value.
Section 15(2) specifies that amount charged for anything done by the supplier in respected of the supply
at the time of or before delivery of goods or supply of service shall be included in taxable value.
Since Spicy Foods (P) Ltd. does the testing before the delivery of goods, the charges therefore will be
included in the taxable value. Therefore, Spicy Foods (P) Ltd.’s argument is not correct. The testing fee
of Rs.15,000 should be added to the price to arrive at taxable value of the consignment.
Question 11: Valuation – Inclusions in Value (Incidental Charges)

Hotel Marudhar Palace charges 10% of the bill amount as service charges and Department has asked
them to pay GST on it. The assesse has submitted that the amount collected from customers is
subsequently disbursed among the staff and therefore it is not part of their income and cannot be
included in the gross amount charged by them. Examine the case and advise suitably.
Solution:
According to Section 15, the value of taxable supply of services is the transaction value, which is the
price actually paid or payable for the said supply of services, where the supplier and the recipient of
the supply are not related and the price is the sole consideration for the supply. Here, the assesse has
charged 10% of the bill amount as service charges from its customers, therefore it will form part of the
value of taxable supply. Thus, such service charges will be included in value of taxable supply and will
be liable to GST.

Question 12: Valuation – Inclusions in Value and Exclusions from Value
Raman 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 Ltd.
has furnished the following details for the current month:
Sahil Traders Jaggi Motors L td.
S. No. Particulars
(Rs.) (Rs.)
(i) Price of the goods (excluding GST) 20,000 15,000
Packing charges 600
(iii) Commission 400
(iv) Weighment charges 1,000
(v) Discount for prompt payment (recorded in 500
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 CGST – 9%, SGST -9% and IGST – 18%:
Make suitable assumptions, wherever necessary.
Note: The supply made to Sahil Traders is an inter-State supply.
Solution:
S. Particulars Sahil Traders (Rs.) Jaggi Motors L td.
No. (Rs.)
(i) Price of the 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 - 500)
(recorded in the invoice) (Note 2)
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:
(1) As per Section 15 of the CGST Act, 2017, incidental expenses, including commission and packing,
charged by supplier to recipient of supply are includible in the value of supply. Weighment charges
are also incidental expenses, hence includible in the value of supply.
(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 Sahil Traders is an inter-State supply, IGST is payable in terms of Section 7
of the IGST Act, 2017.
(4) Since supply made to Jaggi Motors Ltd. is an intra-State supply, CGST & SGST is payable in terms
of Section 8 of the IGST Act, 2017.
Quantum Plast Private Limited, Delhi supplies plastic granulation machine to Capscom Ltd., Delhi. It
furnishes the following details in respect of such supply.
List price of the machine (exclusive of taxes and discounts) 1,00,000
Corrugated Boxes used for packing the machine (not included in price above) 1,000
Subsidy received from Delhi Government on sale of such of such machine 5,000
(considered in price above)
Discount @ 2% is offered on list price of the machine (recorded in the invoice for
the machine)
Determine the value of taxable supply made by Quantum Plast Private Limited.
Solution:
Computation of Value of Taxable Supply
List price of the goods (exclusive of taxes and discounts) 1,00,000
Add: Corrugated Boxes used for packing the machine (Including in the 1,000
value as per Section 15(2)(c))
Add: Subsidy received from Delhi Government on sale of such machine Nil
(Subsidy received from State Government is not included the value in terms
of Section 15(2)(e))
Total 1,01,000
Less: Discount @ 2% on Rs.1,00,000 (Since discount is known at the time of 2,000
supply, it is deductible from the value in terms of Section 15(3)(a))
Value of Taxable Supply 99,000
Shiv 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.
Shiv Shankar Ltd. has furnished the following details for the current month:
S. No. Particulars Narad Traders (Rs.) Nandi Motors Ltd. (Rs.)
(i) Price of the goods (excluding GST) 10,000 30,000
(ii) Packaging charges 500
(iii) Commission 500
(iv) Weighment charges 2,000
(v) Discount for prompt payment 1,000
(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 Shiv Shankar Ltd. for the
given month. Assume the rated 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:
S. No Particulars Narad Traders (Rs.) Nandi Motors 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 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) 2,970
Notes:
(1) As per Section 15 of CGST Act, 2017, incidental expenses, including commission and packing,
charged by supplier to recipient of supply is includible in the value of supply. Also, weighment
charges are also incidental expenses, hence includible in the value of supply.
(2) Since discount is known at the time of supply, it is deductible from the value in terms of Section 15
(3) Since supply made to Narad Traders is inter-State supply in terms of Section 7 of the IGST Act,
2017, IGST is payable.
(4) Since supply made to Nandi Motors Ltd. is an intra-State supply in terms of Section 8 of the IGST
Act, 2017, CGST & SGST is payable on the same.
A manufacturer of machinery supplied a special machine to Texco Furnishers. Following details are
provided in relation to amounts charged:
S. No. Particulars Amount (Rs.)
(i) Price of machinery excluding taxes (before cash discount) 5,00,000
(ii) Packaging charges 10,000
(iii) Extra charges for designing the machine 17,000
(iv) Freight 13,000
Charges mentioned in (ii) to (iv) are not included in (i) above. Other information furnished is –
(1) Cash discount @ 2% on price of machinery has been allowed to the customer at the time of supply
and also recorded in invoice.
(2) GST rate – 18%.
Calculate value of supply of the special machine and GST payable thereon.
Solution:
Price of machinery 5,00,000
Add: Packing charges (Note 1) 10,000
Add: Extra design charges (Note 2) 17,000
Add: Freight (Note 3) 13,000
Total 5,40,000
Less: 2% cash discount on price of machinery = Rs.5,00,000 * 2% (Note 4) 10,000
Value of Taxable Supply 5,30,000
GST Payable @ 18% (Note 5) 95,400
Notes:
(1) All incidental expenses including packing, charged by supplier to recipient of supply are includible
in the value of supply in terms of Section 15(2)(c) of CGST Act, 2017.

(2) 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. Thus, extra designing charges are to be included in the value of supply.
(3) Cash discount was given at the time of supply and also recorded in invoice, so the same is not to
be included with computing value of supply in terms of Section 15(3)(a) of CGST Act, 2017.
(4) The given supply is a composite supply involving supply of goods (special machine) and services
(freight) where the principal supply is the supply of goods.
(5) 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. Thus, tax rate applicable to the goods
(special machine) i.e. 18% has been considered.
Euphoria Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the following
details in relation to inter-State supply of Product A made by it for the month of March, 2018.
List price of product A supplied inter-state (exclusive of taxes) 15,00,000
Subsidy received from Central Government for supply of product A to 2,10,000
Government School.
Subsidy received from a NGO for supply of product A to an old age home 50,000
Tax levied by Municipal Authority 20,000
Packing charges 15,000
Late fee received in March, 2018 from the recipient of product A for delayed 6,000
payment of invoice
The list price of the goods takes into account the two subsidies received. However, the other
charges/taxes/fee are charged to the customs over and above the list price. Calculate the value of taxable
supply made by M/s Euphoria Ltd. and GST payable for the month of March, 2018. Rate of IGST is 18%.
Solution:
List price of product A 15,00,000
Add: Subsidy amounting to Rs.2,10,000 received from Central Government (Note 1) Nil
Add: Subsidy received from NGO (Note 2) 50,000
Add: Tax levied by the Municipal Authority (Note 3) 20,000
Add: Packing charges (Note 4) 15,000
Add: Late fees received in March, 2018 from recipient of supply for delayed 5,085
payment (Note 5)
Note: It is assumed to be inclusive of taxes (Rs.6,000 * 100 / 118) rounded off
GST Payable (Rs.15,90,085 * 18%) rounded off 2,86,215
Notes:
(1) Since subsidy is received from Government, the same is not includible in the value in terms of
Section 15 of the CGST Act, 2017.
(2) 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.
(3) Tax levied by the Municipal Authority is includible in the value as per Section 15 of the CGST Act,
2017.

(4) Packing charge being incidental expenses, the same are includible in the value as per Section 15 of
the CGST Act, 2017.
(5) Late fees paid by recipient of supply for delayed payment is includible in the value as per Section
15 of the CGST Act, 2017.

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.
List price of goods supplied inter state 12,40,000
Items already adjusted in the price given in (i) above:
(1) Subsidy from Central Government for supply of biscuits to Government 1,20,000
School. 30,000
(2) Subsidy from Trade Association for supply of quality biscuits.
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:
List price of the goods 12,40,000
Add: Subsidy amounting to Rs.1,20,000 received from Central Government (Since Nil
subsidy is received from Government, the same is not includible in the value in terms
of Section 15 of the CGST Act, 2017)
Add: Subsidy received from Trade Association (Since subsidy is received from a non- 30,000
Government body, the same is includible in the value in terms of Section 15 of the
CGST Act, 2017)
Add: Tax levied by the Municipal Authority (The same is includible in the value as 24,000
per Section 15 of the CGST Act, 2017)
Add: Packing charges (Being incidental expenses, the same are includible in the value 12,000
as per Section 15 of the CGST Act, 2017)
Add: Late fees paid by recipient of supply for delayed payment (The same is 5,000
includible in the value as per Section 15 of the CGST Act, 2017)
Note: In the above solution, list prices of the goods and late fee for delayed payment of invoice have
been assumed to be exclusive of taxes.

Kamal Book Depot, a wholesale 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:-
(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 14 th 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 are CGST – 9% and SGST – 9%
Would your answer be different if expenses (i) to (v) given in above table are already included in the
price of Rs.2,00,000?
Notes:
(i) All the amounts given above are exclusive of GST.
(ii) 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:
(i) Price of the goods (Note 1) 2,00,000
(ii) Packing charges (Note 2) 5,000
(iii) Freight & Cartage (Note 3) 2,000
(iv) Transit Insurance (Note 3) 1,500
(v) Extra Designing charges (Note 4) 6,000
(vi) Taxes Municipal Authority (Note 5) 500
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)
(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.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.

Ms. Achintya, a registered supplier in Kochi (Kerala State) has provided the following details in respect
of her supplies made Itra-state for the month of March 2018:
(i) List price of goods supplied intra-state (exclusive of items given below from 3,30,000
(ii) to (v))
(ii) Swachh Bharat cess levied on sale of the invoice 12,500
(iii) Packing expenses charged separately in the invoice 10,800
(iv) Discount of 1% on list price of goods provided (recorded in the invoice of
goods)
(v) Subsidy received from State Govt. for encouraging women entrepreneurs 5,000
Compute the value of taxable supply and the gross GST liability of M/s. Achintya for the month of
March 2018 assuming rate of CGST to be 9% and SGST to be 9%. All the amounts given above are
exclusive of GST.
Solution:
Add: Swachh Bharat Cess (SBC) levied on sale of goods (Note 1) 12,500
Add: Packing expenses (Note 2) 10,800
Less: Subsidy received from State Government (Note 3) (5,000)
Less: Discount @ 1% on list price (Note 4) (3,300)
CGST @ 9% 31,050
SGST @ 9% 31,050
Gross GST Liability 62,100
Notes: As per Section 15 of CGST Act, 2017,
(1) Any taxes, duties and cesses levied under any law other than CGST, SGST is includible in the value.
(2) Packing expenses being incidental expenses, are includible in the value.
(3) Since subsidy is received from State Government, the same is not includible in the value. It has been
assumed that such subsidies are directly linked to the price of the goods. Further, since the same
has not been adjusted in the list price, the same is to be excluded from the list price.

(4) Since discount is known at the time of supply, it is deductible from the value.
Special Note: In the above answer, the term “exclusive” mentioned in the question has been taken to
be as “not adjusted in the price” i.e. the list price given in the question is taken to be as “not adjusted in
the list price”, i.e. the list price given in the question is before adjusting the amount of discount and
subsidy. However, it is also possible to take a view that the list price “excludes” amount of discount
and subsidy. Therefore, the same need not be deducted again from the list price to arrive at the taxable
value. Read SBC as other taxes.

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.
List price of goods supplied inter-state (exclusive of taxes) 15,00,000
Subsidy received from Central Government for supply of taxable goods to government 2,10,000
School.
Subsidy received from a NGO for supply of taxable goods to an old age home 50,000
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:
Add: Subsidy amounting to Rs.2,10,000 received from Central Government (Since Nil
subsidy is received from Government, the same is not includible in the value in terms
of Section 15 of the CGST Act, 2017)
Add: Subsidy received from NGO (Since subsidy is received from a non-Government 50,000
body, the same is includible in the value in terms of Section 15 of the CGST Act, 2017)
Add: Tax levied by the Municipal Authority (Includible in the value as per Section 15 20,000
of the CGST Act, 2017)
Add: Packing charges (Being incidental expenses, the same are includible in the value 15,000
Add: Late fees paid by recipient of supply for delayed payment (Includible in the value 5,085
Note: It is assumed to be inclusive of taxes = Rs.6,000 * 100/118 (rounded off)

Shri Krishna Pvt. Ltd., a registered dealer, furnishes the following information relating to goods sold
by it to Shri Balram Pvt. Ltd. in the course of Intra State.
(i) Price of the goods 1,00,000
(ii) Municipal Tax 2,000

(iii) Inspection charges 15,000
(iv) Subsidies received from Shri Ram Trust (As the products is going to be used 50,000
by blind association)
(v) Late fees for delayed payment (Though Shri Balram Pvt. Ltd. made late 1,000
payment but these charges are waived by Shri Krishna Pvt. Ltd.)
(vi) Shri Balram Pvt. Ltd. paid to Radhe Pvt. Ltd. (on behalf of Shri Krishna Pvt. 2,000
Ltd.) weighment charges.
According to GST Law, determine the value of taxable supply made by Shri Krishna Pvt. Ltd. Items
given in Point (ii) to (vi) are not considered while arriving at the price of the goods given in point no.
(i).
Solution:
Computation of Value of Taxable Supply made by Shri Krishna (P) Ltd.
Price of the goods 1,00,000
Add: Municipal tax (Includible in the value as per Section 15 of the CGST Act, 2017) 2,000
Add: Inspection charges (Being incidental expenses, the same are includible in the value 15,000
Add: Subsidy received from Shri Ram Trust (Since subsidy is received from a non- 50,000
Government body, the same is includible in the value in terms of Section 15 of the CGST
Act, 2017)
Add: Late fees for delayed payment (Not includible since waived off) Nil
Add: Weighment charges paid to Radhe Pvt. Ltd. by Shri Balram Pvt. Ltd. on behalf of 2,000
Shri Krishna Pvt. Ltd. (Liability of the supplier being discharged by the recipient, is
includible in the value in terms of Section 15 of the CGST Act, 2017)

XYZ Pvt. Ltd. has provided the following particulars relating to goods sold by it to ABC Pvt. Ltd.
Price of the goods (exclusive of taxes and discounts) 1,25,000
Tax levied by municipal authority on the sale of such goods 15,000
CGST and SGST chargeable on the goods 19,200
Packing charges (not included in price above) 15,500
XYZ Pvt. Ltd. received Rs.9,500 as a subsidy from a non-profit organization in respect of timely supply
of such goods. The price of Rs.1,25,000 of the goods is after considering such subsidy. XYZ Ltd. offers
4% discount on the price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by XYZ Pvt. Ltd.
Solution:
Price of the goods (exclusive of taxes and discounts) 1,25,000
Add:
(a) Tax levied by Municipal Authority on the sale of such goods (Note 1) 15,000
(b) CGST and SGST chargeable on the goods (Note 1) -
(c) Packing charges (Note 2) 15,500
(d) Subsidy received from a non-Government body (Note 3) 9,500
Less:
(a) Discount @ 4 % on Rs.1,25,000 (Note 4) 5,000
Notes:
(1) As per Section 15(2)(a) of CGST Act, 2017, the value of supply shall include any taxes, duties, cess,
fees and charges levied under any law for the time being in force other than the CGST Act, the
SGST Act, the UTGST Act and the IGST, if charged separately by the supplier.
(2) As per Section 15(2)(c) of CGST Act, 2017, 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 shall be included in the
value of taxable supply. Hence, cost of packing shall form a part of the transaction value of the
supply.
(3) As per Section 15(2)(e) of CGST Act, 2017, the value of supply shall include subsidies directly linked
to the price excluding subsidies provided by the Central Government and State Governments.
Hence, subsidy received from non-profit making organization for timely supply of goods will be
included in the value of taxable supply.
(4) As per Section 15(3) of CGST Act, 2017, the value of supply shall not include any discount which is
given before or at the time of supply.

XYZ sells its products through unrelated wholesale dealers. The wholesale price is Rs.1, 00,000
(inclusive of GST). Cash discount of Rs.3,000 is allowed if the payment is made within 7 days and the
recipient agrees to make the payment within 7 days at the time of supply. Recipient actually makes the
payment within 7 days. Charges for normal packing Rs.1,000 which is included in the price. The
supplier has paid turnover tax Rs.1,000 and but the same is not recoverable from the recipient. What is
the value of supply and what is the GST payable, if the product is liable for GST @ 18%?
Solution:
Cum-Tax Price 1,00,000
Add:
(a) Normal Packing (Note 1) -
(b) Turnover Tax (Note 2) -
Less:
(a) Cash Discount (Note 3) 3,000
Cum-Tax Value 97,000
Less: GST @ 18% i.e., 97,000 * 18 /118 14,797
Notes:
(1) As per Section l5(2)(c) of CGST Act, 2017, if packing charges charged by supplier to the recipient
would be included in value of taxable supply. As it is already included in price and thus, no
adjustment is required.
(2) As per Section 15(2)(a) of CGST Act, 2017, any taxes, duties, cesses, fees, and charges levied under
any law for the time being in force, if charged separately by the supplier will form part of taxable
supply. In given case as turnover tax is not charged from recipient, it would not form part of value
of taxable supply.
(3) As per Section 15(3) of CGST Act, 2017, if any discount which is given after the supply has been
made and is established that it is in terms of an agreement then it is excluded in computing the
value of taxable supply.

Arvin Ltd., sold a machine to Isha Ltd. for Rs.4,00,000 (excluding taxes). A cash discount of 3% was
allowed since Isha Ltd., had made full payment in advance. The following additional details are given
below:
S.No. Particulars Amount (Rs.)
(1) Expenses pertaining to installation and erection of the machine at Isha 20,000
Ltd.’s premises (machine was permanently fixed to earth)
(2) Cost of durable and returnable packing (such cost has been amortised 5,000
and included in the cost of the machine)
(3) Actual freight and insurance from factory to buyer’s premises 25,000
(4) Subsidies (not received from Central Government) 15,000
(5) Testing charges paid by recipient on behalf of supplier 10,000
Determine the total amount of GST payable on the machine. Assume transaction is on principal to
principal basis. Assume GST at 18% and show working notes.
Solution:
Price of machine excluding taxes 4,00,000
Add:
(a) Installation and erection of machine (Note 1) 20,000
(b) Durable and returnable packing (Note 2) -
(c) Freight and insurance (Note 1) 25,000
(d) Subsidies not received from Central Government (Note 3) 15,000
(e) Testing charges (Note 4) 10,000
Less:
(a) 3% cash discount of price of machinery = Rs.4,00,000 * 3% (Note 5) 12,000
GST payable @ 18% 82,440
Notes:
(1) As per Section 15(2)(c) of CGST Act, 2017, if installation and erection charges as well as freight and
insurance are charged by supplier to the recipient, then it would be included in value of supply.
(2) Cost of durable and returnable packing shall not be included in taxable value of supply since the
same is amortized and not separately from the recipient.
(3) As per Section 15(2)(e) of CGST Act, 2017, if subsidies directly linked to the price excluding
subsidies provided by the Central Government and State Governments would be included in value
of supply.
(4) As per Section 15(2)(b) of CGST Act, 2017, any amount that the supplier is liable to pay in relation
to such supply but amount incurred by recipient on behalf of the supplier, that amount would be
included in value of supply.
(5) As per Section 15(3) of CGST Act 2017, if any discount which is given before or after the supply has
been made and it is established in terms of an agreement or contract then it is excluded from the
calculation of value of supply.

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.
Determine the value of taxable supply made by Samriddhi Advertisers.

Solution:
Service charges 5,00,000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi Advertisers [Liability 20,000
of the supplier being discharged by the recipient is includible in the value in terms of
Section 15(2)(b)]
Interest for delay in payment of consideration [Interest on delayed payment of 15,000
consideration is includible in the value in terms of Section 15(2)(d)]

Compute the value of taxable supplies if the contracted value of supply is Rs.18,00,000 which includes
the following:
1. Cost of primary packing 45,000
2. Cost of protective packing on customers request 25,000
3. Design and drawing charges 1,00,000
4. Pre-installation consultancy charges 50,000
Additional information:
(a) Freight charges of Rs.65,000 is paid by recipient on behalf of the supplier.
(b) Commission of Rs.20,000 paid to agent by recipient on instruction of supplier.
Solution:
Contracted value of supply of machine 18,00,000
Add:
(a) Cost of primary packing (Note 1) -
(b) Cost of protective packing on customers request (Note 1) -
(c) Design and drawing charges (Note 2) -
(d) Pre-installation consultancy charges (Note 2) -
(e) Freight charges paid by recipient (Note 3) 20,000
(f) Commission paid to agent (Note 3) 65,000
Notes:
(1) As per Section 15(2)(c) of CGST Act, 2017, cost of primary packing and protective packing at
recipient’s request for safe transportation charged by supplier from the recipient shall be included
for determining the value of taxable supply. As it is already is included in the contracted value, no
further adjustment is required.
in respect of supply goods at the time or before delivery of goods (including design and drawing
charges and pre-installation consultancy charges) shall be included in the value of taxable supply.
As it is already is included in the contracted value, no further adjustment is required.
(3) As per Section 15(b) of CGST Act, 2017, any amount that supplier is liable to pay in relation to such
supply but has been incurred by the recipient of the supply and not included in the price actually
paid or payable for the goods shall be included in the value of supply. Thus, commission paid to
agent by recipient on the instruction of supplier and freight charges incurred by the recipient on
behalf of supplier shall form part of taxable value.

Machine India Ltd. is engaged in the manufacture of machines. It has supplied one machine to M/s. Z
& Co. with the following details. Determine the total amount of GST payable thereon.
1. Price of machines excluding taxes and under mentioned charges 8,50,000
2. Installation and erection expenses 30,000
3. Packing charges 12,500
4. Design and engineering charges 4,000
5. Pre-delivery inspection charges 1,000
(a) Cash discount @ 2% on price of machinery is allowed as per terms of contract because buyer made
full payment in advance.
(b) Bought out accessories worth Rs.8,000 supplied free of cost with machine.
(c) Machine is supplied in durable and returnable packing worth Rs.50,000.
(d) The rate of GST is 18%.
Solution:
Price of machines excluding taxes and duties 8,50,000
Add:
(a) Installation and erection expenses (Note 1) 30,000
(b) Packing charges (Note 2) 12,500
(c) Design and engineering charges (Note 3) 4,000
(d) Pre-delivery inspection charges (Note 3) 1,000
(e) Bought out accessories (Note 4) -
(f) Durable and returnable packing (Note 5) -
Less:
(a) 2% cash discount on price of machinery = Rs.8,50,000 * 2% (Note 6) 17,000
GST payable @ 18% 1,58,490
Notes:
(1) As per Section 15(2)(c) of CGST Act, 2017, if installation and erection expenses at the recipient’s site
will also be added, being an amount charged for something done by the supplier in respect of the
supply at the time of making the supply.
(2) As per Section 15(2)(c) of CGST Act, 2017, packing charges charged by supplier to the recipient will
be included for computation of value of supply.
in respect of the supply of goods at the time of, or before delivery of goods shall be included in the
value of taxable supply. Hence, design and engineering charges and pre-delivery inspection
charges shall also be included in the value of taxable supply.
(4) Value of bought out accessories supplied free of cost along with the machinery will not be included
since no amount is charged for supply of accessories.
(5) The value of durable and returnable packing will not be included since no amount is charged for
such supply.
(6) As per Section 15(3) of CGST Act, 2017, if any discount which is given after the supply has been
made and is established that it is in terms of an agreement then it is excluded in computing the
value of taxable supply.

Compute the value of taxable supplies if the contracted value of supply is 20,00,000 which includes
following:
1. Taxes (other than CGST/SGST/IGST) charged by the supplier 20,000
2. Cost of primary packing 45,000
3. Cost of protective packing on customers request 25,000
4. Loading charges 30,000
5. Design and drawing charges 1,00,000
6. Inspection charges 6,000
7. Testing charges 4500
8. Pre-installation consultancy charges 50,000
9. Trade discount 30,000
(a) Subsidy of Rs.70,000 received from Central Government for setting up factory.
(b) Subsidy of Rs.60,000 received from holding company for timely supply of machine to recipient.
Solution:
Contracted value of supply of machine 20,00,000
Add:
(a) Taxes (other than CGST/SGST/IGST) charged by the supplier (Note 1) -
(b) Cost of primary packing (Note 2) -
(c) Cost of protective packing on customers request (Note 2) -
(d) Loading charges (Note 3) -
(e) Design and drawing charges (Note 3) -
(f) Inspection charges (Note 3) -
(g) Testing charges (Note 3) -
(h) Pre-installation consultancy charges (Note 3) -
(i) Subsidy received from CG for setting up factory (Note 4) -
(j) Subsidy received from holding company for timely supply of machine (Note 4) 60,000
Less:
(a) Trade discount (Note 5) -
Notes:
(1) As per Section 15(2)(a) of CGCST Act, 2017, any duty, taxes, cesses, fees and other charges charged
separately by the supplier are to be included in value of taxable supply. As it is already is included
in the contracted value, no further adjustment is required.
(2) As per Section 15(2)(c) of CGST Act, 2017, cost of primary packing and protective packing at
recipient’s request for safe transportation charged by supplier from the recipient shall be included
for determining the value of taxable supply. As it is already is included in the contracted value, no
in respect of supply goods at the time or before delivery of goods shall be included in the value of
taxable supply. Since loading charges, design and drawing charges, inspection charges, testing
charges and pre-delivery consultancy charges are already included in the contracted value, no

(4) As per Section 15(2)(e), the value of supply include subsidies directly in relation to price excluding
subsidy received from Central Government or State Government.
(5) As per Section 15(3)(a) of CGST Act, 2017, the value of the supply shall not include any discount
which is given before or at the time of supply if such discount has been duly recorded in the invoice
issued in respect of such supply. Hence, the same is deductible to arrive at value of taxable supply.
As it is already deducted from taxable value, no further adjustment is required.

Compute value of supply of goods supplied by Bharat Enterprises as per Section 15 of the CGST Act,
2017 with the help of the following particulars:
Sale price for delivery at buyer’s premises 2,42,000
Contracted sale price includes the following elements of cost:
(a) Cost of containers supplied by the buyer (Containers are supplied free of cost by 15,200
recipient and there was not obligation of supplier to supply the same)
(b) Design and engineering charges 22,400
(c) Loading and handling charges incurred after removal from the factory 6,000
(d) Cost of after sale service 10,000
(e) Dharmada charges 2,100
Cash discount @ 2% on Sale Price is allowed as per terms of contract because buyer made full payment
in advance. Give reasons with suitable assumptions wherever necessary.
Solution:
Sale price for delivery at buyer’s premises 2,42,000
Add:
(a) Design and engineering charges (Note 1) -
(b) Loading and handling charges incurred after removal from the factory (Note 1) -
(c) Cost of after sale service (Note 1) -
(d) Dharmada charges (Note 1) -
Less:
(a) Cost of containers supplied by the buyer free of cost (Note 2) 15,200
(b) Cash discount 2% of Sale Price = 2% * Rs.2,42,000 (Note 3) 4,840
Notes:
(1) As per Section 15(2)(c) of CGST Act,2017, 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 shall be included in the
value of taxable supply. Hence, design and engineering charges, loading and handling charges
(even though incurred after removal from the factory), cost of after sale service and dharmada
charges shall also be included in the value of taxable supply. As it is already is included in the
contracted value, no further adjustment is required.
(2) As per Section 15(1) of CGST Act, 2017, value of supply of goods shall be inclusive of goods which
are additionally supplied by supplier to recipient. However, as containers are supplied by recipient
to supplier free of cost and there was no obligation of the supplier to supply the same, value of
container would not be included.

Having regard to the provisions of Section 15 of the Central Goods and Services Tax, 2017, compute the
value of supply of goods for levy of duty of GST, given the following information:
Cum-duty wholesale price 15,000
Cost of normal secondary packing 1,000
Cost of special secondary packing 1,500
Cost of durable and returning packing 1,500
Freight 750
Insurance on freight 200
Trade discount (normal practice) 1,000
Rate of GST is 18%. State the reasons for the admissibility or otherwise of the deductions.
Solution:
Cum-duty wholesale price 15,000
Add:
(a) Cost of normal secondary packing (Note 1) 1,000
(b) Cost of special secondary packing (Note 1) 1,500
(c) Cost of durable and returning packing (Note 1) -
(d) Freight (Note 2) 750
(e) Insurance on freight (Note 2) 200
Less:
(a) Trade Discount (Note 3) 1,000
Cum-Tax Value 17,450
Less:
(a) GST thereon @ 18% (17,450 * 18 / 118) 2,662
Notes:
value of taxable supply. Hence, all kinds of packing is included in the value of supply if the same
is charged from the recipient by the supplier. It is assumed that cost of durable and returnable
packing is not charged by the supplier from the recipient as the same is returnable and hence the
same is not includible.
value of taxable supply. Hence, freight and insurance on freight will from part of value of taxable
supply.
Question 31: Valuation – Cum-Tax Calculation

Determine GST liability if the services have been supplied in the month of July 2018:
(a) Mr. A provides taxable services to Mr. X valuing Rs.20,00,000.
(b) Mr. A provides taxable services to Mr. Y for which he charges Rs.11,80,000 (inclusive of GST).

(c) Mr. A provides taxable services to Mr. Z valuing Rs.15,00,000. He has also incurred travelling
expenses of Rs.1,00,000 for supply of service and the same are also reimbursed by Mr. B (amount
exclusive GST).
Rate of GST is 18% in all cases.
Solution:
(a) GST Payable = Rs.20,00,000 * 18% = Rs.3,60,000.
(b) GST Payable = (Rs.11,80,000 * 18) / 118 = Rs.1,80,000
(c) GST Payable = Rs.16,00,000 * 18% = Rs.2,88,000.
Note: The total value of taxable supply would include expenditure incurred on travelling since
reimbursable expenditure shall also form the part of consideration.
(ICAI – RTP – Final – November 2018)

Question 32: Actual Supply & Deemed Supply, Composite Supply & Mixed Supply and Valuation
Jaskaran, a registered supplier of Delhi, has mode the following supplies in the month of January, 20XX:
Amount (Rs.)
S. No. Particulars
(excluding GST)
(i) Supply of 20,000 packages at Rs.30 each to Sukhija Gift shop in 6,00,000
Punjab
[Each package consists of 2 chocolates, 2 fruit juice bottles and a
packet of toy balloons]
(ii) 10 generators hired out to Morarji Banquet Halls, Chandigarh 2,50,000
[including cost of transporting the generators (Rs.1,000 for each
generator) from Jaskaran’s warehouse to the Morarji Banquet Halls]
(iii) 500 packages each consisting of 1 chocolate and 1 fruit juice bottle
given as free gift to Delhi customers on the occasion of Diwali
[Cost of each package is Rs.12, but the open market value of such
package of goods and of goods of like kind and quality is not
available. Input tax credit has not been taken on the items contained
in the package]
(iv) Catering services provided free of cost for elder brother’s business
inaugural function in Delhi
[Cost of providing said services is Rs.55,000, but the open market
value of such services and of services of like kind and quality is not
available]
You are required to determine the GST liability [CGST & SGST and/or IGST, as the case may be] of
Jaskaran for the month of January, 20XX with the help of the following additional information
furnished by him for the said period:
(a) Penalty of Rs.10,000 was collected from Sukhija Gift Shop for the payment received with a delay of
10 days.
(b) The transportation of the generators from Jaskaran’s warehouse to the customer’s premises is
arranged by Jaskaran through a Goods Transport Agency (GTA) who pays tax @ 12%
(c) Assume the rates of GST to be as under:
Goods / Services supplied CGST SGST IGST
Chocolates 9% 9% 18%
Fruit juice bottles 6% 6% 12%
Toy balloons 2.5% 2.5% 5%
Service of renting of generators 9% 9% 18%
Catering service 9% 9% 18%

Solution:
Computation of GST Payable of Jaskaran for the month of January, 20XX
Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
Supply of 20,000 packages to Sukhija Gift 1,09,526
Shop, Punjab (Note 1) [6,08,475 * 18%]
Renting of 10 generators to Moraji Banquet 45,000
Halls, Chandigarh (Note 2) [2,50,000 * 18%]
500 packages given as free gift to the customers Nil Nil Nil
(Note 3)
Catering services provided free of cost for 5,445 5,445
elder brother’s business inaugural function in [60,500 * 9%] [60,500 * 9%]
Delhi (Note 3)
Total GST liability (rounded off) 5,445 5,445 1,54,526
Notes:
(1) As per Section 2(74) of the CGST Act, 2017, mixed supply means two or more individual supplies
of goods or services, or any combination thereof, made in conjunction with each other by a taxable
person for a single price where such supply does not constitute a composite supply.
Supply of a package containing chocolate, fruit juice bottles and a packet of toy balloons is a mixed
supply as each of these items can be supplied separately and is not dependent on any other. Further,
as per Section 8(b) of the CGST Act, 2017, the mixed supply is treated as a supply of that particular
supply which attracts the highest rate of tax. Thus, in the given case, supply of packages is treated
as supply of chocolates [since it attracts the highest rate of tax]. Consequently, being an inter-State
supply of goods, supply of packages to Sukhija Gift Shop of Punjab is subject to IGST @ 18% each.
Further, value of supply includes interest or late fee or penalty charged for delayed payment of any
consideration for any supply in terms of Section 15(2)(d) of the CGST Act, 2017. Thus, penalty of
Rs.10,000 [considered as inclusive of GST] collected from Sukhija Gift Shop for the delayed
payment will be included in the value of supply. The total value of supply is Rs.6,08,475 [Rs.6,00,000
+ (Rs.10,000 * 100/118)]
(2) Services by way of transportation of goods by road except the services of a Goods Transportation
Agency (GTA) are exempt vide Notification No. 9/2017-IT (Rate). Since Jaskaran is not a GTA,
transportation services provided by him are exempt from GST. However, since the generators are
invariably hired out along with their transportation till customer’s it is a case of composite supply
under Section 2(30) of the CGST, Act, 2017 wherein the principal supply is the renting of generator.
As per Section 8(a) of the CGST Act, 2017, the composite supply is treated as the supply of the
principal supply. Therefore, the service of transportation of generators will also be taxed at the rate
applicable for renting of the generator (principal supply).
Consequently, being an inter-State supply of service, service of hiring out the generators to Morarji
Banquet Halls of Chandigarh is subject to IGST @ 18% each.
(3) As per Section 7(1)(c) of the CGST Act, 2017, an activity made without consideration can be treated
as supply only when it is specified it is Schedule I of the CGST Act, 2017. Para 2 of Schedule I
provides that supply of goods or services or both between related persons or between distinct
persons as specified in Section 25, when made in the course or furtherance of business, are to be
treated as supply even if made without consideration.
However, since the question does not provide that customers are related to Jaskaran, free gifts given
to the customers cannot be considered as supply under Section 7. Consequently, no tax is leviable
on the same.
Further, the catering services provided by Jaskaran to his elder brother without consideration will
be treated as supply as Jaskaran and his elder brother, being members of same family, are related
persons in terms of Explanation (a)(viii) to Section 15 of the CGST Act, 2017 and said services have

been provided in course/furtherance of business. Value of supply of services between related
persons, other than through an agent is determined as per Rule 28 of the CGST Rules, 2017.
Accordingly, the value of supply is the open market value of such supply; if open market value is
not available, the value of supply of goods or services of likes kind and quality. However, if value
cannot be determined under said methods, it must be worked out based on the cost of the supply
plus 10% mark-up. Thus, in the given case, value of catering services provided to the elder brother
of Jaskaran is Rs.60,500 [Rs.55,000 * 110%]. Further, being an intra-State supply of services, catering
services are subject to CGST and SGST @ 2.5% each.
(4) As per Notification No. 13/2017-CT (Rate), 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, Jaskaran has received services
from a GTA who has paid GST @ 12%, reverse charge provisions will not be applicable.
(ICAI – RTP – CA Final – May 2018)

Question 33: Valuation, Place of Supply, Time of Supply, Composite Supply and Documentation
ABC Ltd., Noida (Uttar Pradesh) is a supplier of machinery used for making bottle caps. The supply of
machinery is effected as under:
(a) The wholesale price of the machinery (excluding all taxes and other expenses) at which it is
supplied in the ordinary course of the business to various customers is Rs.42,00,000. However, the
actual price at which the machinery is supplied to an individual customer varies within a range of
± 10% depending upon the terms of contract of supply with the particular customer.
(b) Apart from the price of the machinery, ABC Ltd. charges from the customer the following
incidental expenses:
▪ associated handling and loading charges of Rs.10,000
▪ installation and commissioning charges of Rs.1,00,000
The machinery can be dismantled and erected at another site, if required. The above charges are
compulsorily levied in every case of supply of machinery.
(c) Transportation of machinery to the customer’s premises is arranged by ABC Ltd. through a third-
party service provider [Goods Transport Agency (GTA)]. The customer enters into a separate
service contract with the GTA and pays the freight directly to it.
(d) The company provides one year free warranty for the machinery. However, the company also
provides an extended two-year warranty on payment of additional charge of Rs.3,00,000.
(e) A cash discount of 2% on the price of the machinery is offered at the time of supply, if the customer
agrees to make the payment within 15 days of the receipt of the machinery at his premises. In the
event of failure to make the payment within the stipulated time, the company-
▪ recovers the discount given; and
▪ charges interest @ 1% per month or part of the month on the total amount due from the
customer (towards the machinery supplied) from the date of making the supply till the date of
payment. However, no interest is charged on the tax dues.
(f) For every machinery supplied, ABC Ltd. receives a grant of Rs.2,00,000 from its holding company
DEF Ltd.
ABC Ltd. has supplied a machinery to D Pvt. Ltd. on August 1, 2018 at a price of Rs.40,00,000 (excluding
all taxes). D Pvt. Ltd has its corporate office in New Delhi. However, the machinery has been installed
at its manufacturing unit located in Gurugram (Haryana). D Pvt. Ltd. has paid the freight directly to
the GTA and opted for two year warranty. Discount @ 2% was given to D Pvt. Ltd. as it agreed to make
the payment within 15 days. However, D Pvt. Ltd. paid the consideration on 31st October, 2018.
Assume the rates of taxes to be as under:
Bottle cap making machine
Service of transportation of goods
CGST – 2.5% SGST – 2.5% IGST – 5%

Other services involved in the above supply
CGST – 9% CGST – 9% CGST – 9%
Calculate the GST payable [CGST & SGST or IGST, as the case may be] on the machinery and support
your conclusions with legal provisions in the form of explanatory notes.
Make suitable assumptions, wherever needed.
Solution:
Computation of GST Payable of ABC Ltd.
Price of machine [Note 1] 40,00,000
Handling and loading charges [Note 2] 10,000
Installation and commissioning charges [Note 3] 1,00,000
Transportation cost [Note 4] Nil
Additional warranty cost [Note 5] 3,00,000
Grant from DEF Ltd. [Note 6] 2,00,000
Total price of the machine 46,10,000
Less: 2% cash discount on price of machinery = Rs.40,00,000 × 2% [Note 7] 80,000
Taxable value of supply 45,30,000
Tax liability for the month of August 2018 [Note 11]
IGST @ 12% [Note 8 and Note 9] 5,43,600
Tax liability for the month of October 2018 [Note 11]
Interest collected @ 3% on Rs.44,10,000 [Note 10] 1,32,300
Cash discount recovered [Note 10] 80,000
Cum-tax value of interest and cash discount 2,12,300
IGST @ 12% = (Rs.2,12,300/112) * 12 22,746
Total IGST payable on the machinery 5,66,346
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 when the supplier and the recipient of the supply
are not related and the price is the sole consideration for the supply. It is assumed that ABC Ltd.
and D Pvt. Ltd are not related and the price is the sole consideration for the supply.
(2) All incidental expenses 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) 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.
(4) Transportation cost has not been included in the value of supply of the machinery as it is a separate
service contract between the customer and the third-party service provider. The customer pays the
freight directly to the service provider.
The supplier (ABC Ltd), in this case, merely arranges for the transport and does not provide the
transport service on its own account. Tax will be separately levied on the supply of service of
transportation of goods under reverse charge.
(5) Warranty cost is includible in the value of the supply since transaction value includes all elements
of the price excluding those that can be specifically excluded as per Section 15 of the CGST Act.

(6) Subsidies directly linked to the price excluding subsidies provided by the Central Government and
State Governments are includible in the value of supply in terms of Section 15(2)(e) of the CGST
Act, 2017.
(7) Cash discount was deducted by ABC Ltd. upfront at the time of supply on August 1, 2018 and
hence, the same is excluded from the value of supply as it did not form part of the transaction value.
(8) In the given case-
▪ the location of the supplier is in Noida (UP); and
▪ the place of supply of machinery is the place of installation of the machinery i.e., Gurugram
(Haryana) in terms of Section 10(1)(d) of the IGST Act, 2017.
Therefore, the given supply is an inter-State supply as the location of the supplier and the place of
supply are in two different States [Section 7(1)(a) of IGST Act, 2017]. Thus, the supply will be
leviable to IGST in terms of Section 5(1) of the IGST Act, 2017.
(9) The given supply is a composite supply involving supply of goods (machinery) and services
(handling and loading and installation and commissioning) 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. Thus, tax rate
applicable to the goods (machinery) has been considered.
(10) Interest for the delayed payment of any consideration for any supply is includible in the value of
supply in terms of Section 15(2)(d) of the CGST Act, 2017. Further, cash discount recovered will
also be includible in the value of supply as now the transaction value i.e., the price actually paid
for the machinery is devoid of any discount.
The cash discount not allowed and interest have to be considered as cum tax value and tax payable
thereon has to be computed by making back calculations in terms of Rule 35 of CGST Rules, 2017.
(11) It has been assumed that the invoice for the supply has been issued on August 1, 2018, the date on
which the supply is made. Thus, the time of supply of goods is August 1, 2018 in terms of Section
12(1)(a) of the CGST Act, 2017.
As per Section 12(6) of the CGST Act, 2017, the time of supply in case of addition in value by way
of interest, late fee, penalty etc. for delayed payment of consideration for goods is the date on which
the supplier receives such addition in value. Thus, the time of supply of interest received and cash
discount recovered on account of delayed payment of consideration is 31st October, 2018, the date
when the full payment was made. The supplier may issue a debit note for such interest and cash
discount recovered.
(ICAI – Study Material – May 2018)

Question 34: Valuation in case of Supply when Price is not the Sole Consideration – Rule 27
Rajesh & Co. provides financial and management consultancy to a group of companies for an annual
retainership fee of Rs.15 lakh. It is given a room in the head office of the group for its exclusive use.
Rajesh & Co. pays GST on the amount of Rs.15 lakh. Is the value for the service provided by Rajesh &
Co., correct under GST laws? If not, please elaborate.
Solution:
Rajesh & Co. gets an office room free of cost, which is an additional non-monetary consideration for its
services. The market value of the rent of the room must be added to the retainer fee (Rs.15 lakh) in order
to arrive at the value of the taxable service provided by Rajesh & Co, as per Rule 27 of the CGST Rules
relating to valuation.
Jasmine Traders was the only Indian company making and selling product-M to companies, who used
this as a raw material. However, the international prices of product-M dropped, and the companies
began to import it rather than buying from Jasmine Traders The promoters then set up another
company, which had a manufacturing unit that could use product-M, with common directors and
senior management for better integration of functionality. Jasmine Traders began to supply product-M
to this related concern at low margins. The related concern was not eligible for full ITC GST was paid
on the price charged. Was the value adopted by Jasmine Traders for product-M to its related concern,
correct?
Solution:
The value adopted by Jasmine Traders is not correct. As per provisions of Rule 28(3) of the CGST Rules,
2017, the invoice value could not be the basis of valuation for a supply made to a related person if the
recipient is not eligible for full ITC Under rule 28(a) of the CGST Rules relating to valuation, the open
market value of product-M should be the value of the taxable supply of product M to the related
concern.
In this particular case, the open market value is likely to be the price of imported product-M plus
customs duties, which should be adopted for valuation after excluding the component of IGST on
import as per the definition of open market value in explanation (a) to the CGST Rules relating to
valuation.
Compute the taxable value of supply of goods in the following cases:
(a) YO Pvt. Ltd. sold goods to JO Pvt. Ltd. for consideration of Rs.2,50,000 and a machine costing
Rs.50,000. What will be the value if YO Pvt. Ltd. sells the same product to other customers for
Rs.3,20,000 (including GST).
(b) Rama Pvt. Ltd. sold goods to Krishna Pvt. Ltd. for a consideration of Rs.1,00,000 and a famous
product of Krishna Ltd. costing Rs.20,000. The open market value of the goods sold by Rama is not
known.
(c) John Pvt. Ltd. sold goods to Jason Pvt. Ltd. for Rs.75,000 and an item which is not available in India.
Open market value is not available but John Pvt. Ltd. supplies goods of like kind and quality for
Rs.1,10,000.
Assume rate of GST is 18%.
Solution:
(a) As per Rule 27 of CGST Rules, 2017, where the supply of goods or services is for a consideration
not wholly in money, then the value of the supply shall be the Open Market Value of such supply.
Thus, value of supply = Rs.3,20,000 * 100 / 118= Rs.2,71,186.
(b) As per Rule 27 of CGST Rules, 2017, where the supply of goods or services is for a consideration
not wholly in money and if the open market value is not available, then the value of supply shall
be the sum total of consideration in money and any such further amount as is equivalent to the
consideration not in money, if such amount is known at the time of supply.
Thus, value of supply = Rs.1,00,000 + Rs.20,000 = Rs.1,20,000.
(c) As per Rule 27 of CGST Rules, 2017, if the value of supply cannot be determined by Rule 27(a) or
Rule 27(b), then the value of supply shall be the value of supply of goods or services or both of like
kind or quality.
Thus, value of supply = Rs.1,10,000.
Mr. John purchases a laptop having open market value Rs.90,000 from registered dealer, in exchange
of his old phone. The registered dealer agreed to accept Rs.80,000 instead of his quote of Rs.85,000, as
he would still be in a profitable position (the old phone can be sold for Rs.10,000). Determine GST
implications of such transaction.
Solution:

As per Rule 27 of CGST Rules, 2017, where the price is not the sole consideration for the supply, the
'open market value' would be the value of the supply. Therefore, Rs.90,000 would be the value of the
supply.
Manyata Ltd. manufactures chairs. During the month of January 2018, Sanjay Ltd. purchased 500
Chairs at the contracted price of Rs.8,000 per chairs (excluding GST and discount) from Manyata Ltd.
Sanjay Ltd. supplied designer handles used in the manufacturing of the chairs to Manyata Ltd. without
consideration. The open market value of the handles supplied was Rs.1,000 per pair of handles. Also a
discount of Rs.200 per chair was given by the supplier at the time of the supply and same has been duly
recorded in the invoice issued in respect of such supply. The rate of GST is 28%. Give reasons with
suitable assumptions
Solution:
Contracted sale price of chairs = Rs.8,000 * 500 40,00,000
Add: Open market value of supply of handles = Rs.1000 * 500 (Note 1) 5,00,000
Less: Discount = Rs.200 * 500 (Note 2) (1,00,000)
GST Payable @ 28% 12,32,000
Notes:
(1) As per Rule 27(b) of CGST Rules, 2017, where the supply of goods or services is for a consideration
not wholly in money and if the open market value supplied is not available, the value of the supply
shall be the sum total of consideration in money and any such further amount in money as is
equivalent to the consideration not in money, if such amount is known at the time of supply. In this
case, amount in money as is equivalent to the consideration not in money is open market value of
goods received by the supplier from the recipient.
Question 39: Valuation in case of Supply between Related Persons – Rule 28

M/s Manohar Fabricators owned by Ramji Bhai is popularly known for assembly of large machines.
M/s Shantanu Fabricators owned by wife of Ramji Bhai is engaged in fabrication of small machines. A
factory contracts M/s Solid Fabricators for fabrication of its machinery for a fee of Rs.10,00,000. M/s.
Manohar Fabricators sub-contracts the work to M/s. Shantanu Fabricators for Rs.8,00,000, and ensures
supervision of the work performed by them. Generally, M/s. Shantanu Fabricators charges a fixed sum
of Rs.2,200 per man hour to its clients; it spends 400 hours on this project. Determine value of supply.
Solution:
Since M/s. Manohar Fabricators and M/s. Shantanu Fabricators are owned by Mr. Ramji Bhai and wife
of Mr. Ramji Bhai, the two businesses will be treated as related persons. Therefore, Rs.8,00,000 being
the sub-contract price will not be accepted as transaction value.
As per Rule 28 of CGST Rules, 2017, the value of the service would be the open market value being
Rs.8,80,000 (i.e. Rs.2,200 per hour * 400 hours).


A pharmaceutical company supplies a drug intermediate to its own unit in another State for conversion
into formulations. These supplies are taxable as per Schedule I of the CGST Act. The product is
exclusive to this company, and there is no market sale in India of this drug intermediate. How will the
value of the supply of this drug intermediate be determined under GST laws?
Solution:
Since the supply is made to a distinct person, the same will be valued in accordance with Rule 28 of
CGST Rules relating to valuation.
There is no open market value of the drug intermediate as also there are no like goods. Therefore, value
of supply of such drug intermediate will be determined in terms of clause (c) of Rule 28 i.e., by using
rule 30. Thus, the value of supply of such drug intermediate will be 110% of its cost of production or
manufacture.
However, if the recipient unit is eligible for full ITC, the value declared in the invoice will be deemed
to be the open market value of the drug intermediate and thus, the invoice value will be the value of
taxable supply.

A supplier sold certain goods to SRK Ltd. for Rs.50,000 (excluding taxes) on October 2018. SRK Ltd. is
a related person as defined under Explanation to Section 15. It did not sell the goods but used for
consumption in manufacture of other articles. The cost of goods was Rs.90,000. Determine the value of
supply in the given case. What will be the value of supply if in the aforesaid case SRK Ltd. is not related
to the supplier?
Solution:
As per Rule 28 of CGST Rules, 2017, the value of the supply of goods or services or both between distinct
persons as specified in Section 25 or where the supplier and recipient are related, other than where the
supply is made through an agent, shall be as follows:
(1) the open market value of such supply;
(2) if the open market value is not available, be the value of supply of goods or services of like kind
and quality;
(3) if the value is not determinable under clause (a) or (b), be the value as determined by the application
of Rule 30 or Rule 31, in that order i.e. it must be worked out based on the cost of the supply plus
10% mark-up (Rule 30) or by other reasonable means, in that sequence (Rule 31).
In given case as supplier and recipient are related, so value of supply should be computed as cost of
supply plus 10% markup i.e. Rs.90,000 x 110% = Rs.99,000.
If SRK Ltd. is not related to the supplier, then value of supply would be transaction value i.e. Rs.50,000
according to Section 15 of CGST Act, 2017.

From the following particulars, compute the value of supply for GST purposes. Out of 1,000 units
manufactured, 800 units have been cleared to a sister unit for further production of goods on assessee’s
behalf, the balance 200 units are lying in the stock:
Direct material consumed (inclusive of GST @ 18%) 2,36,000
Direct labour and direct expenses 1,60,000
Works overheads 40,000
Research and development costs 25,000
Administration overheads (75% related to production) 80,000
Inputs received free of cost from sister units (to be used only in goods manufactured 35,000
for sister units)

Abnormal losses (not included above) 24,000
Advertisement and selling costs 36,000
VRS compensation to employees (not included above) 1,20,000
Realisable value of scrap/wastage 20,000
Solution:
As per Rule 28 of CGST Rules, 2017, the value of the supply of goods or services or both where the
supplier and recipient are related shall be as follows:
(a) Value of supply shall be the open market value of such supply;
(b) If the open market value is not available, the value of supply shall be the value of supply of goods
or services of like kind and quality;
(c) If the value is not determinable under clause (a) or (b), the value shall be as determined by the
application of Rule 30 or Rule 31, in that order i.e. it must be worked out based on the cost of the
supply plus 10% mark-up (Rule 30) or by other reasonable means, in that sequence (Rule 31).

Direct material consumed (exclusive of GST @ 18%) = 2,36,000 * 100 / 118 (Note 1) 2,00,000
Add:
(a) Direct labour and direct expenses 1,60,000
(b) Works overheads 40,000
(c) Research and development costs 25,000
(d) Administration overheads related to production = 80,000 * 75% (Note 2) 60,000
(e) Abnormal losses (Note 3) -
(f) Advertisement and selling costs (Note 3) -
(g) VRS compensation to employees (Note 3) -
Less: Realisable value of scrap/wastage 20,000
Cost of production of 1,000 units 4,65,000
Cost per unit 465
Cost of production of 800 units transferred to sister units = 800 * 465 3,72,000
Add: Inputs received free of cost from sister units (to be used only in goods 35,000
manufactured for sister units) (Note 4)
Total cost of production of 800 units transferred to sister unit 4,07,000
Add: 10% mark up as per Rule 28 40,700
Value of Supply of 800 units cleared to sister unit under Rule 28 4,47,700
Notes:
(1) Direct material cost shall be taken as net of GST since input tax credit availed cannot form part of
cost of production.
(2) Administrative overheads relatable to production only shall form part of cost of production.
(3) Abnormal losses and VRS compensation shall also not form part of ‘cost’ as it is non-recurring cost
arising due to unusual or unexpected occurrence of events. Advertisement and selling costs shall
not form part of cost of production as selling and distribution overheads do not form part of cost
of production as per Cost Accounting Standard-4.
(4) Inputs received free of cost from sister unit form part of cost of production as per Cost Accounting
Standard-4.
Question 43: Valuation in case of Supply between Distinct Persons – Rule 28

Krishna Limited supplied CPUs from its establishment located in Rajasthan to its computer
manufacturing unit in Madhya Pradesh @ Rs.25,000 per unit. Krishna Limited supplied such CPUs
during the same period to independent recipients @ Rs.30,000 including CGST and SGST. Determine

the value of supply for Krishna Limited in accordance with the CGST Act, 2017 and the rules made
thereof.
Solution:
As per Section 25(4) of the CGST act 2017, a person who has obtained more than one registration in one
state or union territory or more than one state or union territory shall in respect of each such registration
be treated as distinct person for the purpose of this Act.
As per Section 7 read with Schedule I of CGST Act, 2017, transaction between the distinct persons shall
be deemed to be supply for the purpose of GST even though there is no consideration.
As per Rule 28 of CGST Rules, 2017, the value of such supply would be the open market value.
Price charged from independent recipient 30,000
Less: GST included in the above price = 30,000 * 18 / 118 4,576
Open Market Value of supply of goods 25,424
Question 44: Valuation in case of Supply between Distinct Persons – Rule 28

Radhika Textiles transfers stock of 10,000 metres of fabric (costing Rs.20,00,000) requiring further
processing before sale, from its Udaipur, Rajasthan branch to its Ahmedabad, Gujarat branch. The
Ahmedabad, Gujarat branch, apart from processing its own goods, engages in processing of similar
goods by other persons who supply the same variety of goods, and thereafter sells these processed
goods to wholesalers. There are no other factories in the neighboring area which are engaged in the
same business as that of its Rajasthan unit (sole manufacturer of the fabric). Goods of the same kind
and quality are supplied in lots of 10,000 metres each time by another manufacturer located in Gujarat.
The price of such goods is Rs.14,00,000.
Solution:
As per Section 25(4) of the CGST Act, 2017, a person who has obtained more than one registration,
whether in one State or Union territory or more than one State or Union territory shall, in respect of
each such registration, be treated as distinct person for the purposes of this Act.
As per Section 7 read with Schedule I of CGST Act, 2017, transaction between the distinct persons shall
be deemed to be supply for the purpose of GST even though there is no consideration.
As per Rule 28 of CGST Rules, 2017, the value of such supply would be the open market value.
However, if open market value is not ascertainable, then the value shall be the value of supply of goods
of like kind and quality. In this case, although goods of like kind and quality are available, the same
may not be accepted as the 'like goods' since they are supplied by another manufacturer located in
Gujarat whose transportation cost are lower and thus less expensive in comparison to goods under
consideration which were supplied from Rajasthan.
As per Rule 30 of CGST Rules, 2017, if the value of supply cannot be determined by Rule 28(a) or Rule
28(b), then the value of supply shall be 110% of cost of production. Therefore, the value of the supply
would be taken at 110% of the cost, i.e., Rs.22,00,000 (110% * 20,00,000).
Question 45: Valuation in case of Supply between Principal and Agent – Rule 29
Clean Industries Ltd., Nagpur has various agents located across the State of Maharashtra (except
Nagpur). The stock of washing machines is dispatched from Clean Industries Ltd. to the locations of
the agents, based on receipt of orders from various dealers. Clean Industries Ltd. is also engaged in the
wholesale supply of washing machine in Nagpur. An agent places an order for dispatch of 25 washing
machines on 15-01-2018. Clean Industries Ltd. had sold 25 washing machines to a retailer in Nagpur on
10-01-2018 for Rs.1,50,000. The agent will sell 25 units to a dealer who would sell these washing
machines on MRP basis (i.e. Rs.7,000 / Unit).

Solution:
As per Section 7 read with Schedule I of CGST Act, 2017, transaction between the principal and agent
shall be deemed to be supply for the purpose of GST even though there is no consideration. Therefore,
the transfer of goods by the principal (Clean Industries Ltd.) to its agent for sales, on behalf of the
principal would be deemed to be a supply although made without consideration.
As per Rule 29 of CGST Rules, 2017, the value would be either the open market value, or 90% of the
price charged by the recipient of the intended supply to its customers, at the option of the supplier.
Thus, the value of the supply by Clean Industries Ltd. to its agent would be either Rs.1,50,000 or
Rs.1,57,500 (i.e. 90% * 7,000 * 25), based on the option chosen by Clean Industries Ltd.

Question 46: Valuation in case of Supply between Principal and Agent – Rule 29
The supplies of commodity ‘y’ to the market are channeled through a State Marketing Corporation
which conducts an auction each day to arrive at the price. Gupta and Co. supplies commodity ‘y’
through the State Marketing Corporation. How will this supply of ‘y’ by Gupta and Co. be valued for
paying tax?
Solution:
The State Marketing Corporation is an ‘agent’ in the meaning of the expression as defined in Section
2(5), which includes an auctioneer. Therefore, the value of supply of ‘y’ will be determined in terms of
Rule 29 of CGST Rules relating to valuation. There is no open market for the first supply of commodity
‘y’, as it is compulsorily supplied to the State Marketing Corporation. Therefore, the choice before
Gupta & Co. for valuing the supply of ‘y’ is between the open market value at which ‘y’ is sold by the
State Marketing Corporation or 90% of price of goods of like kind and quality sold by the State
Marketing Corporation to its unrelated customers.
If the value cannot be determined by either of the two methods, it needs to be determined on the basis
of the cost plus 10% mark up as per Rule 30 or on the basis of Best Judgement Method as per Rule 31,
in that order.
Question 47: Valuation in case of Supply under Notified Cases (Money Changer) – Rule 32
Mr. X, a money changer, has exchanged US $ 10,000 to Indian rupees @ Rs. 64 per US $. Mr. X wants to
value the supply in accordance with rule 32(2)(b) of CGST Rules. Determine the value of supply made
by Mr. X.
Solution:
As per Rule 32(2)(b) of CGST Rules, the value in relation to the supply of foreign currency, including
money changing, is deemed to be
(a) 1% of the gross amount of currency exchanged for an amount up to Rs.1,00,000, subject to a
minimum amount of Rs.250;
(b) Rs.1,000 and 0.5% of the gross amount of currency exchanged for an amount exceeding Rs.1,00,000
and up to Rs.10,00,000.
Value of Taxable Supply for Money Changer as per Rule 32
Particulars Amount (Rs.) Amount (Rs.)
Value of currency exchanged in Indian rupees = Rs.64/$ * US $ 10,000 6,40,000
Value as per Rule 32 – For first Rs.1,00,000 = 1% * Rs.1,00,000 1,000
Value as per Rule 32 - For balance Rs.5,40,000 = 0.5% * Rs.5,40,000 2,700

Mr. Zed, a money changer, has converted 5000 USD into 4000 Euros on 15th Jan 18, and RBI reference
rates are Rs.64 per USD and Rs.76 per Euro. In accordance with Rule 32(2)(a) of CGST Rules, 2017,
determine the value of supply made by Mr. Zed.
Solution:
As per Rule 32(2)(a) of CGST Rules, 2017, the value of supply in case where both the currency are
foreign currencies shall be lower of 1% of both foreign currencies converted to Indian rupees i.e. lower
of
(a) 1% of (Rs.64 per USD * 5000 USD) = 1% of Rs.3,20,000 = Rs.3,200
(b) 1% of (Rs.76 per Euro * 4000 Euro) = 1% of Rs.3,04,000 = Rs.3,040
Thus, value of supply shall be Rs.3,040.
M/s. Paisa Changers Ltd., Mumbai is an authorised money changer registered under FEMA, 1999. It
enters into the following transactions of money changing:
(a) Sold 5,000 US $ @ 1 US $ = Rs.61
(b) Purchased 500 Euro @ 1 Euro = Rs.70
(c) Purchased 500 GBP @ 1 GBP = Rs.99
(d) Sold 5,650 US $ for 3,400 GBP.
(e) Old 25,000 units of currency ABC @ 1 ABC = Rs.15
(f) RBI reference rate for the various currencies at the relevant time:
(i) 1 US$ = Rs.60
(ii) 1 Euro = Rs.71
(iii) 1 GBP = Rs. 100
You are required to calculate value of taxable supply of service and tax thereon if all charges are
exclusive of GST. Applicable GST rate is 18%.
Solution:
Value of Taxable Supply for Money Changer as per Rule 32
Sale of 5,000 US $ 5,000
Value = (Selling Rate – RBI Reference Rate) * Units of Foreign Currency Sold
= (Rs.61/US $ – Rs.60/US $) * 5,000 US $
Purchase of 500 Euro 500
Value = (RBI Reference Rate – Buying Rate) * Units of Foreign Currency Purchased
= (Rs.71/Euro – Rs.70/Euro) * 500 Euros
Purchase of 500 GBP 500
Value = (RBI Reference Rate – Buying Rate) * Units of Foreign Currency Purchased
= (Rs.100/GBP – Rs.99/GBP) * 500 GBP
Sold 25,000 units of currency ABC 3,750
Value = 1 % of the Gross Amount of Currency exchanged in Indian Rupees
= 1% * 25,000 ABC * Rs.15/ABC
Direct conversion of GBP into US $ 3,390
Value = 1 % of Lower of Amount 1 or Amount 2 = 1% * Rs.3,39,000
Amount 1 = 5,650 US $ x Rs.60 / US $ = Rs.3,39,000
Amount 2 = 3,400 GBP x Rs.100 / GBP = Rs.3,40,000

Rolex Forex Private Limited; registered in Delhi, is a money changer. It has undertaken the following
purchase and sale of foreign currency:
(i) 1,000 US $ are purchased from Rajesh Enterprises at the rate of Rs.68 per US $ RBI reference rate
for US $ on that day is Rs.68.60.
(ii) 2,000 US $ are sold to Sriniti at the rate of Rs.67.50 per US $. RBI reference rate for US $ for that day
is not available.
Determine the value of supply in each of the above cases in terms of:
(A) Rule 32(2)(a) of the CGST Rules, 2017
(B) Rule 32(2) (b) of the CGST Rules, 2017.
Solution:
Rule 32(2) of the CGST Rules, 2017 prescribes the provisions for determining the value of supply of
services in relation to the purchase or sale of foreign currency, including money changing.
Determination of Value under Rule 32(2)(a) of the CGST Rules, 2017
(i) Rule 32(2)(a) of the CGST Act, 2017 provides that the value of supply of services for a currency,
when exchanged from, or to Indian Rupees, shall be equal to the difference in the buying rate or
the selling rate, as the case may be, and the reserve Bank of India (RBI) reference rate for that
currency at that time, multiplied by the total units of currency. Thus, value of supply is:
= (RBI reference for US $ - Buying rate of US $) * Total number of units of US $ bought
= (Rs.68.6 – Rs.68) * 1,000
= Rs.600
(ii) First proviso to Rule 32(2)(a) of the CGST Act, 2017 lays down that when the RBI reference rate for
a currency is not available, the value shall be 1% of the gross amount of Indian Rupees provided or
received by the person changing the money. Thus, value supply is:
=1% of the gross amount of Indian Rupees received
= 1% of (Rs.67.50 * 2,000)
= Rs.1,350
Determination of Value under Rule 32(2)(b) of the CGST Rules, 2017

Third proviso to Rule 32(2)(a) stipulates that a person supplying the services in relation to the purchase
or sale of foreign currency, including money changing may exercise the option to ascertain the value
in terms of Rule 32(2)(b) for a financial year and such option shall not be withdrawn during the
remaining part of that financial year.
Rule 32(2)(b) provides that value in relation to the supply of foreign currency, including money
changing shall be deemed to be-
S. No. Currency Exchanged Value of Supply
1. Upto Rs.1,00,000 1% of the gross amount of currency exchanged (subject to
minimum of Rs.250)
2. Exceeding Rs.1,00,000 and Rs.1,000 + 0.50% of the gross amount of currency exchanged above
upto Rs.10,00,000 Rs.1,00,000
3. Exceeding Rs.10,00,000 Rs.5,500 + 0.1% of the (gross amount of currency exchanged above
Rs.10,00,000 (subject to maximum of Rs.6,000)
Thus, the value of supply in the given cases would be computed as under:
(i) Gross amount of currency exchanged = Rs.68 * 1,000 = Rs.68,000. Since the gross amount of currency
exchanged is less than Rs.1,00,000, value of supply is 1% of the gross amount of currency exchanged
[1% of Rs.68,000] or Rs.250, whichever is higher.
= Rs.680

(ii) Gross amount of currency exchanged = Rs.67.50 * 2,000 = Rs.1,35,000. Since the gross amount of
currency exchanged exceeds Rs.1,00,000, but less than Rs.10,00,000, value of supply is Rs.1,000 +
0.50% of (Rs.1,35,000 – Rs.1,00,000).
= Rs.1,175
Question 51: Valuation in case of Supply under Notified Cases (Air Travel Agent) – Rule 32
Mr. U is an air travel agent. Compute the value of supply of service made by him during the month of
December, 2018 with the help of following particulars furnished by him:
Other Charges and Taxes Total Value of
Particulars Basic Fare (Rs.)
Fee (Rs.) (Rs.) Tickets (Rs.)
Domestic Bookings 1,00,000 10,510 3,490 1,14,000
International Bookings 3,10,000 19,130 11,870 3,41,000
Solution:
As per Rule 32(3) of CGST Rules, 2017 the value of the supply of services in relation to booking of tickets
for travel by air provided by an air travel agent is
(a) 5% of the basic fare in the case of domestic bookings, and
(b) 10% of the basic fare in the case of international bookings.
Value of Taxable Supply for Air Travel Agent as per Rule 32
Particulars Amount (Rs.) Amount (Rs.)
Basic fare in case of domestic bookings 1,00,000
Value as per Rule 32 = 5% * Rs.1,00,000 5,000
Basic fare in case of international bookings 3,10,000
Value as per Rule 32 = 10% * Rs.3,10,000 31,000
Question 52: Valuation in case of Supply under Notified Cases (Life Insurance Company) – Rule 32
Life Insurance Company gets premium worth Rs.18 Cr., the break-up of which is as follows:
(1) Premium not containing investment portion – Rs.5 Cr.
(2) Premium containing investment portion which is intimated to policy holder – Rs.6 Cr. (Rs.2 Cr. is
investment portion)
(3) Premium containing investment portion which is not intimated to policy holder – Rs.7 Cr., the
break-up of which is as follows:
➔ Single Premium Policy – Rs.2 Cr.
➔ 1st Year Premium – Rs.3 Cr.
➔ 2nd Year, 3rd Year, etc. Premium – Rs.2 Cr.
Compute the taxable value as per Rule 32.
Solution:
Value of Taxable Supply for Life Insurance Company as per Rule 32
Premium not containing investment portion 5 Cr.
Premium containing investment portion which is intimated to policy holder (Rs.6 4 Cr.
Cr. – Rs.2 Cr.)
Premium containing investment portion which is not intimated to policy holder
➔ Single Premium Policy (Rs.2 Cr. * 10%) 0.2 Cr.
➔ 1st Year Premium (Rs.3 Cr. * 25%) 0.75 Cr.
➔ 2nd Year, 3rd Year, etc. Premium (Rs.2 Cr. * 12.5%) 0.25 Cr.
Value of Taxable Supply 10.20 Cr.

Question 53: Valuation in case of Supply under Notified Cases (Life Insurance Company) – Rule 32
LIC of India provides you the following information for the month of December 2018. You are required
to compute value of taxable Supply of services under Rule 32(4) of Determination of Value of Supply
of CGST Rules, 2017.
(a) General policies: Total premiums collected Rs.12,000 lakhs (Out of which 1st year premium is
Rs.5,000 lakhs)
(b) Single premium annuity policies: Premiums collected Rs.850 lakhs.
(c) Only Risk Cover Policies: Premiums collected Rs.500 lakhs.
(d) Life micro-insurance policies where insured amount does not exceed Rs.2,00,000: Premium
collected Rs.10 lakhs.
(e) Variable Insurance Policies: Premiums collected Rs.8,000 lakhs. 80% of the amount is allocated for
investments on behalf of policy holder for which policy holder is given separate break up in
premium receipts.
Solution:
Value of Taxable Supply for Life Insurance Company as per Rule 32
Particulars Amount Rate Taxable Value
(Rs. in lakhs) (Rs. in lakhs)
General policies:
➔ First year premium 5,000 25% 1,250
➔ Subsequent years i.e. policies issued in earlier years 7,000 12.5% 875
Single premium annuity policies 850 10% 85
Only Risk Cover Policies (Note 1) 500 100% 500
Life micro-insurance policies (Note 2) 10 Exempt -
Variable Insurance Policies: Value = Gross Premium - 8,000 - 1,600
Amount allocated towards Investment
Total Taxable Value 4,310
Notes:
(1) Since the entire premium is for risk cover, hence, the option under Rule 32(4) is not available.
(2) As per EN 12/2017-CT (Rate), life micro-insurance policies where insured amount does not exceed
Rs.2,00,000 is not be liable to GST as it the same is exempt.
Question 54: Valuation in case of Supply under Notified Cases (Second Hand Goods) – Rule 32
Mr. Shah is engaged in buying and selling of second hand cars in Pune. During the month of March,
2018 he supplied a second hand car after some processing at Rs.4,50,000 which he purchased from
customer at Rs.3,90,000 and no input tax credit has been availed on such purchase. Compute the value
of taxable Supply. What would your answer be if purchase price of used car is Rs.4,70,000.
Solution:
As per Rule 32(5) of CGST Rules, 2017, where a taxable supply is provided by a person dealing in
buying and selling of second hand goods i.e. used goods as such or after such minor processing which
does not change the nature of the goods and where no input tax credit has been availed on purchase of
such goods, the value of supply shall be the difference between the selling price and purchase price.
(a) Value of taxable supply of second hand car when purchase price is Rs.3,90,000 will be Rs.60,000 as
the difference between purchase and sale price is Rs.60,000 (Rs.4,50,000 – Rs.3,90,000).
(b) Value of taxable supply of second hand car when purchase price is Rs.4,70,000 will be Nil as the
difference between purchase and sale price is Rs.-20,000 (Rs.4,50,000 – Rs.4,70,000).
Question 55: Valuation in case of Supply under Notified Cases (Second Hand Goods) – Rule 32

Mr. Ramesh purchased a motor car on 1st October 2017 for Rs.10,00,000. 70% of the purchase price of
car was financed by Bajaj Finance Ltd. The loan was payable in 50 monthly instalments beginning with
01-11-2017. Mr. Ramesh defaulted in repayment of loan and Bajaj Finance Ltd. repossessed the car on
15-05-2018. The car was disposed on 10-12-2018 for Rs.8,00,000. Determine the value of taxable supply
as per Rule 32(5) of CGST Rules, 2017.
Solution:
As per Rule 32(5) of CGST Rules, 2017, the purchase value of goods repossessed from a defaulting
borrower, who is not registered, for the purpose of recovery of a loan or debt shall be deemed to be the
purchase price of such goods by the defaulting borrower reduced by 5% points for every quarter or
part thereof, between the date of purchase and the date of disposal by the person making such
repossession.
Value of Taxable Supply for Second Hand Goods as per Rule 32
Sale price of car 8,00,000
Purchase value of repossessed car (Refer Working below) 7,50,000
Computation of Purchase Value of Repossessed Car

Purchase price of car 10,00,000
Date of purchase of car 01-10-2017
Date when repossessed car is sold 10-12-2018
No of quarters or part thereof 5
Purchase value of repossessed car = Rs.10,00,000 – (Rs.10,00,000 * 5% * 5 Quarters) 7,50,000
Note: As per Section 2(92) of the CGST Act, 2017, "quarter" shall mean a period comprising three
consecutive calendar months, ending on the last day of March, June, September and December of a
calendar year.

Question 56: Valuation in case of Supply under Notified Cases (Coupons) – Rule 32
Easy Coupons Ltd. sells coupons that are redeemable against specified luxury food products at retail
outlets. Each coupon has a face value of Rs.900 but is redeemable for supplies worth Rs.1,000. What is
the value of supply of such coupon under GST laws?
Solution:
In terms of Rule 32(6) of the CGST Rules relating to valuation, the value of a coupon is the money value
of the goods redeemable against it. Therefore, though the coupon is sold for Rs.900, its value is Rs.1,000.
Question 57: Valuation for Pure Agent – Rule 33

Whether expenditure like travel, hotel stay, transportation and the like incurred by the service supplier
in the course of supplying taxable supply of service may be treated as consideration for taxable supply
of service and included in value for charging GST?
Explain briefly with reference to decided case law.
Solution:
As per Rule 33 of CGST Rules, 2017, the expenditure or costs incurred by a supplier as a pure agent of
the recipient of supply shall be excluded from the value of supply subject to fulfillment of specified
conditions otherwise expenditure incurred will form value of taxable supply. Thus, expenditure like
travel, hotel stay, transportation and the like incurred by the service supplier in the course of supplying

taxable supply of service will be treated as consideration for taxable supply and included in value for
charging GST.
Question 58: Valuation for Pure Agent – Rule 33

Decide where concept of Pure Agent as per Rule 33 of CGST Rules, 2017 is applicable in the following
cases:
(1) Mr. Ram contracts with Mr. Shyam, a real estate agent to sell his house. Thereupon, Mr.Shyam
gives an advertisement in television which amounted to Rs.1 lakh. Mr. Shyam billed Mr. Ram for
Rs.6 lakhs. The invoice showed Rs.5 lakhs as consideration for his services and Rs.1 lakh for the
television advertisement. Mr. Shyam paid GST only on Rs.5 lakhs, claiming that Rs.1 lakh was paid
as a ‘pure agent’. Decide.
(2) In the course of providing a taxable service, Mr. DK, a supplier incurs costs such as travelling
expenses, postage, telephone, etc. totaling to Rs.30,000. Showing this separately in the bill, he
claimed an exclusion of same from the value of the taxable service under the pretext that he was
acting as ‘pure agent’ of the service recipient. Decide.
(3) Mr. VK contracts with Mr. Ranka, an architect for building a house, the consideration for his service
being fixed at R.5,00,000. In course of supplying service, Mr. Ranka incurred expenses such as
telephone charges, air travel tickets, accommodation etc. totaling Rs.1,00,000. Mr. Ranka also
incurred expenses for purchase of electrical fittings on behalf of Mr. VK amounting to Rs.2,00,000.
Mr. Ranka recovered all the expenses from Mr. VK. Mr. Ranka paid GST only on Rs.5,00,000,
claiming Rs.3,00,000 (Rs.1,00,000 + Rs.2,00,000) as reimbursable expenditure incurred as ‘pure
agent’ of Mr. VK. Decide.
(4) A Customs House Agent paid custom duty of Rs.2,00,000 on behalf of his client and the same was
included in his fees Rs.10,00,000. What is the taxable value of his service?
Solution:
(1) Here, Mr. Shyam does not act as ‘pure agent’ while giving the television advertisement, though it
is separately shown in the invoice. Advertising services is an input service for the estate agent in
order to enable or facilitate him to perform his services as an estate agent. Therefore, GST is payable
on Rs.6 lakhs.
(2) Here, the expenditure incurred by Mr. DK in course of providing taxable service is input / input
service procured by Mr. DK on his own account for providing the taxable service. Hence, by merely
indicating such expenditure separately in the bill, the same cannot be excluded from the value of
service.
(3) Mr. Ranka is liable to GST on the Rs.6,00,000. Cum tax calculation as per Rule 35 has to be worked
out if Mr. Ranka is not able to collect GST from Mr. VK on Rs.1,00,000.
➔ Expenditure such as telephone charges, air travel tickets, accommodation etc. totaling
Rs.1,00,000 incurred by Mr. Ranka during the course of business was to enable him to
effectively perform his services and not as a ‘pure agent’. These are input / input services for
Mr. Ranka and thus includible in taxable value.
➔ However, Mr. Ranka acted as ‘pure agent’ of Mr. VK in relation to purchase of electrical fittings
on behalf of Mr. VK and thus, the same will not be included in the taxable value.
(4) The value of taxable services is Rs.8,00,000 as CHA acts as a ‘pure agent’ with respect to payment
of custom duty on behalf of his client.
Question 59: Cum Tax Calculation – Rule 35

Mr. Shyam, a supplier who pays GST regularly, was of the opinion that a particular service rendered
by him was not liable to GST. He, therefore, did not charge GST payable @ 18% on said service. Later
on, it was found that such service is liable to GST. Mr. Shyam claims that as he has not collected GST,
he has not liability to pay the same. Whether Mr. Shyam claim is correct? If no, then how will GST
liability of Mr. Shyam be determined in such a case?
Solution:
Mr. Shyam’s claim is incorrect. Section 9 of the CGST Act, 2017 casts the liability to pay GST upon the
supplier realizing or charging GST at the prevailing rate. Statutory liability does not get extinguished
if service supplier fails to realize or charge GST from recipient.
Thus, in this case, the amount received from the recipient will be taken to be inclusive of GST.
Accordingly, as per Rule 35 of CGST Rules, 2017, GST payable by the service supplier shall be
ascertained by making back calculation in the following manner:
GST = [(Value inclusive of Taxes + Inclusions – Permissible Deductions) * Rate of Tax] /
[100 + Rate of Tax]
Question 60: Cum Tax Calculation – Rule 35

Determine the value of supply for purpose of GST under the CGST Act, 2017 in the following cases:
(a) A supplier supplied his goods for Rs.128 per piece and does not charge any GST in his invoice.
Subsequently it was found that the goods were not exempted from but were liable at 28%
advalorem.
(b) Certain goods were supplied for Rs.128 per piece and 28% advalorem is the rate of GST.
Subsequently it was found that the price cum tax was in fact Rs.148 per piece as the supplier had
collected Rs.20 per piece separately as incidental charges.
(c) The cum tax price per piece was Rs.118 and the supplier had paid tax at 18% advalorem.
Subsequently it was found that the rate of tax was 28% advalorem and the supplier had not
collected anything over and above Rs.118 per piece.
Solution:
As per Section 15 of CGST Act, 2017, value of taxable supply excludes GST and Compensation Cess. As
per Rule 35 of CGST Rules, 2017, if the value includes GST and Compensation Cess, then value of
taxable supply shall be calculated as under:
Taxable Value = [(Value inclusive of Taxes + Inclusions – Permissible Deductions) * 100] /
[100 + Rate of Tax]
(a) Taxable Value = (128 * 100) / 128 = Rs.100
(b) Taxable Value = ((128 + 20)* 100) / 128 = Rs.115.63
(c) Taxable Value = (118 * 100) / 128 = Rs.92.19

CLASSIFICATION
[incl. EXEMPTION]
Question 1: Composite Supply
Discuss the term ‘composite supply’ and its taxability under GST law.
Solution:
As per Section 2(30) of the CGST Act, 2017, composite supply means a supply made by a taxable person
to a recipient and:
▪ comprises 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.
As per Section 8 of the CGST Act, 2017, A composite supply comprising of two or more supplies, one
of which is a principal supply, shall be treated as a supply of such principal supply.
Question 2: Composite Supply
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 tooth brush along with the toothpaste.
Solution:
As per Section 2(30) of the CGST Act, 2017, under composite supply, two or more taxable supplies of
goods or services or both, or any combination thereof, are naturally bundled and supplied in
conjunction with each other, in the ordinary course of business, one of which is a principal supply. In
view of the same,
(i) since, supply of breakfast and dinner with the accommodation in the hotel are naturally bundled,
said supplies qualify as ‘composite supply’.
(ii) since supply of toothbrush along with the toothpaste are not naturally bundled, said supplies do
not qualify as ‘composite supply’.
Question 3: Composite Supply or Mixed Supply

Determine whether the following supplies amount to composite supplies or mixed supplies:
(1) A hotel provides 4 days-3 nights package wherein the facility of breakfast and dinner is provided
along with the room accommodation.
(2) A toothpaste company has offered the scheme of free toothbrush along with the toothpaste.
(3) Supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks
and fruit juices.
Also, mention the tax treatment of composite supply and mixed supply under GST?
Solution:
Composite Supply:
(a) As per Section 2(30) of CGST Act, 2017, composite supply means 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.
(b) Composite supply shall be treated as supply of the principal supply.
Mixed Supply:
(a) As per Section 2(74) of CGST Act, 2017, mixed supply means two or more individual supplies of
goods or services or both, or any combination thereof, made in conjunction with each other by a
taxable person for a single price where such supply does not constitute to composite supply.
(b) Mixed supply would be treated as supply of that particular goods or services which attracts the
highest rate of tax.
In view of the same,
(1) Since, supply of breakfast and dinner with the accommodation in the hotel are naturally bundled,
said supplies qualify as ‘composite supply’.
(2) Since, supply of toothbrush along with the toothpaste are not naturally bundled, said supplies do
not qualify as ‘composite supply’.
(3) Since, supply of items in such package are not naturally bundled, said supplies do not qualify as
‘composite supply’. Each of these items can be supplied separately and is not dependent on any
other and thus, it shall be treated as ‘mixed supply’ when supplied for a single price. However, it
shall not be a mixed supply if these items are charged separately.
Question 4: Exemption Notification

Whether exemption notifications are mandatory or optional? When exemption from whole of tax
collected on goods or services or both has been granted absolutely, can a person pay tax?
Solution:
Exemption Notifications issued by Central Government in public interest are optional. However, when
an exemption is granted absolutely (without any condition, it becomes mandatory and the person
supplying exempted goods or services or both shall not collect the tax in excess of the effective rate.
Question 5: Banking & Financial Services

Discuss the taxability of following activities relating to a bank under CGST Act, 2017.
(a) Bank extended housing loan of Rs.50 lakhs to Mr. A.
(b) Bank received Rs.50,000 as loan processing fee from Mr. A.
(c) Bank received Rs.6 lakhs as interest on loan from Mr. A.
Solution:
In accordance with the provisions of CGST Act, 2017 the taxability of activities is as follows:
(a) Extending loan is not liable to GST as it is mere transaction in money, therefore it is neither goods
as per Section 2(52) of CGST Act, 2017 nor service as per Section 2(102) of CGST Act, 2017.
(b) The loan processing fees received by bank will be liable for GST as the same is within the meaning
of service as per Section 2(102) of CGST Act, 2017.
(c) Interest on loan will not be liable for GST as the same is exempt vide Exemption Notification
12/2017-CT (Rate) and Exemption Notification 9/2017-IT (Rate).
Question 6: Banking & Financial Services

Nirav Bank of India Ltd. provides the following information for the month of July 2018. Compute the
value of taxable supply and GST payable assuming that rate of GST is 18%
Amount
Particulars
(Rs. in lakhs)
1. Interest received on various loans including home loan 2,500
2. Administrative charges and folio charges collected 100
3. Value of sale and purchase of forward contract 50
4. Charges for credit card and debit card facilities extended 200

5. Charges for ATM card transaction 100
6. Commission received for DD, transfer and cheque collection 50
7. Margin earned on reverse repo transactions 500
8. Merchant Banking Services 800
9. Asset Management Services (including portfolio management) 900
10. Commission received for services rendered to Government for collection of 100
taxes
11. Interest on overdraft and cash credits 700
12. Banker to the issue 150
13. Locker rent 50
14. Interest for delayed payment of interest 5
15. Interest for delayed payment of commission by Government 10
16. Amount of commission received for debt collection service 2
17. Discount earned on bills discounted 20
18. Service to merchants accepting credit / debit card payments using point of sale 10
machine of Nirav Bank of India Ltd. (In 20% cases, the amount per transaction was
upto Rs.2,000 and while in other cases the amount was exceeding Rs.2,000)
Solution:
Computation of Taxable Value and GST Payable
Amount
Particulars
(Rs. in lakhs)
1. Interest Received on various loans including home loan (The same is exempt -
vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
2. Administrative charges and folio charges collected 100
3. Value of sale and purchase of forward contract (Forward Contracts are -
‘Securities’. Securities are neither goods as per Section 2(52) of CGST Act, 2017 nor
service as per Section 2(102) of CGST Act, 2017)
4. Charges for credit card and debit card facilities extended 200
5. Charges for ATM card transaction 100
6. Commission received for DD, transfer and cheque collection 50
7. Margin earned on reverse repo transactions (Reverse Repo are ‘Securities’. -
Securities are neither goods as per Section 2(52) of CGST Act, 2017 nor service as
per Section 2(102) of CGST Act, 2017)
Author’s Note: Margin here does not represents service charges.
8. Merchant Banking Services 800
9. Asset Management (including portfolio management) 900
10. Commission received for services rendered to Government for collection of 100
taxes (As it is on activity carried out for consideration and there is no exemption
for the same, it is liable to GST)
11. Interest on overdraft and cash credits (The same is exempt vide EN 12/2017-CT -
(Rate) and EN 9/2017-IT (Rate))
12. Banker to the issue 150
13. Locker rent 50
14. Interest for delayed payment of interest (As per Section 15 of CGST Act, 2017, -
it is includible in value and treated as addition in value for the supply already
rendered. However, as the main supply of interest is exempt, penal interest is also
exempted vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))

15. Interest for delayed payment of commission by Government (As per Section 15 10
of CGST Act, 2017, it is includible in value and treated as addition in value for the
supply already rendered)
16. Amount of commission received for debt collection service 2
17. Discount earned on bills discounted (The same is exempt vide EN 12/2017-CT -
18. Service to merchants accepting credit / debit card payments using point of sale 8
machine of Nirav Bank of India Ltd. – 80% * 10 lakhs (In 20% cases, the amount
per transaction was upto Rs.2,000 and thus, the same is exempt vide EN 12/2017-
CT (Rate) and EN 9/2017-IT (Rate). In balance cases, it is taxable)
Taxable Value 2,470
GST Payable @ 18% 444.60
Question 7: Entertainment Services
Kesar Maharaj, a registered supplier, gave a classical dance performance in an auditorium. The
consideration charged for the said performance is Rs.1,48,500. Is Kesar Maharaj liable to pay GST on
the consideration received for the said performance if such performance is not for promotion of any
product/services? If yes, determine his GST liability (CGST and SGST or IGST, as the case may be). Will
your answer be different if:
(i) Kesar Maharaj is a brand ambassador of a food product and aforesaid performances is for the
promotion of such food product?
(ii) the dance performance given by Kesar Maharaj is not a classical dance performance, but a
contemporary Bollywood style dance performance?
(iii) considered charged by Kesar Maharaj for the classical dance performances is Rs.1,60,000?
Notes:
(1) Services provided by Kesar Maharaj are intra-State supplies.
(2) Wherever applicable, GST has been charged separately.
(3) Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively.
Solution:
NN 12/2017-CT (Rate) exempts services by an artist by way of a performance in folk or classical art
forms of (i) music, or (ii) dance, or (iii) theatre, if the consideration charged for such performance is not
more than Rs.1,50,000. However, exemption will not apply to service provided by such artist as a brand
ambassador.
In view of the aforesaid provisions, services provided by Kesar Maharaj are exempt from GST as
consideration for the classical dance performance has not exceeded Rs.1,50,000. Therefore, his GST
liability is nil.
(i) If Kesar Maharaj is a brand ambassador of a food product and aforesaid performance is for the
promotion of such food product, he will be liable to pay GST as aforesaid exemption is not
applicable to service provided by an artist as a brand ambassador. His CGST and SGST liability
would, therefore, be Rs.13,365 (Rs.1,48,500 * 9%) and Rs.13,365 (Rs.1,48,500 * 9%) respectively.
(ii) If Kesar Maharaj gives a contemporary Bollywood style dance performance, such performance will
not be eligible for aforesaid exemption. The reason for the same is that although the consideration
charged does not exceed Rs.1,50,000, said performance is not in folk or classical art forms of dance.
Hence, GST would be payable on the same. His CGST and SGST liability would, therefore, be
Rs.13,365 (Rs.1,48,500 * 9%) and Rs.13,365 (Rs.1,48,500 * 9%) respectively.
(iii) If the consideration charged for the classical dance performance by Kesar Maharaj is Rs.1,60,000,
he will be liable to pay GST on the same as although the performance is by way of classical art form

of dance, consideration charged for such performance has exceeded Rs.1,50,000. His CGST liability
would, therefore, be Rs.14,400 (Rs.1,60,000 * 9%) and Rs.14,400 (Rs.1,60,000 * 9%) respectively.

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
(a) Music, or
(b) Dance, or
(c) 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.

Mr. Yo Yo Baadshah Singh, a performing artist, provides the following information relating to February
2018.
Performing classical dance 98,000
Performing in television serial 2,80,000
Performing classical dance as brand ambassador 12,00,000
Coaching in recreational activities relating to arts 2,10,000
Activities in sculpture making 3,10,000
Performing western dance 90,000
Determine the value of taxable supply and GST payable by Mr. Yo Yo Baadshah Singh for February
2018. GST @ 18% has been charged separately, wherever applicable.
Solution:
Performing classical dance (The same is exempt vide EN 12/2017-CT (Rate) and EN -
9/2017-IT (Rate) as the consideration charged is less than Rs.1.50 lakhs and the
performance is not done as a brand ambassador)
Performing in television serial (The same is taxable) 2,80,000
Performing classical dance as brand ambassador (The same is taxable) 12,00,000
Coaching in recreational activities relating to arts (The same is exempt vide EN -
12/2017-CT (Rate) and EN 9/2017-IT (Rate))
Activities in sculpture making (The same is taxable) 3,10,000

Performing western dance (The same is not exempt vide EN 12/2017-CT (Rate) and 90,000
EN 9/2017-IT (Rate) as the performance in not folk or classical art forms of Music /
Dance / Theatre)
Taxable Value 18,80,000
GST Payable @ 18% 3,38,400
Question 10: Sports Services

Mr. Simon Taufel acts as an umpire in a cricket match organized by Sports Authority of India. He has
also acted as an umpire in another charity cricket 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 or umpire in a
sporting event organized by a recognized sports body is exempt from GST.
(i) Since in the first case, the cricket match is organized by Sports Authority of India, which is a
recognized sports body, services provided by the individual as an umpire in such cricket match
will be exempt.
(ii) However, when he acts as an umpire in a charity cricket 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.
Question 11: Sports Services

Mr. Pratik a famous cricketer furnishes you with the following information of the various receipts:
Amount
Particulars
(Rs. in lakhs)
Receipts from Sports Authority of India for participation in recognized sport 50
Receipts from franchisee of Indian Premier League (not a recognized sports body) 75
Receipts from acting as brand ambassador for corporate client 28
Receipts of sports training academy to coach young players 15
You are required to determine his GST liability if all the amounts are inclusive of GST. Rate of GST is
18%.
Solution:
Amount
Particulars
(Rs. in lakhs)
Receipts from Sports Authority of India for participation in recognized sport (The -
same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
Receipts from franchisee of Indian Premier League which is not a recognized 75
sports body (The same is taxable)
Receipts from acting as brand ambassador for corporate client (The same is 28
taxable)
Receipts of sports training academy to coach young players (The same is taxable 15
as services by way of training or coaching in recreational activities relating to
sports is exempt only if provided by charitable entities registered under Section
12AA of IT Act, 1961)
Taxable Value 100
(Rs.118 lakhs * 100 / 118)
GST Payable @ 18% 18

Question 12: Unincorporated Body or Non-Profit Body
Common Welfare Association (CWA) of Sun Moon Housing Society in Delhi provides the following
information with respect to the various amounts received by it in the month of November 2018.
Particulars Amount
Monthly subscription collected from member families - Rs.8,500 each from 100 8,50,000
families
Electricity charges levied by State Electricity Board on the members of CWA. The 3,50,000
same was collected from members and remitted to the Board on behalf of member
Electricity charges levied by State Electricity Board on the CWA in respect of 4,32,400
electricity consumed for common use of lifts and lights in common area. Bill was
raised in the name of CWA. CWA collected the said charges by apportioning them
equally among 100 families and then, remitted the same to the Board.
Proceeds from sale of entry tickets to a musical performance conducted by the CWA 40,000
in the park of Sun Moon Housing Society, where the consideration for admission is
not more than Rs.100 per person (members as well as non-members)
Other Services to non-members 2,92,000
Compute the value of taxable supply and GST liability of CWA of Sun Moon Housing Society for the
month of November 2018.
Notes:
(a) Wherever applicable, GST is included in the receipts of CWA.
(b) Wherever applicable, the time of supply falls in the month of November 2018.
(c) Wherever applicable, rate of GST is 18 %.
Solution:
Particulars Amount
Monthly subscription collected from member families - Rs.8,500 each from 100 8,50,000
families (The same is not exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT
(Rate) as the subscription is more than Rs.7,500 per month per member – Refer
Note)
Electricity charges levied by State Electricity Board on the members of CWA. The -
same was collected from members and remitted to the Board on behalf of member
(The same is not taxable as CWA is acting as merely Pure Agent as per Rule 33 of
CGST Rules, 2017)
Electricity charges levied by State Electricity Board on the CWA in respect of 4,32,400
electricity consumed for common use of lifts and lights in common area. Bill was
raised in the name of CWA. CWA collected the said charges by apportioning them
equally among 100 families and then, remitted the same to the Board (The same is
taxable as CWA is not acting as Pure Agent as per Rule 33 of CGST Rules, 2017)
Proceeds from sale of entry tickets to a musical performance conducted by the -
CWA in the park of Sun Moon Housing Society, where the consideration for
admission is not more than Rs.100 per person (members as well as non-members)
(The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate) as the
consideration for admission to musical performance is less than or equal to Rs.500)
Other Services to non-members (The same is taxable) 2,92,000
(Rs.15,74,400 * 100 / 118)
GST Payable @ 18% 2,40,163
Note: If per month per member contribution of any or some members of a RWA exceeds Rs.7,500, entire
contribution of such members whose per month contribution exceeds Rs.7,500 would be ineligible for

the exemption under the said notification. GST would then be leviable on the aggregate amount of
monthly contribution of such members.
Alternatively, since EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate) exempts the service provided by
CWA to its own members by way of share of contribution per month per member up to an amount of
Rs.7,500, it is also possible to take a view that monthly contribution of a member in excess of Rs.7,500,
i.e. Rs.1,000 (Rs.8,500- Rs.7,500) would be taxable. In that case, total monthly subscription charges liable
to tax would be Rs.1,00,000 (Rs.1,000 * 100 members) and GST liability would be computed accordingly.
Question 13: Construction Service

Y Ltd. provided works contract services in December 2018 as per following details:
Installation of machinery 2,00,000
Completion and finishing service plastering (of a building) 1,00,000
Repairs of machinery 50,000
Additions of damaged structure 2,50,000
Installation of electrical fittings of immovable property 75,000
Compute the value of taxable supply and the GST payable thereon assuming that the rate of GST as
18% and assuming that the amounts given above are exclusive of GST.
Solution:
Installation of machinery 2,00,000
Completion and finishing service plastering (of a building) 1,00,000
Repairs of machinery 50,000
Additions of damaged structure 2,50,000
Installation of electrical fittings of immovable property 75,000
GST Payable @ 18% 1,21,500
Question 14: Renting / Leasing / Hiring Services (Immovable Property)

Prime Locations Ltd. registered in Mumbai is engaged in the business of renting of immovable
properties owned by it. During the month of June 20XX, it has collected a rent of Rs.250 lakhs. The said
sum includes rent from,
(1) Vacant land used for horticulture: Rs.10 lakhs
(2) Land used for Bombay Circus: Rs.20 lakhs
(3) Residential Houses are let out to individuals for residential purpose: Rs.20 lakhs
(4) A building let out to RBI: Rs.10 lakhs
(5) A temple hall was let out for religious purpose for general public: Rs.15 lakhs
(6) A building was let out to Ram Ltd. to be used as corporate office: Rs.30 lakhs (including Rs.4 lakhs
on account of municipal tax)
(7) Allowed Mr. Rahim to use space of building for placing vending machines: Rs.9 lakhs
(8) A building was let out to Success School: Rs.25 lakhs
(9) A building was let out to VP Classes for providing coaching classes of CA: Rs.10 lakhs
(10) Residential houses let out to individuals for commercial use: Rs.20 lakhs.
Compute the amount of GST payable by M/s. Prime Locations Ltd. assuming the rent is exclusive of
GST in each case and rate of GST is 18%.
Solution:

Amount
Particulars
(Rs. in lakhs)
1. Vacant land used for Horticulture (The same is exempt vide EN 12/2017-CT -
2. Land used for Bombay Circus 20
3. Residential Houses are let out to individuals for residential purpose (The same -
is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
4. A building let out to RBI 10
5. A temple hall was let out for religious purpose for general public (Since Prime 15
Locations Ltd. is not a charitable or religious trust u/s 12AA; or a trust or an
institution registered u/s 10(23C)(v); or a body or an authority covered u/s
10(23BBA) of the Income-tax Act, 1961, it will not be entitled exemption given vide
(The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
6. A building was let out to Ram Ltd. to be used as corporate office (As per Section 30
15, value includes all taxes except GST and Compensation Cess. Thus, no
deduction shall be allowed of municipal tax)
7. Allowed Mr. Rahim to use space of building for placing vending machines 9
8. A building was let out to Success School 25
9. A building was let out to VP Classes for providing coaching classes of CA 10
10. Residential houses let out to individuals for commercial use (The same is not 20
exempt vide (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT
(Rate) as residential houses are used for commercial purposes)
11. Balance Rent 81
Taxable Value 220
Question 15: Renting / Leasing / Hiring Services (Immovable Property) – Accommodation Services
A non-air conditioned hotel in Chennai has Declared Tariff of Rs.2,000 per day including amenities. On
a particular day of October 2018, its bills were as follows:
(1) Hotel Room – Rs.2,000 and Breakfast – Rs.150
(2) Hotel Room – Rs.1,800, Extra Bed – Rs.100 and Laundry Charges – Rs.200.
(3) Special discounted rate to a regular customer – Rs.800.
(4) Discounted rate to corporate client – Rs.1,300, Laundry Charges – Rs.100, WIFI Charges – Rs.200
and Breakfast – Free.
(5) Cancellation charges for a booked room – Rs.800.
(6) Room to a business customer from Rajasthan who has given his GSTIN Registration number of
Rajasthan. The GSTIN was included in the Tax Invoice issued by hotel - Rs.2,000 including
breakfast.
Calculate the tax liability in each case.
Assume that rate of GST for accommodation is 12% (6% SGST and 6% CGST OR 12% IGST) and rate of
GST for other services is 18% (9% SGST and 9% CGST OR 18% IGST)
Solution:
Computation of GST Payable for Accommodation Services
Hotel Room along with Breakfast (It is a composite supply as per Section 8 of CGST 2,150
Act, 2017)
Hotel room with Extra Bed and Laundry Charges (It is a composite supply as per 2,100
Section 8 of CGST Act, 2017)

Hotel room provided at special discounted rate to a regular customer (Exempt as Nil
per EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate) as value is less than Rs.1,000 per
day)
Hotel room provided at discounted rate to a corporate client along with Laundry 1,600
Charges, WIFI Charges and Breakfast (It is a composite supply as per Section 8 of
CGST Act, 2017)
Room to customer from Rajasthan (As per Section 12 of IGST Act, 2017, Place of 2,000
Supply is Chennai and thus, the hotel cannot charge IGST. It has to charge CGST
and SGST as it is intra-state supply as per Section 8 of IGST Act, 2017 as both
supplier and place of supply are in Chennai)
Taxable Value 7,850
CGST @ 6% 417
SGST @ 6% 417
Computation of GST for Other Services

Cancellation Charges (It is tolerating an act or situation, which is a Supply of 800
Service as per Schedule II of CGST Act, 2017. Thus, GST will be payable @ 18%)
Taxable Value 800
CGST @ 9% 72
SGST @ 9% 72
Question 16: Renting / Leasing / Hiring Services (Immovable Property) – Accommodation Services
M/s. XYZ Ltd. owns hotel, other immovable properties and is engages in letting of the same.
(1) Hotel rooms are let out at declared tariff of Rs.1,000 per room day but actual room rent charged is
Rs.900 per room day. Number of days for which it is let out – 50 days;
(2) Guest house is let out at declared tariff of Rs.900 per room day and actual room rent charged is
Rs.700 per room day. Number of days for which it is let out – 60 days;
(3) A dharmashala (non-commercial) is given on rent. Declared tariff being Rs.1,200 per room day but
actual room rent charged Rs.600 per room day. Number of days for which it is let out – 60 days;
Compute the amount of GST payable if all charges are exclusive of GST and GST rate is 12%.
Solution:
Computation of Taxable Value & GST Payable
(1) Letting out of hotel rooms (Exempt as per EN 12/2017-CT (Rate) and EN 9/2017- Nil
IT (Rate) as value is less than Rs.1,000 per day)
(2) Letting out of guest house (Exempt as per EN 12/2017-CT (Rate) and EN 9/2017- Nil
IT (Rate) as value is less than Rs.1,000 per day)
(3) Letting out of dharmashala (Exempt as per EN 12/2017-CT (Rate) and EN Nil
9/2017-IT (Rate) as value is less than Rs.1,000 per day)
Taxable Value 0
GST Payable @ 12% 0
Question 17: Renting / Leasing / Hiring Services (Movable Property)

From the following details, compute the GST payable thereon if all charges are exclusive of GST
(1) Renting of bus to state transport undertaking: Rs.15 lakh
(2) Renting of goods vehicle to a good transport agency: Rs.25 lakh
(3) Renting of cars designed to carry passengers to a good transport agency: Rs.20 lakh (GST @ 5%)
(4) Renting of dumpers: Rs.15 lakh
(5) Hiring of audio visual equipments for an event: Rs.15 lakhs
(6) Hiring of pandal or shamiana for organizing functions / events: Rs.20 lakh
(7) Hiring of a machinery with transfer of right to use: Rs.60 lakh (GST @ 12%)
(8) Hiring of agro machinery for use in agriculture: Rs.15 lakh
GST rate should be taken as 18%, where rate is specifically not mentioned and where the service is
taxable.
Solution:
Taxable Rate of
Particulars GST (Rs.)
Value GST
(1) Renting of bus to state transport undertaking 15,00,000 Exempt -
(The same is exempt vide EN 12/2017-CT (Rate)
and EN 9/2017-IT (Rate))
(2) Renting of goods vehicle to a good transport 25,00,000 Exempt -
agency (The same is exempt vide EN 12/2017-CT
(3) Renting of cars designed to carry passengers to 20,00,000 5% 1,00,000
a good transport agency (The same is taxable)
(4) Renting of dumpers (The same is taxable) 15,00,000 18% 2,70,000
(5) Hiring of audio visual equipments for an event- 15,00,000 18% 2,70,000
Taxable (The same is taxable)
(6) Hiring of pandal or shamiana for organizing 20,00,000 18% 3,60,000
functions/events (The same is taxable)
(7) Hiring of a machinery with transfer of right to 60,00,000 12% 7,20,000
use (The same is taxable)
(8) Hiring of agro machinery for use in agriculture 15,00,000 Exempt -
(The same is exempt vide EN 12/2017-CT (Rate)
GST Payable 17,20,000
Question 18: Services by / to Entity registered under Section 12AA of Income Tax Act, 1961
Dhyaan Maha Sagar, an entity registered under Section 12AA of the Income Tax Act, 1961 has furnished
you the following details with respect to the activities undertaken by it. You are required to compute
its GST liability from the information given below:
1. Fees charged for yoga camp conducted by the trust 15,00,000
2. Amount received for advancement of educational programmers relating to 7,50,000
abandoned children, senior citizens in rural area and prisoners
3. Amount received for renting of commercial property owned by the trust 41,30,000
4. Payment made for the services received from an architect located in USA, for 10,00,000
the purposes of providing ‘charitable activities’
5. Amount received for activities relating to preservation of forests and wildlife 5,00,000
Note: GST has not been charged by the trust even where it is applicable. Rate of GST is 18%.
Solution:
Computation of GST Payable as Supplier of Service
1. Fees charged for yoga camp conducted by the trust (The same is exempt vide -
EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))

2. Amount received for advancement of educational programmers relating to -
abandoned children, senior citizens in rural area and prisoners (The same is
exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
3. Amount received for renting of commercial property owned by the trust 41,30,000
4. Amount received for activities relating to preservation of forests and wildlife -
Cum Tax Value 41,30,000
Taxable Value (41,30,000 * 100 / 118) 35,00,000
GST Payable @ 18% 6,30,000
Computation of GST Payable as Recipient of Service

1. Payment made for the services received from an architect located in USA, for -
the purposes of providing ‘charitable activities’ (Import of service is covered by
Reverse Charge Mechanism as per Section 5(3) of IGST Act, 2017 read with NN
10/2017-IT (Rate). However, the same is exempt vide EN 9/2017-IT(Rate))
Taxable Value 0

Question 19: Services by / to Entity registered under Section 12AA of Income Tax Act, 1961
JP Charitable Institution, an entity registered under Section 12AA of Income Tax Act, 1961 and
registered in GST, has furnished you the following details with respect to the activities undertaken by
it during the month of January, 2018.
Amount (Rs.)
Particulars
Excluding GST
Membership fees received from members 10,00,000
Amount received for advancement of educational programs relating to 4,00,000
abandoned or orphaned or homeless children
Amount received for renting of commercial property owned by Trust 5,00,000
Amount received for counseling of terminally ill person 3,50,000
Fees charged for Yoga Camp conducted by Trust 2,00,000
Amount received relating to preservation of forest & wildlife 6,00,000
You are required to compute its taxable value of GST from the information given below, assuming that
the rate of GST is 18%. Brief reasoning should be part of your answer.
Solution:
1. Membership fees received from members 10,00,000
2. Amount received for advancement of educational programs Nil
relating to abandoned or orphaned or homeless children
3. Amount received for renting of commercial property owned by 5,00,000
Trust
4. Amount received for counseling of terminally ill person Nil
5. Fees charged for Yoga Camp conducted by Trust Nil
6. Amount received relating to preservation of forest & wildlife Nil
Note: Certain charitable activities provided by an entity registered under Section 12AA of the Income-
tax Act, 1961 are exempt. Since, JP Charitable Institution is registered under Section 12AA of the

Income-tax Act, 1961 and activities mentioned at points (2), (4), (5) and (6) are included in charitable
activities, the same are exempt.
Question 20: Health Care Services

Compute the value of taxable supply and GST payable from the following sums received by Shanthi
Care Hospitals. All amounts are exclusive of GST and rate of GST is 18%.
(1) Medical treatment: Rs.190 lakhs. (It includes Rs.25 lakhs on account of medicines consumed during
course of provision of service)
(2) Ayurveda, Unani and Siddha medical treatment: Rs.20 lakhs
(3) Receipts of Diagnostic Centre: Rs.15 lakhs;
(4) Receipts on account of transportation of patients of clinical establishment: Rs.2 lakhs;
(5) Cosmetic surgery to actors and actress: Rs.20 lakhs;
(6) Cosmetic surgery of patients on account of injury suffered: Rs.15 lakhs
(7) Cord blood bank services: Rs.15 lakhs
Solution:
Particulars Amount
1. Medical treatment (As per Section 8 of CGST Act, 2017, supply of treatment with -
medicines is a composite supply with the principal supply being treatment. As
medical treatment is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate),
the entire composite supply is exempt)
2. Ayurveda, Unani and Siddha medical treatment (Any recognized system of -
medicine is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
3. Receipts of Diagnostic Centre (The same is exempt vide EN 12/2017-CT (Rate) -
4. Receipts on account of transportation of patients of clinical establishment (The -
5. Cosmetic surgery to actors and actress 20,00,000
6. Cosmetic surgery of patients on account of injury suffered (The same is exempt -
7. Cord blood bank services (The same is exempt vide EN 12/2017-CT (Rate) and -
EN 9/2017-IT (Rate))
GST Payable @ 18% 3,60,000

Get Well Soon Nursing Home has received the following amounts in the month of December 2018 in
lieu of various services rendered by it in the same month. You are required to determine its GST liability
for December 2018 from the details furnished below:
Amount (Rs.)
Particulars
(lakhs)
1. Palliative care for terminally ill patients at patient's home (Palliative care is given 30
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)
2. Services provided by cord blood bank unit of the nursing home by way of 24
preservation of stem cells
3. Hair transplant services 100
4. Ambulance services to transport critically ill patients from various locations to 12
nursing home

5. Naturopathy treatments. Such treatment is a recognized system of medicine in 80
terms of Section 2(h) of the Clinical establishments Act, 2010
6. Plastic surgery to restore anatomy of a child affected due to an accident 30
7. Pranic healing treatments. Such treatment is not a recognized system of medicine 120
in terms of Section 2(h) of the Clinical establishments Act, 2010
8. Mortuary services 10
Rate of GST is 18%.
Solution:
Amount (Rs.)
Particulars
(lakhs)
1. Palliative care for terminally ill patients at patient's home (Palliative care is given -
to improve the quality of life of patients who have a serious or life-threatening
disease but the goal of such care is not to cure the disease) (The same is exempt vide
2. Services provided by cord blood bank unit of the nursing home by way of -
preservation of stem cells (The same is exempt vide EN 12/2017-CT (Rate) and EN
9/2017-IT (Rate))
3. Hair transplant services 100
4. Ambulance services to transport critically ill patients from various locations to -
nursing home (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT
(Rate))
5. Naturopathy treatments. Such treatment is a recognized system of medicine in -
terms of Section 2(h) of the Clinical establishments Act, 2010 (The same is exempt
6. Plastic surgery to restore anatomy of a child affected due to an accident (The same -
is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
7. Pranic healing treatments. Such treatment is not a recognized system of medicine 120
in terms of Section 2(h) of the Clinical establishments Act, 2010
8. Mortuary services (The same is not supply as per Schedule III of CGST Act, 2017) -
Taxable Value 220

Shiva Medical Centre, a Multi-specialty hospital, is a registered supplier in Mumbai. It hires senior
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 the 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 NN 12/2017-CT (Rate) read with NN 9/2017-IT (Rate), 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
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
reconstruct anatomy or functions of body affected due to congenital defects, development
abnormalities, injury or trauma.
Circular No. 32/06/2018-CT 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 hospital to the patients and 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 patients (not admitted) or their attendants /
visitors are taxable.
Ayushman Medical Centre, a clinical establishment, offers the following services:
S. Amount (Rs.)
Particulars
No. (excluding GST)
(i) Reiki healing treatments. Such therapy is not a recognized system of 10,00,000
medicine in terms of Section 2(h) of Clinical Establishment Act, 2010.
(ii) Plastic surgeries. (One such surgery was conducted to repair cleft lip of 20,00,000
a new born baby. Consideration of Rs.1,00,000 was changed for the
same.)
(iii) Air ambulance services to transport critically ill patients from distant 1,00,000
locations to Ayushman Medical Centre.
(iv) Alternative medical treatments by way of Ayurveda. Such therapy is 2,50,000
recognized system of medicine in terms of Section 2(h) of Clinical
Establishments Act, 2010
Ayushman Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells. You are required to compute the value of supply and GST liability [CGST &
SGST or IGST] of Ayushman Medical Centre, if any, in the light of relevant GST provisions.
Note: All the services provided by Ayushman Medical Centre are intra-state supplies. Assume the rates
of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
Solution:

Health care services provided by, inter alia, a clinical establishment in India are exempt from GST vide
NN 12/2017-CT(Rate) read with NN 9/2017-IT(Rate). The definition of ‘health care services’ stipulates
that such services must be provided in any recognized system of medicines.
As per Section 2(h) oh Clinical Establishments Act, 2010, recognised system of medicine means
allopathy, yoga, naturopathy, siddha and unani system of medicines or any other system of medicines
as may be recognised by the Central Government. Accordingly, value of supply and GST liability of
Ayushman Medical Centre will be computed as follows:
(i) Reiki healing treatments (Not a recognized system of medicines) 10,00,000
(ii) Plastic surgeries (Rs.20,00,000 – Rs.1,00,000) 19,00,000
(iii) Air ambulance services to transport critically ill patients from Nil
distant locations to the Medical Centre (‘Health care services’
specifically includes services by way of transportation of the
patient to and from a clinical establishment)
(iv) Alternative medical treatments by way of Ayurveda (Being a Nil
recognized system of medicines)
Taxable Value of Supply 29,00,000
CGST @ 9% 2,61,000
SGST @ 9% 2,61,000
Note: 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. Therefore, services provided in relation to
preservation of stem cells by the cord blood bank operated by Ayushman Medical Centre will be
exempt from GST.

Question 24: Educational Services
Worldwide Pvt. Ltd. (a registered taxable person) having the gross receipt of Rs.50 lakhs in the previous
financial year provides the following information relating to their services for the month of July, 2018.
1. Running a boarding school 2,40,000
2. Fees from prospective employer for campus interview 1,70,000
3. Education services for obtaining the qualification recognised by law 3,10,000
of foreign country
4. Renting of furnished flats for temporary stay to different persons 1,20,000
(Rent per day is less than Rs.1,000 per person)
5. Conducting Modular Employable Skill Course, approved by National 1,40,000
Council of Vocational Training
6. Conducting private tuitions amount 3,00,000
Compute the value of taxable supply and the amount of GST payable. The above receipts don’t include
the GST amount. Rate of GST is 18%.
Solution:
Computation of Value of Taxable Supply and Amount of GST Payable
1. Running a boarding school Nil
(Services provided by an educational institution to its students,
faculty and staff are exempt)
2. Fees from prospective employer for campus interview 1,70,000
(Not exempt)

3. Education services for obtaining the qualification recognised by law 3,10,000
of foreign country
(An institution providing education services for obtaining
qualification recognized by a foreign country does not qualify as
educational institution. Thus, said services are not exempt)
4. Renting of furnished flats for temporary stay to different persons Nil
(Exempt assuming that rent is less than Rs.1,000 per day. It has been
assumed that total rent per day is less than Rs.1000 per flat.
However, if it is assumed that total rent per day exceeds Rs.1000 per
flat, services of renting of flats become taxable and thus, value of
taxable supply and GST payable is Rs.9,00,000 and Rs.1,62,000
respectively.)
5. Conducting Modular Employable Skill Course Nil
(An institution providing Modular Employable Skill Course
qualifies as educational institution. Services provided by an
educational institution to its students, faculty and staff are exempt)
6. Conducting private tuitions amount 3,00,000
(Not exempt)
GST Payable @ 18% 1,40,000

VP Trainers, a commercial training centre, provides the various services as follows:
(1) Training and coaching of cricket: Rs.20 lakhs
(2) Training in recreational activities relating to culture: Rs.5 lakhs
(3) Receipts from training in relation to art classes: Rs.7 lakhs
(4) Coaching to students for preparation of CA and IIT exams: Rs.35 lakhs
(5) Conduct admission test for admission to NIT College providing qualification recognized by foreign
law: Rs.7 lakhs
(6) Placement services provided to VIT College providing qualification recognized by Indian law: Rs.2
lakhs
(7) Receipt from sale of prospectus / application forms to trainees: Rs.1 lakh
(8) A building which was let out to school providing school education utpo higher secondary school:
Rs.10 lakhs
(9) Postal coaching receipts: Rs.1 lakh
Compute the GST payable thereon if all charges are exclusive of GST and rate is 18%.
Solution:
Amount
Particulars
(Rs. in lakhs)
1. Training and coaching of cricket (The same is not exempt vide EN 12/2017-CT 20
(Rate) and EN 9/2017-IT (Rate) as VP Trainers are not registered under Section
12AA of Income Tax Act, 1961)
2. Training in recreational activities relating to culture (The same is exempt vide -
3. Receipts from training in relation to art classes (The same is exempt vide EN -
4. Coaching to students for preparation of CA and IIT exams 35

5. Conduct admission test for admission to NIT College providing qualification 7
recognized by foreign law
6. Placement services provided to VIT College providing qualification recognized 2
by Indian law
7. Receipt from sale of prospectus / application forms to trainees 1
8. A building which was let out to school providing school education utpo higher 10
secondary school
9. Postal coaching receipts 1
Taxable Value 76

Edu Care Ltd. is engaged in providing various services to different educational institutions and
furnishes you with the following information for the month of November 2018. You are required to
determine the value of taxable supply and GST payable if all charges are exclusive of GST and the rate
of GST is 18%.
Amount
Particulars
(Rs. in lakhs)
1. Renting of immovable property to higher secondary school 10
2. Renting of immovable property to commercial coaching centre 15
3. Transportation services provided to students of higher secondary school 5
4. Outdoor catering services provided to educational institutions running 7.5
approved vocational courses
5. Security services provided to pre-nursery school 5
6. House-keeping and cleaning services in college providing recognized 2
graduation degree
7. Conduct of examination of schools for admission 3
8. Placement services provided to ICAI 6
9. Development of course content of ICSI 10
10. Training of staff of higher secondary school 1
Solution:
Amount
Particulars
(Rs. in lakhs)
1. Renting of immovable property to higher secondary school 10
2. Renting of immovable property to commercial coaching centre 15
3. Transportation services provided to students of higher secondary school (The -
4. Outdoor catering services provided to educational institutions running 7.5
approved vocational courses
5. Security services provided to pre-nursery school (The same is exempt vide EN -
6. House-keeping and cleaning services in college providing recognized 2
graduation degree
7. Conduct of examination of schools for admission (The same is exempt vide EN -
8. Placement services provided to ICAI 6
9. Development of course content of ICSI 10
10. Training of staff of higher secondary school 1
Taxable Value 51.5

Brilliant Education Ltd., providing educational services, furnishes you with the following information
for the various services provided by it:
(1) Receipt of ‘Gyan Bhandar’, an industrial training institute (ITI) affiliated to the National Council
for Vocational Training (NCVT): Rs.10 lakhs
(2) Receipts of ‘Edu Care’, a vocational education provider affiliated to Sector Skill Council formed
under National Skill Development Corporation (NSDC): Rs.12 lakhs
(3) Receipts of ‘Divyagyan Mission’, an institute, registered with Directorate General of Employment
and Training (DGET), Union Ministry of Labour and Employment, running a Modular Employable
Skill Course (MESC) approved by the National council of Vocational Training: Rs.8 lakhs
(4) Receipts of ‘Brilliant’, a commercial coaching institute providing commercial coaching in the field
of professional courses: Rs.5 lakhs (No certificate was issued on completion of the training)
(5) Receipt of ‘Koncepts’, a commercial coaching institute providing coaching in the field of commerce:
Rs.15 lakhs (A certificate was issued on completion of the training but the same had no recognition)
(6) Receipts of ‘Gurukul’, a school providing education upto higher secondary: Rs.90 lakhs
(7) Receipts of ‘Wonder Kids’, a school providing education upto primary level: Rs.75 lakhs (such
receipts includes the value of renting of premises to commercial coaching centre during holidays
Rs.10 lakhs)
Compute the value of taxable supply and GST payable thereon. All the amounts are exclusive of GST
and rate of GST is 18%.
Solution:
Amount
Particulars
(Rs. in lakhs)
1. Receipt of ‘Gyan Bhandar’, an industrial training institute (ITI) affiliated to the -
National Council for Vocational Training (NCVT) (The same is exempt vide EN
2. Receipts of ‘Edu Care’, a vocational education provider affiliated to Sector Skill -
Council formed under National Skill Development Corporation (NSDC) (The
3. Receipts of ‘Divyagyan Mission’, an institute, registered with Directorate -
General of Employment and Training (DGET), Union Ministry of Labour and
Employment, running a Modular Employable Skill Course (MESC) approved by
the National council of Vocational Training (The same is exempt vide EN 12/2017-
CT (Rate) and EN 9/2017-IT (Rate))
4. Receipts of ‘Brilliant’, a commercial coaching institute providing commercial 5
coaching in the field of professional courses
5. Receipt of ‘Koncepts’, a commercial coaching institute providing coaching in the 15
field of commerce (The same is not exempt vide EN 12/2017-CT (Rate) and EN
9/2017-IT (Rate)) as ‘Koncepts’ cannot be covered within the meaning of
Educational Institution and private coaching is always taxable. The fact that a
certificate is given is not relevant)
6. Receipts of ‘Gurukul’, a school providing education upto higher secondary (The -
7. Receipts of ‘Wonder Kids’, a school providing education upto primary level (The 10
same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate). However,

renting of immovable property to a commercial coaching centre during holidays
is taxable)
Taxable Value 30
Question 28: Legal Services

Mr. Rakesh Goga, an advocate, has rendered the following services in the month of December 2018
(a) Representing Mrs. Harshit Sharma in her divorce case before High Court.
(b) Representing Ankit & Co., an engineer by profession, in relation to his GST liability. (Turnover of
Mr. Ankit in the Financial Year 2017-18 was Rs.22 lakh)
(c) Legal consultancy given to LKS Associates, a partnership firm of advocates. (Turnover of services
of LKS Associates in the Financial Year 2017-18 was Rs.28lakh)
Examine whether GST is payable on each of the above services assuming Mr. Rakesh Goga to be
(a) an advocate other than a senior advocate.
(b) a senior advocate in terms of Section 16 of the Advocates Act, 1961.
Solution:
As per EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate), GST liability of each of the services rendered by
Mr. Rakesh Goga, are examined as follows:
Situation 1:
Situation 2:
Case When Mr. Rakesh Goga is an Advocate
When Mr. Rakesh Goga is a Senior Advocate
other than Senior Advocate
(a) Service of representing Mrs. Harshit Such service will be exempt even if the same are
Sharma in her divorce case will be exempt rendered by a senior advocate.
as Mrs. Sharma is not a business entity.
(b) Since the turnover of Ankit & Co., a Such services, when provided by senior
business entity, is more than Rs.20 lakh in advocate, will also be liable to GST. As per
the preceding Financial Year 2017-18, the Section 9(3) of CGST Act, 2017 read with NN
same will be liable to GST. As per Section 13/2017-CT (Rate) and Section 5(3) of IGST Act,
9(3) of CGST Act, 2017 read with NN 2017 read with NN 10/2017-IT (Rate), in case of
13/2017-CT (Rate) and Section 5(3) of IGST legal service provided by a senior advocate to a
Act, 2017 read with NN 10/2017-IT (Rate), business entity in taxable territory, the business
in case of legal service provided by an entity has to pay GST under reverse charge
advocate to a business entity in taxable mechanism.
territory, the business entity has to pay
GST under reverse charge mechanism.
(c) Legal consultancy provided by an Such services, when provided by a senior
advocate to LKS Associates, a partnership advocate, will be liable to GST if the turnover of
firm of advocates is exempt from GST. the partnership firm of advocates (business
entity) in the preceding Financial Year 2017-18
is more than Rs.20 lakhs. Thus, legal
consultancy provided by Mr. Rakesh Goga to
LKS Associates, a partnership firm of advocates,
will be liable to GST. As per Section 9(3) of CGST
Act, 2017 read with NN 13/2017-CT (Rate) and
Section 5(3) of IGST Act, 2017 read with NN
10/2017-IT (Rate), in case of legal service
provided by a senior advocate to a business
entity in taxable territory, the business entity has
to pay GST under reverse charge mechanism.

Note: It is assumed that the service rendered is
not representation services.
Question 29: Legal Services

Ram Vandamurugan & Co. a partnership firm of advocates is providing legal consultancy services.
Compute the GST liability assuming that the rate is 18% for the following information:
Free services rendered to poor people (value of the services computed on the basis 1,00,000
of open market value as per Rule 27)
Advances received from business clients for which no services has been rendered 10,00,000
so far
Services supplied to individuals who were not carrying on business 2,00,000
Solution:
Free services rendered to poor people (As per Section 7 of CGST Act, 2017, supply -
cannot be there without consideration except if it is covered by Schedule I of CGST
Act, 2017)
Advances received from business clients for which no services has been rendered -
so far (As per Section 13 of CGST Act, 2017, GST shall be payable on advances
received. However, as per Section 9(3) of CGST Act, 2017 read with NN 13/2017-
CT (Rate) and Section 5(3) of IGST Act, 2017 read with NN 10/2017-IT (Rate), in
case of legal service provided by an advocate to a business entity in taxable
territory, the business entity has to pay GST under reverse charge mechanism.)
Services supplied to individuals who were not carrying on business (The same is -
Taxable Value 0
GST Payable @ 18% 0
Question 30: Legal Services (Value of Supply, Time of Supply and Input Tax Credit)
Mr. Sharma, an advocate of Chennai raised following bill on Ram Rahim & Co., a trading entity in
Chennai
(a) Legal Fees - Rs.1,00,000
(b) Out of pocket expenses like typing, photo copy, travelling, etc. - Rs.20,000
(c) Court fee paid on behalf of client - Rs.2,000
The invoice of advocate was dated 5th May and the bill amount was paid to advocate on 1st July. Solution
the following:
(1) Who has to pay GST?
(2) What is the amount of GST assuming that the rate is 18%?
(3) When is due date of payment of tax?
(4) Can Ram Rahim & Co. take credit of the same?
Solution:
(1) Person liable to pay GST
As per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT (Rate), in case of legal service provided
by an advocate to a business entity in taxable territory, the business entity has to pay GST under reverse
charge mechanism. It is assumed that such service is not exempt under EN 12/2017-CT (Rate) and EN

9/2017-IT (Rate) assuming that the aggregate turnover of Ram Rahim & Co. in preceding financial year
is more than Rs.20 lakhs.
(2) Taxable Value and GST Payable
As per Section 15 of CGST Act, 2017, value includes out of pocket expenses like typing, photo copy,
travelling, etc. as they are in nature of inputs or input services. However, as per Rule 33 of CGST Rules,
2017, court fee is paid by advocate on behalf of Ram Rahim & Co. as ‘pure agent’. Hence, the same is
not included in value.
Thus, Ram Rahim & Co. is liable to pay tax on Rs.1,20,000. Thus, SGST payable @ 9% is Rs.10,800 and
CGST payable @ 9% is Rs.10,800.
(3) Due-Date of Payment
As per Section 13 of CGST Act, 2017, time of supply for services under reverse charge is earlier of the
two dates:
➔ Date of payment by the recipient
➔ Date immediately after completion of 60 days from the date of invoice of the supplier
As payment is made to Mr. Sharma within 60 days from date of his invoice, time of supply is date of
payment by Ram Rahim & Co. i.e. 1st July. Hence, tax is payable on or before 20th August.
(4) Availment of ITC
As per Section 16 of CGST Act, 2017, Ram Rahim & Co. can avail input tax credit of such services after
payment of the same as the same is used in course or furtherance of business subject to satisfaction of
other conditions mentioned therein.
Question 31: Agricultural Services

AJ Agro Ltd. furnishes the following details of various services provided by it in the month of
December 2018. You are required to compute the value of taxable supply and GST payable thereon
assuming that rate of GST is 18%:
1. Renting of agro-machinery 5,00,000
2. Cultivation of ornamental flowers 4,00,000
3. Plantation of rubber, tea and coffee 7,00,000
4. Processing of tomato ketchup 1,00,000
5. Processing of potato chips 1,50,000
6. Rearing of silkworm and horticulture 1,00,000
7. Renting of vacant land for performing marriage ceremony 2,50,000
8. Sale of wheat on commission basis 80,000
9. Sale of rice on commission basis 2,50,000
10. Rearing of horses 5,00,000
11. Services by way of fumigation in a warehouse of Agricultural Produce 75,000
12. Services of milling of paddy by rice millers 2,50,000
Solution:
1. Renting of agro-machinery (The same is exempt vide EN 12/2017 (R) – CGST -
and EN 9/2017 (R) – IGST)
2. Cultivation of ornamental flowers (The same is exempt vide EN 12/2017 (R) – -
CGST and EN 9/2017 (R) – IGST)
3. Plantation of rubber (The same is exempt vide EN 12/2017 (R) – CGST and EN -
9/2017 (R) – IGST)
4. Processing of tomato ketchup (Note 1) 1,00,000
5. Processing of potato chips (Note 1) 1,50,000

6. Rearing of silkworm and horticulture (The same is exempt vide EN 12/2017-CT -
7. Renting of vacant land for performing marriage ceremony (The same is not 2,50,000
exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate) as renting of vacant
land is not for agriculture)
8. Sale of wheat on commission basis (The same is exempt vide EN 12/2017-CT -
9. Sale of rice on commission basis (The same is not exempt vide EN 12/2017-CT 2,50,000
(Rate) and EN 9/2017-IT (Rate) as rice is not an agricultural produce)
10. Rearing of horses 5,00,000
11. Services by way of fumigation in a warehouse of Agricultural Produce (The -
12. Services of milling of paddy by rice millers 2,50,000
GST Payable @ 18% 2,70,000
Note:
(1) In terms of the definition of agricultural produce, only such processing should be carried out as is
usually done by cultivator or producer which does not alter its essential characteristics but makes
it marketable for primary market. Potato chips or tomato ketchup are manufactured through
processes which alter the essential characteristics of farm produce. Hence, the same are not
agricultural produce and not covered in exemption. It falls under service of job-work when carried
out for others and thus liable to GST.
Question 32: Agriculture Services

Sakshi Foods Limited registered under GST furnishes the following details with respect to the activities
undertaken by them in the month of March, 2018:
1. Receipts from supply of farm labour 85,000
2. Charges for seed testing 65,000
3. Charges for soil testing of farm land 35,000
4. Charges for warehousing of potato chips 85,000
5. Commission received on sale of wheat 75,000
6. Charges for training of farmers on use of new pesticides and fertilizers developed 10,000
through scientific research
7. Renting of vacant land to a stud farm 1,85,000
8. Leasing of vacant land to a cattle farm 83,500
9. Charges for warehousing of rice 1,50,000
10. Charges for warehousing of cotton fabrics 2,00,000
11. Retail packing and labelling of fruits and vegetables 5,00,000
Compute the value of taxable supply of Sakshi Foods Limited for the month of March, 2018 if all the
above amounts are exclusive of GST.
Solution:
Computation of Taxable Value
1. Receipts from supply of farm labour (The same is exempt vide EN 12/2017-CT -
2. Charges for seed testing (The same is exempt vide EN 12/2017-CT (Rate) and EN -
9/2017-IT (Rate))

3. Charges for soil testing of farm land (The same is exempt vide EN 12/2017-CT -
4. Charges for warehousing of potato chips (Potato chips is not an agricultural 85,000
produce and warehousing of the same is not exempt vide EN 12/2017-CT (Rate) and
5. Commission received on sale of wheat (The same is exempt vide EN 12/2017-CT -
6. Charges for training of farmers on use of new pesticides and fertilizers developed -
through scientific research (The same is exempt vide EN 12/2017-CT (Rate) and EN
9/2017-IT (Rate))
7. Renting of vacant land to a stud farm (The same is taxable as rearing of horses has 1,85,000
been specifically excluded from EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
8. Leasing of vacant land to a cattle farm (The same is exempt vide EN 12/2017-CT -
9. Charges for warehousing of rice (Though rice is not an agricultural produce, -
warehousing of the same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT
(Rate))
10. Charges for warehousing of cotton fabrics (Cotton fabrics is not an agricultural 2,00,000
produce and warehousing of the same is not exempt vide EN 12/2017-CT (Rate) and
11. Retail packing and labelling of fruits and vegetables (The same is exempt vide EN -
Question 33: Transportation of Passengers

M/s. PQR Ltd. is engaged in providing service of transportation of passengers by following modes in
the month of July 2018:
(1) Service of transportation of passengers by National Waterways: Rs.30,00,000;
(2) Service of transportation of passengers in cruise ship within territorial waters of India: Rs.5,00,000;
(3) Service of transportation of passengers by Air Conditioned Stage Carriage: Rs.25,00,000;
(4) Service of transportation of passenger by Non-Air Conditioned Stage Carriage: Rs.25,00,000;
(5) Service of transportation of passengers by contract carriage for tourism: Rs.20,00,000;
(6) Service of transportation of passenger for Mumbai to Chennai port in a vessel and such service is
not for tourism purpose: Rs.10,00,000;
(7) Service of transportation of passenger in Metered Cab: Rs.35,00,000;
(8) Service of transportation of passengers in Radio Taxis: Rs.10,00,000;
(9) Service of transportation of passengers in Non-Air Conditioned Contract Carriages and not for
tourism purposes: Rs.10,00,000;
(10) Service of transportation of passengers in Air Conditioned Contract Carriages: Rs.15,00,000;
(11) Transportation of passengers by ropeway: Rs.1,00,000.
Compute GST liability. GST rate should be taken as 5% for stage carriage & contract carriage and 18%
for others and where the service is taxable.
Solution:
Taxable
Particulars Rate GST (Rs.)
Value (Rs.)
1. Service of transportation of passengers by National 30,00,000 Exempt -
Waterways (The same is exempt vide EN 12/2017-CT (Rate)

2. Service of transportation of passengers in cruise ship 5,00,000 18% 90,000
within territorial waters of India (The same is taxable)
3. Service of transportation of passengers by Air 25,00,000 5% 1,25,000
Conditioned Stage Carriage (The same is taxable)
4. Service of transportation of passenger by Non-Air 25,00,000 Exempt -
Conditioned Stage Carriage (The same is exempt vide EN
5. Service of transportation of passengers by contract 20,00,000 5% 1,00,000
carriage for tourism (The same is taxable)
6. Service of transportation of passenger for Mumbai to 10,00,000 Exempt -
Chennai port in a vessel and such service is not for tourism
purpose (The same is exempt vide EN 12/2017-CT (Rate) and
EN 9/2017-IT (Rate) as the same is for public transport in a
vessel within India and not for tourism purposes)
7. Service of transportation of passenger in Metered Cab 35,00,000 Exempt -
(The same is exempt vide EN 12/2017-CT (Rate) and EN
9/2017-IT (Rate))
8. Service of transportation of passengers in Radio Taxis 10,00,000 5% 50,000
(The same is taxable)
9. Service of transportation of passengers in Non-Air 10,00,000 Exempt -
Conditioned Contract Carriages and not for tourism
purposes (The same is exempt vide EN 12/2017-CT (Rate)
10. Service of transportation of passengers in Air 15,00,000 5% 75,000
Conditioned Contract Carriages (The same is taxable)
11. Transportation of passengers by ropeway (The same is 1,00,000 18% 18,000
taxable)
Total 4,58,000
Question 34: Transportation of Passengers by Air

Super Safe Airlines furnishes the following information for the month of April 2018:
(1) Passengers embarking at Manipur: Rs.50 lakhs (Out of the said sum Rs.10 lakhs relates to other
than economy class)
(2) Passengers where journey terminates at Bagdora district in West Bengal: Rs.40 lakhs (Out of the
said sum Rs.20 lakhs relates to other than economy class)
(3) Amount charged from passengers for flight starting from Mumbai to Chennai (Economy Class):
Rs.30 lakh (including passenger taxes levied by government and shown separately on ticket: Rs.5
lakh)
(4) Amount charged from passengers for flight starting from Mumbai to Chennai (Business Class):
Rs.20 lakh (including passenger taxes levied by government and shown separately on ticket: Rs.2
lakh)
(5) Transport of passengers from Jaipur to Jodhpur (Regional Connectivity Scheme Airport) – Number
of Passengers – 1,000 and Gross Value per Ticket – Rs.2,500. Viability Gap Funding given by
Government to Super Safe Airlines is Rs.15,00,000
Compute the GST payable assuming that the sums given below are exclusive of GST. Rates of GST are
as follows:
(a) Business Class – 12%
(b) Economy Class – 5%
(c) Regional Connectivity Scheme – 5%
Note: Ignore place of supply and compute GST payable without break up of CGST, SGST and IGST

Solution:
Taxable
Value (Rs.)
1. Passengers embarking at Manipur (The same is exempt 50,00,000 Exempt -
2. Passengers where journey terminated at Bagdora district 40,00,000 Exempt -
in West Bengal (The same is exempt vide EN 12/2017-CT
3. Amount charged from passengers for flight starting from 30,00,000 5% 1,50,000
Mumbai to Chennai – Economy Class (All taxes except GST
and Compensation Cess are included in value as per Section
15 of CGST Act, 2017. Thus, passenger tax is included in
value)
Mumbai to Chennai – Business Class (All taxes except GST
and Compensation Cess are included in value as per Section
15 of CGST Act, 2017. Thus, passenger tax is included in
value)
5. Transport of passengers from Jaipur to Jodhpur (Regional 25,00,000 5% 1,25,000
Connectivity Scheme Airport) – 1,000 Tickers * Rs.2,500 per
Ticket (Viability Gap Funding given by Government is
Total 5,15,000
Question 35: Transport of Passengers by Air

Compute value of taxable supply of transport of passengers by air from the following data relating to
sums received exclusive of GST for the month of September 2018:
(1) Passengers embarking at Arunachal Pradesh: Rs.55 lakh (out of the said sum Rs.15 lakh relates to
other than economy class);
(2) Passengers where journey terminated at Assam: Rs.45 lakh (out of the said sum Rs.5 lakh relates to
other than economy class);
(3) Amount charged from passengers for flight starting from Sydney to Delhi: Rs.25 lakh (out of the
said sum Rs.15 lakh relates to other than economy class);
(4) Amount charged from passengers for flight starting from Delhi to Sydney (Economy Class): Rs.34
lakhs (including passenger taxes levied by government and shown separately on ticket: Rs.10 lakh);
(5) Amount charged from passengers for flight starting from Delhi to Sydney (Business Class): Rs.10
lakh (including passenger taxes levied by government and shown separately on ticket: Rs.3 lakh);
Compute value of taxable supply and GST thereon. Rates of GST are as follows:
(a) Business Class – 12%
(b) Economy Class – 5%
Solution:
Taxable
Value (Rs.)
1. Passengers embarking at Arunachal Pradesh (The same is 55,00,000 Exempt -

2. Passengers where journey terminated at Assam (The same 45,00,000 Exempt -
is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT
(Rate))
3. Amount charged from passengers for flights starting from 25,00,000 Not -
Sydney to Delhi (As per Section 13 of IGST Act, 2017, place Taxable
of supply of such service is place of embarkation i.e. Sydney
viz. outside India and hence, it is not chargeable to tax in
India)
Delhi to Sydney – Economy Class (All taxes except GST and
Compensation Cess are included in value as per Section 15
of CGST Act, 2017. Thus, passenger tax is included in value)
Delhi to Sydney – Business Class (All taxes except GST and
Compensation Cess are included in value as per Section 15
of CGST Act, 2017. Thus, passenger tax is included in value)
Total 2,90,000
Question 36: Transportation of Passengers by Rail

Indian Railways has provided the details of receipts against the following services:
(1) Transport of passengers by general class: Rs.20 billion
(2) Transport of passengers by sleeper class: Rs.50 billion
(3) Transport of passengers by 1st class air conditioned coach: Rs.2 billion
(4) Transport of passengers by 2nd tier air conditioned coach: Rs.4 billion
(5) Transport of passengers by 3rd tier air conditioned coach: Rs.4.5 billion
Compute the taxable value of services and GST payable assuming the rate of GST is 5%.
Solution:
Amount
Particulars
(Rs. in Billion)
1. Transport of passengers by general class (The same is exempt vide EN 12/2017- -
2. Transport of passengers by sleeper class (The same is exempt vide EN 12/2017- -
3. Transport of passengers by 1st class air conditioned coach 2
4. Transport of passengers by 2nd tier air conditioned coach 4
5. Transport of passengers by 3rd tier air conditioned coach 4.5
Total Receipts 10.50
Taxable Value (10.5 * 100 / 105) 10.00
Question 37: Transportation of Goods by GTA

M/s. Super Goods Transport Services, a goods transport agency furnishes the following information in
respect of services provided for the month ending May 20XX. Determine the value of taxable supply
and tax thereon:
(1) Service provided to M/s. Ram Ltd. – Rs.4,00,000
(2) Freight for transport of milk and food grains – Rs.2,00,000
(3) Service to an unregistered proprietorship concern – Rs.1,00,000
(4) Service to an unregistered partnership firm – Rs.1,00,000

(5) Composite service provided to Mr. DK which include packing / unpacking, loading and unloading
of used household goods in the course of transportation by road – Rs.20,000
(6) Service provided as a ‘clearing and forwarding agent’ – Rs.1,50,000
Compute GST payable for M/s. Super Goods Transport Services assuming the GTA has not opted for
paying 12% and rate of GST for clearing and forwarding agent is 18%.
Solution:
Computation of GST Payable as GTA
1. Service provided to M/s. Ram Ltd. (As per NN 13/2017-CT (Rate) and NN -
10/2017-IT (Rate), M/s. Ram Ltd. shall pay GST under reverse charge. Thus, the
small shall not be taxable in the hands of M/s. Super Goods Transport Services)
2. Freight for transport of milk and food grains (The same is exempt vide EN -
3. Service to an unregistered proprietorship concern (The same is exempt vide EN -
4. Service to an unregistered partnership firm (As per NN 13/2017-CT (Rate) and -
NN 10/2017-IT (Rate), partnership firm shall get registered and pay GST under
reverse charge. Thus, the small shall not be taxable in the hands of M/s. Super
Goods Transport Services)
5. Composite service provided to Mr. DK which include packing / unpacking, -
loading and unloading of used household goods in the course of transportation by
road – Rs.20,000 (The service will be GTA Service since consignment note is issued
and principal supply is transport of goods. As it is provided to unregistered
individual, the same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
Taxable Value 0
Total GST Payable 0
Computation of Payable as Clearing and Forwarding Agent

Service provided as a ‘clearing and forwarding agent 1,50,000
GST @ 18% 27,000
Question 38: Transportation of Goods by GTA

Discuss whether GST is payable in respect of transportation services provided by Raghav Goods
Transport Agency in each of the following independent cases:
Customer Nature of services provided Amount charged
Shivaji Transportation of milk Rs.20,000
Kabali Transportation of books on a consignment transported in a Rs.3,000
single goods carriage
Kaala Transportation of chairs for a single consignee in the goods Rs.600
carriage
Solution:
Nature of services Amount
Customer Taxability
provided charged
Shivaji Transportation of milk Rs.20,000 Exempt. Transportation of milk by goods
transport agency is exempt.

Kabali Transportation of books Rs.3,000 GST is payable. Exemption is available for
on a consignment transportation of goods only where the
transported in a single consideration for transportation of goods on
goods carriage a consignment transported in a single goods
carriage does not exceed Rs.1,500.
Kaala Transportation of chairs Rs.600 Exempt. Transportation of goods where

for a single consignee in consideration for transportation of all goods
the goods carriage for a single consignee does not exceed
Rs.750 is exempt.
Question 39: Transportation of Goods by Rail

Compute the value of taxable supply and GST liability for the month of October 2018 for transport of
goods by rail by Indian railway within India. Applicable GST rate is 5%.
Amount
Particulars
(Rs. in lakhs)
Transport of postal mails and postal bags 55
Transport of household effects 50
Transport of petroleum products 25
Transport of relief materials to flood affected areas 25
Transport of newspapers and magazines registered with registrar of newspapers 15
Transport of milk 15
Transport of tea 10
Transport of sugar 25
Transport of alcoholic beverages 7
Transport of defence and military equipments 40
Transport of organic manure 90
Transport of baled cotton 25
Transport of other goods 5000
Solution:
Amount
Particulars
(Rs. in lakhs)
Transport of postal mails and postal bags (The same is taxable) 55
Transport of household effects (The same is taxable) 50
Transport of petroleum products (The same is taxable) 25
Transport of relief materials to flood affected areas (The same is exempt vide EN -
Transport of newspapers and magazines registered with registrar of newspapers -
Transport of milk (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017- -
IT (Rate))
Transport of tea (The same is taxable) 10
Transport of sugar (The same is taxable) 25
Transport of alcoholic beverages (The same is taxable) 7
Transport of defence and military equipments (The same is exempt vide EN -

Transport of organic manure (The same is exempt vide EN 12/2017-CT (Rate) and -
Transport of baled cotton (The same is taxable) 25
Transport of other goods (The same is taxable) 5000
Taxable Value 5197

Question 40: Transportation of Goods Services (Composite Supply, Exemption and Reverse Charge
/ Forward Charge)
XYZ Ltd., New Delhi, manufactures biscuits under the brand name ‘Tastypicks’. Biscuits are supplied
to wholesalers and distributors located across India on FOR basis from the warehouse of the company
located at New Delhi. The company uses multiple modes of transport for supplying the biscuits to its
customers spread across the country. The transportation cost is shown as a line item in the invoice and
is billed to the customers with a mark-up of 2% on total amount of freight paid (inclusive of taxes).
Flour used for the production process is procured from vendors located in Madhya Pradesh on ex-
factory basis. The company engages goods transport agencies (GTA) to transport the flour from the
factories of the vendors to its factory of the vendors to its factory located in New Delhi.
The company has provided the following data relating to transportation of biscuits and flour in the
month of April 20XX:
- For sales within the NCR region (Rs.20,00,000), the company arranged a local mini-van belonging
to an individual and paid him Rs.54,000.
- For sales to locations in distant States (Rs.1,78,00,000), the company booked the goods by Indian
Railways and paid rail freight of Rs.3,17,000.
- For sales to locations in neighboring States (Rs.55,00,000), the company booked the goods by road
carriers (GTAs) and paid road freight of Rs.3,73,000. Out of the total sales to neighboring States,
goods worth Rs.10,00,000 were booked through a GTA which paid tax @ 12%. Freight of Rs.73,000
was paid to such GTA.
- For purchase of flour from Madhya Pradesh (Rs.25,00,000), the company booked the goods by a
GTA and paid road freight of Rs.55,000.
- For purchase of butter from Punjab (Rs.15,00,000), the company booked the goods by a GTA and
paid road freight of Rs.35,000.
- For local purchase of baking powder, the company booked the goods by a GTA in a single carriage
and paid road freight of Rs.1,500.
- For transferring the biscuits (open market value – Rs.4,00,000) to one of its sister concern in
Rajasthan, the company booked the goods by a GTA and paid road freight of Rs.40,000.
(i) Based on the particulars given above, compute the GST payable on the amount paid for
transportation by XYZ Ltd. when it avails the services of different transporters.
(ii) Compute the GST charged on transportation cost billed by the company to its customers.
Notes: Assume the rate of GST on transportation of goods and biscuits to be 5% and 12% respectively
[except where any other rate is specified in the question].
Solution:
Computation of GST Payable on amount paid for transportation by XYZ Ltd. when it avails the
services of different transporters
GST Payable
Particulars Freight (Rs.)
(Rs.)
Transportation of biscuits in a local mini-van belonging to an 54,000 Nil
individual

[Only the transportation of goods by road by a GTA and
Courier Agency is liable to GST. Therefore, transportation of
goods by road otherwise than by a GTA and Courier Agency
is exempt from GST as per NN 12/2017-CT(Rate) read with
NN 9/2017-IT(Rate)]
Transportation of biscuits by Indian Railways 3,17,000 15,850
Transportation of biscuits by GTA 3,00,000 15,000
[GST is payable by XYZ Ltd. under reverse charge in terms
of Section 5(3) of the IGST Act, 2017 read with NN 10/2017-
IT(Rate)]
Transportation of biscuits by GTA @ 12% 73,000 8,760
[When the GTA pays tax @ 12%, tax is a payable by the GTA
under forward charge and not by the recipient under reverse
charge – NN 10/2017-IT(Rate)]
Transportation of flour by GTA 55,000 Nil
[Services provided by GTA by way of transport in a goods
carriage of flour is exempt from GST as per NN 9/2017-
IT(Rate)]
Transportation of butter by GTA 35,000 1,750
[Services provided by GTA by way of transport in a goods
carriage of milk is exempt from GST as per NN 9/2017-
IT(Rate). However, road transport of butter will not be
exempted as butter is milk product and not milk.
GST is payable by XYZ Ltd. under reverse charge in terms of
Section 5(3) of the IGST Act, 2017 read with NN 10/2017-
IT(Rate)]
Transportation of baking powder by GTA 1,500 Nil
[Services provided by a GTA by way of transport in a goods
carriage of goods, where consideration charged for the
transportation of goods on a consignment transported in a
single carriage does not exceed Rs.1,500, is exempt as per NN
9/2017-IT(Rate)]
Transportation of biscuits by GTA to sister concern 40,000 2,000
[GST is payable by XYZ Ltd. under reverse charge in terms
of Section 5(3) of the IGST Act, 2017 read with NN 10/2017-
IT(Rate)]
Total tax payable by XYZ Ltd. on availing services of 43,360
different transporters
Computation of GST charged on transportation cost billed by XYZ Ltd. to its customers
Since XYZ Ltd. is supplying biscuits on FOR basis, the service of transportation of biscuits gets bundled
with the supply of biscuits. Thus, the supply of biscuits and transportation service is a composite
supply, chargeable to tax at the tax at the rate applicable to the principal supply (biscuits) i.e., 12%
[Section 8(a) of the CGST Act, 2017 read with the definition of ‘composite supply’ under Section 2(30)
of the CGST Act, 2017 and ‘principal supply’ under Section 2(90) of the CGST Act, 2017].
Freight GST paid on Freight billed with
GST charged @
Particulars paid [A] Freight [B] mark-up @ 2% on
12% (Rs.)
(Rs.) (Rs.) ([A] + [B]) (Rs.)

Transportation of biscuits in a 54,000 - 55,080 6,610
local mini-van belonging to an
individual
Transportation of biscuits by 3,17,000 15,850 3,39,507 40,741
Indian Railways
Transportation of biscuits by 3,00,000 15,000 3,21,000 38,556
GTA
Transportation of biscuits by 73,000 8,760 83,395 10,007
GTA @ 12%
Total tax charged by XYZ Ltd. on transportation cost billed to the customers* 95,914
*Note: It has been assumed that there is no mark-up on transportation cost billed to sister concern (non-
customer).
Author’s Note: As the question is specifically mentioning that mark-up of 2% by company for freight
from its customers is on freight inclusive of taxes, the computation is done as above. In the absence of
any such information, mark-up of 2% shall be computed only on the freight charges as the company
can claim the Input Tax Credit of the taxes on such freight.
Question 41: Government Services

With reference to the provisions of CGST Act, 2017, examine whether GST is leviable in the following
situations:
(1) Government of Rajasthan has provided services to ABC Ltd. of Rajasthan in the month of
November 2018 for a consideration of Rs.50,000. The turnover of ABC Ltd. in Financial Year 2017-
18 was Rs.18,00,000.
(2) Government of Rajasthan has provided services to XYZ Ltd. in the month of November 2018 for a
consideration of Rs.4,000. The turnover of XYZ Ltd. in Financial Year 2017-18 was Rs.28,00,000.
(3) Jaipur Municipal Corporation has awarded a contract for construction of road to PQR Ltd. PQR
Ltd. failed to perform the contract and paid liquidated damages amounting Rs.50,00,000 in
accordance with the terms of contract.
(4) XYZ Ltd. has applied for registration under Companies Act, 2013 to Registrar of Companies and
has paid registration fees of Rs.1,00,000.
(5) Delhi Government has charged Rs.50,00,000 from Agro Care Ltd. for allocation of natural resources
for agricultural purposes in the month of November, 2018.
(6) XYZ Ltd. has paid to Customs Department Rs.50,000 on account Merchant Overtime Charges for
deputing officers after office hours or on holidays for inspection or container stuffing or such other
duties in relation to import export cargo.
(7) XYZ Ltd. has made an upfront payment of Rs.80,00,000 to Bihar Government on account of
assignment of right to use minerals in the State of Bihar.
Solution:
(1) Services provided by the Central Government, State Government, Union Territory or Local
Authority 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 financial year are exempt vide EN 12/2017-CT (Rate)
and EN 9/2017-IT (Rate). Hence, no GST shall be payable on the services provided by Government
of Rajasthan to ABC Ltd. as its turnover is less than Rs.20 lakhs in preceding financial year.
(2) Services provided by Central Government, State Government, Union Territory or a Local Authority
where the consideration for such services does not exceed Rs.5,000 are exempt vide EN 12/2017-CT
(Rate) and EN 9/2017-IT (Rate). Hence, no GST shall be payable on the said services provided by
Government of Rajasthan to XYZ Ltd. as service charges are less than Rs.5,000.
Authority by way of tolerating non-performance of a contract for which consideration in the form

of fines or liquidated damages is payable to the Central Government, State Government, Union
Territory or Local Authority under such contract are exempt vide EN 12/2017-CT (Rate) and EN
9/2017-IT (Rate). Hence, no GST shall be payable on liquidated damages of Rs.50,00,000 paid by
PQR Ltd. to Jaipur Municipal Corporation.
Authority by way of registration required under any law for the time being in force are exempt
vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate). Hence, no GST shall be payable on fees paid
for incorporation by XYZ Ltd.
(5) Services by way of allocation of natural resources to an individual farmer for the purposes of
agriculture are exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate). Such allocations/
auctions to categories of persons other than individual farmers would be leviable to GST. Hence,
the same is taxable and Agro Care Ltd. will be liable to pay GST on Rs.50,00,000 under reverse
charge basis as per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT (Rate) and Section 5(3)
of IGST Act, 2017 read with NN 10/2017-IT (Rate).
(6) Services provided by way of deputing officers after office hours or on holidays for inspection or
container stuffing or such other duties in relation to import export cargo on payment of Merchant
Overtime Charges are exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate). Hence, no GST
shall be payable on Merchant Overtime Charges paid by XYZ Ltd.
(7) Assignment of rights to use minerals in the State of Bihar by State of Bihar to XYZ Ltd is taxable
and XYZ Ltd. will be liable to pay GST on reverse charge mechanism as per Section 9(3) of CGST
Act, 2017 read with NN 13/2017-CT (Rate) and Section 5(3) of IGST Act, 2017 read with NN 10/2017-
IT (Rate).
Question 42: Government Services

With reference to the provisions of CGST Act, 2017, examine whether GST is leviable in the following
situations:
(1) Government of Tamil Nadu is providing renting of immovable property services to ABC Ltd. of
Tamil Nadu in the month of November 2018 for a consideration of Rs.50,000. The turnover of ABC
Ltd. in Financial Year 2017-18 was Rs.18,00,000. ABC Ltd. is unregistered.
(2) Government of Tamil Nadu is providing renting of immovable property services to ABC & Co. of
Tamil Nadu, a partnership firm, in the month of November 2018 for a consideration of Rs.50,000.
The turnover of ABC & Co. in Financial Year 2017-18 was Rs.50,00,000. However, ABC & Co. is
unregistered as it is into supply of exempt goods or services.
(3) Government of Tamil Nadu is providing renting of immovable property services to A & Co. of
Tamil Nadu, proprietor being Mr. A, in the month of November 2018 for a consideration of
Rs.50,000. The turnover of A & Co. in Financial Year 2017-18 was Rs.30,00,000. A & Co. is registered.
Solution:
(1) Renting of immovable property services provided by the Central Government, State Government,
Union Territory or Local Authority to a business entity is taxable irrespective of aggregate turnover
of business entity in the preceding financial year. As ABC Ltd. is unregistered, reverse charge
mechanism is not applicable and Government of Tamil Nadu has to pay GST under forward charge
mechanism.
of business entity in the preceding financial year. As ABC & Co. is unregistered, reverse charge
mechanism is not applicable and Government of Tamil Nadu has to pay GST under forward charge
mechanism.
of business entity in the preceding financial year. As A & Co. is registered, reverse charge
mechanism is applicable as per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT (Rate) and
Section 5(3) of IGST Act, 2017 read with NN 10/2017-IT (Rate) and A & Co. has to pay GST under
reverse charge mechanism.
Question 43: Postal Services

Gondia Post Office provided the following services to persons other than Government during the
month of March 2018, all charges are exclusive of GST-
Services rendered Amount (Rs.)
Basic mail services 1,00,000
Transfer of money through money orders 5,00,000
Operation of saving accounts 1,50,000
Rural postal life insurance services 2,00,000
Distribution of mutual funds, bonds and passport applications 5,00,000
Issuance of postal orders 3,00,000
Collection of telephone and electricity bills 1,00,000
Pension payment services 50,000
Speed post services 5,00,000
Express parcel post services 2,00,000
Compute the value of taxable supply of the month of March 2018.
Solution:
Computation of Taxable Value
Basic mail services (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017- -
IT (Rate))
Transfer of money through money orders (The same is exempt vide EN 12/2017-CT -
Operation of saving accounts (The same is exempt vide EN 12/2017-CT (Rate) and -
Rural postal life insurance services (The same is not exempt vide EN 12/2017-CT 2,00,000
Distribution of mutual funds, bonds and passport applications (The same is not 5,00,000
Issuance of postal orders (The same is exempt vide EN 12/2017-CT (Rate) and EN -
9/2017-IT (Rate))
Collection of telephone and electricity bills (The same is not exempt vide EN 12/2017- 1,00,000
Pension payment services (The same is exempt vide EN 12/2017-CT (Rate) and EN -
9/2017-IT (Rate))
Speed post services (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017- 5,00,000
IT (Rate))
Express parcel post services (The same is exempt vide EN 12/2017-CT (Rate) and EN 2,00,000
9/2017-IT (Rate))
Question 44: Courier Services

M/s Spider Man Couriers of India furnishes you the following information of services (all information
are separate and in addition to each other):
(1) Amounts charged from corporate customers: Rs.55 lakhs (including Rs.5 lakhs towards packing of
goods and documents in boxes and envelopes)
(2) Charges for Express Cargo Service: Rs.25 lakhs (consignment note is not issued)
(3) Charges for documents destined to Western States: Rs.40 lakhs (for documents destined to western
states, the delivery is carried out by M/s. Iron Man Express who is paid 50% out of proceeds
(4) Charges for services where the customers came to the office of M/s Spider Man Couriers: Rs.4 lakhs
(5) Charges for transportation of goods to New York for ABC Ltd., a registered person of New Delhi:
Rs.25 lakhs
You are required to compute the following:
(a) Value of taxable supply and
(b) Net amount of GST, if any, payable thereon by M/s Spider Man Couriers.
Solution:
Amounts charged from corporate customers (Charges towards packing of goods 55,00,000
in boxes and envelopes will from part of value of taxable supply, since most of the
courier agencies carry out such activities and the same fall under composite supply
as per Section 8 of CGST Act, 2017)
Charges for Express Cargo Service (Since consignment note is not issued, the 25,00,000
service will fall under courier service and the same is taxable)
Charges for documents destined to Western States (M/s Spider Man Couriers will 40,00,000
be liable to pay GST on full amount charged. The amount paid to co-loader M/s.
Iron Man Express will be eligible as ‘input service’ on which ITC credit will be
available)
Charges for services where the customers came to the office of M/s. Spider Man 4,00,000
Couriers (Even if the customers come to the office of courier agency, the same
would amount of ‘door-to-door transportation’ and will be covered by courier
agency)
Charges for transportation of goods to New York for ABC Ltd. of India (As per 25,00,000
provisions of Section 12(8) of IGST Act, 2017, place of supply of services by way of
transportation of goods by courier to a registered person shall be the location of
such person i.e. New Delhi, hence shall be liable for GST)
Taxable Value 1,49,00,000
GST thereon @ 18% 26,82,000
Less: ITC on charges of co-loader M/s. Iron Man Express = Rs.40 lakhs * 50% * 18% (3,60,000)
Net GST Payable by Electronic Cash Ledger 23,22,000
Question 45: Various Exemption to Services

Khana Pvt. Ltd., a registered supplier, has provided following outdoor catering services in the month
of September 2018. Compute the value of taxable supply and GST payable thereon if all charges are
exclusive of GST and rate of GST is 18%.
(1) Provides catering services to Higher Secondary School within the premises of school: Rs.5 lakhs
(2) Providing food to the students under mid-day meals scheme sponsored by Government: Rs.10
lakhs
(3) Provides catering services along with supply of food and drinks in marriage functions: Rs.50 lakhs
- Fair market value of goods supplied by receiver: Rs.20 lakhs
- No amount was charged for the goods supplied.
(4) Provides catering service to ABC Pvt. Ltd. where food & drinks are not supplied: Rs.25 lakhs
Solution:

Amount
Particulars
(Rs. in lakhs)
Provides catering services to Higher Secondary School within the premises of -
school (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT (Rate))
Providing food to the students under mid-day meals scheme sponsored by -
Government (The same is exempt vide EN 12/2017-CT (Rate) and EN 9/2017-IT
(Rate))
Provides catering services along with supply of food and drinks in marriage 50
functions (The same is taxable. FMV of the goods supplied by the receiver is not to
be included in the value of taxable supply)
Provides catering service to ABC Pvt. Ltd. where food & drinks are not supplied 25
(The same is taxable)
Taxable Value 75

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 Caters, 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 NN 12/2017-CT (Rate) read with NN 9/2017-IT (Rate). 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 NN 12/2017-CT (Rate) read with NN 9/2017-
IT (Rate)
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 good 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
advised by doctors / nutritionists while other supplies of food by it to patients (not admitted) or
attendants / visitors of the in-patients is taxable.

Examine whether GST is payable in the following independent supply of services:
(i) Indiana Engineering College, a recognized 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:
(i) Services provided by an educational institution by way of conduct of entrance examination against
consideration in the form of entrance fee are exempt from GST vide Notification No. 12/2017 CT
(R).
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).

Decide with reason whether the following independent services are exempt under CGST Act, 2017:
(i) M/s Fast Trans a goods transport agency, transported relief materials meant for victims of Kerala
floods being a natural disaster, by road from Delhi to Ernakulam, for a Limited Co.
(ii) Keyan Enterprises, an event organizer, provided services to Breathing Wall Ltd. by way of
organizing business exhibition at Pragati Maidan in New Delhi as part of Make in India initiative.
Solution:
(i) Services provided by a goods transport agency, by way of transport in a goods carriage of, inter
alia, relief materials meant for victims of inter alia natural or man-made disasters are exempt from
GST. Therefore, services provided by M/s Fast Trans will be exempt from GST.
(ii) Services provided by an organizer to any person in respect of a business exhibition is organized in
India is not exempt. Therefore, the services of organization of event by Keyan Enterprises will not
be exempt from GST.
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 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) As per NN 12/2017-CT (Rate) read with NN 9/2017-IT (Rate), 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) As per NN 12/2017-CT (Rate) read with NN 9/2017-IT (Rate), 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.

Examine whether GST is payable in the following independent cases:
(i) Ekta Charitable Trust, registered under Section 10(23C)(v) of the Income-tax Act manages a temple
in Rohini, Delhi. It has given on rent a community hall, located within the temple premises, to
public for celebration of Teeja Mela. Rent Charged is Rs.9,500.
(ii) Speed post services by Department of Post to Union Territory of Daman & Diu.
(iii) ST Ltd. has given on hire 5 trucks to Titu Transporters of Delhi (a goods transport agency) for
transporting goods in Central and West Delhi. The hiring charges for the trucks are Rs.7,500 per
truck per day.
Solution:
(i) Renting of community hall by Ekta charitable trust is exempt GST. as rent is less than Rs. 10,000 per
day. Exemption Notification No. 12/2017-CT (Rate) read with Notification No. 9/2017-IT (Rate) 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 manages 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, kalyanmandapam 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 Daman
& Diu. Exemption Notification No. 12/2017-CT (Rate) read with Notification No. 9/2017-IT (Rate)
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 services 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 Titu Transporters. Exemption Notification No.
12/2017-CT (Rate) read with Notification No. 9/2017-IT (Rate) provides exemption to services by
way of giving on hire inter alia to a goods transport agency, a means of transportation of goods.

Examine whether GST is exempted on the following independent supplies of services:
(1) Fees charged for yoga camp conducted by a charitable trust
(2) Amount charged by business correspondent for the services provided to the rural branch of a bank
(3) Amount charged by cord blood bank for preservation of stem cells
(4) Amount charged for service provided by commentator to a recognized sports body
(5) Service provided by a private transport operator to Scholar Boys Higher Secondary School in
relation to transportation of students to and from the school.
(6) Service provided by a private transport operator to Vidya College in relation to transportation of
students to and from the school.
(7) Hiring service provided by 3rd party to a private transport operator who in turn provides services
to Scholar Boys Higher Secondary School in relation to transportation of students to and from the
school.
to Vidya College in relation to transportation of students to and from the school.
(9) Services provided by way of vehicle parking to general public in a shopping mall.
Solution:
As per Exemption Notification 12/2017-CT (Rate) and Exemption Notification 9/2017-IT (Rate), the
taxability of the given services is as follows:
(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.
(5) Services provided TO Scholar Boys Higher Secondary School (providing pre-school education and
education upto higher secondary school or equivalent) by way of transportation of students are
exempted from GST.
(6) Services provided TO Vidya College (providing education as a part of curriculum for obtaining
qualification recognized by law for the time being in force) by way of transportation of students
are not exempted from GST and thus, liable for GST.
an Scholar Boys Higher Secondary School (providing pre-school education and education upto
higher secondary school or equivalent) by way of transportation of students are exempted from
GST.
an Vidya College (providing education as a part of curriculum for obtaining qualification
recognized by law for the time being in force) by way of transportation of students are not
exempted from GST and thus, liable for GST.
(9) Services provided by way of vehicle parking to general public are not exempted from GST.
Therefore, GST is payable on the same.
Determine taxable value of supply under GST law with respect to each of the following independent
services provided by the registered persons:
Gross Amount
Particulars
Charged (Rs.)
Amount charged for loading, unloading, packing and warehousing of potato chips 25,000
Fees charged for yoga camp conducted by a charitable trust registered under Section 50,000
12AA of the Income-tax Act, 1961
Amount charged by business correspondent for the services provided to the rural 1,00,000
branch of a bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem cells 5,00,000
Amount charged for service provided by commentator to a recognized sports body 6,00,000
Amount charged for service provided by way of right to admission to circus where 12,000
consideration for the same is Rs.750 per person.
Solution:
Amount charged for loading, unloading, packing and warehousing of potato 25,000
chips (Note 1)
Fees charged for yoga camp conducted by a charitable trust registered under Nil
Section 12AA of the Income-tax Act, 1961 (Note 2)

Amount charged by business correspondent for the services provided to the Nil
rural branch of a bank with respect to Savings Bank Accounts (Note 3)
Amount charged by cord blood bank for preservation of stem cells (Note 4) Nil
Service provided by commentator to a recognized sports body (Note 5) 6,00,000
Amount charged for service provided by way of right to admission to circus 12,000
where consideration for the same is Rs.750 per person. (Note 6)
Notes:
(1) Services by way of loading, unloading, packing, storage or warehousing of agricultural produce
are exempt from GST. Further, potato chips are manufactured through processes which alter the
essential characteristic of agricultural produce, thus is not covered under definition of agricultural
produce.
(2) 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.
(3) 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.
(4) Services provided by cord blood bank by way of preservation of stem cells or any other service in
relation to such preservation are exempt from GST.
(5) 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.
(6) Services provided by way of right to admission to circus where consideration for the same is upto
Rs.500 per person are exempt from GST. Since in the present case, the consideration is more than
Rs.500 per person, so the same is liable to GST.

M/s. XYZ Ltd., a registered person, received the following sums (exclusive of taxes):
(1) Commission for acting as Clearing and Forwarding Agent: Rs.3 lakhs;
(2) Commission for acting as Commission Agent of agricultural produce: Rs.14 lakhs;
(3) Commission for acting as Commission Agent of consumer goods: Rs.10 lakhs;
(4) Margin earned from trading in derivatives: Rs.3 lakhs;
(5) Margin from trading in commodity futures: Rs.3 lakhs.
18% and assuming that the amounts given above are exclusive of GST.
Solution:
Commission for acting as Clearing and Forwarding Agent 3,00,000
Commission for acting as Commission Agent of agricultural produce (The same is -
Commission for acting as Commission Agent of consumer goods 10,00,000
Margin earned from trading in derivatives (Derivatives are covered in securities -
and they are neither covered by the definition of goods nor by the definition
services. Thus, not taxable)
Margin from trading in commodity futures (Commodity futures are covered in -
securities and they are neither covered by the definition of goods nor by the
definition services. Thus, not taxable)

GST Payable @ 18% 2,34,000

RJ & Co. provide the following details in respect of the services provided and the payments there
against received by them for the month of April 2018.
Amount
Particulars
(Rs. in lakhs)
Commission for procurement of services for their client AJ & Co. 10
Commission on distribution of UTI Mutual Fund products 16
Customer care services provided on behalf DJ Ltd. 8
Commission on purchase and sale of food grains 20
Commission on procurement of advertisement for publications company 4
Charges for processing parts and accessories in the manufacture of cycle for use by 10
the client
18% and assuming that the amounts given above are exclusive of GST. Make assumptions where
required and provide suitable explanations.
Solution:
Amount
Particulars
(Rs. in lakhs)
Commission for procurement of services for their client AJ & Co. (The same is 10
taxable)
Commission on distribution of UTI Mutual Fund products (The same is taxable) 16
Customer care services provided on behalf DJ Ltd. (The same is taxable) 8
Commission on purchase and sale of food grains (The same is taxable. Only 20
transportation of food grains is exempt whereas commission on purchase and sale
of food grains is taxable)
Commission on procurement of advertisement for publications company 4
Charges for processing parts and accessories in the manufacture of cycle for use by 10
the client
Taxable Value 68

REVERSE CHARGE
MECHANISM
Question 1: Recipient of Goods or Services
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
(i) Where a consideration is payable for the supply of goods or services or both, the person who is
liable to pay that consideration;
(ii) 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 the goods is given or made available;
and
(iii) Where no consideration is payable for the supply of a service, the person to whom the service is
rendered,
And (i) any reference to a person to whom a supply is made shall be construed as a reference to the
recipient of the supply, and (ii) shall include an agent acting as such on behalf of the recipient in
relation to the goods or services or both supplied.
Question 2: Reverse Charge Mechanism under Section 9(3) and Reverse Charge Mechanism under
9(4)
M/s. Tax Square, tax consultant of Graha Ltd., have advised them that reverse charge mechanism is
applicable both for goods and services. However, Graha Ltd. is of the view reverse charge mechanism
is applicable only for services. Examine the validity of the advice given by M/s. Tax Square.
Solution:
The advice given by M/s. Tax Square is valid in law. The reverse charge mechanism applies to supplies
of both goods and services, as notified by the Government on the recommendations of the GST Council
vide Section 9(3) / Section 5(3) of CGST Act, 2017 / IGST Act, 2017. Notification No. 4/2017-CT (Rate)
and 13/2017-CT (Rate) have been issued. Similar notifications have been issued under IGST Act also.
Reverse charge also applies to supply of notified goods / notified services supplied by unregistered
persons to notified registered person as per Section 9(4) / Section 5(4) of CGST/IGST Act, 2017.
Question 3: Reverse Charge Mechanism under Section 9(3) – Sponsorship Services

Mr. Raj sponsored a dance competition organized by ‘Pinto’s Dance Academy’, a dance school run by
an individual (Mr. Prashanth). The dance competition was named as ‘Raj Dance Floor’ by ‘Pinto’s
Dance Academy’. Who is liable to pay GST in this case?
Will your Solution be different if ‘Pinto’s Dance Academy’ is run by a partnership firm?
Solution:
As per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT(Rate) and Section 5(3) of IGST Act,
2017 read with NN 10/2017-IT(Rate), in case of taxable service provided or agreed to be provided by
way of sponsorship to an body corporate or partnership firm or LLP located in the taxable territory,
person liable to pay GST shall be recipient of service under reverse charge mechanism. However, since

in the given case sponsorship service provided to an individual, the person liable to pay GST will be
supplier of service i.e., ‘Pinto’s Dance Academy’.
The status of recipient of service is relevant for determining as to who would pay GST, status of service
supplier is immaterial. Thus, as long as sponsorship service is rendered to an individual, GST will be
payable by supplier of service i.e., ‘Pinto’s Dance Academy’ irrespective of whether the same is run by
an individual or a partnership firm.
Question 4: Reverse Charge Mechanism under Section 9(3) – Temporary Transfer of Copyright
Services
Mr. VP is an author of book named “Study Revise Krack”. Mr. VP transfer rights to use copyright of
his book to Ms. DK Publisher located in Mumbai for Rs.9 lakhs (excluding taxes). Mr. VP claims that
no GST is payable since his aggregate turnover does not exceed Rs.20 lakhs. Rate of GST is 12%.
Solution:
2017 read with NN 10/2017-IT(Rate), in case of transfer of copyright by an author to a publisher in
taxable territory, person liable to pay GST shall be recipient of service under reverse charge mechanism.
Thus, Ms. DK Publisher shall be liable to pay GST on reverse charge basis. This is irrespective of
aggregate turnover of the supplier of service, Mr. VP. Also, as per Section 24 of CGST Act, 2017,
mandatory registration is required for a person liable to pay tax under Reverse Charge Mechanism
under Section 9(3).
Hence, Ms. DK Publisher shall pay GST amounting to Rs.1,08,000 (Rs.9,00,000 * 12%).
Question 5: Reverse Charge Mechanism under Section 9(3) – Legal Services

Ram Jethmalani & Co., a firm of advocates rendered legal advice to Mr. MD, a scientist and Waterlemon
Ltd., a designing agency. Both Mr. MD and Waterlemon Ltd. have their aggregate turnover in
preceding financial year exceeding Rs.20 lakhs. Who is liable to pay GST in this case?
Will your Solution be different if Mr. MD and Waterlemon Ltd. sought legal advice from Mr. Vakil
Vandamurugan, an individual advocate?
Solution:
In case of taxable services provided by an individual advocate or a partnership firm of advocates by
way of legal services to a business entity whose aggregate turnover is upto Rs.20 lakhs (Rs.10 lakhs for
special category states) in preceding financial year is exempted vide EN 12/2017-CT(Rate) read with
EN 9/2017-IT(Rate). In the given case, turnover of both Mr. MD and Waterlemon Ltd. exceeds Rs.20
lakhs in the preceding financial year. Thus, legal services provided by Ram Jethmalani & Co., a firm of
advocates or by Mr. Vakil Vandamurugan, an individual advocate will not be exempt from GST.
2017 read with NN 10/2017-IT(Rate), in case of legal services provided by an individual advocate or a
firm of advocates to a business entity in taxable territory, the person liable to pay GST shall be recipient
of service under reverse charge mechanism. Thus, GST will be payable by the recipient, Mr. MD and
Waterlemon Ltd. irrespective of whether the legal advice is sought from Ram Jethmalani & Co., a firm
of advocates or from Mr. Vakil Vandamurugan, an individual advocate.
Question 6: Reverse Charge Mechanism under Section 9(3) – GTA Services

VPN Transports, a goods transportation agency located in Mumbai transports a consignment of newly
designed Royal Enfield Bullet from the factory of RE Ltd. in Maharashtra (registered under GST) to the
premises of a dealer in Jammu & Kashmir (registered under GST). As per mutually agreed terms, the
dealer in Jammu & Kashmir is the person liable to pay freight. State the person liable to pay GST
assuming that GTA has not opted for paying GST @ 12%.
(a) What would be your solution if the dealer in Jammu & Kashmir is not registered under GST.
(b) What would be your solution if the dealer in Jammu & Kashmir is not registered under GST but it
is a partnership firm or a body corporate.
Solution:
CGST Act, 2017 and IGST Act, 2017 extends to whole of India including the State of Jammu and
Kashmir. As per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT(Rate) and Section 5(3) of
IGST Act, 2017 read with NN 10/2017-IT(Rate), in case of supply of service by Goods Transport Agency
(GTA) in respect of transportation of goods by road to specified persons (including registered person)
located in taxable territory, person liable to pay GST shall be recipient of service under reverse charge
mechanism. Recipient of service in case of GTA is the person liable to pay freight to GTA. Thus, the
dealer in Jammu & Kashmir who is registered under GST and who is in taxable territory would be liable
to pay GST.
(a) If the dealer is not registered under GST, then such GTA service shall be exempted by virtue of EN
12/2017-CT(Rate) read with EN 9/2017-IT(Rate).
(b) If the dealer is not registered under GST but it is a partnership firm or a body corporate, then such
GTA service shall not be exempted as per EN 12/2017-CT(Rate) read with EN 9/2017-IT(Rate) and
the dealer has to get compulsory registration as per Section 24 of CGST Act, 2017 and pay GST
under reverse charge mechanism under Section 9(3).
Question 7: Reverse Charge Mechanism under Section 9(3) – Security Services

Comment on who is liable to pay GST for the following services:
(1) Security Services by Super Safe Ltd. to Reliance Ltd., a registered company
(2) Security Services by Super Safe & Co. to Super Fear & Co., an unregistered firm
(3) Security Services by Super Safe & Co. to Muthu Ltd., a registered Composition Scheme Dealer
(4) Security Services by Super Safe & Co. to Government Department, registered only for TDS
(5) Security Services by Super Safe & Co. to Fear & Co., a registered firm
Solution:
As per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT (Rate) and Section 5(3) of IGST Act,
2017 read with NN 10/2017-IT (Rate), liability to pay GST for the above cases is as follows:
(1) Forward Charge Mechanism: Super Safe Ltd. (i.e. Supplier) is liable to pay GST as RCM is
applicable only if the supplier is a person other than Body Corporate.
(2) Forward Charge Mechanism: Super Safe & Co. (i.e. Supplier) is liable to pay GST as RCM is
applicable only if the supplier is a person other than Body Corporate and recipient is registered
person.
person but not under Composition Scheme.
person but not being Government Department / Agencies registered only for TDS.
(5) Reverse Charge Mechanism: Fear & Co. (i.e. Recipient) is liable to pay GST as RCM is applicable
if the supplier is a person other than Body Corporate and recipient is registered person but not
being registered under Composition Scheme and not being Government Department / Agencies
registered only for TDS.
Question 8: Reverse Charge Mechanism under Section 9(3) – Various Notified Services
Comment on who is liable to pay GST for the following services:
(1) Insurance Agent providing services to Insurance Company in India
(2) Actuary providing services to Insurance Company in India
(3) A Firm being Direct Selling Agent providing services to Bank
(4) Managing Director providing services to AJ (P) Ltd, a private limited company in India
(5) Independent Director providing services to RJ Ltd., a Government Company
(6) Nominee Director providing services to DK Ltd., a listed company in India
Solution:
(1) Reverse Charge Mechanism: Insurance Company in India (i.e. Recipient) is liable to pay GST as
RCM is applicable for insurance agent supplying services to insurance company in India.
(2) Forward Charge Mechanism: Actuary (i.e. Supplier) is liable to pay GST as RCM is applicable only
for insurance agent supplying services to insurance company in India.
(3) Forward Charge Mechanism: Direct Selling Agent being Firm (i.e. Supplier) is liable to pay GST as
RCM is applicable only for Individual Direct Selling Agent supplying services to Bank.
(4) No GST as per Section 7 read with Schedule III of CGST Act, 2017 for services provided by the
employee to the employer in course of or in relation to employment.
(5) No GST as per Section 7 read with Schedule III of CGST Act, 2017 for duties performed by any
person as a Chairperson or a Member or a Director in a body established by the Central
Government or a State Government or local authority and who is not deemed as an employee
before the commencement of this clause.
(6) Reverse Charge Mechanism: DK Ltd., a listed company in India (i.e. Recipient) is liable to pay GST
as RCM is applicable for the services of a director (not being managing director or whole time
director) to company or body corporate in India.
(1) Mr. Rajinikanth sponsors Indian Football League organized by ITC Ltd.
(2) Indian Premier League is sponsored by Vivo Ltd.
(3) Business support services supplied by Government to a business entity located in India
(4) Renting of immovable property by Government to A & Co., a business entity in India, registered
under GST.
(5) Renting of immovable property by Government to A Ltd., a business entity in India, not registered
under GST.
(6) Speed post services by Postal Department to business entity in India
Solution:
(1) Forward Charge Mechanism: ITC Ltd. (i.e. Supplier) is liable to pay GST as RCM is applicable only
if the recipient is a Body Corporate or a Partnership Firm or a LLP located in Taxable Territory.
(2) Reverse Charge Mechanism: Vivo Ltd. (i.e. Recipient) is liable to pay GST as RCM is applicable if
the recipient is a Body Corporate or a Partnership Firm or a LLP located in Taxable Territory.
(3) Reverse Charge Mechanism: Business Entity in Taxable Territory (i.e. Recipient) is liable to pay
GST as RCM assuming that such services is not exempted under GST.
(4) Reverse Charge Mechanism: A & Co., the Business Entity in Taxable Territory (i.e. Recipient) is
liable to pay GST as RCM is applicable for renting of immovable property services provided by
Government or Local Authority if the recipient is in taxable territory and is registered under GST.
(5) Forward Charge Mechanism: Government (i.e. Supplier) is liable to pay GST as RCM is not
applicable for renting of immovable property services provided by Government or Local Authority
if the recipient is not in taxable territory or is not registered under GST.
(6) Forward Charge Mechanism: Postal Department (i.e. Supplier) is liable to pay GST as RCM is not
applicable for speed post services provided by the Government.

(1) Mr. Ram goes to Arbitral Tribunal for family dispute.
(2) Mr. Ram goes to Arbitral Tribunal for business dispute.
(3) Manpower supply services by partnership firm to business entity being a company
(4) Works contract services provided by an individual to business entity being a company
Solution:
(1) GST is exempted vide EN 12/2017-CT(Rate) read with EN 9/2017-IT(Rate) for services of Arbitral
Tribunal provided to a non-business entity.
(2) Reverse Charge Mechanism: Mr. Ram (i.e. Recipient) is liable to pay GST as RCM is applicable for
services of Arbitral Tribunal provided to a business entity in taxable territory. It is assumed that
the turnover of Mr. Ram in preceding financial year is more than Rs.20 lakhs (Rs.10 lakhs for special
category states) and thus, the said service is not exempted vide EN 12/2017-CT(Rate) read with EN
9/2017-IT(Rate).
(3) Forward Charge Mechanism: Supplier is liable to pay GST as RCM is not applicable for manpower
supply services.
(4) Forward Charge Mechanism: Supplier is liable to pay GST as RCM is not applicable for works
contract services.

With reference to the provisions of GST law, briefly answer the following questions:-
(i) Income is received by Maharashtra Government from renting of immovable property to Ganapati
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?
(ii) 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.
Solution:
(i) Notification No. 12/2017 CT (R) 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, services 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.20
lakh in the preceding financial year. Thus, GST is payable in the given case.
Notification No. 13/2017 CT (R) 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 CGST Act, 2017. Thus, GST is payable by Ganpati Morya Pvt. Ltd.,
being a registered person in the present case.
(ii) Notification No. 13/2017 CT (R) 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.
(ICAI – IPCC [Old Syllabus – 3 Marks] (Adapted) – May 2018 Exam)


State, with reason, person liable to pay GST in each of following independent cases:
(i) Rental income received by Tamil Nadu State Government from renting an immovable property to
Mannappa Pvt. Ltd., an unregistered entity (Turnover of the company was Rs.22 lakhs in the
preceding F.Y.)
(ii) Legal Fees received by Mr. Sushrut, a senior advocate, from M/s. Tatva Trading Company having
turnover of Rs.50 lakhs in preceding F.Y.
Note: Assume recipient is located in taxable territory.
Solution:
(i) GST is payable on reverse charge basis on renting of immovable property services supplied by the
State Government to a registered business entity located in taxable territory. However, reverse
charge is not applicable on supply of renting of immovable property service supplied by the State
Government to an unregistered business entity located in taxable territory.
Therefore, in the given case, person liable to pay GST is the supplier of services, i.e., Tamil Nadu
State Government.
(ii) GST is reverse charge basis on legal services supplied by a senior advocate [Mr. Sushrut] to any
business entity [M/s. Tatva Trading Company].
Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., M/s. Tatva
Trading Company.
Decide which person is liable to pay GST in the following independent cases, where the recipient is
located in the taxable territory. Ignore the Aggregate Turnover and Exemption available.
(i) Miss Shinu Ambani provided sponsorship services to Indian Love Cricket Academy, a Limited
Liability Partnership.
(ii) “Fast move”, a Goods Transport Agency, transport Agency, transported goods of Amba & Co., a
partnership firm which is not registered under GST.
Solution:
(i) In case of services provided by the any person by way of sponsorship to anybody corporate or
partnership firm / limited liability partnership (LLP), GST is liable to be paid under reverse charge
by such body corporate or partnership firm / LLP located in the taxable territory. Therefore, in the
given case, Indian Love Cricket Academy is liable to pay GST under reverse charge.
(ii) In case of services provided by Goods transport Agency (GTA) in respect of transport on goods by
road to, inter alia, any partnership firm whether registered or not under any law; GST is liable to
be paid by such partnership firm. Therefore, in the given case, Amba & Co. is liable to pay GST
under reverse charge. Thus, Amba & Co. has to compulsorily get registered under Section 24 of
CGST Act, 2017.

Decide which person is liable to pay GST in the following independent cases, where the recipient is
located in the taxable territory. Ignore the Aggregate Turnover and Exemption available.
(i) Mr. Raghu provided sponsorship services to WE-WIN Cricket Academy, an LLP.
(ii) ‘Safe Trans’, a goods Transport Agency, transported goods of Kapil & Co., a partnership firm which
is not registered under GST.
Solution:
(i) In case of services provided by any person by way of sponsorship to any body corporate or
partnership firm / LLP, GST is liable to be paid under reverse charge by such body corporate or
partnership firm / LLP located in the taxable territory. Therefore, in the given case, WE-WIN Cricket
Academy is liable to pay GST under reverse charge.
(ii) In case of services provided by Goods Transport Agency (GTA) in respect of transportation of
goods by road to, inter alia, any partnership firm whether registered or not under any law; GST is
liable to be paid by such partnership firm. Therefore, in the given case, Kapil & Co. is liable to pay
GST under reverse charge.
Question 15: Electronic Commerce Operator under Section 9(5) – Notified Services
Mr. Vidyut argues that a person other than the supplier or recipient may be liable to pay tax under GST.
Whether Mr. Vidyut’s contention is correct as per GST law?
Solution:
Yes, Mr. Vidyut’s contention is correct.
2017 read with NN 14/2017-IT (Rate), Government may notify [on the recommendations of the GST
Council] specific categories of services the tax on supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it. In such cases, all the provisions of the GST
law shall apply to such electronic commerce operator as if he is the person liable to pay tax in relation
to supply of such services.
The following are the notified services for the said purposes:
(a) Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle
supplied through ECO
(b) Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or
other commercial places meant for residential or lodging purposes supplied through ECO., except
where the person supplying such service through ECO is liable for registration.
(c) Services by way of house-keeping such as plumbing, carpentering, etc. supplied through ECO.,
except where the person supplying such service through ECO is liable for registration,
Question 16: Electronic Commerce Operator under Section 9(5) – Notified Services
A hotel is providing accommodation in Delhi, through an electronic commerce operator - Trivago. The
hotel is not liable to get registered as per the provisions of Section 22(1) of the CGST Act. Who is the
person liable to pay GST in this case assuming that if the Electronic Commerce Operator Trivago does
not have a physical presence in India?
Whether your solution would be different if the hotel is liable to get registered as per the provisions of
Section 22(1) of the CGST Act?
Solution:
2017 read with NN 14/2017-IT (Rate), Government may notify [on the recommendations of the GST
Council] specific categories of services the tax on supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it.
Services by way of providing accommodation in hotels through electronic commerce operator is a
notified service for said purpose if the supplier of service is not liable to get registered as per the
provisions of Section 22(1) of the CGST Act, 2017. Thus, person liable to pay GST in this case is the
Electronic Commerce Operator i.e. Trivago. All the provisions of the GST law shall apply to such
electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply
of such services. If Trivago does not have a physical presence in India, then person liable to pay tax is
the person representing the Electronic Commerce Operator (Trivago) for any purpose in India. If there
is no representative of Trivago in India, then Trivago shall appoint a person in India for procedural
requirements of GST.

If the hotel is liable to get registered as per the provisions of Section 22(1) of the CGST Act, 2017, then
the hotel itself has to pay GST under Forward Charge Mechanism i.e. Trivago shall not pay GST in such
cases.
TIME OF SUPPLY
Question 1: Time of Supply
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) Date on which the payment is credited to the entity’s bank account,
whichever is earlier.
Question 2: Time of Supply for Goods where Supply involves Movement of Goods
From the following information, determine the time of supply of goods where supply involves
movement of goods:
Date of Date of Date of Date of
S.No Invoice or Removal of Delivery of Receipt of Remarks
Document Goods Goods payment
1. 15-12-2017 12-12-2017 15-12-2017 20-12-2017 Nil
01-01-2018 Supply is on account of Inter-
2. 05-01-2018 10-01-2018 N.A.
State stock transfer.
Rs.1,00,000 is received as
advance on 01-01-2018 and
01-01-2018 invoice for the whole amount
3. 15-02-2018 10-02-2018 25-02-2018 Rs.3,00,000 is issued on 15-02-
15-03-2018 2018. Balance payment
Rs.2,00,000 is received on 15-
03-2018
Solution:
Time of Supply for Goods as per Section 12 of CGST Act, 2017
Date of Date of Date of Due Date Time of
S.No Invoice or Removal of Receipt of of Invoice Supply Remarks
Document Goods payment Section 31 Section 12
Since invoice is
not issued on or
before removal of
1. 15-12-2017 12-12-2017 20-12-2017 12-12-2017 12-12-2017
goods, TOS is
Due-Date of
Invoice
Since invoice is
2. 01-01-2018 05-01-2018 N.A. 05-01-2018 01-01-2018 issued on or
before removal of
goods, TOS is
Actual Date of
Invoice
Since invoice is
01-01-2018 not issued on or
10-02-2018
before removal of
3. 15-02-2018 10-02-2018 10-02-2018 for entire
goods, TOS is
Rs.3 lakhs
15-03-2018 Due-Date of
Invoice
Notes: As per Notification No. 66/2017 – CT, a registered person who is supplying GOODS and who
did not opt for the composition levy under Section 10 shall NOT pay GST on receipt of advance
payment for SUPPLY OF GOODS. In simple words, for supplier of goods, except for person opting for
composition levy, time of supply shall be either date of invoice or last date on which invoice is to be
raised, as the case may be.
As per Section 10 of CGST Act, 2017 read along with Rule 7 of CGST Rules, 2017, even Composition
Taxable Person dealing with GOODS shall NOT pay GST on receipt of advance payment for SUPPLY
OF GOODS. This is due to the fact that they have to pay certain percentage of their Turnover in the
State or the Union Territory as Composition Tax and Turnover in the State or the Union Territory does
not includes receipt of advance payment. In simple words, even for person opting for composition levy
and who is supplying goods, time of supply shall be either date of invoice or last date on which invoice
is to be raised, as the case may be.
Question 3: Time of Supply for Goods where Supply does not involve Movement of Goods
From the following information, determine the time of supply of goods where supply does not involves
movement of goods in each of the independent case:
Date of Invoice or Date when Goods made available Date of Receipt of
S.No
Document to Recipient Payment
1. 15-12-2017 12-12-2017 20-12-2017
2. 12-12-2017 15-12-2017 20-12-2017
3. 12-12-2017 15-12-2017 01-12-2017
Solution:
Time of Supply for Goods as per Section 12 of CGST Act, 2017
Date when
Date of Date of Due Date Time of
Goods made
S.No Invoice or Receipt of of Invoice Supply Remarks
available to
Document payment Section 31 Section 12
Recipient
Since invoice is
not issued on or
before removal of
1. 15-12-2017 12-12-2017 20-12-2017 12-12-2017 12-12-2017
goods, TOS is
Due-Date of
Invoice.
Since invoice is
issued on or
before removal of
2. 12-12-2017 15-12-2017 20-12-2017 15-12-2017 12-12-2017
goods, TOS is
Actual Date of
Invoice.

Since invoice is
issued on or
before removal of
3. 12-12-2017 15-12-2017 01-12-2017 15-12-2017 12-12-2017
goods, TOS is
Actual Date of
Invoice.
Question 4: Time of Supply for Goods

An order is placed on Upbeat Garments, a composition scheme dealer, on 1st September 2018 for supply
of customized suit. Upbeat Garments gets the suit ready and informs the customer and issues the
invoice on 3rd October 2018. The customer collects the suit from the premises of Upbeat Garments on
13th October 2018 and hands over the payment on the same date, which is entered in the accounts on
the next day, 14th October 2018. What is the time of supply of the customized suit?
What would have been your answer if Upbeat Garment is a regular taxable person?
Solution:
Time of supply of goods for composition taxable person in terms of Section 12(2) is date of issue of
invoice/last date on which the invoice is required to be issued. In this case, date of invoice is 3rd October
2018 and thus, the time of supply will be 3rd October 2018.
As per Notification No. 66/2017 – CT, a registered person who is supplying GOODS and who did not
opt for the composition levy under Section 10 shall NOT pay GST on receipt of advance payment for
SUPPLY OF GOODS. In simple words, for supplier of goods, except for person opting for composition
levy, time of supply shall be either date of invoice or last date on which invoice is to be raised, as the
case may be.
Therefore, even if Upbeat Garments is a regular taxable person, time of supply in terms of Section 12(2)
is date of issue of invoice / last date on which the invoice is required to be issued. i.e. in this case date
of invoice (3rd October 2018).


Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2nd August but no
invoice was made and the cartons were not entered in the accounts. There was no evidence of receipt
of payment. What is the time of supply of the 150 cartons?
Solution:
Time of supply of goods is the earlier of the following two dates in terms of Section 12:
➔ Date of issue of invoice/last date on which the invoice is required to be issued
➔ Date of receipt of payment
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 or date of receipt of payment, whichever is earlier.
The invoice for supply of goods must be issued on or before the dispatch of goods i.e., on 2nd August.
Since there is no evidence of receipt of payment, time of supply of the goods will be 2nd August, the
date when the invoice should have been issued.
(ICAI – IPCC [New Syllabus – 4 Marks] [Adapted] – May 2018 Exam)

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(2) of the CGST Act, 2017, time of supply of goods is the earlier of the following two
dates:
▪ Date of issue of invoice/last date on which the invoices is required to be issued
▪ Date of receipt of payment.
Further, date of receipt of payment is earlier of date of recording the payment in books of account and
date of crediting of payment in bank account.
However, as per Notification No. 66/2017 – CT, a registered person who is supplying GOODS and who
Further, as per Section 31 of CGST Act, 2017, 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.
Thus, the time of supply shall be the last date for raising invoice i.e. 03-10-2017.
(ICAI – IPCC [Old Syllabus & New Syllabus – 4 Marks] – MTP 1– May 2018 [Adapted])
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
customized 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, 3 rd 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 18 th December, 20XX and hands over the cheque

for payment on the same date. The said payment is entered in the accounts on 20 th December, 20XX and
amount is credited in the bank account on 21st December, 20XX.
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 12(2) of the CGST Act, 2017, time of supply of goods is the earlier of the following two
dates:
▪ Date of issue of invoice/last date on which the invoices is required to be issued
▪ Date of receipt of payment.
Further, date of receipt of payment is earlier of date of recording the payment in books of account and
date of crediting of payment in bank account.
However, as per Notification No. 66/2017 – CT, a registered person who is supplying GOODS and who
Thus, the time of supply shall be the invoice date i.e. 3rd December, 20XX.
Question 8: Time of Supply for Continuous Supply of Goods

From the following information determine the time of supply if there is continuous supply of goods:
S.No. Invoice date Removal of goods Statement of account Receipt of payment
15-11-2018
1 01-12-2018 05-12-2018 02-12-2018
25-11-2018
18-01-2019
2 21-01-2019 05-01-2019 10-02-2019
31-01-2019
14-01-2019
3 08-02-2019 05-02-2019 01-02-2019
23-01-2019
Solution:
As per Section 2(32) of CGST Act, 2017, continuous supply of goods means supply of goods which is
provided or agreed to be provided continuously or on recurrent basis under contract whether or not
by means of wire, cable, pipeline or other conduit and for which the supplier invoices the recipient on
a regular or periodic basis.
As per Section 31 of CGST Act, 2017, in case of continuous supply of goods, the due date of issuance of
invoice is before or at the time of issuance of successive statements or receipt of successive payments.
Time of Supply for Continuous Supply of Goods as per Section 12 of CGST Act, 2017
Due-Date
Invoice Removal Statement Receipt of of Time of
S.No. Reason
date of goods of accounts Payment Issuance supply
of Invoice
TOS is date of
invoice since
15-11-2018
invoice is
1 01-12-2018 05-12-2018 02-12-2018 02-12-2018 01-12-2018
issued before
25-11-2018
due-date of
invoice
18-01-2019 TOS is due-
2 21-01-2019 05-01-2019 10-02-2019 05-01-2019 05-01-2019 date of invoice
31-01-2019 since invoice is

issued after
due-date of
invoice
TOS is due-
date of invoice
14-01-2019
since invoice is
3 08-02-2019 05-02-2019 01-02-2019 01-02-2019 01-02-2019
issued after
23-01-2019
due-date of
invoice
Question 9: Time of Supply for Sale of Goods on Approval basis

From the following information determine the time of supply if goods are supplied on approval basis
S.No. Removal of goods Issuance of invoice Accepted by recipient Receipt of payment
1. 01-12-2018 15-12-2018 05-12-2018 25-12-2018
2. 01-12-2018 15-12-2018 15-12-2018 12-12-2018
3. 01-12-2018 25-07-2019 25-07-2019 20-07-2019
Solution:
As per Section 31 of CGST Act, 2017, in case of sale of goods on approval basis, the due date of issuance
of invoice is earlier date of supply (i.e. date of acceptance) or 6 months from date of removal of goods.
Time of Supply for Goods (Sale of Goods on Approval basis) as per Section 12 of CGST Act, 2017
Accepted
Removal Issuance Receipt of Due-Date Time of
S.No. by Reason
of goods of invoice payment of Invoice Supply
recipient
1 01-12-2018 15-12-2018 05-12-2018 25-12-2018 05-12-2018 05-12-2018 TOS is due-date
of invoice since
the invoice is
raised after due-
date of invoice
2 01-12-2018 15-12-2018 15-12-2018 12-12-2018 15-12-2018 15-12-2018 TOS is actual date
of invoice since
the invoice is
raised before due-
date of invoice
3 01-12-2018 25-07-2019 25-07-2019 20-07-2019 02-06-2019 02-06-2019 TOS is due-date
of invoice since
the invoice is
raised after due-
date of invoice

Question 10: Time of Supply for Goods under Reverse Charge Mechanism
Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
S.No Date of issue of invoice Date of receipt Date of payment by recipient of goods
by supplier of goods of goods
1 30-11-2018 2-12-2018 25-01-2019
2 30-11-2018 2-12-2018 25-11-2018
3 30-11-2018 2-12-2018 Part payment made on 25-11-2018 and balance
amount paid on 28-12-2018
4 1-11-2018 5-12-2018 Payment is entered in the books of account on
25-11-2018 and debited in recipient’s bank
account on 28-11-2018
5 30-11-2018 2-12-2018 Payment is entered in the books of account on
25-11-2018 and debited in recipient’s bank
account on 20-11-2018
6 30-11-2018 2-01-2019 10-01-2019
Solution:
Time of Supply for Goods under RCM as per Section 12 of CGST Act, 2017
Date of
Date of issue
Date of Immediately Time of supply of
of invoice by Date of payments by
S.No receipt of following 30 goods [Earlier of
supplier of recipient of goods
goods days from date (2), (3) & (4)]
goods
of invoice
(1) (2) (3) (4) (5)
1 30-11-2018 02-12-2018 25-01-2019 31-12-2018 02-12-2018
2 30-11-2018 02-12-2018 25-11-2018 31-12-2018 25-11-2018
3 Part of payment made 25-11-2018 for part
on 25-11-2018 and payment made
30-11-2018 02-12-2018 31-12-2018
balance amount paid and 02-12-2018 for
on 28-12-2018 balance amount.
4 Payment is entered in 25-11-2018 i.e. the
the books of account date when
on 25-11-2018 and payment is entered
01-11-2018 05-12-2018 02-12-2018
debited in recipient’s in books of
bank account on 28- account of the
11-2018 recipient.
5 Payment is entered in
20-11-2018 i.e. the
the books of account
date when
on 25-11-2018 and
30-11-2018 02-12-2018 31-12-2018 payment is debited
debited in recipient’s
in the recipient’s
bank account on 20-
bank account
11-2018
6 31-12-2018 i.e. 31st
30-11-2018 02-01-2019 10-01-2019 31-12-2018 day from issuance
of invoice
Question 11: Time of Supply for Services

From the following information, determine the time of supply of services:
Date of Completion of
S. No. Date of Issue of Invoice Date of Receipt of Payment
Services
1. June 15 June 30 July 20
2. June 15 June 30 June 1
Part payment is received on May 1
3. June 15 July 1
and balance payment on July 17
Part payment is received on May 1
4. June 15 July 30
and balance payment on July 17
Payment is entered in the books of
5. June 15 June 28 account on June 25 and debited in
recipient’s bank account on June 30
Payment is entered in the books of
6. June 15 August 1 account on June 25 and debited in
recipient’s bank account on June 30
Solution:
Time of Supply for Services as per Section 13 of CGST Act, 2017
Date of Date of
Date of Issue
S. No Completion Receipt of Time of Supply Remarks
of Invoice
of Services Payment
1. June 15 June 30 July 20 June 30 Since invoice is issued
within 30 days of
completion of service,
TOS will be earlier of Date
of Invoice or Date of
Payment.
2. June 15 June 30 June 1 June 1 Since invoice is issued
within 30 days of
completion of service,
TOS will be earlier of Date
of Invoice or Date of
Payment.
3. June 15 July 1 Part payment May 1 for Part Since invoice is issued
is received Payment within 30 days of
on May 1 completion of service,
and balance July 1 for TOS will be earlier of Date
payment on Balance of Invoice or Date of
July 17 Payment Payment.
4. June 15 July 30 Part payment May 1 for Part Since invoice is not issued
is received Payment within 30 days of
on May 1 completion of service,
and balance June 15 for TOS will be earlier of Date
payment on Balance of Completion of Service
July 17 Payment or Date of Payment.
5. June 15 June 28 Payment is June 25 Since invoice is issued
entered in within 30 days of
the books of completion of service,
account on TOS will be earlier of Date
June 25 and of Issuance of Invoice or

debited in Date of Payment in Books
recipient’s of Accounts or Date of
bank account Payment in Bank Account.
on June 30
6. June 15 August 1 Payment is June 15 Since invoice is not issued
entered in within 30 days of
the books of completion of service,
account on TOS will be earlier of Date
June 25 and of Completion of Service
debited in or Date of Payment in
recipient’s Books of Accounts or Date
bank account of Payment in Bank
on June 30 Account.

From the following information determine the Time of Supply for Services:
Date of Payment entry Credit in
Invoice
S.No completion in supplier’s bank
date
of service books account
1 20-10-2017 21-10-2017 26-10-2017 30-10-2017
2. 20-10-2017 30-10-2017 24-10-2017 22-10-2017

3. 16-11-2017 26-12-2017 28-01-2018 29-01-2018
30-10-2017 30-10-2017 30-10-2017 Rs.5,00,000 is received as
advance on 30-10-2017 and
4. 01-12-2017
30-10-2017 06-12-2017 08-12-2017 balance amount Rs.6,80,000 is
received on 06-12-2017
Solution:
Time of Supply for Services as per Section 13 of CGST Act, 2017
Date of Payment entry Credit in
S.No completion of Invoice date in supplier’s bank Time of Supply
service books account
Earlier of date invoice
or date of payment
1 20-10-2017 21-10-2017 26-10-2017 21-10-2017 since invoice is Issued
within 30 days of
completion of service
Earlier of date invoice
or date of payment
2 20-10-2017 30-10-2017 22-10-2017 22-10-2017 since invoice is issued
within 30 days of
completion of service
Since invoice is not
issued within 80 days
of completion of
3 16-11-2017 26-12-2017 28-01-2018 16-11-2017 service and advance
payment is not
received, the date of
completion of

provision of service
shall be considered.
Since Rs.5,00,000 is
received as advance
prior to completion of
30-10-2017 30-10-2017 30-10-2017
service TOS-date of
4 01-12-2017 receipt of such
advance.
For balance amount of
30-10-2017 06-12-2017 30-10-2017 Rs.6,80,000 TOS is date
of invoice

Slide Systems Ltd. receives the order and advance payment on 5 February for carrying out systems
design job. It delivers the designs on 23 May. 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 as per Section 31, 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 5 February and the service was provided on 23 May. Therefore, the date
of payment, i.e., 5 February is the time of supply of the service in this case.

Full Proof Security Co. provides service of testing of electronic devices. In one case, it tested a batch of
devices on 9th August 2017 and 10th August 2017 but could not raise invoice till 11th November 2017
because of some dispute about the condition of the devices on return. The payment was made in
January 2018. What is the time of supply of the service?
Solution:
As per Section 13(2), if the invoice is not issued in time, the time of supply of services is the date of
payment or the date of provision of service, whichever is earlier. In this case, the service is provided on
10th August 2017 but not invoiced within the prescribed time limit. Therefore, the date of provision of
service, i.e., 10th August 2017, will be the time of supply.

Determine the time of supply in the following cases with reference to CGST Act, 2017:
(i) Qube Space Private Limited is engaged in supplying taxable services. It receives advances of
Rs.1,50,000 from a client on 15th July 2017 for the service to be rendered in the month of October
2017.
(ii) Ravan Ltd. received advance of Rs.1,18,000 (including GST) from a client on July 2017 for supplying
services in the month of October, 2017. However, due to some unavoidable reasons, said services
could not be provided and the advance money (including GST) was returned to the client on
September 2017.
Solution:
The time of supply will be as follows:

(i) As per Section 13 of CGST Act, 2017, since advance is received on 15th July 2017 prior to completion
of services in the month of October 2017, the time of supply of service shall be the date of receipt of
advance i.e. 15th July 2017.
(ii) As per Section 13 of CGST Act, 2017, since advance is received on July 2017 prior to completion of
services in the month of October 2017, the time of supply of service shall be the date of receipt of
advance i.e. July 2017. Receipt Voucher will be issued as per Section 31 of CGST Act, 2017 at the
time of receipt of advance payment. It is immaterial that services have not been provided
subsequently and the money was returned on September 2017.
The amount of GST included in the amount refunded in the month September 2017 would be
adjusted against GST liability of that month as per Section 31 of CGST Act, 2017 by way of issuing
Refund Voucher as the supply is not materialized and the tax invoice was not raised.

Determine the time of supply in the following cases with reference to CGST Act, 2017:
(i) RJ AJ & Co. supplied management consultancy services to M/s. DS & Sons on 5th August 2018 and
billed it for Rs.50,000 on 11th September 2018. It received the payment for the same on 16th December
2018.
(ii) Jinendra & Co. supplied accounting services to M/s. Mamta & Co. for the month of September 2018
and billed it for Rs.10,000 on 10th October 2018. It received the payment for the same on 4th October
2018.
Solution: The time of supply will be as follows:

(i) As per Section 13 of CGST Act, 2017, if invoice is not issued within 30 days from date of supply of
service, time of supply will be date of provision of service or date of receipt of payment, whichever
is earlier. In this case, as invoice is issued (11th September 2018) after 30 days of completion of
service (5th August 2018), time of supply is earlier of date of completion of service (5th August 2018)
or date of receipt of payment (16th December 2018) i.e. 5th August 2018.
(ii) As per Section 13 of CGST Act, 2017, if invoice is issued within 30 days from date of supply of
service, time of supply will be date of issuance of invoice or date of receipt of payment, whichever
is earlier. In this case, as invoice is issued (10th October 2018) within 30 days of completion of service
(30th September 2018), time of supply is earlier of date of issuance of invoice (10th October 2018) or
date of receipt of payment (4th October 2018) i.e. 4th October 2018.

Ram Ltd. provided taxable services to Ravan Ltd. on 10th October 2018 and issued invoice for the same
on 25th October 2018. Ravan Ltd. made the payment for said services on 19th October 2018 by cheque
which was entered in the books of accounts of Ram Ltd. same day. However, the amount was credited
in the bank account of Ram Ltd. on 28th October 2018. You are required to determine the time of supply
in the given case.
Solution:
As per Section 13 of CGST Act, 2017, if the invoice is issued within the prescribed period of 30 days
from the date of completion of service, the time of supply shall be:
(i) Date of issuance of invoice i.e. 25th October 2018 or
(ii) Date of receipt of payment i.e. 19th October 2018,
whichever is earlier, i.e. 19th October 2018.
Note: As per Explanation of Section 13, date of payment is
(i) date on which the payment is entered in the books of account of the person liable to pay tax i.e. 19th
October 2018
(ii) date on which the payment is credited to the bank account of the person liable to pay tax i.e. 28th
October 2018
whichever is earlier, i.e. 19th October 2018

On the basis of following information, determine the time of supply as per Section 13 of CGST, 2017:
(i) Commencement of supplying of Service on 20th June 2018
(ii) Completion of Service on 15th July 2018
(iii) Invoice issued on 20 August 2018
th
(iv) Payment received by cheque and entered in the books on 15th August 2018
(v) Amount credited in bank account on 25th August 2018
(vi) Service became taxable for the first time on 1st July 2018
Solution:
As per Section 13 of CGST Act, 2017, if the invoice is not issued within the prescribed period of 30 days
from the date of completion of service, the time of supply shall be:
(i) Date of completion of service i.e. 15th July 2018 or
(ii) Date of receipt of payment i.e. 15th August 2018,
whichever is earlier, i.e. 15th July 2018.
Note: As per Explanation of Section 13, date of payment is
(i) date on which the payment is entered in the books of account of the person liable to pay tax i.e. 15th
August 2018
(ii) date on which the payment is credited to the bank account of the person liable to pay tax i.e. 25th
August 2018
whichever is earlier, i.e. 15th August 2018.

Mr. XYZ & Co., a firm of Chartered Accountants, issued invoice for services rendered to Mr. A on 7th
September, 2017. Determine the time of supply in the following independent cases:
(i) The provision of service was completed on 1st August, 2017.
(ii) The provision of service was completed on 14th August, 2017.
(iii) Mr. A made the payment on 3rd August, 2017 where provision of service was remaining to be
completed.
(iv) Mr. A made the payment on 15th September, 2017 where provision of service was remaining to be
completed.
Solution:
Time of supply will be:
(A) if the invoice is issued within 30 days of supply of service, date of invoice or date of receipt of
payment, whichever is earlier.
(B) if the invoice is issued within 30 days of supply of service, date of provision of service or date of
receipt of payment, whichever is earlier.
In accordance with aforesaid provisions, time of supply is:
(i) 01.08.2017 since the invoice is not issued within 30 days of supply of service.
(ii) 07.09.2017 since the invoice is issued within 30 days of supply of service.
(iii) 03.08.2017 viz earlier of 07.09.2017 or 03.08.2017
(iv) 07.09.2017 viz earlier of 07.09.2017 or 15.09.2017
Question 20: Time of Supply for Continuous Supply of Services

Srivatsa Limited entered in to a contract with Nakshatra Limited for construction of a new building to
be used primarily for the purpose of commerce for a total consideration of Rs.50 Crores on 1st July 2018.

The initial booking amount of Rs.10 Crores was billed and received on the date of contract itself. It was
further agreed that Rs.20 Crores, Rs.15 Crores and Rs.5 Crores respectively would be received on
completion of 40%, 80% and 100% of the construction work of the building. Determine the time of
supply in respect of each of the following stages of completion with the help of relevant details
furnished as under:
Stage & Percentage of Date of Completion Date of Issuance Date of Payment of
completion of the building of Services of Invoice stipulated amount
Stage I - 40% 15 January 2018
th 25 January 2018
th 28th February 2018
Stage II - 80% 5th June 2018 15th July 2018 21th August 2018
Stage III - 100% 7 October 2018
th 5 November 2018 20th September 2018
th
& 27th October 2018

A certificate from Chartered Engineer registered with Institution of Engineers has been obtained for
each stage of completion of the building. Give brief reasons for your Solution.
Solution:
As per Section 2(33) of CGST Act, 2017, continuous supply of services means supply of services which
is provided or agreed to be provided continuously or on recurrent basis under contract for a period
exceeding 3 months with periodic payment obligation. Thus, the above service falls within continuous
supply of services.
As per Section 31(5) of CGST Act, 2017, in case of continuous supply of service, the due date of issuance
of invoice would be the date of completion of that event as payment is linked to the completion of an
event. Therefore, in the given case, the date of completion of various stages of construction which
require payment to be made (including initial booking) will be considered as due date of issuance of
invoice and time of supply will be determined in accordance with Section 13(2) as under :
Date of Completion
Date of
Stage of of Services i.e. Due- Date of
Issuance of Time of Supply
Completion Date of Issuance of Payment
Invoice
Invoice
Initial
1st July 2018 1st July 2018 1st July 2018 1st July 2018
Booking
25th January 28th February 15th January 2018
40% 15th January 2018
2018 2018 (Refer Note)
21 th August 5 th June 2018
80% 5th June 2018 15th July 2018
2018 (Refer Note)
20 th September 20 th September 2018 &
5th November
100% 7th October 2018 2018 & 27th 7th October 2018
2018
October 2018 (Refer Note)
Note: Since invoice has been not been issued on or before the due-date of issuance of invoice, time of
supply is earlier of date of completion of event or date of receipt of payment, whichever is earlier.

Question 21: Time of Supply for Services where RCM is applicable
On 4th September, 2017, V.R. Mehman a famous music composer, received Rs.3 crore of consideration
from Zilmil Music Co. Ltd. for sale of copyright of his original music album. He finished his work &
made available the CD to the music company on 20 th July, 2017 & raised the invoice on 24 th July, 2017.
What will be the time of supply as per CGST Act, 2017?
Note: Above service is taxable under reverse charge basis.
Solution:

As per Section 13 of CGST Act, 2017, the time of supply of service on which GST is payable on reverse
charge basis is earlier of the following:
➔ Date of payment (04.09.2017), or
➔ Date immediately following 60 days since issue of invoice by the supplier (23.09.2017)
Thus, time of supply of services is 04.09.2017.

From the following information, determine the Time of Supply for Services where recipient has to pay
GST under Reverse Charge Mechanism in each of the independent case:
Date of Issue of Invoice by
Date of Payment by Recipient of Services
S. No. Supplier of Services
(1) (2)
1. August 10 June 29
2. August 10 June 1
3. Part payment made on June 30 and balance amount June 29
paid on September 1
4. Payment is entered in the books of account on June 28 June 1
and debited in recipient’s bank account on June 30
5. Payment is entered in the books of account on June 30 June 29
and debited in recipient’s bank account on June 26
Solution:
Time of Supply of Services as per Section 13 of CGST Act, 2017
Date of Issue of Date immediately Time of Supply for
Date of Payment by
Invoice by Supplier following 60 days Services [Earlier of
S. No. Recipient of Services
of Services from invoice (1) & (3)]
(1) (2) (3) (4)
1. August 10 June 29 August 29 August 10
2. August 10 June 1 August 1 August 1
Part payment made on June 30 for part
June 30 and balance payment and
3. June 29 August 29
amount paid on August 29 for
September 1 balance amount
Payment is entered in the June 28 (i.e. when
books of account on June payment is entered
4. 28 and debited in June 1 August 1 in the books of
recipient’s bank account account of the
on June 30 recipient)
Payment is entered in the
June 26 (i.e. when
books of account on June
payment is debited
5. 30 and debited in June 29 August 29
in the recipient’s
recipient’s bank account
bank account)
on June 26

A firm of lawyers’ issues invoice for services to Uttam Ltd. on 5th January 2018. The payment is
contested by Uttam Ltd. on the ground that on account of negligence of the firm, the company’s case
was dismissed by the Court for non-appearance, which necessitated further appearance for which the

firm is billing the company. The dispute drags on and finally payment is made on 15th December 2018.
Identify the time of supply of the legal services.
Note: Legal services are taxable on reverse charge basis.
Solution:
Time of Supply for Services that are taxable under reverse charge is earliest of the following two dates
in terms of Section 13(3):
(a) Date of payment [15th December 2018]
(b) 61st day from the date of issue of invoice [7th March 2018]
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 i.e. 7th March 2018 has to be taken as the time of
supply.

PJ Ltd. imports business support services from VJ Inc. of USA on 15th May. VJ Inc. of USA raises invoice
for $ 1,50,000 on 30th June. Determine the time of supply for each of the independent case assuming that
PJ Ltd. makes the above mentioned payment on the dates as indicated below:
Case 1: 15th August
Case 2: 15th September
Solution:
As per Section 5(3) of IGST Act, 2017 read with NN 10/2017-IT(Rate), in case of import of services from
a supplier of services in non-taxable territory to a recipient of services in taxable territory, the recipient
shall pay GST under Reverse Charge Mechanism.
As per Section 13 of CGST Act, 2017, the time of supply in respect of persons who are required to pay
tax as recipients of service under the Reverse Charge Mechanism shall be earlier of
➔ the date on which payment is made or
➔ the date immediately following 60 days from the date of issue of invoice by the supplier.
Case 1: The time of supply is date of payment i.e. 15 th August, since payment is made within 60 days
from the date of invoice.
Case 2: The time of supply is date immediately following 60 days from the date of issue of invoice i.e.
30th August, since payment is not made within 60 days from the date of invoice.

PJ Ltd. is located in India and holding 51% of shareholding of VJ Inc. of USA. PJ Ltd. imports business
support services from VJ Inc. of USA on 15 th May. VJ Inc. of USA raises invoice for $ 1,50,000 on 30 th
June. PJ Ltd. enters such expenses in his books of accounts on 15 th September and makes the payments
on 15th December. Determine the time of supply.
What would have been your answer if the payment is never done?
Solution:
As per Section 5(3) of IGST Act, 2017 read with NN 10/2017-IT (Rate), in case of import of services from
a supplier of services in non-taxable territory to a recipient of services in taxable territory, the recipient
shall pay GST under Reverse Charge Mechanism.
As per section 13 of CGST Act, 2017, in case of ‘Associated Enterprises’ where the person providing
service is located outside India, time of supply shall be earlier of
➔ the date of entry in the books of account of the recipient of supply or
➔ the date of payment as entered in the books of account of the recipient or date on which the
payment is debited in his bank account, whichever is earlier
Thus, the time of supply will be 15th September. The answer would have been the same even if payment
is never done.

VK Industries Ltd engaged the services of a transporter for road transport of a consignment on 17th
October and made advance payment for the transport on the same date, i.e., 17 th October. However, the
consignment could not be sent immediately on account of a strike in the factory, and instead was sent
on 20th October. Invoice was received from the transporter on 22nd October. What is the time of supply
of the transporter’s service?
Note: Transporter’s service is taxed on reverse charge basis.
Solution:
As per Section 13 of CGST Act 2017, time of supply of service taxable under reverse charge is the earlier
of the following two dates:
➔ Date of payment as entered in the books of account of the recipient or date on which the payment
is debited in his bank account, whichever is earlier
➔ 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 October, will be treated as the time of supply of service.

Ms. Thensittu who is the author and owner of the copyright of a book “Break of Dawn” has entered
into agreement with “Bright Future Publishers” on 15th August for its publication. In terms of the
agreement the copy right is transferred to “Bright Future Publishers” for a lump sum amount of Rs.5
lakhs. An invoice was issued by Ms. Thensittu on 15th August and payment was received on 30th
December. Determine the time of supply for purpose of goods and services tax.
Solution:
2017 read with NN 10/2017-IT (Rate), in case of supply of services by an author by way of transfer or
permitting the use or enjoyment of a copyright covered under Section 13(1)(a) of the Copyright Act,
1957 relating to original literary works to a publisher in taxable territory, the recipient shall be liable to
pay GST under Reverse Charge Mechanism.
As per Section 13 of CGST Act 2017, time of supply of service taxable under reverse charge is the earlier
of the following two dates:
➔ Date of payment as entered in the books of account of the recipient or date on which the payment
is debited in his bank account, whichever is earlier
➔ 61st day from the date of issue of invoice
Since in this case the payment is not made within 60 days from the date of invoice, the time of supply
shall be 61st day from the date of invoice i.e. 15th October.

Question 28: Time of Supply for Services where RCM is applicable, Payment and Interest
Royal Sweet Co., Delhi, a registered supplier, has furnished the details of the following few
transactions which took place in November, 2018:
S. No Date Particulars Date of Invoice Amount (Rs.)
Payment made to an advocate
(i) 11.11.2018 07.07.2018 1,25,000
in Delhi
Paid sitting fee to Director from
Haryana for meeting held in Delhi
(ii) 20.11.2018 15.10.2018 75,000
on 15.10.2018
[Inter-State supply]

Assume the rates of taxes to be as under:-
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, 2018 along with time of supply of the aforementioned activities.
Solution:
S. Particulars Time of Supply for CGST SGST IGST Interest
No. Services (Rs.) (Rs.) (Rs.) (Rs.)
Services from an
06.09.2018 244
(i) A dvocate in 11,250 11,250 -
[Refer Note 1 & Note 3] [Refer Note 4]
Delhi
Director’s 20.11.2018
(ii) - - 13,500 -
Sitting F ee [Refer Note 2 & Note 3]
Notes:
(1) As per Section 9(3) of CGST Act, 2017 read with NN 13/2017-CT (Rate), 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) As per Section 5(3) of IGST Act, 2017 read with NN 10/2017-IT (Rate), 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 t ime of supply for 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. 06.09.2018. The due date for payment of tax is 20.10.2018 with return
of September, 2018.
(ii) Time of supply of service is 20.11.2018 and due date for payment of tax is 20.12.2018
with return of December, 2018.
(4) The due date for payment of tax in case (i) is 20.10.2018 with return of September, 2018.
However, the payment of tax is actually made on 11.11.2018. Thus, payment of tax is delayed
by 22 days.
(5) As per Section 50 of the CGST Act, 2017, i n 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. 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)
Question 29: Time of Supply and Value of Supply

Q Ltd., a registered supplier, is engaged in supplying the services. Compute GST payable by it in the
month of December, 2018 from the information given below:
Supply of farm labour for agriculture purpose 1,00,000
Service to people free of cost (Cost for the same) 60,000
Advance received in December, 2018 from clients for which no service has been 85,000
rendered till date.
Amount received for the services rendered in July, 2018 (Bills for the same were issued 90,000
in July 2018 itself)
Bill raised for the services rendered in the month of December 2018 against which no 75,000
amount is received so far
The above amounts are exclusive of GST. Assume rate of GST is 18% for taxable supplies.
Solution:
Computation of Value of Taxable Supply & GST Payable
Supply of farm labour for agriculture purpose (Note 1) -
Service to people free of cost (Note 2) -
Advance received in December, 2018 from clients for which no service has been 85,000
rendered till date (Note 3)
Amount received for the services rendered in July, 2018 (Bills for the same were issued -
in July 2018 itself) (Note 4)
Bill raised for the services rendered in the month of December 2018 against which no 75,000
amount is received so far (Note 5)
Notes:
(1) As per EN 12/2017-CT (Rate), supply of farm labour for agriculture purpose is not be liable to GST
as it the same is exempt.
(2) As per Section 7 of CGST Act, 2017, supply of service rendered free of cost will not be taxable as no
consideration is received for supplying such service.
(3) As per Section 13 of CGST Act, 2017, time of supply for supply of services shall be “date of receipt
of payment or date of issuance invoice, whichever is earlier”. Hence, advance received for services
to be provided in future the same shall be liable to GST in the month of December, 2018.
(4) As per Section 13 of CGST Act, 2017, time of supply for supply of services shall be “date of receipt
of payment or date of issuance invoice, whichever is earlier”. As the same is taxable in month of
July, 2018, no tax liability shall arise in month of December, 2018.
(5) As per Section 13 of CGST Act, 2017, time of supply shall be “date of receipt of payment or date of
issuance invoice, whichever is earlier”. Hence, GST liability shall arise in month of December, 2018
at the time of issuance of invoice though the payment is not yet received.

Question 30: Time of Supply for Voucher Supply
Sodexo meal coupons are sold to a company on 9th August for being distributed to the employees of
the said company. The coupons are valid for six months and can be used against purchase of food items.
The employees use them in various stores for purchases of various edible items on different dates
throughout the six months. What is the date of supply of the coupons?
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 of CGST Act, 2017.
Question 31: Time of Supply for Voucher Supply
Food meal coupons are sold to a company on 9 th 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:
Section 12(4) of CGST Act, 2017 provides that in case of supply of vouchers by a supplier, the time of
supply shall be the date of issue of invoice, if the supply is identifiable at that point; or the date of
redemption of Vouchers, in all other cases.
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) of CGST Act.

Question 32: Time of Supply for Residual Cases
An income-tax and money laundering case against Mr. XYZ, working in a multi-national company,
reveals a large volume of undisclosed assets, which he claims as service income. On this basis, the GST
authorities investigate the GST liability. Dates of provision of service, whether in the first half or the
second half of the financial year being scrutinised by income-tax authorities, are not known. Mr. XYZ
voluntarily pays GST during the investigation. What is the time of supply of the services?
Solution:
Where it is not possible to determine the time of supply in terms of date of invoice or date of provision
of service or date of receipt of payment or date of receipt of services in the books of account of the
recipient, and where periodical return is not to be filed (Mr. XYZ, being an employee in a multi-national
company, is not a registered person), the date of payment of tax is taken as the time of supply as per
Therefore, the date when Mr. XYZ pays the GST will be the time of supply.

Question 33: Time of Supply for Interest on Delayed Payment
Mr. Pyarelal supplied goods for the value of Rs.10,000 to its customer Miss Pyari on 01.01.2018 on the
condition that payment for the same will be made within a week. However, Miss Pyari made payment
for the said goods on 02.02.2018 and thus paid interest amounting to Rs.500. What is the time of supply
with regard to addition in the value by way of interest in lieu of delayed payment of consideration?
Solution:
As per Section 12(6) of CGST Act, 2017, the time of supply with regard to an addition in value on
account of interest, late fee or penalty or delayed payment of consideration shall be the date on which
the supplier received such additional consideration.
Thus, time of supply in respect of interest would be the date on which the supplier has received such
additional consideration, i.e. 02.02.2018. Further, Mr. Pyarelal is required to make payment on or before
20th of March, 2018.

Question 34: Time of Supply for Interest on Delayed Payment
Mr. X supplied goods for the value of Rs.50,000 to its customer Miss Diyana on 01.01.20XX on the
condition that payment for the same will be made within a week. However, Miss Diyana made payment
for the said goods on 02.02.20XX and thus paid interest amounting to Rs.2,000. What is the time of
supply with regard to addition in the value by way of interest in lieu of delayed payment of
consideration?
Solution:
As per Section 12(6) of CGST Act, the time of supply with regard to an addition in value on account of
interest, late fee or penalty or delayed payment of consideration shall be the date on which the supplier
received such additional consideration.
Thus, time of supply in respect of interest would be the date on which the supplier has received such
additional consideration, i.e., 02.02.20XX. Further, Mr. X is required to make payment on or before 20 th
of March, 20XX.
Question 35: Time of Supply for Change in Rate of Tax in case of Supply of Services
Determine the time of supply assuming that rate of GST changes from 18% to 28% w.e.f. June 1 in the
following independent cases:
S. No. Date of Supply of Services Date of Issue of Invoice Date of Receipt of Payment
1. June 15 July 20
2. May 25 May 25 June 25
3. June 15 May 20
4. April 10 May 25
5. June 5 May 25 June 25
6. June 15 May 20
Solution:
As per Section 14 of CGST Act, 2017, in case of change in rate of tax where supply is before change and
(a) both issuance of invoice and receipt of payment after change, time of supply shall be earlier of the
two events namely, date of issuance of invoice or date of receipt of payment.
(b) issuance of invoice is before change and receipt of payment after change, time of supply shall be
date of issuance of invoice.
(c) receipt of payment before change and issuance of invoice is after change, time of supply shall be
date of receipt of payment.
As per Section 14 of CGST Act, 2017, in case of change in rate of tax where supply is after change and
(a) both issuance of invoice and receipt of payment before change, time of supply shall be earlier of
the two events namely, date of issuance of invoice or date of receipt of payment.
(b) issuance of invoice is before change and receipt of payment after change, time of supply shall be
date of receipt of payment.
(c) receipt of payment before change and issuance of invoice is after change, time of supply shall be
date of issuance of invoice.
Time of Supply for Change in Rate of Tax as per Section 14 of CGST Act, 2017
Date of Supply of Date of Issue of Date of Receipt Time of Supply Applicable
S. No
Services Invoice of Payment Section 14 Rate of Tax
1. June 15 July 20 June 15 28%
2. May 25 May 25 June 25 May 25 18%
3. June 15 May 20 May 20 18%
4. June 5 April 10 May 25 April 10 18%

5. May 25 June 25 June 25 28%
6. June 15 May 20 June 15 28%

An online portal, Best Info, raises invoice for database access on 21st February 2018 on Roy & Bansal
Ltd. The payment is made by Roy & Bansal Ltd. by a demand draft sent on 25th February 2018, which
is received and entered in the accounts of Best Info on 28th February 2018. Best Info encashes the demand
draft and thereafter, gives access to the database to Roy & Bansal Ltd from 3rd March 2018. In the
meanwhile, the rate of tax is changed from 1st March 2018. What is the time of supply of the service of
database access by Best Info?
Solution:
As issuance of invoice and receipt of payment (entry of the payment in Best Info’s accounts) occurred
before the change in rate of tax, the time of supply of service by the online portal is earlier of the date
of issuance of invoice (21st February 2018) or date of receipt of payment (28th February 2018) i.e., 21st
February 2018 and thus, the old rate would be applicable. This would be so even though the service
commences after the change in rate of tax as per Section 14 of CGST Act, 2017.
Tax Square raises invoice for consultancy services on 21st February 2018 on Roy & Bansal Ltd. The
payment is made by Roy & Bansal Ltd. by a cheque sent on 25th February 2018, which is received and
entered in the accounts of Tax Square on 28th February 2018. The cheque is cleared and credit in bank
account on 3rd March 2018. The opinion is given to Roy & Bansal Ltd on 30th March 2018. In the
meanwhile, the rate of tax is changed from 1st March 2018. What is the time of supply of the service of
database access by Best Info?
What would have been your answer, if cheque is cleared and credit in bank account on 6 th March 2018?
Solution:
(a) If the cheque is cleared and credit in bank account on 3rd March 2018 (within 4 days from date of
change in rate of tax), then the date of receipt of payment is earlier of date of entry of payment in
books of accounts (28th February 2018) or date of credit in bank account (i.e. 3rd March 2018) i.e. 28th
February 2018.
As per Section 14 of CGST Act, 2017, as supply is after change in rate of tax but both issuance of
invoice and receipt of payment (entry of the payment in Tax Square’s accounts) occurred before the
change in rate of tax, the time of supply of service is earlier of the date of issuance of invoice (21 st
February 2018) or date of receipt of payment (28 th February 2018) i.e., 21st February 2018 and thus,
the old rate would be applicable. This would be so even though the service commences after the
change in rate of tax.
(b) If the cheque is cleared and credit in bank account on 6 rd March 2018 (after 4 days from date of
change in rate of tax), then the date of receipt of payment is date of credit in bank account i.e. 6 th
March 2018.
As per Section 14 of CGST Act, 2017, as supply is after change in rate of tax, issuance of invoice is
before change in rate of tax and receipt of payment (credit in bank account of Tax Square) is after
change in rate of tax, the time of supply of service is date of receipt of payment i.e., 6th March 2018
and thus, the revised rate would be applicable.
Question 38: Time of Supply for Change in Rate of Tax in case of Supply of Goods
Mr. A buys a motor car from a car dealer. Mr. A has made payment for the same on 20th October, 2018
and car dealer has issued an invoice in respect of the same on 25th October, 2018. The car was to be

delivered on 1st November 2018 on occasion of his birthday. On 26th October 2018, the rate of tax
applicable to motor car was revised upward, and the car dealer is demanding differential amount of
tax. Is this correct on dealer’s part?
Note: Assume that date of supply of car is only on date of delivery of car.
Solution:
both issuance of invoice and receipt of payment before change, time of supply shall be earlier of the
two events namely, date of issuance of invoice or date of receipt of payment. As per Notification No.
66/2017-CT, a registered person who is supplying GOODS and who did not opt for the composition
levy under Section 10 shall NOT pay GST on receipt of payment for SUPPLY OF GOODS even in case
of change in rate of tax (i.e. time of supply shall be date of issue of invoice).
As per Section 14 of CGST Act, 2017 read with Notification No. 66/2017-CT, in case car dealer is under
regular scheme, time of supply shall be date of issuance of invoice i.e. 25 th October 2018. Thus, the old
rate tax remains applicable and the car dealer is not correct in demanding differential amount of tax as
the revised rate of tax is not applicable to the transaction.
Mr. A buys a motor car from a car dealer. Car dealer has issued an invoice in respect of the same on
25th October, 2018. The car was to be delivered on 1st November 2018 on occasion of his birthday and
the payment was to be made on the date of delivery. On 26th October 2018, the rate of tax applicable to
motor car was revised upward, and the car dealer is demanding differential amount of tax. Is this
correct on dealer’s part?
Note: Assume that date of supply of car is only on date of delivery of car.
Solution:
As per Section 14 of CGST Act, 2017, in case of change in rate of tax where supply of goods is after
change (as delivery of car is given after change), issuance of invoice is before change and receipt of
payment is after change, time of supply shall be date of receipt of payment. As per Notification No.
As per Section 14 of CGST Act, 2017 read with Notification No. 66/2017-CT, in case car dealer is under
regular scheme, time of supply shall be date of issuance of invoice i.e. 25th October 2018. Thus, the old
rate tax remains applicable and the car dealer is not correct in demanding differential amount of tax as
the revised rate of tax is not applicable to the transaction.
(ICAI – Study Material (Revised) – May 2018)

I buy a set of modular furniture from a retail store. Invoice is issued to me and I make the payment.
The furniture is to be delivered to me later in the week when a technician is available to assemble and
install it. The next day the rate of tax applicable to modular furniture is revised upward, and the store
sends me a supplementary invoice with the delivery note accompanying the furniture to collect the
differential amount of tax. Is this correct on store’s part?
Solution:
both issuance of invoice and receipt of payment before change, time of supply shall be earlier of the
two events namely, date of issuance of invoice or date of receipt of payment. As per Notification No.

As per Section 14 of CGST Act, 2017 read with Notification No. 66/2017-CT, in case retail store is under
regular scheme, time of supply shall be date of issuance of invoice. As date of invoice is before supply,
the old rate tax remains applicable and the retail store is not correct in demanding differential amount
of tax as the revised rate of tax is not applicable to the transaction.

COMPOSITION
SCHEME
Question 1: Aggregate Turnover
Explain the term ‘aggregate turnover’ or
List the inclusions and exclusions for computing the “Aggregate Turnover” under CGST Act, 2017.
Solution:
As per Section 2(6) of CGST Act, 2017, aggregate turnover includes the aggregate value of all:
(i) taxable supplies,
(ii) exempt supplies,
(iii) exports of goods and/or services and
(iv) inter-State supplies of persons having the same PAN., to be computed on all India basis
Aggregate turnover excludes:
(i) value of inward supplies on which tax is payable by a person on reverse charge basis,
(ii) central tax, State tax, Union territory tax, integrated tax and cess
Question 2: Exemption Scheme (Normal & Special)

A dealer, Mr. Shaktivel, has two offices – one in Chennai and another in Bangalore. The turnover of
Chennai is Rs.13 lakhs and the turnover of Bangalore is Rs.11 lakhs. Mr. Shaktivel contends that he is
not required to be registered under GST. Decide
Solution:
The contention of Mr. Shaktivel is not correct. In order to determine whether Mr. Shaktivel is liable for
registration under Section 22, turnover of both the offices would be taken into account as the definition
of aggregate turnover is computed PAN India basis. Since, the PAN India turnover exceeds Rs.20 lakhs,
Mr. Shaktivel is liable for registration.
However, if Mr. Shaktivel is suppling only goods both in TN (Chennai) and Karnataka (Bangalore),
then contention of Mr. Shaktivel is correct as then threshold exemption for registration as per Section
23 read with NN 10/2019-CT is Rs.40 lakhs.

Delta Oils, Puducherry, is engaged in supplying machine oil as well as petrol. The turnover of machine
oil is Rs.13 lakhs and that of petrol is Rs.11 lakhs. Supply of petrol is not leviable to GST, but supply of
machine oil is taxable. Delta Oils contend that since turnover of machine oil does not exceed Rs.20 lakhs,
it is not liable for registration under GST. Decide
Solution:
The contention of Delta Oils is not correct in law. In order to determine whether Delta Oils liable for
registration, turnover of both supplies – non-taxable supplies as well as taxable supplies would be taken
into account as the definition of aggregate turnover includes exempt supplies (which in turn includes
non-taxable supplies). Since, the turnover of both non-taxable supplies as well as taxable supplies
exceeds Rs.20 lakhs, Delta Oils is liable for registration as per Section 22.
It is important to note that that threshold exemption for registration of Rs.40 lakhs as per Section 23
read with NN 10/2019-CT is not applicable for the State of Puducherry even though Delta Oils is supply
only goods. Thus, Delta Oils cannot take the benefit of threshold exemption of Rs.40 lakhs.

(ICAI – RTP – IPCC (Adapted) – May 2018)
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:
(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
The above figures are excluding GST.
Determine whether Pure Oils is liable for registration.
Will your answer 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?
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 or services or both, if his aggregate turnover in a
financial year exceeds Rs.20 lakhs. However, if such taxable supplies are made from any of the specified
Special Category States, namely, States of Tripura, Manipur, Mizoram and Nagaland, he shall be liable
to be registered if his aggregate turnover in a financial year exceeds Rs.10 lakhs.
Also, if such supplier is supplying ONLY goods, then he shall be liable to be registered if his aggregate
turnover in a financial year exceeds Rs.40 lakhs as per Section 23 read with NN 10/2019-CT. However,
benefit of NN 10/2019-CT is not applicable if supplier is having his place of business in Puducherry,
Telengana, Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand, Tripura, Manipur, Mizoram and
Nagaland.
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:
(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 1,75,000
Oils in Delhi
(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 lakhs as per Section 23 read with NN 10/2019-CT,
Pure Oils is not liable to be registered assuming it is supplying only goods from Delhi and Punjab.

However, if Pure Oils made supply of machine oils amounting to Rs.2,50,000 from its branch in Tripura
in addition to the above supply, then threshold limit of registration will be reduced to Rs.10 lakhs as
per Section 22 as Tripura is one of the specified Special Category States and also, benefit of Rs.40 lakhs
will not be available.
Aggregate Turnover in that case would be Rs.9,55,000 + Rs.2,50,000 = Rs.12,05,000. So, if Pure Oils
supplies machine oils amounting to Rs.2,50,000 from its branch in Tripura, then it is liable to be
registered in all 3 States – Delhi, Punjab and Tripura.

Rishabh Enterprises, a sole proprietorship firm, started an air-conditioned restaurant in Maharashtra
in the month of February wherein the customers are served cooked food as well as cold drinks / non-
alcoholic beverages. In March, the firm opened a liquor shop in Mizoram for trading of alcoholic liquor
for human consumption.
Determine whether Rishabh Enterprises is liable to be registered under GST law with the help of the
following information:
Particulars February (Rs.) March (Rs.)
Serving of cooked food and cold drinks/non- alcoholic 5,50,000 6,50,000
beverages in restaurant in Maharashtra
Sale of alcoholic liquor for human consumption in Mizoram - 5,00,000
Interest received from banks on the fixed deposits 1,00,000 1,00,000
Export of packed food items from restaurant in Maharashtra 1,50,000 2,00,000
The above figures are excluding GST.
You are required to provide reasons for treatment of various items given above.
Solution:
Nagaland.
In the given question, since Rishabh Enterprises is engaged in making taxable supplies from
Maharashtra which is not a specified Special Category State, the threshold limit for obtaining
registration is Rs.20 lakhs. The threshold limit is not reduced to Rs.10 lakhs in this case, as sale of
alcoholic liquor for human consumption from Mizoram (one of the specified Special Category States)
are non-taxable supplies in terms of Section 9(1) of CGST Act, 2017. Also, benefit of Rs.40 lakhs as per
Section 23 read with NN 10/2019-CT will not be available as serving of food is supply of services as per
Section 7 read with Schedule II and NN 10/2019-CT is available of if supplier is supplying ONLY goods.
As per Section 2 (6) of the CGST Act, 2017, aggregate turnover includes the aggregate value of

In the light of the afore-mentioned provisions, the aggregate turnover of Rishabh Enterprises is
computed as under:
Computation of Aggregate Turnover of Rishabh Enterprises
Cumulative Turnover
Turnover of
Particulars of February & March
February (Rs.)
(Rs.)
Serving of cooked food and cold drinks / non- 5,50,000 12,00,000
alcoholic beverages in restaurant in Maharashtra (5,50,000 + 6,50,000)
Add: Sale of alcoholic liquor for human consumption - 5,00,000
in Uttarakhand (Note 1)
Add: Interest received from banks on the Fixed 1,00,000 2,00,000
Deposits (Note 2) (1,00,000 + 1,00,000)
Add: Export of packed food items from restaurant in 1,50,000 3,50,000
Maharashtra (1,50,000 + 2,00,000)
Aggregate Turnover 8,00,000 22,50,000
Notes:
(1) As per Section 2(47) of the CGST Act, 2017, exempt supply includes non-taxable supply. Thus,
supply of alcoholic liquor for human consumption in Uttarakhand, being a non- taxable supply, is
an exempt supply and is, therefore, includible while computing the aggregate turnover.
(2) Services by way of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount (other than interest involved in credit card services) is
exempt vide EN 12/2017 CT (R). Thus, interest received from banks on the fixed deposits is an
exempt supply and is, therefore, includible while computing the aggregate turnover.
Rishabh Enterprises was not liable to be registered in the month of February since its aggregate
turnover did not exceed Rs.20 lakhs in that month. However, since its aggregate turnover exceeds Rs.20
lakhs in the month of March, it should apply for registration within 30 days from the date on which it
becomes liable to registration.
Question 6: Composition Scheme (Normal) – Eligibility of Scheme

Details of PJ & Co., a manufacturing concern for the Financial Year 2018-19 is as follows:
Intra-State Supply of readymade garments in Maharashtra 35,00,000
Inter-State Supply of auto-components in Tamil Nadu 45,00,000
Total Value of Taxable Supplies 80,00,000
The company wants to opt for composition scheme under Section 10 of CGST Act, 2017. Determine
whether it is eligible to opt for composition scheme.
Solution:
As per provisions of Section 10 of CGST Act, 2017, a person can opt for composition scheme if he is not
engaged in making any inter-State outward supplies of goods. In this case since PJ & Co. has effected
inter-State taxable supply of goods, it cannot opt for composition scheme for the Financial Year 2018-
19.

Details of VJ Ltd., a trading concern for the Financial Year 2018-19 is as follows:
Intra-State Supply of readymade garments in Maharashtra 35,00,000

Intra-State Supply of auto-components in Tamil Nadu 45,00,000
Total Value of Taxable Supplies 80,00,000
The company wants to opt for composition scheme for factory in Maharashtra and tax at normal rates
in Tamil Nadu.
Solution:
As per provisions of Section 10 of CGST Act, 2017, all registered persons having same PAN have to opt
for composition scheme uniformly. If a company opts for regular levy for one registered place, other
registered place become ineligible for composition levy. Thus, VJ Ltd. cannot opt for composition
scheme in Maharashtra and pay normal tax in Tamil Nadu.

DK Ltd. is a manufacturing concern in Chennai. In Financial Year 2018-19, total value of supplies
including inward supplies taxed under reverse charge basis are Rs.1,55,00,000 (exclusive of taxes). The
break-up of supplies is as follows:
Intra-State Supplies made under forward charge 1,10,00,000
Intra-State Supplies made which are which are chargeable to GST at Nil rate 20,00,000
Intra-State Supplies which are wholly exempt under Section 11 of CGST Act, 2017 10,00,000
Value of inward supplies on which tax payable under RCM 15,00,000
Determine whether DK Ltd. is eligible to opt composition scheme for Financial Year 2019-20.
Solution:
Composition Scheme under Section 10 can be opted in Current Financial Year only if the aggregate
turnover in the Preceding Financial Year is upto Rs.1.5 Crores (Rs.75 lakhs for 8 Special Category States
viz 1. Uttarakhand, 2. Arunachal Pradesh, 3. Manipur, 4. Meghalaya, 5. Mizoram, 6. Nagaland, 7.
Sikkim and 8. Tripura). Such person eligible for composition scheme and opting for the same can pay
composition tax, in lieu of tax under Section 9, up to the turnover of Rs.1.5 Crores in Current Financial
Year (Rs.75 lakhs for 8 Special Category States).
As per Section 2(6) of the CGST Act, 2017, aggregate turnover means the aggregate value of
Computation of Aggregate Turnover to determine the eligibility of Composition Scheme

Intra-State Supplies made under forward charge 1,100,00,000
Intra-State Supplies which are wholly exempt under Section 11 of CGST Act, 2017 10,00,000
Value of inward supplies on which tax payable under RCM -
As the aggregate turnover does not exceed Rs.1.5 Crores in Tamil Nadu (Chennai) during the Financial
Year 2018-19, DK Ltd. is eligible to pay tax under Composition Scheme for Financial Year 2019-20.
Author’s Note: Special composition scheme under NN 2/2019-CT(Rate) is not relevant for this question
as aggregate turnover exceeds Rs.50 lakhs in Preceding Financial Year. Thus, the same is not discussed
in above question.

(ICAI – Questions for Practice (Adapted) – May 2018)

Pepper & Salt Ltd., registered in Madhya Pradesh has the turnover amounting to Rs.80 lakhs in the
financial year 2018-19. It wants to avail the benefit of composition scheme in the year 2019-20. You are
required to advise Pepper and Salt Ltd. regarding the availability of composition scheme in the year
2019-20. Will your answer change, if Pepper & Salt Ltd. is registered in Arunachal Pradesh?
Solution:
Year (Rs.75 lakhs for 8 Special Category States). Such composition tax is as follows:
(i) 1% (0.5% CGST + 0.5% SGST) of the turnover in State/ Union territory in case of a manufacturer.
(ii) 5% (2.5% CGST + 2.5% SGST) of the turnover in State / Union Territory in case of persons engaged
in making supplies referred to in Clause (b) of Paragraph 6 of Schedule II (i.e. restaurant services),
and
(iii) 1% (0.5% CGST + 0.5% SGST) of the taxable turnover in State/ Union territory in case of other
suppliers (i.e. trader).
However, it has to be ensured that such person opting for composition scheme fulfills the following
conditions as given under Section 10 of CGST Act, 2017:
(a) It is not engaged in the supply of services other than supplies of food articles (restaurant service
and outdoor catering service). In case he supplies services other than food related services, value
of such services in Current FY does NOT exceed 10% of the Turnover in a State / Union Territory
in the Preceding Financial Year or Rs.5 lakhs, whichever is higher.
(b) It is not engaged in making any supply of goods which are not taxable under the CGST Act/SGST
Act/ UTGST Act.
(c) It does not make any inter-State outward supplies of goods.
(d) It does not supply goods through an electronic commerce operator who is required to collect tax at
source under Section 52.
(e) It does not manufacture ice cream, pan masala and tobacco etc.
Thus, Pepper & Salt Ltd., registered Madhya Pradesh, can avail the benefit of the composition scheme
in FY 2019-20 as the threshold for composition scheme is Rs.1.5 Crores for Madhya Pradesh and its
turnover in Preceding FY 2018-19 (Rs.80 lakhs) is less than the threshold limit (Rs.1.5 Crores).
However, if Pepper & Salt Ltd. is registered in Arunachal Pradesh, it cannot avail the benefit of
composition in FY 2019-20 as the threshold for composition scheme is Rs.75 lakhs for Arunachal
Pradesh and its turnover in the Preceding FY 2018-19 (Rs.80 lakhs) exceeds the threshold limit (Rs.75
lakhs).
in above question.
(ICAI – IPCC [New Syllabus – 4 Marks] (Adapted) – May 2018 Exam)

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.
(i) Determine whether Sai Trading Company will be eligible for composition levy.

(ii) Will your answer be different, if in the above scenario, M/s Sai Trading Company is making intra
state supply within state of Jammu & Kashmir?
Solution:
and
Act/ UTGST Act.
In the light of the afore-mentioned provisions,

(i) Sai Trading Company registered in Andhra Pradesh is eligible for composition scheme under
Section 10 as its aggregate turnover does not exceed Rs.1.5 Crores and it is not making inter-State
supplies of goods.
(ii) Since the turnover limit for determining the eligibility for composition scheme in the State of
Jammu and Kashmir is also Rs.1.5 Crores, Sai Trading Company will be eligible for composition
scheme under Section 10 with other condition of not making inter-State supplies of goods being
fulfilled.
in above question.
(ICAI – RTP – IPCC (Adapted) – November 2018)

M/s. Handsome and Likemi Company, a partnership firm at Mumbai is running a mobile phone
showroom. Along with mobile phone showroom, it is also engaged in providing health and fitness
services. Turnover of the mobile phone showroom was Rs.128 lakhs and receipts of the health and
fitness service was Rs.26 lakhs in the preceding financial year.
(i) With reference to the provisions of the CGST Act, 2017, examine whether the firm can opt for the
composition scheme,

(ii) If M/s. Handsome and Likemi Company obtain separate registration for their mobile phone
showroom & for health fitness centre, can it opt for composition scheme only for mobile phone
showroom?
(iii) Will your answer change, if the turnover of the mobile phone showroom was Rs.124 lakhs and
receipts of the health and fitness service was Rs.18 lakhs in the preceding financial year?
Solution:
and
Act/ UTGST Act.

(i) M/s Handsome and Likemi Company in Maharashtra (Mumbai) is not eligible to opt for
composition scheme as its turnover in the Preceding Financial Year exceeds Rs.1.5 Crores (Rs.1.54
Crores).
(ii) Where more than one registered persons are having the same Permanent Account Number, the
registered person shall not be eligible to opt for composition scheme unless all such registered
persons opt to pay tax under composition scheme.
Therefore, M/s. Handsome and Likemi Company will not be able to opt for composition scheme
only for mobile phone showroom as all the registrations under the same PAN have to opt for
composition scheme. Since its aggregate turnover (PAN India) in Preceding Financial Year exceeds
Rs.1.5 Crores (Rs.1.54 Crores), it is ineligible for composition scheme for both mobile phone
showroom and for health fitness centre even if separate registration is taken for both of them.
(iii) M/s Handsome and Likemi Company in Maharashtra (Mumbai) is eligible to opt for composition
scheme as its turnover in the Preceding Financial Year is up to Rs.1.5 Crores (Rs.1.42 Crores). And
it can be under composition scheme in Current Financial Year till its turnover from supply of
services in Current Financial Year exceeds 10% of Previous Year Turnover or Rs.5 lakhs, whichever
is higher.
Note: It is important to note that amount of turnover from supply of services in Preceding Financial
Year is not relevant for eligibility of composition scheme under Section 10. If a person is eligible
and opting for composition scheme under Section 10, it can be under composition scheme in
Current Financial Year till its turnover from supply of services in Current Financial Year exceeds
10% of Previous Year Turnover or Rs.5 lakhs, whichever is higher.
in above question.

(ICAI – IPCC [Old Syllabus & New Syllabus – 6 Marks] (Adapted) – MTP 2 – Nov 2018)
(ICAI – IPCC [New Syllabus – 2 Marks] (Adapted) – Nov. 2018 Exam)
M/s Ginny and John Company in Kerala is a partnership firm of interior decorators and also running a
readymade garment showroom. Turnover of the showroom was Rs.130 lakhs and receipts of the
interior decorator service was Rs.22 lakhs in the preceding financial year.
(i) With reference to the provisions of the CGST Act, 2017, examine whether the firm can opt for the
composition scheme?
(ii) Can M/s. Ginny and John Company opt for composition scheme only for showroom?
(iii) Will your answer change, if the turnover of the showroom was Rs.120 lakhs and receipts of the
interior decorator service was Rs.22 lakhs in the preceding financial year?
Solution:
and
Act/ UTGST Act.

(i) M/s Ginny and John Company in Kerala is not eligible to opt for composition scheme as its turnover
in the Preceding Financial Year exceeds Rs.1.5 Crores (Rs.1.52 Crores).

(ii) Where more than one registered persons are having the same Permanent Account Number, the
registered person shall not be eligible to opt for composition scheme unless all such registered
persons opt to pay tax under composition scheme.
Therefore, M/s Ginny and John Company will not be able to opt for composition scheme only for
showroom as all the registrations under the same PAN have to opt for composition scheme. Since
its aggregate turnover (PAN India) in Preceding Financial Year exceeds Rs.1.5 Crores (Rs.1.52
Crores), it is ineligible for composition scheme for both showroom and for interior decoration
service centre even if separate registration is taken for both of them.
(iii) M/s Ginny and John Company is eligible to opt for composition scheme as its turnover in the
Preceding Financial Year is up to Rs.1.5 Crores (Rs.1.42 Crores). And it can be under composition
scheme in Current Financial Year till its turnover from supply of services in Current Financial Year
exceeds 10% of Previous Year Turnover or Rs.5 lakhs, whichever is higher.
Note: It is important to note that amount of turnover from supply of services in Preceding Financial
Year is not relevant for eligibility of composition scheme under Section 10. If a person is eligible
and opting for composition scheme under Section 10, it can be under composition scheme in
in above question.
(ICAI – RTP – Final (Adapted) – November 2018)

Shubhlaxmi Foods is engaged in supplying restaurant service in Maharashtra. In the preceding
financial year, it has a turnover of Rs.140 lakhs from the restaurant service and Rs.8 lakhs from the
supply of farm labour in said State. Further, it has also earned a bank interest of Rs.10 lakhs from the
fixed deposits.
Shubhlaxmi Foods wishes to opt for composition scheme in the current year. You are required to advise
Shubhlaxmi Foods on the same.
Would your answer be different if Shubhlaxmi Foods is engaged in milling of paddy into rice on job
work basis instead of supply of farm labour and the turnover from the said activity is Rs.11 lakhs?
Solution:
and
Act/ UTGST Act.
Also, it is important to note that as per Order 01/2019, 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, shall NOT be taken into account for determining the eligibility for composition scheme under
second proviso to Section 10(1) and in computing aggregate turnover in order to determine eligibility
for composition scheme.

(i) Shubhlaxmi Foods apart from the restaurant service, it is providing 2 other services viz. the services
of supply of farm labour and services by way of extending deposits where the considerations is
represented by way of interest. Both other services are exempt from GST vide NN 12/2017 CT (Rate)
read with NN 9/2017-IT (Rate). However, while computing aggregate turnover, 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 shall not be taken into account; but value of other exempt
services shall be taken into account.
M/s Shubhlaxmi Foods is eligible to opt for composition scheme as its turnover in the Preceding
Financial Year is up to Rs.1.5 Crores (Rs.1.48 Crores). And it can be under composition scheme in
Note: It is important to note that M/s Shubhlaxmi Foods has to pay composition tax @ 5% on both
turnover of restaurant service and turnover of services of supply of farm labour in Current
Financial Year.
(ii) Shubhlaxmi Foods apart from the restaurant service, it is providing 2 other services viz. the services
of milling of paddy into rice on job work and services by way of extending deposits where the
considerations is represented by way of interest. However, the latter is exempt from GST vide NN
12/2017 CT (Rate) read with NN 9/2017-IT (Rate). However, while computing aggregate turnover,
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 shall not be taken into account; but
value of other taxable services shall be taken into account.
M/s Shubhlaxmi Foods is not eligible to opt for composition scheme as its turnover in the Preceding
Financial Year is up to Rs.1.5 Crores (Rs.1.51 Crores).
in above question.

Question 14: Composition Scheme (Normal & Special) – Eligibility of Scheme
Bansal and Chandiok is a partnership firm of Chartered Accountants in Jaipur (Rajasthan). The firm
specializes in banks audits providing services to banks across India. It has an annual turnover of Rs.110
lakhs in the preceding financial year. With reference to the provisions of the CGST Act, 2017, examine
whether the firm can opt for the composition scheme. Will your answer change, if
(a) Bansal and Chandiok is not a partnership firm of Chartered Accountants but a partnership firm
providing support services to restaurants like booking tables, advertisement etc.?
(b) Bansal and Chandiok is not a partnership firm of Chartered Accountants but a trader supplying
goods in neighboring states?
(c) The turnover of the firm is Rs.40 lakhs?
Solution:
and
Act/ UTGST Act.
Also, as per NN 2/2019-CT (Rate), a person who is not eligible for composition scheme under Section
10 can opt for special composition scheme if the aggregate turnover in the Preceding Financial Year is
upto Rs.50 lakhs. Such person eligible for special composition scheme under NN 2/2019-CT (Rate) and
opting for the same can pay composition tax @ 6% (CGST – 3% and SGST 3%), in lieu of tax under
Section 9, up to the turnover of Rs.50 lakhs in Current Financial Year.
However, it has to be ensured that such person opting for special composition scheme fulfills the
following conditions as given under NN 2/2019-CT (Rate):
(a) It is not engaged in making any supply of goods which are not taxable under the CGST Act/SGST
Act/ UTGST Act.
(b) It does not make any inter-State outward supplies of goods.
(c) It does not supply goods or services through an electronic commerce operator who is required to
collect tax at source under Section 52.
(d) It does not supplies ice cream, pan masala and tobacco etc.
Basis above provisions, a firm of Chartered Accountants, being a supplier of professional services (other
than restaurant services) is not eligible to apply for composition scheme under Section 10. Also, as its
aggregate turnover is more than Rs.50 lakhs in Preceding FY (Rs.110 lakhs), it will not be eligible even
for special composition scheme under NN 2/2019-CT (Rate). Therefore, it has to discharge its tax
liability under regular provisions at the applicable rates under Section 9.
(a) The firm will not be eligible to apply for composition scheme under Section 10 even if the firm is
providing support services to restaurants as the supplier providing only restaurant services per se
are eligible for composition scheme under Section 10. Also, as its aggregate turnover is more than
Rs.50 lakhs in Preceding FY (Rs.110 lakhs), it will not be eligible even for special composition
scheme under NN 2/2019-CT (Rate).
(b) The firm will not be eligible to apply for composition scheme under Section 10 or special
composition scheme under NN 2/2019-CT (Rate) even if the firm is a trader supplying goods in
neighboring states as the supplier having inter-State supplies cannot opt for composition scheme
under Section 10 or NN 2/2019-CT (Rate).
(c) The firm will not be eligible to apply for composition scheme under Section 10 even if the aggregate
turnover in Preceding FY is Rs.40 lakhs as it is supplying services more than the prescribed limit
under Section 10. However, the firm will be eligible to apply for special composition scheme under
NN 2/2019-CT (Rate) as it is not eligible for Section 10 and also, its aggregate turnover is up to Rs.50
lakhs in Preceding FY (Rs.40 lakhs). It has to pay composition tax @ 6% (3% CGST + 3% SGST)
under NN 2/2019-CT (Rate).
(ICAI – IPCC [Old Syllabus & New Syllabus – 4 Marks] (Adapted) – MTP 1– May 2018)
(ICAI – IPCC [Old Syllabus – 4 Marks] (Adapted) – MTP 1 – May 2018)
Question 15: Composition Scheme (Normal & Special) – Eligibility of Scheme
Ramaswamy, a registered supplier, is an interior decorator. His registered office is located in Gujarat
and he is not engaged in making any inter-State supply of services. His aggregate turnover in the FY
2017-18 is Rs.40 lakhs. With reference to the provisions of the CGST Act, 2017, examine whether
Ramaswamy can opt for the composition scheme in the FY 2018-19?
Will your answer be different if Ramaswamy is engaged is supplying restaurant services and procures
food items required for his restaurant from neighbouring State of Maharashtra?
Solution:
and
Act/ UTGST Act.
Also, as per NN 2/2019-CT (Rate), a person who is not eligible for composition scheme under Section
10 can opt for special composition scheme if the aggregate turnover in the Preceding Financial Year is

upto Rs.50 lakhs. Such person eligible for special composition scheme under NN 2/2019-CT (Rate) and
opting for the same can pay composition tax @ 6% (CGST – 3% and SGST 3%), in lieu of tax under
Section 9, up to the turnover of Rs.50 lakhs in Current Financial Year.
However, it has to be ensured that such person opting for special composition scheme fulfills the
following conditions as given under NN 2/2019-CT (Rate):
(a) It is not engaged in making any supply of goods which are not taxable under the CGST Act/SGST
Act/ UTGST Act.
(e) It does not make any inter-State outward supplies of goods.
(f) It does not supply goods or services through an electronic commerce operator who is required to
collect tax at source under Section 52.
(g) It does not supplies ice cream, pan masala and tobacco etc.

Ramaswamy, being a supplier of interior decorator services (other than restaurant services) is not
eligible to apply for composition scheme under Section 10. However, as his aggregate turnover is up to
Rs.50 lakhs in Preceding FY (Rs.40 lakhs), it will be eligible for special composition scheme under NN
2/2019-CT (Rate). Therefore, he has the option to discharge composition tax @ 6% (CGST @ 3% + SGST
@ 3%) under NN 2/2019-CT (Rate) instead under paying regular tax at the applicable rates under Section
9.
However, Ramaswamy is providing restaurant services, it will be eligible to apply for composition
scheme under Section 10. A registered person cannot opt for composition scheme if, inter alia, he is
engaged in making any inter-State outward supplies of goods, but there is no restriction on
procurement of goods inter-State. Thus, once he is eligible for composition scheme under Section 10,
he will not be eligible for special composition scheme under NN 2/2019-CT (Rate) even though his
aggregate turnover is up to Rs.50 lakhs in Preceding FY (Rs.40 lakhs). Therefore, he has the option to
discharge composition tax @ 5% (CGST @ 2.5% + SGST @ 2.5%) under Section 10 instead under paying
regular tax at the applicable rates under Section 9.
Question 16: Composition Scheme (Normal) – Computation of Composition Tax

SRK & Co. is having Trading Unit (Unit I) in Rajasthan and Manufacturing Unit (Unit II) in Tamil Nadu.
Total turnover of 2 units in last Financial Year was Rs.65 lakhs (Rs.40 lakhs + Rs.25 lakhs). Total turnover
of 2 units in the first quarter and second quarter of this financial year was Rs.25 lakhs (Unit I: Rs.5 lakhs
+ Unit II: Rs.20 lakhs) and Rs.30 lakhs (Unit I: Rs.10 lakhs + Unit II: Rs.20 lakhs). You are required to
determine composition tax liability.
Solution:
Computation of Aggregate Turnover and Composite Tax (Rs. in lakhs)
Rate of Total Composite Tax
Turnover in Turnover in
Unit composite
1st Quarter 2nd Quarter 1st Quarter 2nd Quarter
tax
Unit I 5 10 1% 0.05 0.10
Unit II 20 20 1% 0.20 0.20
0.25 0.30
Total 25 30 (CGST – 0.125 (CGST – 0.15
SGST – 0.125) SGST – 0.15)
Question 17: Composition Scheme (Normal) – Computation of Composition Tax

AJ Ltd., a manufacturing concern located in Kolkatta (West Bengal) has opted for composition scheme
for the Financial Year 2018-19. Details of supplies including inward supplies taxable under reverse
charge basis is as follows:

Intra-State Supplies of Goods chargeable @ 12% GST 10,00,000
Intra-State supplies which are wholly exempt under Section 11 of CGST Act, 2017 5,00,000
Value of inward supplies on which tax payable under RCM (GST Rate 5 %) 10,00,000
Determine tax payable by AJ Ltd.
Solution:
Computation of Aggregate Turnover and Composite Tax Payable
Intra-State supplies which are wholly exempt under Section 11 of CGST Act, 2017 5,00,000
Value of inward supplies on which tax payable under RCM (GST Rate 5 %) Nil
CGST Payable under Composition Scheme @ 0.5% 32,500
SGST Payable under Composition Scheme @ 0.5% 32,500
Computation of Tax Payable under Reverse Charge Mechanism

Value of inward supplies on which tax payable under RCM 10,00,000
Note: Input Tax Credit on above service on which tax is paid under RCM cannot be availed.

Question 18: Composition Scheme (Normal) – Exit from Scheme
Mr. X availing composition scheme during a financial year crosses the turnover of Rs.1.5 Crore during
the course of the year i.e. say 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 availed shall lapse from the day on which his aggregate turnover during the financial
year exceeds Rs.1.5 Crores vide Section 10(3) of CGST Act, 2017. He is required to file an intimation for
withdrawal from the scheme in prescribed form within 7 days from the day on which the threshold
limit has been crossed.
Question 19: Regular Scheme v. Composition Scheme

Mr. RJ, a retailer who keeps no inventories, presents the following expected information for the year:
Purchases of goods (GST @ 5%) 50 lakhs
Sales at fixed selling price inclusive of all taxes (GST @ 5%) 60 lakhs
Determine whether Mr. RJ should opt for composition scheme if composite tax is 1% of turnover and
expenses of keeping detailed statutory records required under the GST laws will get reduced to
Rs.50,000 from Rs.1,00,000 p.a. and other expenses are Rs.2,00,000 p.a.
Solution:
To determine whether Mr. RJ should opt for composition scheme, it is important to compare the cost
of product to the ultimate consumer and profit earned by Mr. RJ under both options.
Comparison of Cost of Product and Profit
Particulars Regular Scheme Composition Scheme
Cost of goods sold (Refer Note) 50,00,000 52,50,000
Add: Costs of maintaining records 1,00,000 50,000
Add: Other expenses 2,00,000 2,00,000
Total Costs 53,00,000 55,00,000
Sales (inclusive of all taxes) 60,00,000 60,00,000
Less: GST 2,85,714 60,000
(Rs.60 lakhs * 5 / 105) (Rs.60 lakhs * 1 / 100)
Net Sales 57,14,286 59,40,000
Profit of the Dealer (Net Sales – Total Costs) 4,14,286 4,40,000
Note: No credit under composition scheme and thus, cost of goods sold will be higher.
From the above comparison, it is apparent that while cost to ultimate consumer remains same in both
the cases, the profit of the dealer is higher if the dealer opts for composition scheme. Hence, composition
scheme should be opted.

INPUT TAX CREDIT

Question 1: Meaning of Capital Goods
What does “capital goods” mean under CGST Act? Explain
Solution:
As per Section 2(19) of CGST Act, 2017, “capital goods” means goods, the value of which is capitalized
in the books of account of the person claiming the input tax credit and which are used or intended to
be used in the course or furtherance of business;

Question 2: Meaning of Input Tax
Explain the meaning of the term “input tax” under Section 2(62) of CGST Act, 2017.
Solution:
As per Section 2(62) of CGST Act, 2017, “input tax” in relation to a registered person, means the central
tax, State tax, integrated tax or United territory tax charged on any supply of goods or services or both
made to him and includes-
(a) The integrated goods and services tax charged on import of goods;
(b) The tax payable under the provisions of Section 5(3) and Section 5(4) of the IGST Act;
(c) The tax payable under the provisions of Section 9(3) and Section 9(4) of the CGST Act and respective
SGST Act; or
(d) The tax payable under the provisions of Section 7(3) and Section 7(4) of the UTGST Act,
But does not include the tax paid under the composition levy.
Question 3: Availment of ITC
What is input tax? What are the conditions necessary for obtaining input tax credit?
Solution:
Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union territory tax
(UTGST) charged on supply of goods or services or both made to a registered person. It also includes
tax paid on reverse charge basis and integrated goods and services tax charged on import of goods. It
does not include tax paid under composition levy.
Following four conditions are to be satisfied by the registered 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; and
(d) he has furnished the return under Section 39.

J&J Ltd., a manufacturer, imported some inputs and paid basic customs duty of Rs.5 lakhs under
Section 12 of Customs Act, 1962 and IGST of Rs.2 lakhs under Section 3(7) of Customs Tariff Act, 1975.

Calculate the amount that he can claim as ITC admissible. Would it make any difference, if the assesse
is not a manufacturer, but a service provider or a trader?
Solution:
J&J Ltd., a manufacturer, will be entitled to input tax credit of IGST paid of Rs.2 lakhs under Section
3(7) of the Customs Tariff Act, 1975. It will not be entitled to input tax credit of basic customs duty of
Rs.5 lakhs under Section 12 of Customs Act, 1962.
Even if J&J Ltd. is a service provider or a trader, it would not make any difference.

Super Star Ltd. delivered a machine to Little Super Star Ltd. In January 2019 under Invoice No.640
dated 28th January 2019 for Rs.10,00,000 plus GST @ 18%, and undertook trial runs and calibration of
the machine as per the requirements of Little Super Star Ltd. The amount chargeable for the post-
delivery activities was covered in a debit note raised in April 2019 for Rs.1,00,000 plus GST @ 18%. The
company has filed its annual return for Financial Year 2018-19 on 10th November 2019. Determine the
time limit for taking input tax credit for the amount of tax covered in debit note as well as original
invoice.
Solution:
As per Section 16(4) of CGST Act, 2017, a registered person shall not be entitled to take input tax credit
in respect of any invoice or debit note for supply of goods or services or both after
➔ the due date of furnishing of the return under Section 39 for the month of September following the
end of financial year to which such invoice relating to such debit note pertains, or
➔ furnishing of the relevant annual return,
Though the debit note was received in the next Financial Year i.e. Financial Year 2019-20, it relates to
an invoice received in the Financial Year 2018-19. Therefore, the time limit for taking ITC of tax on tax
invoice amounting to Rs.1,80,000 (18% of Rs.10,00,000) as well as ITC of tax on debit note amounting to
Rs.18,000 (18% of Rs.1,00,000) is 20th October 2019; being earlier of the actual date of filing the annual
return for 2018-2019 (10th November 2019) or the due date of filing of return for September 2019 (20 th
October 2019).

Ajith Vijay & Co. purchased goods valuing Rs.5,00,000 (exclusive of CGST and SGST @ 9% each) under
the cover of invoice dated 25-12-2018. The company made payment to the supplier on the same date.
Since there was a doubt regarding admissibility of tax credit on such inputs, the company did not take
the input tax credit at the time of receipt of input. The company obtained clarification from a legal
consultant who opined that the goods were eligible as inputs under GST laws. The opinion was
received on 05-05-2019. The company now wants to avail input tax credit of the tax paid on such inputs.
Can it do so? The company has filed its annual return for the year 2017-18 on 10-08-2019.
Solution:
As per Section 16(4), a registered person shall not be entitled to take input tax credit in respect of any
invoice or debit note for supply of goods or services or both after
(a) the due date of furnishing of the return under Section 39 for the month of September following the
end of financial year to which such invoice pertains (i.e. 20 th October 2019); or
(b) furnishing of the relevant annual return (i.e. 10th August 2019),
As Ajith Vijay & Co. has received the opinion on 05-05-2019, it still has time to avail ITC till 10th August
2019.

Vidhu Ltd., a registered manufacturer of Bangalore entered in a contract with a supplier for supply of
Input 'A' in July, 2018. As per contract it was agreed that 10,000 Kgs of Input 'A' will be supplied for
Rs.5,90,000 (inclusive of CGST and SGST @ 9% each) in 4 lots. Invoice of Rs.5,90,000 has been issued
with supply of first lot of Input 'A'. Following further information has been provided regarding supply
of Input 'A' received in subsequent lots. Briefly explain whether Vidhu Ltd. eligible to take credit on
proportionate basis.
Input 'A' (in lots) Quantity in Kgs Date of Receipt of Supply
First Lot 2,500 13-07-2018
Second lot 3,000 29-08-2018
Third Lot 1,500 15-09-2018
Fourth Lot 3,000 10-11-2018
Solution:
No, Vidhu Ltd. is not eligible to take credit on proportionate basis. As per first proviso to Section 16(2),
where the goods against an invoice are received in lots or instalments, the registered person shall be
entitled to take credit upon receipt of the last lot or instalment. In the given case Input 'A' has been
received in lots. Thus, the credit of tax of Rs.90,000 (Rs.5,90,000 * 18 / 118) paid on such input shall be
taken by Vidhu Ltd. only after receipt of fourth lot i.e., 10-11-2018.

A registered supplier of taxable goods supplied goods valued for Rs.1,18,000 (inclusive of CGST
Rs.9,000 and SGST Rs.9,000) to Bhadani Ltd. under the forward charge on 10-10-2018 for which tax
invoice was also issued on the same date. The inputs were received by Bhadani Ltd. on 20-10-2018.
Bhadani Ltd. availed credit of Rs.18,000 on 20-11-2018 at the time of filing GSTR-3B for October 2018.
But Bhadani Ltd. did not make any payment towards such supply along with tax thereon to the
supplier. Is Bhadani Ltd. eligible to avail input tax credit on such supply? Discuss ITC implications if
Bhadani Ltd. makes the payment of Rs.1,18,000 to the supplier on 15-12-2019.
Solution:
Yes, Bhadani Ltd. can avail input tax credit on receipt of taxable supply of goods. But it is required to
pay the consideration along with tax within 180 days from the date of issue of invoice.
(i) If Bhadani Ltd. does not make payment within 180 days from the date of invoice:
As per Rule 37 of CGST Rules, 2017, a registered person, who has availed of input tax credit on any
inward supply of goods or services or both, but fails to make payment to the supplier within 180
days from the date of issue of invoice shall furnish the details of such supply and the amount of
input tax credit proportionate to such unpaid amount, availed of, in Form GSTR-3B in succeeding
month after expiry of 180 days.
In this case since Bhadani Ltd. does not make any payment within 180 days from date of invoice
i.e. up to 8th April 2019, therefore amount equal to input tax credit availed by Bhadani Ltd. shall be
added towards its output tax liability along with interest in the month of May 2019 in which details
of such supplies are required to be furnished.
As per Section 50, interest shall be calculated @ 18% for the period starting from date of availing
credit till the date when input tax credit added to the output tax liability is paid.
Particulars Details
Amount of input tax credit (Rs.) 18,000
Date of availing credit (i.e. Date of filing GSTR-3B for October 2018) (Refer 20-11-2018
Note)
Date of payment of ITC added to output tax liability (i.e. Date of filing GSTR- 20-05-2019
3B for April 2019)

No. of days for which interest to be paid (Days between 20-11-2018 and 20- 181
05-2019)
Interest @ 18% to be paid on 20-05-2019 (Rs.) = (Rs.18,000 * 18% * 181) / 365 1,607
(ii) Re-credit of input tax credit if payment made after 180 days:
If Bhadani Ltd. makes payment on 15-12-2019 (i.e. after 180 days from date of issue of invoice), then
it shall be entitled to re-avail the credit of input tax.
Author’s Note: It is important to note that there is no time limit for re-availment of ITC.

VJ Ltd. is engaged in manufacture of taxable goods. Compute the ITC available with VJ Ltd. for the
month of December 2018 from the following particulars:
S.No. Inward Supplies GST (Rs.) Remarks
1. Inputs 'A' 1,10,000 One invoice on which GST payable was Rs.10,000, is
missing
2. Inputs 'B’ 1,50,000 Inputs are to be received in two instalments. First
instalment been received in December 2018
3. Capital goods 3,00,000 VJ Ltd. has capitalized the capital goods at full invoice
inclusive of GST as it will avail depreciation on the full
value.
4. Input services 2,00,000 One invoice dated 23-03-2018 on which GST payable was
Rs.25,000 has been received in December, 2018
Notes:
(a) All the conditions necessary for availing the ITC have been fulfilled.
(b) Annual return for the Financial Year 2018-19 was filed on 20th September, 2019.
Solution:
Computation of Admissible ITC
Inputs 'A' (Note 1) 1,00,000
Inputs 'B' (Note 2) Nil
Capital goods (Note 3) Nil
Input services (Note 4) 1,75,000
Total Admissible ITC 2,75,000
Notes:
(1) As per Section 16(2), the registered person should have the invoice in its possession to claim ITC.
Thus, ITC cannot be taken on missing invoice.
(2) As per Section 16(2), when inputs are received in instalments, ITC can be availed only on receipt of
last instalment.
(3) As per Section 16(2), input tax paid on capital goods cannot be availed as ITC if depreciation has
been claimed on such tax component.
(4) 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 actual date of filing annual return for such financial year, whichever is earlier. Since,
the annual return for the FY 2018-19 has been filed on 20th September 2019 (which is prior to due
date of filing the return for September, 2019 i.e. 20th October, 2019), ITC on the invoice pertaining
to FY 2018-19 cannot be availed after 20th September 2019.

Compute the amount of Input tax credit admissible to PJ Ltd. in respect of various inputs purchased
during the month of September 2018.

Goods purchased without invoice 50,000
Goods purchased from DK Ltd. (Full Payment is made by PJ Ltd. to DK Ltd. 1,00,000
against such supply but tax has not been deposited by DK Ltd.)
Purchases of goods not to be used for business purposes 20,000
Purchases of goods from VJ Ltd. (Invoice of VJ Ltd. is received in month of 25,000
September 2018 but goods were received in month of October 2018)
Goods purchased against valid invoice from SRK Ltd. (Tax has been deposited 35,000
by SRK Ltd. PJ Ltd. has made payment to SRK Ltd. for such purchases in the
month of October 2018)
Solution:
Goods purchased without invoice (Refer Note 1) -
Goods purchased from DK Ltd. (Full Payment is made by PJ Ltd. to DK Ltd. 1,00,000
against such supply but tax has not been deposited by DK Ltd.) (Refer Note 2)
Purchases of goods not to be used for business purposes (Refer Note 3) -
Purchases of goods from VJ Ltd. (Invoice of VJ Ltd. is received in month of -
September 2018 but goods were received in month of October 2018) (Refer Note
4)
Goods purchased against valid invoice from SRK Ltd. (Tax has been deposited 35,000
by SRK Ltd. PJ Ltd. has made payment to SRK Ltd. for such purchases in the
month of October 2018) (Refer Note 5)
Notes:
(1) No input tax credit will be available since PJ Ltd. is not in possession of valid tax paying document.
(2) As per Section 16, input tax credit shall not be admissible to registered person unless the tax
charged in respect of such supply has been actually paid by the supplier to the Government.
However, the condition that tax should actually have been paid by the supplier to the government
on the goods or services for which ITC is being taken could not be satisfied upfront by the recipient.
Also, recipient availing ITC will never be in a position to know whether the supplier has paid his
taxes or not. This information is to be checked and provided by the Common GST Portal whether
the supplier has paid the taxes or not. Till the time the GST Portal provides such information to
the recipient availing ITC, ITC can be availed on a provisional basis. If the supplier pays the tax,
Provisional ITC becomes Final ITC. If the supplier doesn’t pay the taxes, Provisional ITC taken
needs to be reversed (addition to output tax liability of the recipient) with interest.
Author’s Note: It is important to note that as on date there is no matching concept and thus, no
concept of Provisional ITC exists.
PJ Ltd. has to reverse the ITC (addition to output tax liability of the recipient) with interest in the
return of the month succeeding the month in which discrepancy has been communicated.
(3) As per Section 16, a registered person shall be entitled to take input tax credit on goods which are
used or intended to be used in the course or furtherance of his business. Since PJ Ltd. has purchased
the goods for non-business purpose, no credit will be admissible on such purchases.
(4) As per Section 16, input tax credit is admissible only when registered person has received such
goods. Since the goods are received in the month of October 2018, input tax credit cannot be taken
in the month of September 2018. It will be admissible in the month of October 2018.
(5) As per Section 16, input tax credit shall be admissible in month of September 2018 even if payment
is made by PJ Ltd. to SRK Ltd. in month of October 2018.

Shanti Ltd., a registered manufacturer, has furnished the following information regarding inputs
received in the factory and input service used for manufacture:
Particulars GST (Rs.) Excise Duty
(Rs.)
Raw material (Invoice dated 10-10-2018 for Rs.80,000 and 1,00,000 -
dated 30-09-2017 for Rs.20,000)
Consumables (Invoice dated 30-10-2018 but goods received 5,000 -
on 02-11-2018)
Input Service (Invoice dated 15-10-2018) 25,000 -
Office Equipment (Invoice dated 17-10-2018) 7,500
Motor Spirit (Invoice dated 02-10-2018) - 19,000
Paints (Invoice is missing) 2,500 -
Determine the total ITC that can be availed during the month of October 2018. Annual return for
Financial Year 2017-18 was filed on 10th October 2018.

Raw material (Note 1) 80,000
Consumables (Note 2) -
Input Service (Eligible for ITC) 25,000
Office Equipment (Eligible for ITC) 7,500
Motor Spirit (Note 3) -
Paints (Note 4) -
Notes:
(1) 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 actual date of filing annual return, whichever is earlier.
Since the Annual Return for the Financial Year 2017-18 has been filed on 10th October, 2018 (which
is prior to due date of filing the return for September 2018 i.e., 20 th October, 2018), ITC on the invoice
pertaining to Financial Year 2017-18 (amounting to Rs.20,000) cannot be availed after 10 th October
2018 (i.e. actual date of filing of Annual Return of FY 2017-18). And thus, ITC of Rs.20,000 of
September 2017 (FY 2017-18) cannot be availed in October 2018 as filing of return of October 2018
shall be in the month of November 2018.
(2) As per Section 16, ITC shall be admissible only after receipt of goods. Since, consumables are
received only in November 2018, ITC on the same cannot be availed in October 2018. It shall be
admissible only on November 2018.
(3) Excise duty paid on Motor Spirit cannot be availed as ITC for payment of GST on outward supplies.
(4) As per Section 16, no ITC will be available on paints since Shanti Ltd. is not in possession of valid
tax paying document.

Comment on admissibility of Input Tax Credit in following cases:
(i) Can a person take ITC without payment of consideration for the supply along with tax to the
supplier?
(ii) A driving school imports a motor vehicle for use in its training activity. Can it take ITC of the IGST
paid on the import?
(iii) A company is in the business of manufacturing garments. It buys a motor vehicle for use of his
Executive Directors. Can it avail the ITC in respect of GST paid on purchase of such motor vehicle?

(iv) A technical testing agency tests and certifies each batch of machine tools before dispatch by Special
Ltd. Some of these tools are dispatched to a unit in a SEZ without payment of GST as these supplies
are not taxable. Should Special Ltd. reverse ITC on the testing agency’s services to the extent
attributable to the SEZ supplies?
Solution:
(i) Yes. The recipient can take ITC without payment of consideration for the supply along with tax to
the supplier. However, he is required to pay the consideration along with tax within 180 days from
the date of issue of invoice. This condition of payment within 180 days is not applicable where tax
is payable on reverse charge basis.
(ii) Yes. As per Section 17(5) of the CGST Act, 2017, ITC is allowed on motor vehicle if they are used to
make the taxable supply of imparting training on driving of motor vehicle.
(iii) No. As per Section 17(5)(a), ITC on motor vehicles for transportation of passengers having seating
capacity of less than or equal to 13 persons (including driver) can be availed only if the taxable
person
(a) is in the business of further supply of motor vehicles.
(b) is in the business of transport of passengers or
(c) is providing the services of imparting training on driving / flying / navigating motor vehicles
or
(iv) No. As per Section 16(2) of the IGST Act, 2017, credit of input tax is allowed to be taken for inward
supplies used to make zero rated supplies. Supplies to SEZ units are zero rated supplies in terms
of Section 16(1) of IGST Act, 2017. Also, as per Section 17 of the CGST Act, 2017, ITC is disallowed
only to the extent it pertains to supplies used for non-business purposes or it pertains to supplies
other than taxable and zero-rated supplies. Thus, full ITC is allowed on inward supplies of Special
Ltd. even though it is used for effecting supplies to the unit in the SEZ.

Dhanush Ltd., a manufacturer, purchased in the month of November 2018 inputs of Rs.2,00,000 on
which it pays GST @ 18% of Rs.36,000. The company availed the aforementioned ITC of Rs.36,000 for
the month of November 2018. In February 2019 before the said inputs are put into use, the company
has written off such inputs in books of accounts. Discuss the treatment on input tax credit on the same.
Solution:
According to Section 17(5) of the CGST Act, 2017, goods written off are considered as ineligible input
and credit of GST paid on such goods cannot be taken. Since Dhanush Ltd. has already availed ITC on
such inputs in November 2018, the amount so availed will be added to the output tax liability of
Dhanush Ltd. in the month of February 2019.

Dabaang & Co., a manufacturer, which is engaged in supply of taxable goods has purchased 10,000 kg
of inputs for Rs.10,00,000 (exclusive of CGST @ 9% and SGST @ 9%) on which input tax credit has been
taken. Due to technical changes in manufacturing process, the said inputs became obsolete and their
value has been written off in the books of accounts. Explain the treatment of input tax credit in above
case.
Solution:
As per Section 17(5) of the CGST Act, 2017, if the value of any goods is written off in the books of
account, then no input tax credit shall be allowed in respect of the said input. Where input tax credit
has been taken in respect of the said goods, the same has to be paid by recipient of input goods. Since
in the given case, Dabaang & Co. has availed input tax credit, it has to pay Rs.90,000 (Rs.10,00,000 * 9%)
towards CGST liability and Rs.90,000 (Rs.10,00,000 * 9%) towards SGST liability.

Golmaal Ltd. conducted its AGM at its head office in New Delhi and availed services of Sapaad Caterers
on that occasion. Sapaad Caterers charged Rs.10,00,000 plus GST @ 18% for the supply of outdoor
catering services. You are required to advice Golmaal Ltd. if it can avail Input tax credit of the GST paid
on outdoor catering service.
Solution:
As per Section 17(5) of the CGST Act, 2017, input tax credit shall not be available in respect of supply
of outdoor catering service unless when such services are provided by an employer to its employees
under a statutory obligation. Hence, Golmaal Ltd. is not entitled to avail input tax credit of GST paid
on outdoor catering services availed from Sapaad Caterers.

Chalte Raho Ltd. is engaged in supply of passenger transportation services. In the month of November,
2018, it has purchased two motor vehicles for Rs.40,00,000 plus GST @ 28%. You are required to advice
Chalte Raho Ltd. if it can avail Input tax credit of the GST paid by it on motor vehicles.
Solution:
As per Section 17(5) of the CGST Act, 2017, input tax credit shall not be available in respect of motor
vehicles and other conveyances used for transportation of passengers having seating capacity of less
than or equal to 13 persons (including driver). However, credit will be available when they are used
for making the taxable supplies of transportation of passengers. In this case Chalte Raho Ltd. is engaged
in transportation of passengers it will be entitled to take credit of GST amounting Rs.11,20,000
(Rs.40,00,000 * 28%).

Ambuja Builders Ltd. is engaged in supply of works contract services for construction of immovable
property. It gives a part of the construction work to a sub-contractor. The subcontractor charges GST in
his invoice to Ambuja Builders Ltd. You are required to advice Ambuja Builders Ltd. if it can avail
Input tax credit of the GST charged to it by the sub-contractor.
Solution:
As per Section 17(5) of the CGST Act, 2017, input tax credit shall not be available in respect of works
contract services when supplied for construction of an immovable property. However, credit is allowed
where it is an input service for further supply of works contract service. In the given case, the services
supplied by the sub-contractor have been used by the Ambuja Builders Ltd. for supply of works
contract service. Hence, Ambuja Builders Ltd. can avail the Input tax credit of the GST charged on the
input service provided by the sub-contractor.

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:
(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 washing 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 and other conveyances for transportation of
passengers having seating capacity of less than or equal to 13 persons (including driver). However,
the same is allowed when the motor vehicles and other conveyances are used, inter alia, for further
supply of such vehicles or conveyances. 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) of CGST Act.
(ii) Section 17(5) specifically blocks on 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 washing 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.

Super Hero Automobiles is engaged in the manufacture of motor cars. Compute the amount of input
tax credit admissible from the following particulars with suitable explanation where required:
Raw Steel 4,00,000
Batteries 1,00,000
Cutting oil 50,000
Electric lamps for lighting manufacturing area 75,000
Solution:
Raw Steel (Eligible as “Inputs”) 4,00,000
Batteries (Eligible as “Inputs”) 1,00,000
Cutting oil (Eligible as “Inputs”) 50,000
Electric lamps for lighting manufacturing area (Eligible as “Inputs”) 75,000

Vijay Ltd., a registered manufacturer furnishes the following information for the month of September
2018 regarding GST paid on procurement of inputs etc. You are required to determine the amount of
ITC credit available to this company giving explanations for the treatment of the given items:
Inputs used in factory of manufacture 1,50,000
Goods for use in generation of electricity for captive consumption 50,000
Cement for construction of a godown in the factory 60,000
Goods for laying of foundation for support of plant and machinery 30,000
Food and beverages primarily for personal use of employees 10,000
Consumable stores for use in manufacture of goods 5,000
Solution:

Inputs used in factory of manufacture (Eligible as “Inputs”) 1,50,000
Goods for use in generation of electricity for captive consumption (Eligible as 50,000
“Inputs”)
Cement for construction of a godown in the factory (Note 1) -
Goods for laying of foundation for support of plant and machinery (Note 2) 30,000
Food and beverages primarily for personal use of employees (Note 3) -
Consumable stores for use in manufacture of goods (Eligible as “Inputs”) 5,000
Notes:
(1) As per Section 17(5), input tax credit shall not be admissible in respect of goods or services or both
received by a taxable person for construction of an immovable property (other than plant or
machinery) on his own account including cases when such goods or services or both are used in
the course or furtherance of business. Hence, input tax credit shall not be available in respect of
goods used in construction of godown in the factory.
(2) As per Section 17(5) mentioned above, input tax credit shall be admissible in respect of goods or
services or both received by a taxable person for construction of plant or machinery. Hence, tax
paid on cement shall be available for input tax credit.
(3) As per Section 17(5), no input tax credit is available in respect of food and beverages except when
such services are provided by an employer to its employees under a statutory obligation or except
where an inward supply of goods or services or both of a particular category is used by a registered
person for making an outward taxable supply of the same category of goods or services or both or
as an element of a taxable composite or mixed supply. Hence, input tax credit is available on food
and beverages for use of employees during office hours due to statutory obligation.

Based on the following information for the month of September 2018, determine the ITC available for
use as per CGST Act, 2017:
Particulars GST (Rs.) Excise Duty
(Rs.)
Pollution Control Equipment (Value is capitalized in books 50,000 -
of account)
Spares for Pollution Control Equipment 5,000 -
Equipment used in office within factory 20,000 -
Capital goods used for generation of electricity for captive -
1,00,000
use within the factory
Motor vehicle for transportation of goods (Value is -
2,00,000
capitalized in books of account)
Dairy and bakery products consumed by the employees 10,000 -
Inputs used for construction of a building 50,000 -
Cement used for construction of storage tank 15,000 -
Paints used for painting machinery used 3,000 -
Packing Material 5,000 -
Lubricating Oils 10,000 -
High Speed Diesel Oil - 10,000
Motor Spirit - 20,000
Accounting and auditing services 5,000 -
Legal services 10,000
Advertisement services 50,000 -
Renting of Motor Vehicle services 25,000 -
Solution:
Pollution Control Equipment (Eligible as “Capital Goods” as the same has been 50,000
capitalized in Books of Accounts)
Spares for Pollution Control Equipment (Eligible as “Inputs”) 5,000
Equipment used in office within factory (Eligible as “Inputs” as the same has not 20,000
been capitalized in Books of Accounts)
Capital goods used for generation of electricity for captive use within the factory
(Eligible as “Capital Goods” as the same has been capitalized in Books of 1,00,000
Accounts)
Motor vehicle for transportation of goods (Eligible as “Capital Goods” as the
2,00,000
same has been capitalized in Books of Accounts)
Dairy and bakery products consumed by the employees (Refer Note 1) -
Inputs used for construction of a building (Refer Note 2) -
Cement used for construction of storage tank (Refer Note 2) -
Paints used for painting machinery used (Eligible as “Inputs”) 3,000
Packing Material (Eligible as “Inputs”) 5,000
Lubricating Oils (Eligible as “Inputs”) 10,000
High Speed Diesel Oil (Refer Note 3) -
Motor Spirit (Refer Note 3) -
Accounting and auditing services (Eligible as “Input Services”) 5,000
Legal services (Eligible as “Input Services”) 10,000
Advertisement services (Eligible as “Input Services”) 50,000
Renting of Motor Vehicle services (Refer Note 4) -
Notes:
as an element of a taxable composite or mixed supply.
(2) As per Section 17(5), input tax credit shall not be admissible in respect of goods or services or both
machinery) on his own account including cases when such goods or services or both are used in
the course or furtherance of business. Hence, input tax credit shall not be available in respect of
inputs used for construction of a building and cement used for construction of storage tank.
Author’s Note: There can be an alternate view that storage tank itself is plant & machinery and
thus, ITC on the same is available.
(3) Excise duty paid on High Speed Diesel Oil and Motor Spirit cannot be availed as ITC for payment
of GST on outward supplies.
(4) As per Section 17(5), input tax credit shall not be admissible in respect of Renting of Motor Vehicle
services unless when such services are provided by an employer to its employees under a statutory
obligation.

Super Strong Ltd., a registered manufacturer engaged in taxable supply of goods, procured the
following goods during the month of November 2018. The same has been capitalized in the books of

accounts of Super Strong Ltd. Compute the amount of Input Tax credit available by giving necessary
explanations for treatment of various items.
Electrical transformers used in the factory 2,00,000
Moulds and dies used in the factory 20,000
Pollution control equipment used in the factory 1,50,000
Capital goods purchased on which depreciation has been taken on full value 1,00,000
including input tax thereon.
Capital goods used as parts purchased from supplier who paid tax of Rs.10,000 -
under composition scheme and the composite tax has not been collected from
Super Strong Ltd.
Solution:
Electrical transformers used in the factory (Note 1) 2,00,000
Moulds and dies used in the factory (Note 1) 20,000
Pollution control equipment used in the factory (Note 1) 1,50,000
Capital goods purchased on which depreciation has been taken on full value -
including input tax thereon (Note 2)
Capital goods used as parts purchased from supplier who paid tax of Rs.10,000 -
under composition scheme and the composite tax has not been collected from
Super Strong Ltd. (Note 3)
Notes:
(1) As per Section 2(19), "Capital Goods" means goods, the value of which is capitalized in the books
of account of the person claiming the input tax credit and which are used or intended to be used in
the course or furtherance of business. Thus, electrical transformers, moulds and dies and pollution
control equipment, which are used or intended to be used in the course or furtherance of business
are eligible for ITC as capital goods.
(2) As per Section 16(3), no input tax credit shall be admissible where registered person has claimed
depreciation on the tax component of the cost of capital goods and plant and machinery under the
provisions of the Income-tax Act, 1961.
(3) As per Section 17(5), input tax credit shall not be available in respect of goods or services or both
on which tax has been paid under Section 10. Thus, no ITC shall be allowed of tax paid under
composition scheme by the supplier.

Compute the amount of input tax credit available to Kum Kum Ltd. in respect of the following items
procured by them in the month of March 2019:
Input used for the manufacture of the final product 75,000
Food and Beverages procured from Spicy Caterers for being used in dealer's 20,000
meet
Goods used for providing services during warranty period 5,000
Goods used for setting up Telecommunication Towers being immovable 1,00,000
property
Inputs stolen from the factory store 8,500
Solution:

Input used for the manufacture of the final product 75,000
Food and Beverages procured from Spicy Caterers for being used in dealer's meet -
(Note 1)
Goods used for providing services during warranty period 5,000
Goods used for setting up Telecommunication Towers being immovable -
property (Note 2)
Inputs stolen from the factory store (Note 3) -
Total Admissible ITC 80,000
Notes:
(1) As per Section 17(5), no Input tax credit is available in respect of food and beverages except when
as an element of a taxable composite or mixed supply. Hence, no input tax credit is available on
food and beverages procured from Spicy Caterers for being used in dealer's meet.
(2) As per Section 17(5), goods received by taxable person for construction of an immovable property
(other than plant and machinery) on his own account including when such goods used in course
or furtherance of business shall be considered as ineligible input and no credit shall be allowed of
tax paid on such goods. Since, telecommunication tower is an immovable property and specifically
excluded from the definition of plant and machinery, no input tax credit shall be allowed in respect
of goods used for setting it up.
(3) As per Section 17(5), goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples are considered as ineligible input and credit of GST paid on such goods cannot be taken.

Compute the amount of input tax credit available to Pehal Ltd. in respect of the following items
procured by them in the month of March 2019:
Goods used in constructing an additional floor of office building 50,000
Packing materials used in a factory 5,000
Goods destroyed due to natural calamities 10,500
Goods used for repairing the office building and cost of such repairs is debited 15,000
to profit and loss
Papers for photocopying machine used in administrative office purchased from -
supplier who paid tax of Rs.500 under composition scheme and the composite
tax has not been collected from Pehal Ltd.
Goods given as gifts 2,000
Inputs used for tests or quality control check 6,600
Solution:
Goods used in constructing an additional floor of office building (Note 1) -
Packing materials used in a factory (Note 2) 5,000
Goods destroyed due to natural calamities (Note 3) -
Goods used for repairing the office building and cost of such repairs is debited 15,000
to profit and loss (Note 4)

Papers for photocopying machine used in administrative office purchased from -
supplier who paid tax of Rs.500 under composition scheme and the composite
tax has not been collected from Pehal Ltd. (Note 5)
Goods given as gifts (Note 3) -
Inputs used for tests or quality control check (Note 2) 6,600
Notes:
machinery) on his own account including when such goods or services or both are used in the
course or furtherance of business. Hence, input tax credit shall not be available in respect of goods
used in construction of an additional floor of office building.
(2) Packing materials and Inputs used for tests or quality control check are used in course of business
and thus, input tax credit shall be available.
(3) As per Section 17(5), input tax credit shall not be available in respect of goods lost, stolen, destroyed,
written off or disposed of by way of gift or free samples. Hence, no ITC shall be available in respect
of goods destroyed due to natural calamities and goods given as gifts.
(4) As per the Explanation to Section 17, the expression "construction" includes re-construction,
renovation, additions or alterations or repairs, to the extent of capitalization to the immovable
property. Thus, goods used for revenue repairs are considered as an eligible input and credit shall
be allowed on the same.
on which tax has been paid under Section 10. Thus, no ITC shall be allowed of tax paid under
composition scheme by the supplier.

Compute the amount of input tax credit available to KJVP Ltd. in respect of the following items
procured by them in the month of August 2018:
Goods supplied for captive consumption in a factory 10,000
Goods purchased for being used in repairing the factory shed and same has been 15,000
capitalized in books
Cement used for making foundation and structural support to Plant and 8,500
Machinery
Inputs used in trial runs 15,600
Food and beverages purchased for the employees during office hours due to 4,400
statutory obligation
Solution:
Goods supplied for captive consumption in a factory 10,000
Goods purchased for being used in repairing the factory shed and same has been -
capitalized in books (Note 1)
Cement used for making foundation and structural support to Plant and 8,500
Machinery (Note 2)
Inputs used in trial runs 15,600
Food and beverages purchased for the employees during office hours due to 4,400
statutory obligation (Note 3)

Notes:
course or furtherance of business. Construction includes re-construction, renovation, additions or
alterations or repairs, to the extent of capitalisation, to the said immovable property. Since the cost
of repairs is capitalized in books, no credit of input tax paid on goods used shall be allowed.
(2) As per Explanation to Section 17, "plant and machinery" means apparatus, equipment, and
machinery fixed to earth by foundation or structural support that are used for making outward
supply of goods or services or both and includes such foundation and structural supports. Input
tax credit is admissible in respect of goods or services or both received by a taxable person for
construction of plant or machinery. Hence, tax paid on cement shall be available for input tax credit.
as an element of a taxable composite or mixed supply. Hence, input tax credit is available on food
and beverages for use of employees during office hours due to statutory obligation.

Heavy Machines Ltd. is engaged in the manufacture of heavy machinery. Compute the amount of input
tax credit available to Heavy Machines Ltd. in respect of the following items procured by them in the
month of August 2018:
Electrical transformers to be used in the manufacturing process 5,00,000
Truck used for transportation of inputs in the factory 2,50,000
Raw material 3,50,000
Confectionery items for consumption of employees working in the factory 30,000
Solution:
Electrical transformers to be used in the manufacturing process (Note 1) 5,00,000
Truck used for transportation of inputs in the factory (Note 2) 2,50,000
Raw material (Note 1) 3,50,000
Confectionery items for consumption of employees working in the factory (Note -
3)
Notes:
(1) As per Section 16(1), ITC is admissible in respect of any goods used in the course or furtherance of
business. Hence, ITC is admissible in case of electrical transformers and raw materials used in
course or furtherance of business.
(2) As per Section 17(5), input tax credit is available of input tax paid on motor vehicles and other
conveyances used for transportation of passengers having seating capacity of less than or equal to
13 persons (including driver). Since the truck is used for transportation of goods, input tax credit
shall be allowed on same.

confectionery items for consumption of employees working in the factory.

Fast & Furious Ltd. is engaged in the manufacture of cars. Compute the amount of input tax credit
available to Fast & Furious Ltd. in respect of the following services procured by them in the month of
August 2018:
Accounting and auditing services 5,000
Health insurance services for employees (Services are provided under 7,500
Government obligation)
Routine maintenance of the cars manufactured by Fast & Furious Ltd. 35,000
Repair services for office building (Cost of repairs is charged to Profit & Loss 9,500
Account)
Hotel accommodation and conveyance facility to employees on vacation 5,500
Testing services availed for car engines 12,000
Solution:
Accounting and auditing services (Note 1) 5,000
Health insurance services for employees (Services are provided under 7,500
Government obligation) (Note 2)
Routine maintenance of the cars manufactured by Fast & Furious Ltd. (Note 1) 35,000
Repair services for office building (Cost of repairs is charged to Profit & Loss 9,500
Account) (Note 3)
Hotel accommodation and conveyance facility to employees on vacation (Note -
4)
Testing services availed for car engines (Note 1) 12,000
Notes:
(1) As per Section 16(1), ITC is admissible in respect of any services used in the course or furtherance
of business. Hence, ITC is admissible in case of accounting and auditing services, routine
maintenance of the cars manufactured and testing services availed for car engines, which are used
in course or furtherance of business.
(2) As per Section 17(5), no input tax credit is available in respect of health insurance services except
when such services are provided by an employer to its employees under a statutory obligation or
except where an inward supply of goods or services or both of a particular category is used by a
registered person for making an outward taxable supply of the same category of goods or services
or both or as an element of a taxable composite or mixed supply. Thus, ITC on health insurance
services can be availed as the same is provided by an employer to its employees under a statutory
obligation
(3) As per the Explanation to Section 17, the expression "construction" includes re-construction,
renovation, additions or alterations or repairs, to the extent of capitalization to the immovable
property. Thus, services used for revenue repairs are considered as an eligible input and credit shall
be allowed on the same.
(4) As per Section 17(5), no input tax credit shall be allowed on services extended to employees on
vacation.

Compute the amount of input tax credit available to Vikram Veda & Co. in respect of the following
services procured by them in the month of May 2018:
Sales promotion services 25,000
Health care services availed from Super Star Club for upkeep of health of their 7,500
employees
Vikram Veda & Co. hired cab on rent for employees. (Government has issued a 5,000
notification for such service to be mandatorily provided to employees)
Market research services 8,000
Quality control services 12,000
Work contract services for construction of office building 30,000
Solution:
Sales promotion services (Note 1) 25,000
Health care services availed from Super Star Club for upkeep of health of their -
employees (Note 2)
Vikram Veda & Co. hired cab on rent for employees. (Government has issued a 5,000
notification for such service to be mandatorily provided to employees) (Note 3)
Market research services (Note 1) 8,000
Quality control services (Note 1) 12,000
Work contract services for construction of office building (Note 4) -
Notes:
(1) As per Section 16(1), ITC is admissible in respect of any services used in the course or furtherance
of business. Hence, ITC is admissible in case of sales promotion services, market research services
and quality control services, which are used by supplier in course or furtherance of business.
(2) As per Section 17(5), no input tax credit is available in respect of health insurance services except
or both or as an element of a taxable composite or mixed supply. Thus, ITC on health insurance
services cannot be availed as the same is not provided under a statutory obligation.
(3) As per Section 17(5), no input tax credit is available in respect of renting or hiring of motor vehicles
services except when such services are provided by an employer to its employees under a statutory
obligation or except where an inward supply of goods or services or both of a particular category
is used by a registered person for making an outward taxable supply of the same category of goods
or services or both or as an element of a taxable composite or mixed supply. Thus, ITC on renting
or hiring of motor vehicles services can be availed as the same is provided under a statutory
obligation.
course or furtherance of business. Since, work contract services for construction of office building,
no credit of input tax paid on goods used shall be allowed.


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 the month of February, 20XX:
S. No. Particulars GST paid (Rs.)
(i) Trucks used for the transport of raw material 1,20,000
(ii) Foods and beverages for consumption of employees working in the factory 40,000
(iii) Inputs are to be received in five lots, out of which third lot was received 80,000
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 and GST 4,00,000
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:
Trucks used for the transport of raw material (Note 1) 1,20,000
Foods and beverages for consumption of employees working in the factory (Note 2) Nil
Inputs are to be received in five lots, out of which third lot was received during the Nil
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 time was missing and GST paid on 3,50,000
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:
13 persons (including driver). Since the truck is used for transportation of goods, input tax credit
shall be allowed on same.
foods and beverages for consumption of employees working in the factory
(3) As per Section 16(2), when inputs are received in instalments, ITC can be availed only on receipt of
last instalment.
(4) As per Section 17(5), no input tax credit is available in respect of membership of a club except when
such services are provided by an employer to its employees under a statutory obligation. Hence,
no input tax credit is available on membership of a club.
(5) As per Section 16(2), the registered person should have the invoice in its possession to claim ITC.
(6) As per Section 16(2), ITC is available only upon the receipt of goods.

Le Marc Ltd. of Nashik, Maharashtra, a registered supplier, is engaged in manufacturing taxable goods.
It provides the following details of items purchased and services availed by it from Gujarat, for the
month of March, 20XX:
S. No. Particulars IGST (Rs.)
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 in lieu of services 2,000
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:
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 (Note 1) 2,00,000
Food items for consumption of employees (Note 2) -
Rent-a-cab facility given to employees (Note 3) 36,000
Total Eligible ITC 2,36,000
Notes:
13 persons (including driver). Thus, ITC on motor vehicle purchased for employees is not available
and ITC on motor vehicle purchased for transportation of goods within the factory is available.
(2) As per Section 17(5), no input tax credit is available in respect of food and beverages services except
or both or as an element of a taxable composite or mixed supply. Thus, ITC on food and beverages
services cannot be availed as the same is not provided under a statutory obligation.
(3) As per Section 17(5), no input tax credit is available in respect of renting or hiring of motor vehicles
services except when such services are provided by an employer to its employees under a statutory
obligation or except where an inward supply of goods or services or both of a particular category
is used by a registered person for making an outward taxable supply of the same category of goods
or services or both or as an element of a taxable composite or mixed supply. Thus, ITC on rent-a-
cab can be availed as the same is provided under statutory obligation.

Harshgeet (P) Ltd., a registered supplier, is engaged in the manufacture of taxable goods. The company
provides the following information pertaining to GST paid on the purchases made/input services
availed by it during the month of July, 2018:
S. No. Particulars GST Paid (Rs.)

1. Raw Material (to be received in September, 2018) 2,50,000
2. Membership of a club availed for employees working in the factory 1,45,000
3. Inputs to be received in 5 lots, out of which 3rd lot was received during 80,000
the month
4. Trucks used for transport of raw material 40,000
5. Capital goods (out of 3 items, invoice for 2 items is missing and GST 1,50,000
paid on that item is Rs.80,000)
Determine the amount of tax credit available with Harshgeet (P) Ltd. for the month of July, 2018 by
giving the necessary explanation for treatment of various items. All the conditions necessary for
availing the ITC have been fulfilled.
Solution:
Particulars ITC (Rs.)
Raw Material Nil
(ITC not available as raw material is not received in July, 2018)
Membership of a club availed for employees working in the factory Nil
(Blocked credit in terms of Section 17(5) of the CGST Act, 2017)
Inputs to be received in 5 lots, out of which 3rd lot was received during the month Nil
(In case of goods received in lots, ITC can be taken only upon receipt of the last
lot)
Trucks used for transport of raw material 40,000
(ITC of GST paid on motor vehicles is allowed when used for transportation of
goods in terms of Section 17(5) of the CGST Act, 2017)
Capital Goods 70,000
(ITC on Capital Goods – Rs.80,000 is not allowed as invoice for the same is not
available. ITC on Capital Goods – Rs.70,000 is allowed as invoice for the same is
available)
Total ITC Available 1,10,000

CANWIN Ltd., a registered supplier, is engaged in the manufacture of Tanks. The company provides
the following information pertaining to GST paid on the purchases made/input services availed by it
during the month of January 2019:
(i) Purchase of Machinery where debit note is issued 1,15,000
(ii) Input purchased was directly delivered to Mr. Joe, a job worker and a 80,000
registered supplier
(iii) Computers purchased (Depreciation was claimed on the said GST portion 50,000
under the Income-Tax Act, 1961)
(iv) Works Contract services availed for construction of staff quarters within the 4,25,000
company premises
Determine the amount of ITC available to M/s. CANWIN Ltd. for the month of January 2019 by giving
brief explanations for treatment of various items. Subject to the information given above, all the
conditions necessary for availing the ITC have been fulfilled.
Solution:
Particulars ITC (Rs.)
Purchase of machinery where debit note is issued (Note 1) 1,15,000
Inputs directly delivered to a job worker supported by a valid document 80,000
Computers (Note 2) Nil
Works contract services availed for construction of staff quarters within the company Nil
premises (Note 3)
Total ITC Admissible 1,95,000
Notes:
(1) As per Section 16, input tax credit on goods purchased on the basis of debit note which is a valid
document is allowed.
(2) As per Section 16, where depreciation has been claimed on the tax component of the cost of capital
goods and plant and machinery under the provisions of the Income Tax Act, 1961, the input tax
credit on the said tax component is not allowed.
(3) As per Section 17(5), input tax credit on works contract services supplied for construction of an
immovable property is specifically disallowed except where it is an input service for further supply
of works contract service.

Vasudev Pvt. Ltd., a registered supplier, is engaged in the manufacture of taxable goods The company
provides the following information pertaining to GST paid on the purchase made/input services
availed by it during the month of July, 20XX:
S. No. Particulars GST paid
(1) Raw Material (To be received in September, 20XX) 2,50,000
(2) Membership of a club availed for employees working in the factory 1,45,000
(3) Inputs to be received in 5 lots, out of which 3rd lot was received during the 80,000
month
(4) Trucks used for transport of raw material 40,000
(5) Capital goods (out of 3 items, invoice for 2 items is missing and GST paid 1,50,000
on those items is Rs.80,000)
Determine the amount of tax credit available with Vasudev Pvt. Ltd. for the month of July, 20XX by
giving the necessary explanation for treatment of various items. All the conditions necessary for
availing the input tax credit (ITC) have been fulfilled.
Solution:
Raw Material (Note 1) Nil
Membership of a club availed for employees working in the factory (Note 2) Nil
Inputs to be received in 5 lots, out of which 3rd lot was received during the month Nil
(Note 3)
Truck used for transport of raw material (Note 4) 40,000
Capital goods (Note 5) 70,000
Notes:
(1) As per Section 16, ITC is not available as raw material is not received in July, 20XX.
(2) As per Section 17(5), no input tax credit is available in respect of membership of a club except when
such services are provided by an employer to its employees under a statutory obligation. Hence,
no input tax credit is available on membership of a club.
(3) As per Section 16, in case of goods received in lots, ITC can be taken only upon receipt of the last
lot.

13 persons (including driver). Thus, ITC on truck used for transport of raw material is available.
(5) As per Section 16, ITC of GST paid on items for which invoice is missing is not available. So, ITC of
Rs.80,000 is not available.

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 2018:
(i) Purchase of bus used for the transportation of its employees 3,30,000
(ii) Inputs consisting of three lots, out of which first lot was received during 1,25,000
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, 2018 by giving necessary explanations for treatment of various items. All the conditions
necessary for availing the input tax credit have been fulfilled.
Solution:
Purchase of bus used for the transportation of its employees (Note 1) 3,30,000
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 5,55,000
Notes:
13 persons (including driver). Thus, ITC on bus used for the transportation of its employees (> 13
persons) is available.
(2) As per Section 16, when inputs are received in instalments, ITC can be availed only on receipt of
last instalment.
(3) As per Section 16, the registered person should have the invoice in its possession to claim ITC.
(4) As per Section 17(5), no input tax credit is available in respect of outdoor catering services except
or both or as an element of a taxable composite or mixed supply. Thus, ITC on outdoor catering
beverages services cannot be availed as the same is not provided under a statutory obligation.
Radiance Soap Factory, a registered supplier, is engaged in manufacturing beauty soaps – ‘Glow 24*7’
in Mumbai. It has provided the following information pertaining to purchases made/services availed
in the month of January, 2019:
Particulars GST Paid (Rs.)
Soap making machine 50,000
Motor vehicles for transportation of inputs 70,000
Membership of “Amaze” health and fitness centre 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 Radiance Soap Factory for the
month of January, 2019 assuming that all the other conditions for availing ITC, wherever applicable,
have been fulfilled.
Solution:
Soap making machine (Note 1) 50,000
Motor vehicles for transportation of inputs (Note 2) 70,000
Membership of ‘Amaze’ health and fitness centre for its employees (Note 3) Nil
Inputs stolen from the factory (Note 4) Nil
Notes:
(1) As per Section 16, ITC in respect of goods used in course / furtherance of business is available.
13 persons (including driver). Thus, ITC on motor vehicle used for the transportation of inputs is
available.
(3) As per Section 17(5), no input tax credit is available in respect of health and fitness centre except
when such services are provided by an employer to its employees under a statutory obligation.
Hence, no input tax credit is available on health and fitness centre.
(4) As per Section 17(5), ITC in respect of goods stolen is blocked.
Shridhar Co. Ltd., a registered supplier, is engaged in the manufacture of heavy machinery. It procured
the following items during the month of March.
S. No. Items GST Paid (Rs.)
(i) Sweets for consumption of employees working in the factory 50,000
(ii) Raw material 1,00,000
(iii) Trucks used for the transport of raw material 2,00,000
(iv) Electrical transformers to be used in the manufacturing process 4,00,000
Determine the amount of input tax credit available with Shridhar Co. Ltd, for the month of March by
giving necessary explanations for treatment of various items.
Note: All the conditions necessary for availing the input tax credit have been fulfilled.
Solution:
S. No. Items ITC (Rs.)
(i) Sweets for consumption of employees working in the factory (Note 1) Nil
(ii) Raw material (Note 2) 1,00,000

(iii) Trucks used for the transport of raw material (Note 3) 2,00,000
(iv) Electrical transformers (Note 4) 4,00,000
Total ITC 7,00,000
Notes:
(1) As per Section 17(5), no input tax credit is available in respect of food and beverages services except
or both or as an element of a taxable composite or mixed supply. Thus, ITC on sweets for
consumption of employees working in factory cannot be availed as the same is not provided under
statutory obligation.
(2) As per Section 16(1), raw materials being goods used in the course or furtherance of business, ITC
thereon is available.
13 persons (including driver). Thus, ITC on truck used transport of raw materials is available.
(4) As per Section 16(1), electrical transformers used in the course or furtherance of business, ITC
thereon is available.
Question 37: Utilization of ITC

From the following information, compute the Net GST payable for the month of September 2019:
Particulars Output Tax Liability Input Tax Credit
IGST 1,000 1,300
CGST 300 200
SGST 300 200
Total 1,600 1,700
Solution:
Option 1: Computation of Net Output Tax Payable
Particulars IGST (Rs.) CGST (Rs.) SGST (Rs.)
Gross Output Tax Payable 1,000 300 300
Less: Utilization of Input Tax Credit
▪ Utilization of IGST ITC (1,000) (200) (100)
▪ Utilization of CGST ITC - (100) -
▪ Utilization of SGST ITC - - (200)
Net Output Tax Payable in Electronic Cash Ledger 0 0 0
Bal. ITC carried forward in Electronic Credit Ledger 0 100 0



Note: As per Section 49, Section 49A and Section 49B read with Rule 88A, order of utilization is as
follows:
Order of Utilization of ITC of IGST
▪ ITC of IGST on inward supply first is to be utilized for payment of Output IGST liability on outward
supply,
▪ ITC of IGST on inward supply then is to be utilized for payment of Output CGST liability and
Output SGST liability on outward supply IN ANY ORDER & IN ANY PROPORTION.
▪ ITC of IGST to be completely exhausted mandatorily before using ITC of CGST and ITC of SGST
Order of Utilization of ITC of CGST
▪ ITC of CGST on inward supply first is to be utilized for payment of Output CGST liability on
outward supply,
▪ ITC of CGST on inward supply then is to be utilized for payment of Output IGST liability.
▪ ITC of CGST on inward supply CANNOT be utilized for payment of Output SGST liability.
▪ ITC of CGST should be fully utilized before using ITC of SGST / UTGST for Output IGST liability
(if any)
Order of Utilization of ITC of SGST
▪ ITC of SGST on inward supply first is to be utilized for payment of Output SGST liability on
outward supply,
▪ ITC of SGST on inward supply then is to be utilized for payment of Output IGST liability. However,
ITC of CGST should be fully utilized before using ITC of SGST / UTGST for Output IGST liability.
▪ ITC of SGST on inward supply CANNOT be utilized for payment of Output CGST liability.
Special Note: It is important to note that after using it IGST ITC against IGST Output, balance IGST
ITC can be used for payment of CGST Output and SGST Output in any order and in any proportion.
Thus, there can be multiple answers for the same question.
(ICAI – IPCC [Old Syllabus – 4 Marks] (Adapted) – Nov. 2018 Exam)

Question 38: Utilization of ITC
From the following information, compute the Net GST payable for the month of March, 2019:
Particulars Output GST Opening ITC as per Credit Ledger
CGST 2,000 Nil
SGST 15,000 1,000
IGST 24,000 37,000
Solution:
Computation of Net Output Tax Payable
Gross Output Tax Payable 24,000 2,000 15,000
▪ Utilization of IGST ITC (24,000) (2,000) (11,000)
▪ Utilization of CGST ITC
▪ Utilization of SGST ITC (1,000)
Net Output Tax Payable in Electronic Cash Ledger Nil Nil 3,000

follows:
supply,
outward supply,
(if any)
outward supply,
Question 39: Availment of ITC and Utilization of ITC

Mr. Karan, a supplier of goods, pays GST under regular scheme. Mr. Karan is not eligible for any
threshold exemption. He has made the following outward taxable supplies in a tax period:
Intra-State supply of goods 20,00,000
Inter-State supply of goods 7,50,000
He has also furnished the following information in respect of purchases made by him in that tax period:
Intra-State supply of goods 12,00,000
Inter-State supply of goods 2,50,000
Mr. Karan has following ITCs with him at the beginning of the tax period:
CGST 50,000
SGST 50,000
IGST 1,10,000
Note:
(a) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
(b) Both inward and outward supplies 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. Karan during the tax period. Make suitable assumptions as
required.
Solution:
Computation of Gross Output Tax Payable
S. No. Particulars Amount (Rs.) Amount (Rs.)
1. Intra-State supply of goods
➔ CGST @ 9% on Rs.20,00,000 1,80,000
➔ SGST @ 9% on Rs.20,00,000 1,80,000 3,60,000

2. Inter-State supply of goods
➔ IGST @ 18% on Rs.7,50,000 1,35,000
3. Total GST payable 4,95,000
Computation of Total ITC

Particulars IGST @ 18% (Rs.) CGST @ 9% (Rs.) SGST @ 9% (Rs.)
Opening ITC 1,10,000 50,000 50,000
Add: ITC on Intra-State purchases of goods - 1,08,000 1,08,000
valuing Rs.12,00,000
Add: ITC on Inter-State purchases of goods 45,000 - -
valuing Rs.2,50,000
Total ITC 1,55,000 1,58,000 1,58,000
Computation of Net Output Tax Payable through Electronic Cash Ledger

IGST @ 18% CGST @ 9% SGST @ 9%
Particulars
(Rs.) (Rs.) (Rs.)
Gross Output Tax Payable 1,35,000 1,80,000 1,80,000
▪ Utilization of IGST ITC (1,35,000) (10,000) (10,000)
▪ Utilization of CGST ITC - (1,58,000) -
▪ Utilization of SGST ITC - - (1,58,000)
Net Output Tax Payable in Electronic 0 22,000 22,000
Cash Ledger
Bal. ITC carried forward in Electronic 0 0 0
Credit Ledger
follows:
supply,
outward supply,
(if any)
outward supply,


(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:-
Value of intra-State supply of goods 12,000
Value of intra-State purchase of goods 10,000
Notes:
(a) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(b) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(c) 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 neighboring 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:-
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%
Notes:
(a) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(b) 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.
Solution:
Computation of Net Output Tax Payable by Tirupati Traders
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 * 9 %) (Rs.12,000* 9 %)
the same]
Less: Input Tax Credit (ITC) on intra-State purchase of (900) (900)
goods (Rs.10,000 * 9%) (Rs.10,000* 9%)
[CGST and SGST paid on the intra-State purchases of
goods]
Net Output Tax Payable in Electronic Cash Ledger 180 180
Computation of Net Output Tax Payable by Govind

IGST @ 18% payable on inter-State supply of services [Being an inter-State 32,400
supply, IGST is payable on the same in terms of Section 5 of the IGST Act, [1,80,000 × 18%]
2017]

Less: ITC of CGST @ 9% paid on intra-State receipt of goods and services (9,000)
[Cross-utilisation of CGST towards IGST]
Less: ITC of SGST @ 9% paid on intra-State receipt of goods and services (9,000)
[Cross-utilisation of SGST towards IGST]
Net Output Tax Payable in Electronic Cash Ledger 14,400
follows:
supply,
outward supply,
(if any)
outward supply,

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 Output Tax Payable by Shipra Traders
Particulars CGST @ 9% (Rs.) SGST @ 9% (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
[ITC of CGST and SGST paid on intra-State [10,000 * 9%] [10,000 * 9%]
purchase is available in full, even if some inputs are
lying in stock]
Net Output Tax Payable in Electronic Cash Ledger Nil Nil
Bal. ITC carried forward in Electronic Credit Ledger 45 45
(ICAI – RTP – CA Final (Adapted)– May 2018)

M/s. XYZ, a registered supplier, supplies the following goods and services for construction of buildings
and complexes
➔ excavator for required period at a per hour rate.
➔ manpower for operation of the excavators at a per day rate
➔ soil-testing and seismic evaluation at a per sample rate.
The excavators are invariably hired out along with operators. Similarly, excavator operators are
supplied only when the excavators is hired out.
M/s. XYZ receives the following services:
➔ Annual maintenance services for excavators.
➔ health insurance for operators for the excavator.
➔ Scientific and technical consultancy for soil testing and seismic evaluation.
For a given month, the receipts (exclusive of GST) of M/s XYZ are as follows:
➔ Hire charges for excavators Rs.18,00,000
➔ Service charges for supply of manpower of operation of the excavator Rs.20,000
➔ Service charges for soil testing and seismic evaluation at three sites Rs.2,50,000.
The GST paid during the said month on services received by M/s XYZ is as follows:
➔ Annual maintenance for excavators Rs.1,00,000
➔ Health insurance for excavator operators Rs.11,000
➔ Scientific and technical consultancy for soil testing and seismic evaluation- Rs.1,00,000
Compute the net GST payable by M/s. XYZ for the given month.
Assume the rates of GST to be as under.
➔ Hiring out of excavators-12%
➔ Supply of manpower services and soil- testing and seismic evaluation services-18%
Note: Opening balance of input tax credit of GST is nil.
Solution:
Particulars Value Received Rate of GST payable
(Rs.) GST (Rs.)
Hiring charges for excavators 18,00,000 12% 2,16,000
Service charges for supply of manpower 20,000 12% 2,400
for operation of excavators (Refer Note
1)
Service charges for soil testing and 2,50,000 18% 45,000
seismic evaluation (Refer Note 2)
Gross GST liability 2,63,400
Notes:
(1) Since the excavators are invariably hired out along with operators and excavators operated are
supplied only when the excavator is hired out, it is a case of composite supply under Section 2 (30)
of the CGST Act, 2017 wherein the principal supply is the hiring out of the excavator.
As per Section 8 (a) of the CGST Act, 2017, the composite supply is treated as the supply of the
principal supply. Therefore, the supply of manpower for operation of the excavators will also be
taxed at the rate applicable for hiring out of the excavator (principal supply), which is 12%.
(2) Soil testing and seismic evaluation services being independent of the hiring out of excavator will
be taxed at the rate applicable to them, which is 18%.
Computation of Input Tax Credit

Particulars GST paid (Rs.) ITC available
(Rs.)

Annual maintenance services for excavators (Refer Note 1) 1,00,000 1,00,000
Health insurance for excavators operators (Refer Note 2) 11,0000 -
Scientific and technical consultancy (Refer Note 1) 1,00,000 1,00,000
Total Input Tax Credit available 2,00,000
Notes:
(1) Section 17(5) of the CGST Act, 2017 blocks credit on goods and/or services received by a taxable
person for construction of an immovable property on his own account. Here, though the excavators
are used for building projects, the same are not used by M/s. XYZ on its own account for
construction of immovable property, instead they are used for outward taxable supply of hiring
out of machinery.
Therefore, the annual maintenance service for the excavators does not get covered by the bar under
Section 17 of the CGST Act, 2017 and the credit thereon will be available. The same applies for
scientific & technical consultancy for construction projects because in this case also, the service is
used for providing the outward taxable supply of soil testing and seismic evaluation service and
not for construction of immovable property.
(2) Section 17(5) of the CGST Act, 2017 allows input tax credit on health insurance only when:
(a) The Government notifies the services as obligatory for an employer to provide to its employees
under any law for the time being in force, or
(b) The said service is used for making an outward taxable supply of the same category of service
or as part of a taxable composite or mixed supply.
Since, in the given case, the health insurance service does not fall under any of the above two
categories, the credit thereon will not be allowed.
Computation of Net Output Tax Payable

GST Payable
Particulars
(Rs.)
Gross GST liability 2,63,400
Less: Input tax credit 2,00,000
Net Output Tax Payable in Electronic Cash Ledger 63,400

The following are details of purchases, sales, etc. effected by M/s Lavanya & Co. a registered
manufacturer under CGST Act, 2017:
(a) Purchased raw material ‘X’ from local dealer for Rs.91,840 (inclusive of GST @ 12%)
(b) Purchased raw material ‘Y’ from local dealer for Rs.1,12,000 (inclusive of GST @ 12%)
(c) Purchased capital goods from within the state to be used in manufacture of the taxable goods for
Rs.2,24,000 (inclusive of GST @ 12%). Depreciation @ 15% is to be charged.
(d) Other direct and indirect expenses amounting to Rs.88,000.
(e) Earned 5% profit margin on total cost.
(f) Only 70% production is sold within the state and applicable GST rate being 12%
Calculate the amount of CGST and SGST payable after utilizing input tax credit assuming no opening
balance of input tax credit is available.
Solution:
Computation of Taxable Value of Supply
(i) Cost of raw material ‘X’ from local dealer = (Rs.91,840 * 100) / 112 82,000
(ii) Cost of raw material ‘Y’ from local dealer = (Rs.1,12,000 * 100) / 112 1,00,000
(iii) Depreciation = [(Rs.2,24,000 * 100) / 112] * 15% = Rs.2,00,000 * 15% 30,000
(iv) Other direct and indirect expenses 88,000

Total Cost of Goods Manufactured = (i) + (ii) + (iii) + (iv) 3,00,000
Cost of goods sold = 70% of Cost of Goods Manufactured = 70% * Rs.3,00,000 2,10,000
Add: Profit Margin @ 5% of Cost of goods sold = 5% * Rs.2,10,000 10,500
Computation of Net GST Payable

Particulars CGST @ 6% (Rs.) SGST @ 6% (Rs.)
GST payable on intra-State supply of goods 13,230 13,230
[Being an intra-State supply, CGST and CGST is [2,20,500 * 6%] [2,20,500 * 6%]
payable on the same]
Less: ITC on intra-State purchase of goods
[ITC of CGST and SGST paid on intra-State purchase is
available in full, even if some inputs are lying in stock]
(i) Raw Material X 4,920 4,920
[82,000 * 6%] [82,000 * 6%]
(ii) Raw Material Y 6,000 6,000
[1,00,000 * 6%] [1,00,000 * 6%]
(iii) Capital Goods 12,000 12,000
[2,00,000 * 6%] [2,00,000 * 6%]
Net Output Tax Payable in Electronic Cash Ledger Nil Nil
Bal. ITC carried forward in Electronic Credit Ledger 9,690 9,690

R Ltd., a registered manufacturer in state of Maharashtra provides the following particulars:
(a) Inputs purchased within state for Rs.1,12,000 (including GST @ 12%)
(b) Machinery purchased for Rs.2,00,000 (excluding GST @ 12%) from a local dealer in Maharashtra
eligible for input tax credit. Depreciation rate is 15%.
(c) Manufacturing expenses and profits amounting to Rs.70,000
(d) Goods produced were sold outside Maharashtra with IGST @ 18% on sales.
Calculate the amount of GST payable after utilizing input tax credit.
Solution:
Computation of Taxable Value of Supply and Gross Output Tax Liability
(i) Cost of inputs purchased from local dealer = (Rs.1,12,000 * 100) / 112 1,00,000
(ii) Depreciation = Rs.2,00,000 * 15% 30,000
(iii) Manufacturing expenses and profits 70,000
IGST @ 18% 36,000

Inputs purchased within the State 6,000 6,000
[1,12,000 * 6 / 112] [1,12,000 * 6 / 112]
Machinery purchased within the State 12,000 12,000
[2,00,000 * 6 / 100] [2,00,000 * 6 / 100]
Total Input Tax Credit 18,000 18,000
Computation of Net GST Payable through Electronic Cash Ledger

Particulars IGST @ 18% (Rs.)
Total GST Payable 36,000
Less: ITC of CGST against IGST liability respectively (18,000)
[Cross-utilization of CGST towards IGST]
Less: ITC of SGST against IGST liability (18,000)
[Cross-utilization of SGST towards IGST]
Net GST Payable through Electronic Cash Ledger -
follows:
supply,
outward supply,
(if any)
outward supply,

Mr. DK of Kolkata purchased goods from Assam amounting Rs.1,18,000 (including 18% IGST) in the
month of March 2018. He also purchased raw material worth Rs.1,25,000 from local dealer who has
opted for composition scheme. He incurred Rs.75,000 as direct and indirect expenses and added profit
margin @ 20% of cost.
Mr. DK sold 70% of finished goods to Mr. VK of Mumbai with IGST @ 12% payable thereon and 30%
of finished goods to Mr. PK of Kolkata with CGST @ 6% and SGST @ 6% payable thereon.
Compute the net CGST, SGST and IGST liability and input tax credit if any, for the month of March
2018.
Solution:
Computation of Taxable Value of Supply
(i) Cost of raw material from Assam = (Rs.1,18,000 * 100) / 118 1,00,000
(ii) Cost of raw material from dealer opting for composition scheme 1,25,000
(iii) Other direct and indirect expenses 75,000
Total Cost of Goods = (i) + (ii) + (iii) 3,00,000
Add: Profit Margin @ 20% of Cost of Goods = 20% * Rs.3,00,000 60,000
Goods sold to Mr. VK of Mumbai (70% of goods produced) = Rs.3,60,000 * 2,52,000
70%

Goods sold to Mr. PK of Kolkata (30% of goods produced) = Rs.3,60,000 * 30% 1,08,000

CGST @ 6% (Rs.) SGST @ 6% IGST @ 12%
Particulars
(Rs.) (Rs.)
Goods sold to Mr. VK of Mumbai - - 30,240
[2,52,000 * 12%]
Goods sold to Mr. PK of Kolkatta 6,480 6,480 -
[1,08,000 * 6%] [1,08,000 * 6%]
Less: ITC of IGST in respect of purchase - - 18,000
of raw material from Assam [1,00,000 * 18%]
Net GST Payable through Electronic 6,480 6,480 12,240
Cash Ledger
Notes:
(1) Credit will be available for GST charged by supplier outside the State and hence same shall not be
included in the cost.
(2) No input tax credit shall be admissible on purchased made from dealer who has opted to the
composition scheme.
(3) As per Section 49, 4 9 A a n d 4 9 B read with Rule 88A, IGST shall first be utilised towards
payment of IGST and the amount remaining, if any, may be utilised towards the payment of
CGST and SGST in any proportion and in any order.

Vidya & Co., registered dealer in Delhi, furnished the following details of purchases and sales
pertaining to the month of July 2018:
Goods ‘X’ purchased from local market (including GST @ 12% ) 50,400
Goods ‘Y’ purchased from Jaipur (including GST @ 18% ) 82,600
Sales made during the month to dealer of Kolkata of product
➔ Goods ‘X’ 40,000
➔ Goods ‘Y’ 25,000
Sales made within the State of Goods ‘Y’ 35,000
Above sales amount given is exclusive of tax. Compute the net CGST, SGST and IGST liability and
input tax credit, if for the month of July 2018.
Solution:
Inter-State Sales
➔ Goods ‘X’ sold in Kolkatta 4,800 - -
[40,000 * 12%]
➔ Goods ‘Y’ sold in Kolkatta 4,500 - -
[25,000 * 18%]
Intra-State Sales of Goods ‘Y’ - 3,150 3,150
[35,000 * 9%] [35,000 * 9%]


➔ CGST & SGST of Goods ‘X’ purchased - 2,700 2,700
from local market [50,400 * 6 / 112] [50,400 * 6 / 112]
➔ IGST of Goods ‘Y’ purchased from Jaipur 12,600 - -
[82,600 * 18 / 118]
Total ITC 12,600 2,700 2,700

▪ Utilization of IGST ITC (9,300) (1,650) (1,650)
▪ Utilization of CGST ITC - (1,500) -
▪ Utilization of SGST ITC - - (1,500)
Net Output Tax Payable in Electronic 0 0 0
Cash Ledger
Bal. ITC carried forward in Electronic 0 1,200 1,200
Credit Ledger
follows:
supply,
outward supply,
(if any)
outward supply,
Mr. Bholenath, a registered supplier of goods, pays GST under regular scheme and provides the
following information for the month of January, 20XX:
(i) Inter-state taxable supply of goods 10,00,000
(ii) Inter state taxable supply of goods 2,00,000

(iii) Inter-state purchase of taxable goods 5,00,000
He has the following input tax credit at the beginning of January 20XX: CGST – Rs.20,000, SGST –
Rs.30,000 and IGST – Rs.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:
Gross Output Tax Payable
S. No. Particulars GST (Rs.)
(i) Inter-State taxable supply of goods
IGST @ 18% on Rs.10,000 1,80,000
(ii) Intra-State taxable supply of goods
CGST @ 9% on Rs.2,00,000 18,000
SGST @ 9% on Rs.2,00,000 18,000
Total ITC in Electronic Credit Ledger

Opening ITC 25,000 20,000 30,000
Add: ITC on Intra-State purchases of __ 45,000 45,000
taxable goods valuing Rs.5,00,000
Total ITC 25,000 65,000 75,000
Net Output Tax Payable from Electronic Cash Ledger

Particulars IGST @ 18% CGST @ 9% SGST @ 9%
(Rs.) (Rs.) (Rs.)
Gross Output Tax Payable 1,80,000 18,000 18,000
▪ Utilization of IGST ITC (25,000) - -
▪ Utilization of CGST ITC (47,000) (18,000) -
▪ Utilization of SGST ITC (57,000) - (18,000)
Net Output Tax Payable in Electronic 51,000 0 0
Cash Ledger
follows:
supply,
outward supply,
(if any)

outward supply,
Mr. Kanhaiya, a supplier of goods, pays GST under regular scheme. He is not eligible for any threshold
exemption. He has made for following outward taxable supplies in the month of January 2019:
Intra state suppliers of goods 6,00,000
Intra state suppliers of goods 2,00,000
He has also furnished following information in respect of purchases made by him from registered
dealers during January 2019:
Intra state purchase of goods 4,00,000
Intra state purchase of goods 50,000
Balance of ITC available at the beginning of the January 2019:
CGST 15,000
SGST 35,000
IGST 20,000
Notes:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies.
(ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. Kanhaiya for the month of January, 2019.
Solution:
Gross Output Tax Payable
S. No. Particulars GST (Rs.)
(i) Intra-State supply of goods
CGST @ 9% on Rs.6,00,000 54,000
SGST @ 9% on Rs.6,00,000 54,000
(ii) Inter-State supply of goods
IGST @ 18% on Rs.2,00,000 36,000
Total ITC in Electronic Credit Ledger

Opening ITC 20,000 15,000 35,000
Add: ITC on Intra-State purchases of 36,000 36,000
goods valuing Rs.4,00,000
Add: ITC on Intra-State purchases of
goods valuing Rs.50,000 9,000
Total ITC 29,000 51,000 71,000

Particulars IGST @ 18% CGST @ 9% SGST @ 9%
(Rs.) (Rs.) (Rs.)
Net Output Tax Payable in Electronic 0 3,000 0
Cash Ledger
Bal. ITC carried forward in Electronic 0 0 10,000
Credit Ledger
follows:
supply,
outward supply,
(if any)
outward supply,

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:
Amount
Particulars
(Rs. in lakhs)
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 to registered persons 10
Value of inter-State inward supply to registered persons 5
Value of intra-State inward supply to unregistered persons 2
Following additional information is also provided by Mr. Ekaant:
Amount
Particulars
(Rs. in lakhs)

IGST credit on capital goods purchased in the month of July 1.5
CGST/SGST credit on other inward supplies [including credit of Rs.5,000 0.50
(CGST and SGST each) on account of membership of a club] (CGST & SGST each)
Availed consultancy services from Mr. Sujit, lawyer located in Delhi [Intra- 1
State services]
The amount of ITC brought forward in the month of July, 20XX is CGST: Rs.2 lakhs, SGST: Rs.2 lakhs
and IGST: Rs.5 lakhs
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 are CGST - 9%, SGST - 9% and IGST - 18%.
Notes:
(i) All the amounts given above are exclusive of taxes.
(ii) All the conditions necessary for availing the ITC have been fulfilled.
Solution:
Computation of Gross GST Payable
Particulars Value (Rs.) IGST (Rs.) CGST (Rs.) SGST (Rs.)
Value of intra-State legal consultancy services i.e. 1,00,000 - 9,000 9,000
inward supplies liable to reverse charge
mechanism (to be paid in cash) (A) (Note 1)
Value of inter-State outward supplies to 30,00,000 5,40,000 - -
registered persons (B1)
Value of intra-State outward supplies to 65,00,000 - 5,85,000 5,85,000
registered as well as unregistered persons (B2)
(Rs.50,00,000 + Rs.15,00,000)
Gross Output Tax Payable excluding RCM 5,40,000 5,85,000 5,85,000
(B) = (B1) + (B2)
Computation of Total ITC in Electronic Credit Ledger

Particulars Value (Rs.) IGST (Rs.) CGST (Rs.) SGST (Rs.)
Brought forward ITC 5,00,000 2,00,000 2,00,000
Value of intra-State inward supplies from 10,00,000 90,000 90,000
registered person (Note 2)
Value of inter-State inward supplies from 5,00,000 90,000 - -
registered person (Note 2)
Value of intra-State inward supplies from 2,00,000 - - -
unregistered person (Note 3)
IGST credit of capital goods (Note 2) 1,50,000
Credit on other inward supplies purchased in the * 45,000 45,000
month of July less credit on membership of a club
(Note 2 & Note 4)
Credit legal consultancy services (Note 2) - 9,000 9,000
Total Input Tax Credit including RCM 7,40,000 3,44,000 3,44,000
(C)
Computation of Net GST Payable from Electronic Cash Ledger

Gross Output Tax Payable excluding RCM 5,40,000 5,85,000 5,85,000
Less: Utilization of Input Tax Credit including RCM
▪ Utilization of IGST ITC (5,40,000) (1,00,000) (1,00,000)
▪ Utilization of CGST ITC - (3,44,000) -

▪ Utilization of SGST ITC - - (3,44,000)
Net GST Payable after set-off (D) 0 1,41,000 1,41,000
Net GST liability to be paid in Cash (A) + (D) 0 1,50,000 1,50,000
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 change 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 is 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 of only notified goods / services from any unregistered supplier to notified
registered recipient is subject to RCM under Section 9(4). 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.
(5) As per Section 49, Section 49A and Section 49B read with Rule 88A, order of utilization is as follows:
▪ ITC of IGST on inward supply first is to be utilized for payment of Output IGST liability on
outward supply,
▪ ITC of IGST to be completely exhausted mandatorily before using ITC of CGST and ITC of
SGST
outward supply,
▪ ITC of CGST should be fully utilized before using ITC of SGST / UTGST for Output IGST
liability (if any)
outward supply,
▪ ITC of SGST on inward supply then is to be utilized for payment of Output IGST liability.
However, ITC of CGST should be fully utilized before using ITC of SGST / UTGST for Output
IGST liability.


M/s J & Co. Chartered Accountants, a partnership firm, having its registered and head office in Mumbai
and registered under the GST Act in the State of Maharashtra only. It does not have any branches in
other State. The gross receipts of the firm in the Financial Year 2017-18 was Rs.60 lakhs. Firm has
submitted following information for the month of August, 2018:
Amount (Rs.)
Particulars
(excluding GST)
Professional Services provided and bills raised during the month for providing 1,00,000
services of ITR filing and income tax consultancy
Internal Audit of X Pvt. Ltd. at their office in Mumbai (registered in the State 50,000
of Maharashtra)
Statutory audit services provided to M/s Tirupati Trading Pvt. Ltd. at 70,000
Ahmedabad (registered in the State of Gujarat)
Firm has also furnished following information in respect of input services availed from registered
dealers for providing output services during the month August, 2018:
Amount (Rs.)
Particulars CGST SGST IGST
(excluding GST)
Services availed from courier agency 5,000 450 450 Nil
Railway travelling expenses from Mumbai to 12,000 Nil Nil 600
Ahmedabad and Return Ticket for conducting of
audit of M/s Tirupati Trading Pvt. Ltd. for 3 Tier
AC
Service availed from another professional firm 20,000 3,600 Nil Nil
at Mumbai amount is paid without TDS u/s 194J
of Income Tax Act
Notes:
(i) Rate of CGST, SGST and IGST to be 9%, 9% & 18% respectively, on outward supplies.
(ii) All the conditions necessary for availing the ITC have been fulfilled.
(iii) Opening balance of available input tax credit is Nil for CGST, SGST and IGST.
Compute the Net GST payable by M/s J & Co. for the month August, 2018 after adjusting the GST credit.
Brief reasoning should form part of your answer.
Solution:
Computation of Net GST Payable from Electronic Cash Ledger
S. No Particulars IGST (Rs.) CGST (Rs.) SGST (Rs.)
1. Professional services and services of ITR filing and - 9,000 9,000
IT consultancy (Rs.1,00,000)
2. Internal audit services (Rs.50,000) - 4,500 4,500
3. Statutory audit services (Rs.70,000) 12,600 - -
Total GST 12,600 13,500 13,500
Less: Set off of ITC (Refer working below) 4,200 450 450
Net GST Payable 8,400 13,050 13,050
Computation of ITC available for set-off

S. No Particulars IGST (Rs.) CGST (Rs.) SGST (Rs.)
1. ITC on courier services (Rs.5,000) - 450 450
2. ITC on railway travelling expenses for conducting 600 - -
of audit of M/s Tirupati Pvt. Ltd. (Rs.12,000)
3. ITC on services availed from another professional 3,600 - -
firm at Mumbai (Rs.20,000)
Total ITC 4,200 450 450

Note: Rs.3,600 given against services availed from another professional firm at Mumbai given against
CGST is assumed to be IGST assuming it to be drafting mistake in question. However, it is also possible
to assume the said amount of Rs.3,600 as Rs.1,800 - CGST and Rs.1,800 - SGST.

M/s Maheshwari Corporation (P) Ltd. is a supplier of goods and services at Bangalore, registered in the
state of Karnataka, having turnover of Rs.200 lakhs in the last financial year. It has furnished the
following information for the month of June, 2018.
Excluding GST
1. Service provide by way of labour contractor for repairing a single 1,30,000
residential unit otherwise than as a part of residential complex (It is
an intra-state transaction)
2. Intra-State sale of taxable goods including Rs.50,000 received as 2,50,000
advance in April, 2018. This invoice for the entire sale value is
issued on 15th June,2018
3. Goods transport services received from GTA, GTA is paying tax@ 1,80,000
12% (It is an inter-state transaction.)
4. Goods Purchased from unregistered dealer on 201th June, 2018 80,000
(Inter-State Purchases are worth Rs.45,000 and balance purchases
were intra-State).
Compute Net GST liability (CGST, SGST, IGST as the case may be) of M/s Maheswari Corporation (P)
Ltd. for the month of June, 2018 assuming the rates of GST, unless otherwise specified, as under:
CGST – 9%, SGST – 9%, IGST – 18%
Solution:
Computation of Net GST liability
Particulars Value of Supply CGST SGST IGST
(Rs.) (Rs.) (Rs.)
Services provided by way of labour 1,30,000 11,700 11,700 Nil
contracts for repairing a single
residential unit otherwise than as a part
of residential complex
(Services by way of pure labour
contracts of construction, erection,
commissioning, or installation of
original works pertaining to a single
of a residential complex are exempt.
Labour contracts for repairing are thus,
taxable)
Intra State sale of taxable goods 2,50,000 22,500 22,500 Nil
(Time of supply of goods is the time of
issue of invoice. So, advance received in
April, 2018 will also be taxed in June,
2018)
Goods purchased from unregistered Nil Nil Nil
dealer on 20 June, 2018
th

(All intra-State and inter-State
procurements made by a registered
person have been exempted from
reverse charge liability)
Less: ITC of GST paid on GTA services (10,800) (10,800)
received
(Since GTA is paying tax @12%, tax is
payable under forward charge. Further,
ITC of IGST [Rs.1,80,000 * 12% =
Rs.21,600] paid on the same is
available)
Net GST Liability - 23,400 23,400 Nil
follows:
supply,
outward supply,
(if any)
outward supply,

Insight Ltd. is operating in West Bengal. The tax liability for the month of August, 2017 is as follows:
S. No. Tax liability West Bengal (Rs.)
(1) Output CGST payable 24,000
(2) Output SGST payable 9,000
(3) Output IGST payable 3,000
(4) Input CGST 7,000
(5) Input SGST 14,000
(6) Input IGST 12,000
Calculate tax payable and carry forward for the month of August, 2017.
Solution:

▪ Utilization of IGST ITC (3,000) (9,000) -
Net Output Tax Payable in Electronic Cash 0 8,000 0
Ledger
Bal. ITC carried forward in Electronic Credit 0 0 5,000
Ledger
follows:
supply,
outward supply,
(if any)
outward supply,
(ICAI – IPCC [Old Syllabus – 6 Marks] (Adapted) – Nov. 2018 Exam)

Mr. Thiraj, a registered supplier of service in Bangalore (Karnataka State) has provided the following
information for the month of February 2018:
(i) Intra-state taxable supply of service 5,20,000
(ii) Legal fee paid to a Lawyer located within the state 20,000
(iii) Rent paid to the State Govt. for his office building 30,000
(iv) Received for services towards conduct of exams in Loveall University, 16,000
Pune (recognized by law), being an inter-State transaction
Compute the net GST liability (CGST, SGST or IGST) of Mr. Thiraj for the month of February, 2018.Rate
of CGST, SGST and IGST are 9%, 9% and 18% respectively.
All the amounts given above are exclusive of taxes.

Solution:
Value of CGST @ SGST @ IGST @
S. No. Particulars
Supply (Rs.) 9% (Rs.) 9% (Rs.) 18% (Rs.)
Output Supply liable under FCM
(i) Intra-State taxable supply of services 5,20,000 46,800 46,800
(ii) Services towards conduct of exams in 16,000 Exempt
Loveall University, Pune (Note 1)
Inward Supply liable under RCM
(i) Legal fee paid to lawyer located within 20,000 1,800 1,800
State (Note 2)
(ii) Rent paid to State Government for Office 30,000 2,700 2,700
Building (Note 3)
Total Tax Liability 51,3000 51,300
Less: Cash paid towards tax payable under (4,500) (4,500)
reserve charge [A] (Note 4)
Output Tax payable against which ITC can be set 46,8000 46,8000
off
Less: ITC of tax paid on legal fees and rent (4,500) (4,500)
Output Tax Payable after set off of ITC [B] 42,300 42,300
Net GST Liability [A]+[B] 46,800 46,800
Notes:
(1) Since Loveall University provides education recognized by law, it is an educational institution and
services provided to an educational institution, by way of conduct of examination by such
institution are exempt from GST. It has been logically assumed that the education provided by the
Loveall University is recognised by Indian law.
(2) In case of legal services provided by an advocate to any business entity GST is payable under
reverse charge by the recipient of service.
(3) In case of services supplied by, inter alia, State Government by way of renting of immovable
property to a person registered under the CGST Act, GST is payable under reverse charge by the
recipient of service
(4) The amount available in the electronic credit ledger may be used for making payment towards
output tax. However, tax payable under reverse charge is not an output tax. Therefore, tax payable
under reverse charge cannot be set off against the input tax credit and thus, will have to be paid in
cash.

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:
(i) Intra-State sale of taxable goods including Rs. 1,00,000 received as advance in 4,00,000
January, 20XX, the invoice for the entire sale value is issued on 15 th February,
20XX
(ii) Goods purchased from unregistered dealer on 20 th February, 20XX (Inter-State 1,00,000
purchases are worth Rs.30,000 and balance purchases are intra-State)
(iii) Services provided by way of labour contracts for repairing a single residential 1,00,000
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 is an 2,00,000
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% and IGST –
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:
Particulars Value of Supply IGST (Rs.) CGST (Rs.) SGST (Rs.)
Intra-State sale of taxable goods (Note 1) 4,00,000 36,000 36,000
Goods purchased from unregistered Nil Nil Nil
dealer on 20th February, 20XX (Note 2)
Services rendered by way of labour 1,00,000 9,000 9,000
contracts for repairing a single
of residential complex (Note 3)
Goods transport services received from 2,00,000 Nil
GTA (Note 4)
Gross GST Liability 45,000 Nil 45,000

Total GST liability for the month of February, 20XX Nil 45,000 45,000
Less: Input tax credit available (Note 5) (Rs.2,00,000 x 12%) 24,000
Net GST Liability Nil 21,000 45,000
Notes:
(1) Section 12 of CGST Act, 2017 read with Notification No. 66/2017-CT 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 30.09.2019. [Notification No. 38/2017 CT (R) read along with Notification No. 32/2017 IT (R)]
(3) Services by way of pure labour contracts of construction, earlier, 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). Labour contracts for repairing are thus,
taxable.
(4) As per Notification No. 13/2017 CT(R), 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.
(5) As per Section 49, Section 49A and Section 49B read with Rule 88A, order of utilization is as follows:
▪ ITC of IGST on inward supply first is to be utilized for payment of Output IGST liability on
outward supply,

▪ ITC of IGST to be completely exhausted mandatorily before using ITC of CGST and ITC of
SGST
outward supply,
▪ ITC of CGST should be fully utilized before using ITC of SGST / UTGST for Output IGST
liability (if any)
outward supply,
▪ ITC of SGST on inward supply then is to be utilized for payment of Output IGST liability.
However, ITC of CGST should be fully utilized before using ITC of SGST / UTGST for Output
IGST liability.

Mr. Nimit, a supplier of goods, pays GST under regular scheme. He is not eligible for any threshold
exemption. He has made the following outward taxable supplies in the month of August, 2018:
Intra-state supplies of goods 6,00,000
Inter-state supplies of goods 2,00,000
He has also furnished following information in respect of purchases made by him from registered
dealers during August, 2018:
Intra-state purchase of goods 4,00,000
Inter-state purchase of goods 50,000
Balance of ITC available at the beginning of the August 2018:
CGST 15,000
SGST 35,000
IGST 20,000
Notes:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies.
(ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. Nimit for the month of August, 2018.
Solution:
S. No. Particulars GST (Rs.) GST (Rs.)
(i) Intra-State supply of goods
CGST @ 9% on Rs.6,00,000 54,000
SGST @ 9% on Rs.6,00,000 54,000 1,08,000
(ii) Inter-State supply of goods

IGST @ 18% on Rs.2,00,000 36,000
Computation of Total ITC in Electronic Credit Ledger

Opening ITC 20,000 15,000 35,000
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 9,000
valuing Rs.50,000
Total ITC 29,000 51,000 71,000
Computation of Net Output Tax Payable from Electronic Cash Ledger

Net Output Tax Payable in Electronic 0 3,000 0
Cash Ledger
Bal. ITC carried forward in Electronic 0 0 10,000
Credit Ledger
follows:
supply,
outward supply,
(if any)
outward supply,


M/s. Pradyumn Corporation Pvt. Ltd., a registered dealer of Mumbai furnishes you following
information for the month of October, 2018.
(i) Intra state sale of taxable goods (out of above Rs.50,000 was received as 2,00,000
advance in September, 2018)
(ii) Goods purchased from unregistered dealer (purchase on 20 th October, 50,000
2018) (Rs.10,000 in case of Inter State & Balance Intra-State)
(iii) Amount received for services by way of labour contracts for repairing 50,000
a single residential unit otherwise than as a part of residential complex
(It is Intra-State transaction)
(iv) Professional fees p[aid to Ms. Udadhi located in non-taxable territory 50,000
(It amounts to Inter State Transaction)
Compute GST liability (CGST, SGST, or IGST, as the case may be) of M/s Pradyumn Corporation Pvt.
Ltd. for the month of October, 2018.
Assume the rates of GST as under:
CGST 9%
SGST 9%
IGST 18%
Note: Turnover of M/s. Pradyumn Corporation Pvt. Ltd. was Rs.2 crore in the previous financial year.
Solution:
Computation of Gross GST liability of M/s. Pradyumn Corporation Pvt. Ltd. for October, 2018
Particulars Value of CGST (Rs.) SGST (Rs.) IGST
Supply (Rs.)
Intra-State sale of taxable goods (Note 2,00,000 18,000 18,000
1)
Goods purchased from registered Nil Nil Nil
dealer on 20 October, 2018 (Note 2)
th
Amount received for services 50,000 4,500 4,500

rendered by way of labour contracts
for repairing a single residential unit
otherwise than as a part of residential
complex (Note 3)
Professional fees paid to Ms. Udadhi 50,000 9,000
located in a non-taxable territory
(Note 4)
Total GST Liability (including RCM Liability) 22,500 22,500 9,000
Notes:
(1) As per Section 12 of CGST Act, 2017 read along with Notification No. 66/2017-CT, supplier of goods
is not liable to pay GST on the receipt of advance. Thus, since GST liability would have not arisen
on advance of Rs.50,000 received in September, 2018, the same has to been included in the GST
liability of the company for the month of October, 2018.
(2) Intra-State or Inter-State supplies of only notified goods / services from any unregistered supplier
to notified registered recipient is subject to RCM under Section 9(4) of CGST Act / Section 5(4) of
IGST Act. Since no tax has been paid, so no credit is available.
(3) As per Section 11 of CGST Act, 2017 read along with Exemption Notification 12/2017-CT (Rate) and
as per Section 6 of IGST Act, 2017 read along with Exemption Notification 9/2017-IT (Rate), 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. Labour contracts for repairing are thus, taxable.

(4) As per Section 5(3) of IGST Act, 2017 read with NN 10/2017-IT(Rate), in case of service supplied by
a person located in a non-taxable territory to a person other than non-taxable online recipient, GST
is payable under reverse charge by such recipient.

Nargis Agro Traders located at Jaipur and engaged in the business as retail traders provides the
following details of its purchases and sales made during the month of July, 2018:
Items Purchase (Rs.) Sales (Rs.)
Sugar Candies 1,00,000 1,20,000
Chocolate Bars 80,000 1,00,000
Wafers Packets 75,000 60,000
Biscuits 50,000 50,000
The rate of the under GST on the items are 5%, 12%, 12% and 18% respectively. You are required to
calculate the amount of GST payable and the date by which the due tax is to be paid by the trader for
the month of July, 2018 after availing the Input Tax Credit.
Solution:
Computation of Output Tax
Sugar Chocolate Wafers Output Tax
Particulars Biscuits
Candies Bars Packets (Rs.)
Sales 1,20,000 1,00,000 60,000 50,000
GST rate 5% 12% 12% 18%
Output Tax on Sales 6,000 12,000 7,200 9,000 34,200

Sugar Chocolate Wafers Input Tax
Candies Bars Packets Credit (Rs.)
Purchases 1,00,000 80,000 75,000 50,000
GST rate 5% 12% 12% 18%
Input Tax Credit on 5,000 9,600 9,000 9,000 32,600
Purchases
Computation of Net Tax Payable by Electronic Cash Ledger

Sugar Chocolate Wafers Net Output
Candies Bars Packets Tax (Rs.)
Output Tax on Sales 6,000 12,000 7,200 9,000 34,200
Less: Input Tax 5,000 9,600 9,000 9,000 32,600
Credit on Purchases
Net Output Tax Payable by Electronic Cash Ledger 1,600
Note: Due date for payment of GST of month of July 2018 on or before 20 August, 2018 i.e. due date of
filing GSTR-3B.

A manufacturer has purchased raw material for Rs.1,05,000 (inclusive of 5% GST) and plant and
machinery for Rs.2,24,000 (inclusive of 12% GST). The manufacturing and other expenses (excluding
depreciation) are Rs.3,00,000. He sells the resultant products at 50% above cost (GST on sales is 12%).
The plant and machinery is to be depreciated at 50% straight line. Compute the amount of GST payable
in cash. All purchases and sales are made within the State of Rajasthan.

Solution:
Raw material net of GST = Rs.1,05,000 * 100 / 105 1,00,000
Add: Depreciation on plant and machinery = 50% of price net of GST = 50% * 1,00,000
(Rs.2,24,000 * 100 / 112)
Add: Manufacturing and other expenses 3,00,000
Total Cost 5,00,000
Add: 50% mark-up on cost 2,50,000

Particulars CGST SGST Total
Output Tax on Sales = Rs.7,50,000 * 12% 45,000 45,000 90,000
Less: Input Tax Credit on Purchases as follows:
ITC on raw materials and components = Rs.1,05,000 * 5 / 105 2,500 2,500 5,000
ITC on plant and machinery = Rs.2,24,000 * 12 / 112 12,000 12,000 24,000
Net GST Payable by Electronic Cash Ledger 30,500 30,500 61,000
Question 59: Availment of ITC and Utilization of ITC along with Reversal of ITC
M/s. Comfortable (P) Ltd. is registered under GST in Chennai, Tamil Nadu. It is engaged in the
manufacture of iron and steel products. It has carried out following transactions in the financial year
20XX-XY:
(a) Purchased 1,000 Metric Ton (MT) iron @ 1,000 per MT (excluding GST) from M/s. Hard Ltd. of
Chennai. M/s. Hard Ltd. has fulfilled the order as follows:
Date Quantity (MT) Taxable Value
28-Feb-20XY 200 2,00,000/-
10-Mar-20XY 250 2,50,000/-
25- Mar -20XY 250 2,50,000/-
28- Mar -20XY 200 2,00,000/-
Balance order requirement has been fulfilled by Hard Ltd. on 5-Apr-20XY. However, Hard Ltd. has
raised the invoice for full order at the time of dispatch of first lot, i.e. on 28-Feb-20XY. M/s.
Comfortable (P) Ltd. has made the full payment on 28-Feb-20XY for the order.
(b) Company has received IT Engineering Services from M/s. Dynamic Infotech (P) Ltd. of Chennai for
Rs.11,00,000/. (Excluding GST) on 28-Oct-20XX. Invoice for service rendered was issued on 5-Nov-
20XX. M/s Comfortable (P) Ltd. made part-payment of Rs.4, 13,000/- on 31- Dec-20XX. Being
unhappy with service provided by M/s Dynamic Infotech (P) Ltd., it did not make the balance
payment. Deficiency in service rendered was made good by M/s Dynamic Infotech (P) Ltd. by 15-
Feb-20XY. M/s. Comfortable (P) Ltd. made payment of Rs.2,95,000/- on 15-Feb-20XY towards full
and final settlement of the dues and did not pay the balance amount.
(c) Company has made the following intra State supplies (excluding GST) for the financial year 20XX-
XY:
1. Value of intra-State supplies made to registered persons 10,00,000
2. Value of intra-State supplies made to unregistered persons 2,00,000
(i) Compute the GST liability (CGST, SGST or IGST, as the case may be) of M/s. Comfortable (P) Ltd.
for the financial year 20XX-XY:
(ii) Compute the amount of input tax credit to be reversed in the FY 20XX-XY and/or in the next FY
20XY-YZ, if any.

Assume the rates of GST as CGST – 9%, SGST – 9% and IGST – 18%.
Notes:
(i) All the conditions necessary for availing input tax credit have been fulfilled.
(ii) Ignore interest, if any
Solution:
Computation of Net GST Payable for the Financial Year 20XX-XY
Particulars Value (Rs.) CGST (Rs.) SGST (Rs.)
Gross GST Payable
Intra-State supplies made to registered persons 10,00,000 90,000 90,000
Intra-State supplies made to unregistered persons 2,00,000 18,000 18,000
Total (A) 1,08,000 1,08,000
Input Tax Credit
Supply of iron in lots by M/s Hard Limited (Note 1) 10,00,000 - -
Supply of IT Engineering Services by Dynamic 11,00,000 99,000 99,000
Infotech (P) Ltd. (Note 2)
Total (B) 99,000 99,000
Net GST Payable (A)-(B) 9,000 9,000
Notes:
(1) Section 16 of CGST Act, 2017 provides that where the goods against an invoice are received in lots
or installments, the registered person shall be entitled to take credit upon receipt of the last lot or
installment. Although 900 tonnes of iron are received in financial year 20XX-XY, the last lot
available in FY 20XX-XY.
In view of above provisions, full input tax credit in respect of transaction (a) will be claimed in
financial year 20XY-20YZ i.e. on receipt of last installment.
(2) Section 16 of CGST Act, 2017 inter alia provides that every registered person is entitled to take
credit of input tax charged on supply of services to him which are used in the course of business
on receipt of the said services.
Thus, in view of the above mentioned provisions full input tax credit of Rs.1,98,000/- can be claimed
in financial year 20XX-XY.
Input Tax Credit to be reversed in Financial Year 20XY-YZ

Total Value of procurement of IT Engineering Services 11,00,000
Add: Total GST on the above value @ 18% [CGST + SGST] 1,98,000
Value including GST 12,98,000
Less: Amount paid for the said services including GST (Rs.4,13,000 + Rs.2,95,000) 7,08,000
Amount (value along-with tax payable thereon) not paid for the said service 5,90,000
ITC to be reversed (Rs.5,90,000 * 18/118) 90,000
Note:
Section 16 of CGST Act, 2017 provides that where a recipient fails to pay to the supplier of goods or
services or both, other than the supplies on which tax is payable on reverse charge basis, the amount
towards the value of supply along with tax payable thereon within a period of 180 days from the date
of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall
be added to his output tax liability, along with interest thereon, in the prescribed manner.
However, the recipient shall be entitled to avail of the credit if input tax on payment made by him of
the amount towards the value of supply of goods or services or both along with tax payable thereon.
Since the full amount of value alongwith tax payable thereon has not been paid by M/s Comfortable (P)
Ltd. to M/s Dynamic Infotech (P) Ltd within a period of 180 days from the date of issue of invoice, the

proportionate amount of input tax credit availed needs to be reversed. However, the reversal will be
done in the financial year 20XY-20YZ during when the time period of 180 days expires.
Question 60: Common ITC on Inputs and Input Services

A garment factory receives a Government order for making uniforms for defense personnel. This
supply is exempt from tax under a special notification. The fabric is separately procured for the supply,
but thread, buttons and lining material for the collars are the ones which are used for other taxable
products of the factory. The turnover of the other garments of the factory and exempted uniforms in
September is Rs.8 crore and Rs.2 crore respectively. The ITC on thread, button and lining material
procured in September 2018 is Rs.10,000, Rs.30,000 and Rs.20,000 respectively. Calculate the eligible
ITC on thread, button and lining material.
Solution:
Thread, buttons and lining material are inputs which are used for making taxable as well as exempt
supplies. Therefore, credit on such items will be availed first and then credit attributable to exempt
supplies will be added to the output tax liability in terms of Rule 43 of the CGST Rules, 2017.
Credit attributable to Exempt Supplies = Common Credit * (Exempt Turnover / Total Turnover)
➔ Common Credit = Rs.10,000 + Rs.30,000 + Rs.20,000 = Rs.60,000
➔ Exempt Turnover = Rs.2 crore
➔ Total Turnover = Rs.10 crore (Rs.2 crore + Rs.8 crore)
➔ Credit attributable to Exempt Supplies = (Rs.2 crore / Rs.10 crore) * Rs.60,000 = Rs.12,000
Credit of Rs.60,000 will be eligible credit for the month of September 2018. However, ineligible credit of
Rs.12,000 will be reversed from ITC during the month of September 2018.

PK Ltd. provides taxable as well as exempted services. Turnover of PK Ltd. during the month of
November 2018 is as under
Value of exempted supply of services 20,00,000
Value of taxable supply of services 40,00,000
Value of zero rated taxable supply of services 20,00,000
Total 80,00,000
Details of input tax credit for the month of November 2018 are as under:
CGST SGST IGST
Particulars
Amount (Rs.)
Total input tax credit available for inputs and input services 1,08,000 1,08,000 54,000
The above input tax credit on input services includes the following:
Credit on input services exclusively used for supplying exempted 18,000 18,000 7,200
services
Credit on input services exclusively used for supplying taxable services 54,000 54,000 3,600
(including zero rated supplies)
Credit availed on inputs which are not eligible under Section 17(5) 18,000 18,000 6,300
Credit on input services exclusively used for supplying services for 10,800 10,800 5,400
personal use
What would be the entitlement of input tax credit of PK Ltd. for month of November 2018 under Rule
42 of the CGST Rules, 2017. Also, calculate the amount to be reversed from ITC of PK Ltd.
Solution:
Computation of Eligible ITC

SGST
S. No. Particulars CGST (Rs.) IGST (Rs.)
(Rs.)
1. Total input tax credit available for inputs and 1,08,000 1,08,000 54,000
input services
2. Credit on input services exclusively used for (10,800) (10,800) (5,400)
supplying services for personal use
supplying exempted services
4. Credit availed on inputs which are not eligible (18,000) (18,000) (6,300)
under Section 17(5)
5. Amount of input tax credited to the Electronic 61,200 61,200 35,100
Credit Ledger [1 - (2 + 3 + 4)]
supplying taxable services (including zero rated
supplies)
7. Common credit of input and input services [5 - 7,200 7,200 31,500
6]
8. Total inadmissible common credit as per Rule (2,160) (2,160) (9,450)
42(1) (Refer Note)
9. Net eligible common credit [7 - 8] 5,040 5,040 22,050
10. Total eligible credit i.e. [6 + 9] 59,040 59,040 25,650
11. Inadmissible common credit to be reversed is i.e. 2,160 2,160 9,450
Step-8
Note:
Amount of ITC towards Exempt Supplies and Supply made for Non-Business Use
1. Aggregate Value of Exempted Supply of Services of 20,00,000 20,00,000 20,00,000
November 2017
2. Total Turnover of November 2017 80,00,000 80,00,000 80,00,000
3. Ratio [1/2] 0.25 0.25 0.25
4. Credit attributable towards Exempt Supplies 1,800 1,800 7,875
[7,200 * 0.25] [7,200 * [31,500 *
0.25] 0.25]
5. Credit attributable for Supplies made for Non-Business 360 360 1,575
Purpose (Refer Note) [7,200 * 5%] [7,200 * 5%] [31,500 *
5%]
6. Total Inadmissible Common Credit as per Rule 42(1) 2,160 2,160 9,450
[4 + 5]
Note: It is assumed that common credit is also used in relation to supplies made for non-business
purposes as the question gives the details of exclusive credit in relation to supplies made for non-
business purposes.

VJ Ltd., a registered supplier, supplies taxable as well as exempted goods. The information regarding
the exempted goods supplied by it during the month of October 2018 is not available. Besides this,
turnover of supply of goods during the month of October 2018 includes:
Value of taxable supply of goods 50,00,000
Value of zero rated taxable supply of goods 10,00,000

Total 60,00,000
Details of input tax credit for the month of October 2018 are as under:
CGST SGST IGST
Particulars
Amount (Rs.)
Total input tax credit available for inputs and input services 1,80,000 1,80,000 1,51,200
The above input tax credit on input services includes the following:
Credit on input services exclusively used for supplying exempted 45,000 45,000 7,200
services
Credit on input services exclusively used for supplying taxable services 63,000 63,000 23,400
(including zero rated supplies)
Credit availed on inputs which are not eligible under Section 17(5) 42,000 42,000 48,000
Credit on input services exclusively used for supplying services for 22,500 22,500 60,000
personal use
During the month of September 2018, the value of supply of taxable goods was Rs.65,00,000 and value
of supplies of exempted goods was Rs.10,00,000. What would be the input tax credit entitlement of VJ
Ltd. for month of October 2018. Also compute the amount, if any, to be reversed from ITC of VJ Ltd.
during October 2018.
Solution:
SGST
S. No. Particulars CGST (Rs.) IGST (Rs.)
(Rs.)
1. Total input tax credit available for inputs and 1,80,000 1,80,000 1,51,200
input services
supplying services for personal use
supplying exempted services
4. Credit availed on inputs which are not eligible (42,000) (42,000) (48,000)
under Section 17(5)
5. Amount of input tax credited to the Electronic 70,500 70,500 36,000
Credit Ledger [1 - (2 + 3 + 4)]
supplying taxable services (including zero rated
supplies)
7. Common credit of input and input services [5 - 7,500 7,500 12,600
6]
8. Total inadmissible common credit as per Rule (1,375) (1,375) (2,310)
42(1) (Refer Note)
9. Net eligible common credit [7 - 8] 6,125 6,125 10,290
10. Total eligible credit i.e. [6 + 9] 69,125 69,125 33,690
11. Inadmissible common credit to be reversed is i.e. 1,375 1,375 2,310
Step-8
Note:
Amount of ITC towards Exempt Supplies and Supply made for Non-Business Use
S.No Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
1. Aggregate Value of Exempted Supply of Goods for 10,00,000 10,00,000 10,00,000
September 2017
2. Total Turnover for September 2017 75,00,000 75,00,000 75,00,000

3. Ratio [1/2] 0.1333 0.1333 0.1333
4. Credit attributable towards Exempt Supplies 1,000 1,000 1,680
[7,500 * [7,500 * [12,600 *
0.1333] 0.1333] 0.1333]
5. Credit attributable for Supplies made for Non- 375 375 630
Business Purpose [7,500 * 5%] [7,500 * 5%] [12,600 *
5%]
6. Total Inadmissible Common Credit as per Rule 42(1) 1,375 1,375 2,310
[4 + 5]
Note: It is assumed that common credit is also used in relation to supplies made for non-business
purposes as the question gives the details of exclusive credit in relation to supplies made for non-
business purposes.
(ICAI – RTP – CA Final – Nov 2018)

Question 63: Common ITC of Inputs and Input Services
‘All-in-One Store’ is a chain of departmental store having presence in almost all metro cities across
India. Both exempted as well as taxable goods are sold in such Stores. The Stores operate in rented
properties. All-in-One Stores pay GST under regular scheme.
In Mumbai, the Store operates in a rented complex, a part of which is used by the owner of the Store
for personal residential purpose.
All-in-One Store, Mumbai furnishes following details for the month of October, 20XX:
(i) Aggregate value of various items sold in the Store:
Taxable items – Rs.42,00,000
Items exempted vide a notification – Rs.12,00,000
Items not leviable to GST – Rs.5,00,000
(ii) Mumbai Store transfers to another All-in-One Store located in Goa certain taxable items for the
purpose of distributing the same as free samples. The value declared in the invoice for such items
is Rs.5,00,000. Such items are sold in the Mumbai Store at Rs.8,00,000.
(iii) Aggregate value of various items procured for being sold in the Store:
Taxable items – Rs.55,00,000
Items exempted vide a notification – Rs.15,00,000
Items not leviable to GST – Rs.5,00,000
(iv) Freight paid to goods transport agency (GTA) for inward transportation of taxable items –
Rs.1,00,000
(v) Freight paid to GTA for inward transportation of exempted items – Rs.80,000
(vi) Freight paid to GTA for inward transportation of non-taxable items – Rs.20,000
(vii) Monthly rent payable for the complex – Rs.5,50,000 (one third of total space available is used for
personal residential purpose).
(viii) Activity of packing the items and putting the label of the Store along with the sale price has been
outsourced. Amount paid for packing of all the items – Rs.2,50,000
(ix) Salary paid to the regular staff at the Store – Rs.2,00,000
(x) GST paid on inputs used for personal purpose – Rs.5,000
(xi) GST paid on rent cab services availed for business purpose – Rs.4,000
(xii) GST paid on items given as free samples – Rs.4,000
Given the above available facts, you are required to compute the following:
A. Input tax credit (ITC) credited to the Electronic Credit Ledger
B. Common Credit
C. ITC attributable towards exempt supplies out of common credit
D. Eligible ITC out of common credit
E. Net GST liability for the month of October, 20XX

Notes:
(1) Whether applicable, GST under reverse charge is payable @ 5% by All-in One Stores. Rate of GST
in all other cases is 18%.
(2) All the sales and purchases made by the Store are within Maharashtra. All the purchases are made
from registered suppliers. All the other expenses incurred are also within the State.
(3) Wherever applicable, the amounts given are exclusive of taxes.
(4) All the necessary conditions for availing ITC have been complied with.
Solution:
(A) Computation of ITC credited to Electronic Credit Ledger
As per rule 42 of the CGST Rules, 2017, the ITC in respect of inputs or input services being partly used
for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies
and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting
taxable supplies.
ITC Credited to the Electronic Credit Ledger of registered person [‘C 1’] is calculated as under-
C1 = T – (T1+T2+ T3)
Where,
T = Total input tax involved on inputs and input services in a tax period.
T1 = Input tax attributable to inputs and input services intended services intended to be used
exclusively for non-business purposes
T2 = Input tax attributable to inputs and input services intended services intended to be used
exclusively for effecting exempt supplies
T3 = Input tax in respect of inputs and input services on which credit is blocked under section 17(5)
of the CGST Act, 2017
Computation of Total Input Tax involved [T]
GST paid on taxable items [Rs.55,00,000 x 18%] 9,90,000
Items exempted vide a notification [Since exempted, no GST is paid] Nil
Items not leviable to tax [Since non-taxable, no GST is paid] Nil
GST paid under reverse charge on freight paid to GTA for inward transportation of 5,000
taxable items - [Rs.1,00,000 x 5%]
exempted items - [Rs.80,000 x 5%]
non-taxable items - [Rs.20,000 x 5%]
GST paid on monthly rent – [Rs.5,50,000 x 18%] 99,000
GST paid on packing charges [Rs.2,50,000 x 18%] 45,000
Salary paid to staff at the Store Nil
[Services by an employee to the employer in the course of or in relation to his
employment is not a supply in terms of para 1 of the Schedule III to CGST Act, 2017
and hence, no GST is payable thereon]
GST paid on inputs used for personal purpose 5,000
GST paid on rent a cab services availed for business purpose 4,000
GST paid on items given as free samples 4,000
Total Input Tax involved in a tax period (October, 20XX) [T] 11,57,000
Computation of T1, T2, T3
GST paid on monthly rent attributable to personal purposes [1/3 of Rs.99,000] 33,000
GST paid on inputs used for personal purpose 5,000
Input tax exclusively attributable to non-business purposes [T1] 38,000
exempted items
[As per section 2(47) of the CGST Act, 2017 exempt supply means. Inter alia, supply
which may be wholly exempt from tax by way of a notification issued under section
11. Hence, input service of inward transportation of exempt items is exclusively
used for effecting exempt supplies]
non-taxable items
[Exempt supply includes non-taxable supply in terms of section 2(47) of the CGST
Act, 2017. Hence, input service of inward transportation of non-taxable items is
exclusively used for effecting exempt supplies]
Input tax exclusively attributable to exempt supplies [T 2] 5,000
GST paid on rent a cab services availed for business purpose 4,000
[ITC on rent a cab service is blocked under section 17(5)(b)(iii) of the CGST Act,
2017 as the same is not used by All-in-One Store for providing the rent a cab service
or as part of a taxable composite or mixed supply. It has been assumed that the
Government has not notified such service under section 17(5)(b)(iii)(A) of the CGST
Act, 2017].
GST paid on items given as free samples 4,000
[ITC on goods inter alia, disposed of by way of free samples is blocked under
section 17(5)(h) of the CGST Act, 2017].
Input tax for which credit is blocked under section 17(5) of the CGST Act, 2017 8,000
[T3] **
**Since GST paid on inputs used for personal purposes has been considered while computing T 1, the
same has not been considered again in computing T3.
ITC credited to the Electronic Credit Ledger = C1 = T - (T1 + T2 + T3)
= Rs.11, 57,000 – (Rs.38,000 + Rs.5,000 + Rs.8,000)
= Rs.11, 06, 000
(B) Computation of Common Credit
C2 = C1- T4
Where C2 = Common Credit
T4 = Input tax credit attributable to inputs and input services intended to be used exclusively for
effecting taxable supplies
Computation of T4
GST paid on taxable items 9,90,000
GST paid under reverse charge on freight paid to GTA for inward transportation of
5,000
taxable items
Input Tax exclusively attributable to Taxable Supplies [T 4] 9,95,000
Common Credit C2 = C1 - T4
= Rs.11, 06, 000 - Rs.9,95, 000
= Rs.1,11,000
(C) Computation of ITC attributable towards exempt supplies out of common credit
ITC attributable towards exempt supplies is denoted as ‘D1’ and calculated as –
D1= C2 * (E/F)
Where,
‘E’ is the aggregate value of exempt supplies during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax period
Aggregate value of exempt supplies during October, 20XX

= Rs.15,00,000 (Rs.12,00,000 + Rs.3,00,000)
Total turnover in the State during the tax period
= Rs.65,00,000 (Rs.42,00,000 + Rs.12,00,000 + Rs.3,00,000 + Rs.8,00,000)
Note: Transfer of items to Store located in Goa is inter-State supply in terms of Section 7 of the IGST
Act, 2017 and hence includible in the total turnover. Such supply is to be valued as per Rule 28 of the
CGST Rules, 2017. However, the value declared in the invoice cannot be adopted as the value since the
recipient Store at Goa is not entitled for full credit. Therefore, open market value of such goods, which
is the value of such goods sold in Mumbai Store, is taken as the value of items transferred to Goa Store.
D1 = 1, 11,000 * (15, 00,000 / 65, 00,000)
= Rs.25,615 (rounded off)
(D) Computation of Eligible ITC out of Common Credit

Eligible ITC attributed for effecting taxable supplies is denoted as ‘C 3’, where,-
C3 = C2- D1
= Rs.1,11,000 – Rs.25,615
= Rs.85,385
(E) Computation of Net GST liability for the month of October, 20XX
GST liability under Forward Charge
Taxable items sold in the store [Rs.42,00,000 × 18%] 7,56,000
Taxable items transferred to Goa Store [Rs.8,00,000 × 18%] 1,44,000
Ineligible ITC [ITC out of common credit, attributable to exempt supplies] 25,615
Total output tax liability under forward charge 9,25,615
Less: ITC credited to the Electronic Credit Ledger (11,06,000)
ITC carried forward to the next month (1,80,385)
Net GST Payable [A] Nil
GST liability under Reverse Charge
Freight paid to GTA for inward transportation of taxable items – [Rs.1,00,000 × 5%] 5,000
Freight paid to GTA for inward transportation of exempted items – [Rs.80,000 × 5%] 4,000
Freight paid to GTA for inward transportation of non-taxable items – [Rs.20,000 ×
1,000
5%]
Total tax liability under Reverse Charge [B] 10,000
Net GST liability [A] + [B] 10,000
As per Section 49(4) of the CGST Act, 2017 amount available in the Electronic Credit
Ledger may be used for making payment towards output tax. However, tax
payable under reverse charge is not an output tax 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.
Note: While computing net GST liability, ITC credited to the Electronic Credit Ledger (C1) can
alternatively be computed as follows:
GST paid on taxable items [Rs.55,00,000 × 18%] 9,90,000
Items exempted vide a notification [Since exempted, no GST is paid] Nil
Items not leviable to tax [Since non-taxable, no GST is paid] Nil
taxable items – [Rs.1,00,000 × 5%]
GST paid under reverse charge on freight paid to GTA for inward transportation of Nil
exempted items – [Rs.80,000 × 5%]

[As per Section 2(47) of the CGST Act, 2017, exempt supply means, inter alia, supply
which may be wholly exempt from tax by way of a notification issued under Section
11. Hence, input service of inward transportation of exempt items is exclusively
attributable to exempt supplies is to be excluded]
GST paid under reverse charge on freight paid to GTA for inward transportation of Nil
non-taxable items – [Rs.20,000 × 5%]
[Exempt supply includes non-taxable supply in terms of Section 2(47) of the CGST
Act, 2017. Hence, input service of inward transportation of non-taxable is
exclusively used for effecting exempt supplies. Input tax exclusively attributable to
exempt supplies is to be excluded]
GST paid on monthly rent – for business purposes 66,000
[(Rs.5,50,000 × 18%) – 1/3 of [(Rs.5,50,000 × 18%)]
GST paid on packing charges [(Rs.2,50,000 × 18%)] 45,000
Salary paid to staff at the Store Nil
[Services by an employee to the employer in the course of or in relation to his
employment is not a supply in terms of para 1 of the Schedule III to CGST Act, 2017
and hence, no GST is payable thereon]
GST paid on inputs used for personal purpose Nil
[ITC on goods or services or both used for personal consumption is blocked under
section 17(5)(g) of the CGST Act, 2017]
GST paid on rent a cab services availed for business purpose Nil
[ITC on rent a cab service is blocked under section 17(5)(b)(iii) of the CGST Act,
2017 as the same is not used by All-in-One Store for providing the rent a cab service
or as part of a taxable composite or mixed supply. It has been assumed that the
Government has not notified such service under section 17(5)(b)(iii)(A) of the CGST
Act, 2017]
GST paid on items given as free samples Nil
[ITC on goods Inter alia, disposed of by way of free samples is blocked under
section 17(5)(h) of the CGST Act, 2017]
Total input tax credited to Electronic Credit Ledger [C1] 11,06,000
Author’s Note: ICAI has not considered “D2” while computing reversal of ITC which is ITC
attributable towards non-business purposes out of common credit, the working of which is as follows:
D2 = C2 * 5% = Rs.1,11,000 * 5% = Rs.5,550.
Question 64: Common ITC of Inputs and Input Services for Banking Sector
Sync Bank, having a branch in Chennai engaged in supply of services by way of accepting deposits and
extending loans opted for the option to avail credit of 50% of input tax of the month to which input tax
relates under Section 17(4). Its head office is in Mumbai. ITC (CGST & SGST) available for the month
May 2018 is Rs.1,00,000 which includes:
Input Tax (Rs.)
Particulars
(CGST &SGST)
Services availed from its distinct establishment i.e. from Mumbai Head Office 20,000
Outdoor catering services received for its employees 15,000
Goods that has obsolete and whose value has been written off in books 7,000
Auditing Services 8,000
Goods which are used for personal use of employees 3,000
Compute the amount of input tax credit of May 2018 that can be availed by Sync Bank.
Solution:

As per Section 17(4), every banking company or a financial institution, including a non-banking
financial company, engaged in supply of services by way of accepting deposits or extending loans or
advances (which is not opting for provisions of Section 17(2)) has the option to avail of, every month,
an amount equal to 50% of the eligible input tax credit on inputs and input services in that month and
the rest shall lapse.
Eligible ITC (Rs.)
Particulars
(CGST &SGST)
(1) Total ITC available 1,00,000
(2) Less: ITC on services availed from Mumbai Head Office – 100% ITC is (20,000)
admissible
(3) Less: ITC on following services – No ITC is admissible as per Section 17(5)
(a) Outdoor catering services received for its employees (15,000)
(b) Goods that has obsolete and whose value has been written off in books (7,000)
(c) Goods which are used for personal use of employees (3,000)
(4) Balance ITC available 55,000
(5) 50% ITC admissible on above [4 * 50%] 27,500
(6) 100% ITC admissible on services availed from Mumbai Head Office 20,000
(7) Total ITC admissible to Sync Bank [5 + 6] 47,500
Question 65: Common ITC of Inputs and Input Services for Banking Sector
United National Bank provides the following information for the month of December 2018. Details of
GST paid are as follows:
Eligible ITC available on Inputs received 25,020 25,020
Eligible ITC available on Input Services availed 22,040 22,040
Value of taxable supply of services 15,00,000
Value of exempt supply of services 10,00,000
Compute the amount of input tax credit available to United National Bank for the month of December
2018. Also, compute the net SGST and CGST liability.
Solution:
As per Section 17(4), every banking company or a financial institution, including a non-banking
financial company, engaged in supply of services by way of accepting deposits or extending loans or
advances has the option either
➔ to avail of, every month, an amount equal to 50% of the eligible input tax credit on inputs and input
services in that month or
➔ to comply with the provisions of Section 17(2) of taking credit of inputs and input services used for
making taxable supplies.
Option 1 - Option to avail 50% Eligible ITC under Section 17(4)

Total Eligible ITC available 47,060 47,060
Less: ITC lapsed (23,530) (23,530)
(50% of ITC on eligible inputs and input services i.e. Rs.47,060 * 50%)
Remaining Amount of ITC credited to Electronic Credit Ledger 23,530 23,530
Computation of Net Tax Liability

CGST @ 9% SGST @ 9% Total
Particulars
(Rs.) (Rs.) (Rs.)
Tax liability of Bank before availing eligible ITC on 1,35,000 1,35,000 2,70,000
supply of taxable services of Rs.15,00,000
Less: Net Eligible CGST Credit available on Inputs / (23,530) - (23,530)
Input Services
Less: Net Eligible SGST Credit available on Inputs / - (23,530) (23,530)
Input Services
Net output tax liability of Bank after utilizing eligible 1,11,470 1,11,470 2,22,940
ITC
Option 2 - Eligible ITC under Section 17(2)

Amount of ITC credited to Electronic Credit Ledger 47,060 47,060
As per Rule 42 of CGST Rules, 2017, Credit of CGST paid & SGST paid on 18,824 18,824
input / input services attributable towards exempt supplies to be reversed
from ITC = Rs.47,060 * Rs.10,00,000 / Rs.25,00,000
Computation of Net Tax Liability

CGST @ 9% SGST @ 9% Total
Particulars
(Rs.) (Rs.) (Rs.)
Tax liability of Bank before availing eligible ITC on 1,35,000 1,35,000 2,70,000
supply of taxable services of Rs.15,00,000
Add: Credit of CGST paid & SGST paid to be reversed 18,824 18,824 37,648
from ITC (adding to output liability)
Less: Eligible CGST Credit available on Inputs / Input (47,060) - (47,060)
Services
Less: Eligible SGST Credit available on Inputs / Input - (47,060) (47,060)
Services
Net output tax liability of Bank after utilizing eligible 1,06,764 1,06,764 2,13,528
ITC
Question 66: Common ITC of Capital Goods

Mr. Prasan, a manufacturer is engaged in supplying exempted as well as taxable goods. On 10 th
September 2018, he purchased capital goods used for making exempted supplies on which IGST paid
was Rs.1,00,000. On 25th April 2019 he used such capital goods for purpose of manufacturing both
taxable supplies as well as exempted supplies. Compute implication on ITC.
Solution:
As per Rule 43 of CGST Rules, 2017, where any capital goods earlier used for exempted supplies are
subsequently used for providing taxable supplies also, then the eligible input tax credit which shall be
credited to the electronic credit ledger is arrived at by reducing the input tax at the rate of 5% for every
quarter or part thereof
i.e. Rs.1,00,000 - (5% * 4 quarters * Rs.1,00,000) = Rs.80,000 (which shall be credited to electronic credit
ledger in the month of April 2019)
Amount of input tax credit attributable on common capital goods towards exempt supplies to be
reversed from ITC in the month of April, 2019 = Rs.80,000 * 1 / 60 = Rs.1,333.33.
Note: As per Section 2(92), "quarter" shall mean a period comprising three consecutive calendar
months, ending on the last day of March, June, September and December of a calendar year. Here, 4

quarters are taken (quarter ending on September 2018, quarter ending on December 2018, quarter
ending on March 2019 and quarter ending on June 2019).

Oberoi Industries is a manufacturing company registered under GST. It manufactures two taxable
products ‘X’ and ‘Y’ and one exempt product ‘Z’. The turnover of ‘X’, ‘Y’ and ‘Z’ in the month of April,
20XX was Rs.2,00,000, Rs.10,00,000 and Rs.12,00,000. Oberoi Industries is in possession of certain
machines and purchases more of them. Useful life of all the machines is considered as 5 years.
From the following particulars furnished by it, compute the amount to be credited to the electronic
credit ledger of Oberoi Industries and amount of common credit attributable towards exempted
supplies, if any, for the month of April, 20XX.
Particulars GST paid (Rs.)
Machine ‘A’ purchased on 01.04.20XX for being exclusively used for non-business 19,200
purposes
Machine ‘B’ purchased on 01.04.20XX for being exclusively used in manufacturing 38,400
zero-rated supplies
Machine ‘C’ purchased on 01.04.20XX for being used in manufacturing all the three 96,000
products – X, Y and Z
Machine ‘D’ purchased on April 1, 2 years before 01.04.20XX for being exclusively 1,92,000
used in manufacturing product Z. From 01.04.20XX, such machine will also be used
for manufacturing products X and Y.
Machine ‘E’ purchased on April 1,3 years before 01.04.20XX for being exclusively used 2,88,000
in manufacturing products X and Y. From 01.04.20XX, such machine will also be used
for manufacturing product Z.
Solution:
Particulars Amount Ineligible Amount to be
(Rs.) ITC (Rs.) credited to ECrL (Rs.)
Machine ‘A’ 19,200 19,200 Nil
[Since exclusively used for non-business
purposes, ITC is not available under Rule 43(1)(a)
of CGST Rules, 2017]
Machine ‘B’ 38,400 Nil 38,400
[For ITC purposes, taxable supplies include zero-
rated supplies under Rule 43(1)(b) of CGST Rules,
2017. Hence, full ITC is available]
Machine ‘C’ 96,000 Nil 96,000
[Commonly used for taxable and exempt supplies
– Rule 43(1)(c) of the CGST Rules, 2017]
Machine ‘D’ 1,15,200 Nil 1,15,200
[Owing to change in use from exclusively exempt (Refer Note)
to both taxable and exempt, common credit to be
reduced by ITC @ 5% per quarter or part thereof
in terms of proviso to Rule 43(1)(c) of CGST Rules,
2017]
= Rs.1,92,000 – Rs.76,800 (Rs.1,92,000 * 5% * 8
quarters)
Machine ‘E’ 1,15,200 Nil Nil
(Refer Note)

[Owing to change in use from exclusively taxable (Credit was already
to both taxable and exempt, common accredit to taken in Electronic
be reduced by ITC @ 5% per quarter or part Credit Ledger at the
thereof in terms of proviso to Rule 43(1)(d) of time of Purchase)
CGST Rules, 2017]
= Rs.2,88,000 – Rs.1,72,800 (Rs.2,88,000 * 5% * 12
quarters)
Amount to be credited to the Electronic Credit Ledger of Oberoi Industries 2,49,600
for the month of April, 20XX
Note: Addition to Output Tax Liability on Common Credit
(a) Total common credit = Rs.3,26,400
(b) Common credit for the tax period (in the given case, a month) under Rule 43(1)(e) of CGST Rules,
2017
= 3,26,400 / 60 = Rs.5,440
(c) Common credit attributable to exempt supplies in April, 20XX under Rule 43(1)(g) of CGST Rules,
2017
= Common credit for a month * (Turnover of Exempt Supplies / Total Turnover)
= Rs.5,440 * (12,00,000/24,00,000) = Rs.2,720
(Such credit, along with the applicable interest, shall be added to the output tax liability / reversed
from ITC of Oberoi Industries)

PQR Ltd., a registered supplier, supplying taxable as well as exempted goods, provides following
turnover details during the month of December 2018:
Value of Taxable Supply of Goods 20,00,000
Value of Zero Rated Supply of Goods 10,00,000
Sale Value of Securities 7,00,00,000
Supply of Goods made for Non-Business Use 80,000
Total 7,30,80,000
Details of input tax paid on Capital Goods for the month of December 2018 are as under:
CGST @ 6% CGST @ 6% Total (Rs.)
Particulars
(Rs.) (Rs.)
Credit on capital goods exclusively exempted goods 12,600 12,600 25,200
Credit on capital goods exclusively used for 36,000 36,000 72,000
supplying taxable goods including zero-rated
supplies
Credit on capital goods for non-business use 8,400 8,400 16,800
Details of Capital Goods used for both supply of taxable as well as exempt goods:
Capital Value and Date of Inward Supplies CGST @ 6% SGST @ 6%
Goods (exclusive of CGST & SGST) (Rs.) (Rs.)
P Rs.3,50,000 – 13/09/2018 21,000 21,000
Q Rs.1,00,000 – 25/11/2018 6,000 6,000
R Rs.5,20,000 – 06/12/2018 31,200 31,200
Total 58,200 58,200
Determine the credit on capital goods attributable for tax period of December 2018.
Solution:
Computation of ITC on Capital Goods attributable for Tax Period of December 2018

(i) Credit on capital goods exclusively used for supplying exempted 12,600 12,600
goods
(The amount of input tax in respect of capital goods used exclusively
for effecting exempt supplies shall not be credited to his electronic
credit ledger)
(ii) Credit on capital goods exclusively used for supplying taxable 36,000 36,000
goods including zero-rated supplies
(The amount of input tax in respect of capital goods exclusively used
for supplying taxable goods including zero-rated supplies shall be
credited to the Electronic Credit Ledger)
(iii) Credit on capital goods exclusively used for supplying goods for 8,400 8,400
non-business use
(The amount of input tax in respect of capital goods used exclusively
for non-business purposes shall not be credited to his Electronic
Credit Ledger)
(iv) Credit on capital goods used for supplying taxable as well as 58,200 58,200
exempted supplies
(The amount of input tax shall be credited to Electronic Credit
Ledger and the useful life of such goods shall be taken as 5 years - Tc.
However, as ITC for Capital Goods P and Capital Goods Q would
have been already availed in September 2018 and November 2018,
ITC only of Capital Goods R amounting to Rs.31,200 would be
credited to Electronic Credit Ledger in December 2018)
(v) Amount of ITC attributable to the month of December 2018 on 970 970
Common Capital Goods during their residual life Tm = Tc / 60 =
Rs.58,200 / 60
(vi) Amount of ITC on Common Capital Goods whose residual life 970 970
remains in beginning of tax period i.e. December 2018 (Tr) (Note 1)
(vii) Amount of common credit attributable towards exempted 200 200
supplies to be added to output tax liability / reversed from ITC (Te)
Te = Tr * (Value of exempt supply and supply made for non-business
used during tax period / Total value of supply during tax period) =
Rs.970 * Rs.7,80,000 / Rs.37,80,000 (Note 2 and Note 3)
Total ITC on Capital Goods attributable for Tax Period of 67,000 67,000
December 2018 = (ii) + (iv) – (vii) = Rs.36,000 + Rs.31,200 - Rs.200
Notes:
(1) Calculation of ITC on Capital Goods whose residual life remains during the tax period:
Value of inward ITC attributable for 1 month
supplies CGST @ 6% SGST @ 6% (Tr = Aggregate of Tm)
Capital
(exclusive of (Tc) (Tc) CGST @ 6% SGST @ 6%
Goods
CGST & SGST) (Rs.) (Rs.) (Tm = Tc / 60) (Tm = Tc / 60)
(Rs.) (Rs.) (Rs.)
P 3,50,000 21,000 21,000 350 350
Q 1,00,000 6,000 6,000 100 100
R 5,20,000 31,200 31,200 520 520
Total 58,200 58,200 970 970

(2) Total Turnover:

Value of Taxable Supply of Goods 20,00,000
Value of Zero Rated Taxable Supply of Goods 10,00,000
Sale Value of Securities (Transaction in securities is exempt supply. Value of 7,00,000
exempt supply of transaction in securities is 1% of sales value of securities i.e.
1% * Rs.7,00,00,000)
Total Turnover 37,80,000
(3) Value of Exempt Supply and Supply of Goods made for Non-Business Use:
Sale Value of Securities (Transaction in securities is exempt supply. Value of 7,00,000
exempt supply of transaction in securities is 1% of sales value of securities i.e.
1% * Rs.7,00,00,000)
Value of Exempt Supply and Supply of Goods made for Non-Business Use 7,80,000
Question 69: Availment of ITC in case of Mandatory Registration

Small & Co. is engaged in supplying taxable goods to its customers within the state and it is not liable
for registration under Section 22 of CGST Act, 2017. From 10-10-2018 onwards, it started inter-state
supply of taxable goods and thus, applied for registration on 25-10-2018 and the same has been granted
to it. Its CGST, SGST and IGST liability for the month of October 2018 is Rs.25,600, Rs.25,600 and
Rs.50,900 respectively. Small & Co. has provided the following details of stock of input held on 09-10-
2018 and tax paid thereon:
Inputs received on 15-09-2018 (Invoice dated 12-09-2018) lying in 14,500 14,500
stock as on 09-10-2018
semi-finished stock as on 09-10-2018
Inputs received on 24-07-2018 (Invoice dated 10-07-2018) contained 15,800 15,800
in finished goods as on 09-10-2018
Small & Co. has to make e-payment of tax on the due date i.e. on 20-11-2018. Briefly explain the tax
payable by Small & Co. in cash, if any.
Note: Small & Co. cannot opt for the Composition Scheme.
Solution:
As per Section 18(1) of CGST Act, 2017, a person applying for registration within 30 days from date on
which he becomes liable to registration under this Act and has been granted registration shall be
entitled to take credit of input tax in respect of input held in stock, or contained in semi-finished or
finished goods in stock on date immediately preceding the date from which he becomes liable to
registration. Thus, Small & Co. can get the credit of input held in stock, or contained in semi-finished
or finished goods in stock as on 09-10-2018 in the given case.
in respect of any supply of goods or services or both to him after the expiry of 1 year from the date of
issue of tax invoice relating to such supply. Thus, Small & Co. cannot take the credit of stock of inputs
lying in semi-finished stock as it is more than 1 year old stock.
Computation of Eligible Input Tax Credit

stock as on 09-10-2018
Inputs received on 10-08-2017 (Invoice dated 08-08-2017) lying in - -
semi-finished stock as on 09-10-2018
Inputs received on 24-07-2018 (Invoice dated 10-07-2018) contained 15,800 15,800
in finished goods as on 09-10-2018
Total Eligible Input Tax Credit 30,300 30,300

▪ Utilization of IGST ITC - - -
▪ Utilization of CGST ITC (4,700) (25,600) -
Net Output Tax Payable in Electronic Cash 41,500 0 0
Ledger
follows:
supply,
outward supply,
(if any)
outward supply,
Question 70: Availment of ITC in case of Mandatory Registration

Sethu Ltd. is not required to register under CGST Act, 2017 but it wishes to obtain voluntary registration
so, it applied for voluntary registration on 10th August 2018 and registration certificate has been granted
to it on 15th August 2018. CGST liability and SGST liability for the month of August 2018 is Rs.30,000
each. It is not engaged in making inter-state outward taxable supplies.
Sethu Ltd. provides the following information of inputs held in stock on 14th August 2018.
Input procured on 07-07-2018 lying in stock:
➔ CGST @ 9% 10,000
➔ SGST @ 9% 10,000

Input received on 15-03-2018 contained in semi-finished goods held in stock:
➔ CGST @ 9% 7,500
➔ SGST @ 9% 7,500
Inputs valued Rs.1,50,000 contained in finished goods procured on 20-07-2017 held in
stock:
➔ IGST @ 18% 27,000
Inputs valued Rs.75,000 procured on 11-06-2018 lying in stock:
➔ IGST @ 18% 13,500
Capital goods procured on 10-05-2018:
➔ CGST @ 6% 15,000
➔ SGST @ 6% 15,000
You are required to compute the amount of tax to be paid in cash by Sethu Ltd. for the month of August
2018.
Solution:
As per Section 18(1) of CGST Act, 2017, in case of a person obtaining voluntary registration he shall be
entitled to take credit of input tax in respect of input held in stock, or contained in semi-finished or
finished goods in stock on date immediately preceding the date of grant of registration. Thus, Sethu
Ltd. can get the credit of input held in stock, or contained in semi-finished or finished goods in stock as
on 14-08-2018 in the given case.
in respect of any supply of goods or services or both to him after the expiry of 1 year from the date of
issue of tax invoice relating to such supply. Thus, Sethu Ltd. cannot take the credit of stock of inputs
contained in finished goods held in stock as it is more than 1 year old stock.
Computation of Eligible Input Tax Credit

Input procured on 07-07-2018 lying in stock on 14 th 10,000 10,000 -
August 2018
Input received on 15-03-2018 contained in semi- 7,500 7,500 -
finished goods held in stock on 14th August 2018
Inputs valued Rs.1,50,000 contained in finished goods - - -
procured on 20-07-2017 held in stock on 14th August
2018 (Refer Note 1)
Inputs valued Rs.75,000 procured on 11-06-2018 lying - - 13,500
in stock on 14th August 2018
Capital goods procured on 10-05-2018 (Refer Note 2) - - -
Total Eligible Input Tax Credit 17,500 17,500 13,500
Notes:
(1) Since inputs of value of Rs.1,50,000 has been purchased on 20-07-2017 and 1 year has been elapsed
on 20th July 2018 from date of issue of invoice, no input tax credit shall be admissible in respect of
said input.
(2) There is no provision under Section 18(1) to avail input tax credit of capital goods lying in stock by
the person who obtains voluntary registration.

Gross Output Tax Payable 0 30,000 30,000
▪ Utilization of IGST ITC - (6,750) (6,750)

Net Output Tax Payable in Electronic Cash 0 5,750 5,750
Ledger
follows:
supply,
outward supply,
(if any)
outward supply,
Question 71: Availment of ITC in case of shift from Composition Scheme to Regular Scheme
Small to Big Ltd. paying tax under composition scheme crosses the threshold and becomes liable to pay
tax under regular scheme on 01-04-2018. Can it avail input tax credit and if so calculate the amount of
ITC available?
The following are the details of stock available with Small to Big Ltd. as on 31-03-2018:
Inputs lying in stock (Invoice dated 07-01-2018) 5,000 5,000
Inputs lying in semi-finished goods in stock (Invoice dated 11-11-2017) 7,400 7,400
Capital goods procured on 15-08-2017 (Invoice dated 11-08-2017) 10,000 10,000
Solution:
As per Section 18(1) of CGST Act, 2017, where any registered person ceases to pay tax under Section
10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in
semi-finished or finished goods held in stock and on capital goods on the day immediately preceding
the date from which he becomes liable to pay tax under Section 9. Thus, Small to Big Ltd. shall be
entitled to avail credit of stock as on 31-03-2018.
As per Rule 40 of the CGST Rules, 2017, the capital goods credit can be claimed after reducing the tax
paid on such capital goods by 5% points per quarter of a year or part thereof from the date of invoice
or such other documents on which the capital goods were received by the taxable person.
Computation of Eligible Input Tax Credit on Inputs & Capital Goods

Inputs lying in stock (Invoice dated 07-01-2018) 5,000 5,000
Inputs lying in semi-finished goods in stock (Invoice dated 11-11- 7,400 7,400
2017)
Capital goods procured on 15-08-2017 (Invoice dated 11-08-2017) 8,500 8,500
(Refer Note 1)
Eligible Input Tax Credit on Inputs & Capital Goods 20,900 20,900
Notes:
(1) Computation of Eligible Input Tax Credit on Capital Goods is as follows:
Particulars CGST & SGST
(Rs.)
Date of invoice of capital goods 11-08-2017
Date preceding the day from which Small to Big Ltd. is liable to pay tax 31-03-2018
under Section 9
No. of calendar quarters or part thereof from date of invoice 3
ITC of CGST and SGST paid on capital goods procured on 15-08-2017 20,000
(Invoice dated 11-08-2017)
Less: ITC to be reduced by (Rs.20,000 * 5% * 3) (3,000)
Eligible Input Tax Credit on Capital Goods 17,000
As per Section 2(92), "quarter" shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year.
Question 72: Availment of ITC in case of shift from Exempt Supply to Taxable Supply
Mansingh & Co., a registered dealer engaged in supplying exempted goods to its customers. On 05-11-
2018, exemption notification was rescinded and goods were liable for tax. Compute the eligible credit
for the month of November 2018 with the following information:
Particulars Value (Rs.) CGST (Rs.) SGST (Rs.) IGST (Rs.)
Value of inputs lying in stock as on 04- 2,00,000 - - 36,000
11-2018. All inputs were procured
after 01-01-2018
Value of inputs contained in semi- 1,50,000 13,500 13,500 -
finished goods lying in stock as on 04-
11-2018 but only inputs worth
Rs.90,000 in semi-finished goods were
procured after 04-11-2017
Inputs received on 04-02-2018 lying in 1,00,000 9,000 9,000 -
finished goods in stock on 04-11-2018
Capital goods procured in 25-12-2017 10,00,000 - - 1,20,000
which is exclusively used in supplying
exempted goods
Solution:
As per Section 18(1) of CGST Act, 2017, where an exempt supply of goods or services or both by a
registered person becomes a taxable supply, such person shall be entitled to take credit of input tax in
respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock
relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the
day immediately preceding the date from which such supply becomes taxable.
As per Rule 40 of the CGST Rules, 2017, the capital goods credit can be claimed after reducing the tax
paid on such capital goods by 5% points per quarter of a year or part thereof from the date of invoice
or such other documents on which the capital goods were received by the taxable person.

Computation of Eligible Input Tax Credit on Inputs & Capital Goods

Value of inputs lying in stock as on 04-11-2018. All - - 36,000
inputs were procured after 01-01-2018 (Refer Note 1)
Value of inputs contained in semi-finished goods 8,100 8,100 -
lying in stock as on 04-11-2018 but only inputs worth
Rs.90,000 in semi-finished goods were procured after
04-11-2017 (Refer Note 2)
Inputs received on 04-02-2018 lying in finished goods 9,000 9,000 -
in stock on 04-11-2018 (Refer Note 3)
Capital goods procured in 25-12-2017 which is 90,000
exclusively used in supplying exempted goods
(Refer Note 4)
Eligible Input Tax Credit on Inputs & Capital 17,100 17,100 1,26,000
Goods
Notes:
(1) All inputs lying in stock were acquired within 1 year prior to the effective date on which the goods
became taxable and thus, entire ITC would be allowed.
(2) Out of the total stock of inputs contained in semi-finished goods valuing Rs.1,50,000, inputs totaling
to Rs.60,000 are older than 1 year from the effective date on which the goods became taxable. Thus,
ITC to this extent stands disallowed. ITC on inputs contained in stock of Rs.90,000 would be eligible
(Eligible ITC = Rs.13,500 * Rs.90,000 / Rs.1,50,000 each in respect of CGST and SGST)
(3) All inputs contained in finished goods in stock were acquired within 1 year prior to the effective
date on which the goods become taxable and thus, entire ITC would be allowed.
(4) Computation of Eligible Input Tax Credit on Capital Goods is as follows:
Particulars CGST & SGST (Rs.)
Date of invoice of capital goods 25-12-2017
Date preceding the day on which exempt supply becomes taxable 04-11-2018
supply
No. of calendar quarters or part thereof from date of invoice 5
ITC of IGST paid on capital goods procured on 25-12-2017 1,20,000
Less: ITC to be reduced by (Rs.1,20,000 * 5% * 5) (30,000)
Eligible Input Tax Credit on Capital Goods 90,000
As per Section 2(92), "quarter" shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year.

Question 73: Availment of ITC in case of shift from Exempt Supply to Taxable Supply
SNP Pvt. Ltd. Coimbatore exclusively manufactures and sells product ‘Z’ which is exempt from GST
vide notifications issued relevant GST legislation. The company sells ‘Z’ only within Tamil Nadu. The
turnover of the company in the previous year was Rs.55 lakh. The company expect the sales to grow by
20% in the current year. Owing to the growing demand for the product, the company decided to
increases its production capacity and purchased additional machinery for manufacturing ‘Z’ on
01.07.2017. The purchase price of the capital goods was Rs.20 lakh exclusive of GST @ 18%.
However, effective from 01.11.2017, exemption available on ‘Z’ was withdrawn by the Central
Government and GST @ 12% was imposed thereon. The turnover of the company for the half year
ended on 30.09.2017 was Rs.40 lakh.
The Board of Directors of SNP Pvt. Ltd. wants to know-
(i) Whether they have to register under GST?

(ii) Whether they can take input tax credit on machinery purchased? If yes, then how much credit can
be availed?
Advice Board of Directors of SNP Pvt. Ltd. on the above issues with reference to the provisions of GST
law.
Solution:
(i) Section 22 (1) of the CGST Act, 2017 inter alia provides that every supplier, whose aggregate
however in a financial year exceeds Rs.20,00,000 is liable to be registered under GST in the
State/Union territory from where he makes the taxable supply of goods and/or services.
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 in terms of Section 23 (1)
(a) of CGST Act, 2017.
In the given case, the turnover of the company for the half year ended on 30.09.2017 is Rs. 40 lakh
which is more than the threshold limit of Rs.20 lakh. Therefore, as per Section 22 of CGST Act, 2017,
the company will be liable to registration. However, since SNP Pvt. Ltd. supplied exempted goods
till 31.10.2017, it was not required to be registered till that day, though voluntary registration was
allowed under Section 25 (3) of the CGST Act, 2017.
However, the position will change from 01.11.2017 as the supply of goods become taxable from that
day and the turnover of company is above Rs.20 lakh. It is important to note here that in terms of
Section 2 (6) of the CGST Act, 2017, the aggregate turnover limit of Rs.20 lakh includes exempt
turnover also.
Therefore, turnover of ‘Z’ will be considered for determining the limit of Rs.20 lakh even though
the same was exempt from GST. Therefore, the company needs to register within 30 days from
01.11.2017 (the date on which it becomes liable to registration) in terms of Section 25 (1) of the CGST
Act, 2017.
Further, the company cannot avail exemption of Rs.20 lakh from 01.11.2017 as the GST law does
not provide any threshold exemption from payment of tax but threshold exemption from obtaining
registration (which in this case had been crossed).
(ii) Rule 43 (1) (a) of the CGST Rules, 2017 disallows input tax credit on capital goods used or intended
to be used exclusively for effecting exempt supplies.
However, as per Section 18 (1) (d) of the CGST Act, 2017, where an exempt supply of goods and/or
services by a registered persons becomes a taxable supply, such person gets entitled to take credit
of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished
goods held in stock relatable to such exempt supply and on capital goods exclusively used for such
exempt supply on the day immediately preceding the date from which such supply becomes
taxable.
Rule 40 (1) (a) of the CGST Rules, 2017 lays down that the credit on capital goods can be claimed
after reducing the tax paid on such capital goods by 5% per quarter of a year or part thereof from
the date of the invoice.
Therefore, in the given case, SNP Pvt. Ltd. could not claim credit on machinery till the time it was
supplying exempt goods. However, it can claim credit from 31.10.2017- the day immediately
preceding the date from which the supply became taxable (01.11.2017).
The credit will be available for the remaining useful life of the machinery and will be computed as
follows:
Particulars Amount (Rs)
Date of purchase of machinery 01.07.2017
Date on which credit becomes eligible 31.10.2017
Number of quarters for which credit is to be reduced 2 (including part of quarter)
GST paid on machinery (Rs.20,00,000 x 18%) Rs.3,60,000
Less: Credit to be reduced (Rs.3,60,000 x 5% x 2) Rs.36,000

Amount of credit that can be taken (Rs.3,60,000 - Rs.36,000) Rs.3,18,000
Author’s Note: If the question is looked from the angle of taking registration for the first time, then
ITC on Capital Goods in stock cannot be availed. However, as law is silent and there are 2 possible
interpretations, assessee can take a stand which is more beneficial for him.
Question 74: Availment of ITC in case of Transfer of Business

AJ Ltd., a registered company engaged in supplying taxable goods is being sold to RJ Ltd., with specific
provision for transfer of liabilities. The unutilized credit in respect of CGST and SGST is Rs.48,000 and
48,000 respectively. RJ Ltd. wants to utilize such credit remaining unutilized. Discuss its eligibility.
Solution:
As per Section 18(3), where there is a change in the constitution of a registered person on account of
sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for
transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which
remains unutilized in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased
or transferred business in such manner as may be prescribed.
Therefore, RJ Ltd. is entitled to utilize the unutilized credit on input, input services and capital goods
lying in account of AJ Ltd., provided AJ Ltd. furnishes details of such transaction on sale of business in
form GST ITC-02 electronically in common portal with request to transfer unutilized tax credit in
Electronic Credit Ledger of transferee i.e., RJ Ltd.
A certificate of CA / CMA is to be furnished and the transfer details to be accepted by the transferee.
Question 75: Availment of ITC in case of Transfer of Business

RDX Ltd., a registered manufacturer demerged its entity into RD Ltd. and RX Ltd. The total value of
assets of RDX Ltd. is Rs.50,00,000. Unutilized credit on account of CGST, SGST and IGST amounted to
Rs.75,000, Rs.50,000 and Rs.90,000 respectively. The value of assets obtained as per the scheme by RD
Ltd. and RX Ltd. is Rs.30,00,000 and Rs.20,00,000 respectively. The said value of assets including assets
on which ITC is availed and being distributed to RD Ltd. and RX Ltd. amounting to Rs.5,00,000 and
Rs.10,00,000 respectively. Discuss the eligibility of credit transferred to new units on account of
demerger.
Solution:
As per Section 18(3), where there is a change in the constitution of a registered person on account of
sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for
transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which
remains unutilized in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased
or transferred business in such manner as may be prescribed.
As per Rule 41 of CGST Rules, 2017, in case of demerger, input tax credit shall be apportioned in the
ratio of value of assets of new unit as specified in demerger scheme. In the given case, credit transferred
to both the new units would be:
Particulars RDX Ltd. RD Ltd. RX Ltd.
Value of assets 50,00,000 30,00,000 20,00,000
Unutilized ITC relating to CGST (to be 75,000 45,000 30,000
apportioned in ratio of value of assets of RD (75,000 * 3 / 5) (75,000 * 2 / 5)
Ltd. and RX Ltd.)
Unutilized ITC relating to SGST (to be 50,000 30,000 20,000
Ltd. and RX Ltd.)

Unutilized ITC relating to IGST (to be 90,000 54,000 36,000
Ltd. and RX Ltd.)
Total Apportioned Credit 1,29,000 86,000
Note: It is important to note that ratio for distribution of ITC is based on value of all assets given to
demerged companies. The ratio is not based on value of assets on which ITC is availed and given to
demerged companies.
Question 76: Reversal of ITC in case of shift from Taxable Supply to Exempt Supply
The goods manufactured by Tax Exem Ltd. have been exempted from GST with effect from 01-07-2018.
Earlier these goods were liable to CGST @ 9% and SGST @ 9% respectively. The inputs used in
manufacturing were also liable to CGST @ 9% & SGST @ 9% respectively. Following information is
provided on 30-06-2018:
(a) The inputs costing Rs.2,36,000 (inclusive of CGST & SGST) are lying in stock.
(b) The inputs costing Rs.88,500 (inclusive of CGST & SGST) are held in process.
(c) The finished goods valuing Rs.7,08,000 are in stock; the input cost (inclusive of CGST and SGST) is
50% of the value.
(d) The input tax credit on capital goods lying in stock is Rs.72,000. These goods were purchased on
15-06-2017.
(e) The balance in Electronic Credit Ledger as on 30-06-2018 is Rs.1,80,000 (CGST – Rs.90,000 and SGST
– Rs.90,000).
The department has asked Tax Exem Ltd. to reverse the credit taken on inputs and capital goods
referred above. However, Tax Exem Ltd. contends that credit once validly taken is indefeasible and not
required to be reversed. Comment on the credit admissibility or credit reversal.
What would your Solution be if the balance in Electronic credit Ledger account as on 30-06-2018 is
Rs.1,00,000 (CGST – Rs.50,000 and SGST – Rs.50,000)?
Solution:
As per Section 18(4), where any registered person who has availed input tax credit and the goods or
services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit in
the electronic credit ledger or 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 and on capital
goods taking useful life of capital goods 5 years, on the day immediately preceding the date of such
exemption. The balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.
Computation of Amount Payable on Inputs & Capital Goods

(Rs.)
Inputs lying in stock (Amount Payable = Rs.2,36,000 * 18 / 118) 36,000
Inputs held in process (Amount Payable = Rs.88,500 * 18 / 118) 13,500
Inputs contained in finished goods lying in stock (Amount Payable = 54,000
Rs.7,08,000 * 50% * 18 / 118)
Amount Payable on capital goods used for 13 months (including part of 56,400
month) taking useful life as 5 years = Rs.72,000 * 47/60 as per Rule 44 of CGST
Rules, 2017
(47 months being remaining residual life of capital goods)
Amount Payable on Inputs and Capital Goods 1,59,900
Payment of Amount Payable if balance in Electronic Credit Ledger is Rs.1,80,000


Amount Payable as computed above 79,950 79,950
Less: Payment using Electronic Credit Ledger (79,950) (79,950)
Balance Payment by Electronic Cash Ledger 0 0
Balance Amount by Electronic Credit Ledger shall lapse (Rs.90,000 10,050 10,050
– Rs.79,950 each in CGST and SGST)

Balance Payment by Electronic Cash Ledger 29,950 29,950
Question 77: Reversal of ITC in case of shift from Regular Scheme to Composition Scheme
VK Ltd., a registered person supplying taxable goods in Chennai has opted to pay tax on composition
scheme under Section 10 with effect from 01-04-2018. It provides following information relating to
balance of input tax credit lying as on 31-03-2018.
(a) The inputs costing Rs.1,12,000 (inclusive of CGST @ 6% & SGST @ 6%) are lying in stock.
(b) Inputs contained in finished goods where tax invoice is not available relating to such inputs but it
is known that market price of such inputs (inclusive of CGST @ 6% & SGST @ 6%) on 31-03-2018 is
Rs.1,68,000
(c) The input tax credit on capital goods lying in stock is Rs.90,000. These goods were purchased on
15-06-2017.
(d) Balance in Electronic Credit Ledger as on 31-03-2018 is Rs.1,30,000 (CGST – Rs.65,000 and SGST –
Rs.65,000).
Decide whether VK Ltd. is eligible for input tax credit lying on 31-03-2018.
Solution:
As per Section 18(4), where any registered taxable person who has availed of input tax credit opts to
pay tax under Section 10 i.e. composition scheme, he shall pay an amount, by way of debit in the
electronic credit ledger or 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 and on capital
goods, taking useful life of capital goods 5 years, on the day immediately preceding the date of
exercising such option.
Computation of Amount Payable on Inputs & Capital Goods

(Rs.)
Inputs lying in stock (Amount Payable = Rs.1,12,000 * 12 / 112) 12,000
Inputs contained in finished goods lying in stock (Amount Payable = 18,000
Rs.1,68,000 * 12 / 112) (Refer Note)
Amount Payable on capital goods used for 10 months (including part of 75,000
month) taking useful life as 5 years = Rs.90,000 * 50/60 as per Rule 44 of CGST
Rules, 2017
(50 months being remaining residual life of capital goods)
Amount Payable on Inputs and Capital Goods 1,05,000
Note: As per Rule 44(3) of CGST Rules, 2017, where the tax invoices related to the inputs lying in stock
are not available, the registered person shall estimate the amount under Rule 44(1) based on the
prevailing market price of goods on the date of opting for composition scheme.

Balance Payment by Electronic Cash Ledger 0 0
Balance Amount by Electronic Credit Ledger shall lapse (Rs.65,000 12,500 12,500
– 52,500 each in CGST and SGST)
Question 78: Reversal of ITC in case of Sale of Capital Goods

Jindal Ltd. purchased machinery (capitalized in books of accounts) for Rs.11,80,000, which is inclusive
of GST at 18%. The equipment was purchased on 10-12-2018 and was disposed of as second hand
equipment on 20-08-2019 for a price of Rs.9,00,000. GST rate on the date of disposal was 18%. You are
required to calculate the amount payable on disposal of the equipment.
Solution:
As per Section 18(6) of the CGST Act read with Rule 40(2) of CGST Rules, 2017, in case of supply of
capital goods or plant and machinery, on which input tax credit has been taken, the registered person
shall pay an amount:
(a) equal to the input tax credit taken on the said capital goods reduced by an amount calculated @5%
for every quarter or part thereof from the date of issue of invoice for such goods; or
(b) the tax on the transaction value of such capital goods or plant and machinery determined under
Section 15,
whichever is higher.
Computation of Amount Payable
Particulars Amount
(Rs.)
Date of invoice for purchase of capital goods 10-12-2018
Date of supply of capital goods after taking into use 20-08-2019
No. of calendar quarters or part thereof from the date of invoice till date of supply 4
CGST and SGST paid on purchase of Capital Goods [Rs.11,80,000 * 18 / 118] 1,80,000
Less: Rs.1,80,000 * 5% * 4 quarters (36,000)
Amount of CGST and SGST → A 1,44,000
Transaction value on supply of capital goods or plant and machinery u/s 15 9,00,000
Amount of CGST and SGST (@ 18%) → B 1,62,000
Amount of Tax Payable (Higher of A or B) 1,62,000

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 22 nd
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:
As per Section 18(6) of the CGST Act read with Rule 40(2) of CGST Rules, 2017, in case of supply of
capital goods or plant and machinery, on which input tax credit has been taken, the registered person
shall pay an amount:

(a) equal to the input tax credit taken on the said capital goods reduced by an amount calculated @5%
(b) the tax on the transaction value of such capital goods or plant and machinery determined under
Section 15,
Date of invoice for purchase of capital goods 8th July 2017
Date of supply of capital goods after taking into use 22nd October, 2018
No. of calendar quarters or part thereof from the date of invoice till date of 6
supply 1,80,000
GST paid on purchase of Capital Goods [Rs.10,00,000 * 18 / 100] (54,000)
Less: Rs.1,80,000 * 5% * 6 quarters 1,26,000
Amount of GST → A
Amount of GST (@ 18%) → B 1,35,000

KD Ltd., a manufacturer of goods, has purchased capital goods under cover of invoice dated 25-09-
2017 for Rs.5,90,000 (inclusive of CGST @ 9% and SGST @ 9%). After taking it for business use, the said
capital goods were supplied for Rs.3,00,000 on 28-07-2018. Explain the treatment of input tax credit.
Solution:
As per Section 18(6) of the CGST Act, 2017 read with Rule 40(2) of CGST Rules, 2017, in case of supply
of capital goods, on which input tax credit has been taken, the registered person shall pay an amount-
(a) equal to the input tax credit taken on the said capital goods reduced by an amount calculated @ 5%
(b) the tax on the transaction value of such capital goods or plant and machinery Computed under
Section 15,
Particulars Amount
(Rs.)
CGST and SGST paid on purchase of Capital Goods [Rs.5,90,000 * 18 / 118] 90,000
Less: Rs.90,000 * 5% * 5 quarters (22,500)
Amount of CGST and SGST → A 67,500
Amount of CGST and SGST (@ 18%) → B 54,000
Amount of Tax Payable (Higher of A or B) 67,500
Question 81: Reversal of ITC in case of Sale of Special Capital Goods

What would be the impact on input tax credit if capital goods being moulds are removed as scrap at a
transaction value of Rs.25,000 on 09-09-2017? The rate of tax on moulds is 18%.
Solution:

As per Section 18(6), where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap,
taxable person may pay tax on the transaction value of such goods determined under Section 15. In the
given case where the moulds are cleared as scrap, the manufacturer shall pay an amount equal to the
tax leviable on transaction value i.e. Rs.25,000 * 18% = Rs.4,500.

Bharat Associates Pvt. Ltd. purchased machinery worth Rs.9, 00,000 (excluding GST) on 20-07-2017 on
which it paid GST @ 18% and availed the ITC. On 05-03-2018, it sold the machinery for Rs. 7,00,000
(excluding GST) to Hindustan Associates Pvt. Ltd. The GST rate on sale is 18%. What will be the course
of action for Bharat Associates Pvt. Ltd. to follow under CGST Act, 2017?
Solution:
If capital goods or plant and machinery on which input tax credit (ITC) has been taken are supplied
outward by a registered person, he must pay an amount that is higher of the following:
(a) ITC 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 or
(b) Tax on transaction value.
Particulars Amount
(Rs.)
ITC on purchase of Capital Goods (Rs.9, 00,000 × 18%) 1,62,000
Less: Rs.1,62,000 * 5% * 3 quarters (Refer Note) (24,300)
Amount of CGST and SGST → A 1,37,700
Amount of CGST and SGST (@ 18%) → B 1,26,000
ICAI’s Note: In the above solution, amount of ITC to be paid (amount of reduced ITC based on
percentage points) has been computed on the basis of provisions of Rule 40(2) of the CGST Rules, 2017
[ITC reduced by 5% for every quarter or part thereof from the date of the issue of invoice]. However,
the said amount can also be computed on the basis of provisions of Rule 44(6) of the CGST Rules, 2017
[ITC of remaining useful life in months computed on prorate basis, taking the useful life as 5 years].
Classic Textiles Ltd. purchased a needle detecting machine on 6 th July, 2017 from Balaji Engineering
Works Ltd. for Rs.10,00,000 (excluding GST) paying GST @ 18% on the same. It availed the input tax
credit of the GST paid on the machine and started using in the manufacture of goods. The machine was
sold on 18th October, 2018 for Rs.6,00,000 (excluding GST), as second hand machine to AB. Pvt. Ltd. The
GST rate on supply of machine is 18%.
Compute the amount payable by Classic Textiles Ltd. 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:

(i) 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
(ii) tax on transaction value.
Date of invoice for purchase of capital goods 6th July 2017
Date of supply of capital goods after taking into use 18 October, 2018
nd
No. of calendar quarters or part thereof from the date of invoice till date of 6
supply 1,80,000
GST paid on purchase of Capital Goods [Rs.10,00,000 * 18 / 100] (54,000)
Less: Rs.1,80,000 * 5% * 6 quarters 1,26,000
Amount of GST → A
Amount of GST (@ 18%) → B 1,08,000
Question 84: Job-Work – ITC and Deemed Supply

P Ltd. sends the inputs to JB & Co. for further processing on 30-08-2018. The value of goods sent for Job
work is Rs.1,00,000. What are the tax implications in following cases, if GST @ 18% is levied?
(a) JB & Co. sends the processed goods back to P Ltd on 30-10-2018
(b) JB & Co. sends the processed goods back to P Ltd on 30-10-2019
Make suitable assumptions as required.
Solution:
As per Section 19 read along with Section 143 of the CGST Act, 2017, principal can remove the goods
without payment of tax and take input tax credit provided inputs sent for job work are returned back
within 1 year (+ 1 year extension) of removal. Otherwise, it shall be treated as supply from principal to
Job worker as on 30-08-2018 and subject to tax along with interest.
(a) JB & Co. sends the processed goods back to P Ltd. on 30-10-2018:
In the present case, the inputs are received back by P Ltd. before completion of 1 year on 30-10-2018
and hence, no tax is payable.
(b) JB & Co. sends the processed goods back to P Ltd. on 30-10-2019:
In the present case, the inputs are received back by P Ltd. after completion of 1 year on 30-10-2019 and
hence, P Ltd. needs to pay the tax along with the interest on the supply made by him to JB & Co. i.e. it
would be deemed that P Ltd. supplied the goods to JB & Co. on 30-08-2018. Hence, P Ltd. have to pay
CGST – Rs.9,000 and SGST – Rs.9,000 along with interest @ 18% p.a. from the due-date of payment (i.e.
20-09-2018) till the date of payment.
Question 85: Input Tax Credit and Input Service Distributor

ABC Ltd. has following units:
A: Factory in Hassan, Karnataka; closed from 2017-18 onwards, no turnover.
B: Factory in Tumkur, Karnataka; turnover of Rs.27 crores in 2017-18;
C: Service centre in Hyderabad, Telangana; turnover of Rs.1 crore in 2017-18;
D: Service centre in Chennai, Tamil Nadu; turnover of Rs.2 crores in 2017-18;
ABC Ltd.’s corporate office functions as ISD. It has to distribute ITC of Rs.9 lakh for December 2018. Of
this, an invoice involving tax of Rs.3 lakh pertains to technical consultancy for Tumkur unit. What
should be the distribution of the credit?
Solution:
As per Rule 39(d) of CGST Rules relating to ITC,
(i) Rs.3 lakh is attributable to Tumkur unit, and will be transferred to Tumkur unit only.
(ii) Of the remaining Rs.6 lakh, Hassan unit will not be entitled to any credit as ITC is distributed to
only those recipients which supply goods and / or services. Rs.6 lakh have to be distributed among
Tumkur unit and the service centres in Hyderabad and Chennai in proportion of their turnover in
the previous FY, that is, in 2017-18.
(a) Hassan unit will not get any credit.
(b) Tumkur unit will get credit of (27 crore / 30 crore) * 6 lakhs = Rs.5.4 lakhs;
(c) Hyderabad service centre will get credit of (1 crore / 30 crore) * 6 lakhs = Rs.20,000; and
(d) Chennai service centre will get credit of (2 crore / 30 crore) * 6 lakhs = Rs.40,000.
Question 86: Input Tax Credit and Input Service Distributor

PQR Ltd., a registered supplier of goods having Head Office at Rajasthan, also registered as Input
Service Distributor (ISD), furnishes the following information for month of November 2018 and asks
you to distribute the credit to various units:
Input CGST SGST IGST Total
Particulars
Service (Rs.) (Rs.) (Rs.) (Rs.)
“M” Used in Unit – I (Input service “M” is availed 1,500 1,500 - 3,000
for employee on vacation during the month
to its Unit I)
“N” Used in Unit – II 18,000 18,000 - 36,000
“O” Used in Unit – I, II and III - - 46,000 46,000

“P” Used in Unit – I, II, III and IV 2,100 2,100 - 4,200
Total Amount of Credit 21,600 21,600 46,000 89,200
Total turnover of the units for the year ending 31st March, 2018 are as under:
Units Particulars Total (Rs.)
Unit – I - 35,00,000
Unit – II Not registered as exclusively engaged in supply of exempt goods 50,00,000
Unit – III - 45,00,000
Unit – IV - 85,00,000
Total Turnover of PQR Ltd. 2,15,00,000
All units are operational during the current year. Unit I is located in Rajasthan whereas Unit II, Unit III
and Unit IV are located in Delhi, Gujarat and Mumbai respectively.
Compute credit attributable to each of the units in the month of November 2018.
Solution:
Computation of ITC to be distributed for month of November 2018 to various units as per Rule 39
of the CGST Rules, 2017 (Amount in Rs.):
Credit to be distributed as
Total ITC Available Unit Unit Unit Unit
Particulars
I II III IV
CGST SGST IGST Total CGST SGST IGST IGST IGST IGST
Input 1,500 1,500 - 3,000 1,500 1,500 - - - -
Service “M”
(Note 1)
Input 18,000 18,000 - 36,000 - - - 36,000 - -
Service “N”
(Note 2)

Input - - 46,000 - - 12,385 17,692 15,923 -
Service “O”
(Note 3)
Input 2,100 2,100 - 4,200 342 342 - 977 879 1,660
Service “P”
(Note 3)
Total ITC 21,600 21,600 46,000 89,200 1,842 1,842 12,385 54,669 16,802 1,660
distributed
Notes:
(1) Given that the service availed for employee on traveling during the month would not be eligible
input service under Section 17(5), the taxes relating to Input Service “M” should be distributed as
ineligible input tax (Rs.1,500 + Rs.1,500), and the distribution must be done separately for CGST
and SGST. Since, the service is wholly attributable to Unit I, hence distributed only to such unit.
(2) The credit of input tax attributable as input service to a particular unit shall be distributed only to
that unit. Since Unit II is exclusively engaged in supply of exempted goods, the total credit of Input
Service “N” Rs.36,000 is distributable to it. Further as per Rule 39(1)(d) of CGST Rules, 2017, no
differentiation is to be made whether the unit is registered or not, and therefore, credit attributable
to Unit II is distributed to that unit although it is not registered, which implies, it is a loss of credit.
(3) As per Section 20(2)(b), the credit of tax attributable as input service to more than one unit but not
to all the units shall be distributed only amongst such units to which the input service is
attributable and such distribution shall be pro rata on the basis of the turnover of such units, to the
total turnover of all such units during the relevant period. Hence, the credit of Input Service "O"
is distributed to Units-I, II & III and the credit of Input Service "P" is distributed to Units-I, II, III
and IV.
(4) The ‘turnover in State’ is arrived at a value for the ‘relevant period’. Since all the 4 units were
operational during the preceding financial year, the relevant period would be the preceding
financial year.

TAX INVOICE, CN &

DN
(ICAI – IPCC [Old Syllabus & New Syllabus – 3 Marks] – MTP 1– May 2018)
Question 1: Tax Invoice – Due-Date for Supply of Goods
Discuss the time-limit for issuance of invoice in case of taxable supply of goods.
Solution:
As per Section 31 of the CGST Act, 2017, in case of taxable supply of goods, invoice shall be issued
before or at the time of –
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case.
In case of continuous supply of goods, where successive statements of accounts/ successive payments
are involved, the invoice shall be issued before/at the time each such statement is issued or each such
payment is received.
Question 2: Tax Invoice – Due-Date for Supply of Goods

DK Industries Ltd., Chennai, entered into a contract with KD Entrepreneurs, Kolkatta, for supply of
spare parts of a machine on 1st July. The spare parts were to be delivered on 30th July. However, there
was delay in delivery and DK Industries Ltd. removed the finished spare parts from its factory on 20th
September. Determine the date by which invoice must be issued by DK 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 20th September.

Question 3: Tax Invoice – Due-Date for Supply of Goods and Contents of Tax Invoice
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, 2019. 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, 2019 showing the lumpsum 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?
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 03.02.2019.
However, the invoice has been issued on 10.02.2019.
In such a case, the time of supply as per Section 13 of the CGST Act, 2017 would be 04.01.2019 i.e.
earliest of the following:
(a) Date of provision of service (04.01.2019)
(b) Date of receipt of payment (11.02.2019)
(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.
Question 4: Tax Invoice – Due-Date for Continuous Supply of Services

R & M Ltd., a registered person, provides the services of repair and maintenance of computer systems.
On April 1, it has entered into an annual maintenance contract with Mr. PK for his system. 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 within 1 month 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 R & M Ltd. 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 May 1,
August 1, November 1, and February 1.

Mr. Lakhan provides Continuous Supply of Services (CSS) to M/s. TNB Limited. He furnishes the
following further information:
(i) Date of commencement of providing CSS – 01-10-2017
(ii) Date of completion of providing CSS – 31-01-2018
(iii) Date of receipt of payment by Mr. Lakhan – 30-03-2018
Determine the time of issue of invoice as per provisions of CGST Act, 2017, in the following
circumstances:
(i) If no due date for payment is agreed upon by both under the contract of CSS.
(ii) If payment is linked to the completion of service.
(iii) If M/s. TNB limited has to make payment on 25-03-2018 as per the contract between them.
Solution:
(i) 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.
Thus, in the given case, the invoice should be issued on or before 30.03.2018 (date of receipt of
payment by Mr. Lakhan).
(ii) If payment is linked to the completion of an event, the invoice should be issued on or before the
date of completion of that event.
Since in the given case payment is linked to the completion of service, invoice should be issued on
or before 31.01.2018 (date of completion of service).
(iii) Where the due date of ascertainable from the contract, the invoice should be issued on or before
the due date of payment.
If M/s. TNB limited has to make payment on 25.03.2018 as per the contract between them, the
invoice should be issued on or before 25.03.2018.
Mr. Mayank provides Continuous Supply of Services (CSS) to M/s. Omega Limited. He furnishes the
following further information:
(i) Date of commencement of providing CSS 01-10-20XX
(ii) Date of completion of providing CSS 31-01-20XY
(iii) Date of receipt of payment by Mr. Mayank 30-03-20XY
Determine the time of issue of invoice as per provisions of CGST Act, 2017, in the following
circumstances:
(i) If no due date for payment is agreed upon by both under the contract of CSS.
(ii) If payment is linked to the completion of service.
(iii) If M/s. Omega Limited has to make payment on 25-03-20XY as per the contract between them.
Solution:
As per Section 31 of CGST Act, 2017
(i) 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 services receives payment.
Thus, in the given case, the invoice should be issued on or before 30.03.20XY (date of receipt of
payment by Mr. Mayank).
(ii) If payment is linked to the completion of an event, the invoice should be issued on or before the
date of completion of that event.
Since in the given case payment is linked to be completion of service, invoice should be issued on
or before 31.01.20XY (date of completion of services).
(iii) Where the due date of payment is ascertainable from the contract, the invoice should be issued on
or before the due date of payment.
If M/s. Omega limited has to make payment on 25.03.20XY as per the contract between them, the
invoice should be issued on or before 25.03.20XY.
Question 7: Bill of Supply
Examiner whether the following statement is true or false giving brief reasons:
It is mandatory to issue a tax invoice in case a registered person has opted for composition levy scheme.
Solution:

The given statement is false. As per Section 31(3)(c) of CGST Act read with Rule 49 of the CGST Rules,
a registered person paying tax under the provisions of Section 10 (i.e. composition levy) is required to
issue, instead of a tax invoice, a bill of supply containing the specified particulars in the prescribed
manner.
Question 8: Bill of Supply
Draupad 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
as per Section 31 read with CGST Rules, 2017.
Therefore, in the given case, Draupad Fabrics cannot issue tax invoice. Instead, it shall issue a Bill of
Supply.
Question 9: Tax Invoice, Bill of Supply and Tax Invoice cum Bill of Supply
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.
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 given statement is true.
A non-banking financial company is 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.

Question 10: Tax Invoice, Bill of Supply and Tax Invoice cum Bill of Supply
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 invoice 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) 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 exempted goods is required to issue a bill of supply instead of tax invoice.

Further, 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 / bill of supply if:
(a) value of the goods supplied < Rs.200,
(b) the recipient is unregistered; and
(c) the recipient does not require such tax invoice / bill of supply.
Instead such registered person shall issue a Consolidated Tax Invoice / Consolidated Bill of Supply
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 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.
Question 11: Consolidated Tax Invoice and Consolidated Bill of Supply

Champalal Stationers is a trader dealing in stationery items. It is registered under GST and has
undertaken following sales during the day:
1. Mr. A – a painter (unregistered person) 180
2. B & Co. – an unregistered trader 400
3. C Ltd. – a registered retail dealer 120
4. Mr. D – a student (unregistered) 250
5. Edu Charitable Trust – an unregistered entity 150
None of the recipients require a tax invoice. Even C Ltd. does not requires tax invoice as it is a
composition dealer.
Determine in respect of which of the above supplies, Champalal Stationers may issue a Consolidated
Tax Invoice instead of Tax Invoice at the end of the day?
Solution:
In the given illustration, Champalal Stationers can issue a Consolidated Tax Invoice only with respect
to supplies made to Mr. A [worth Rs.180] and Edu Charitable Trust [worth Rs.150] as
(a) the value of goods supplied to these recipients is less than Rs.200 and
(b) the recipients are unregistered and
(c) the recipients don’t require a tax invoice.
As regards the supply made to C Ltd., although the value of goods supplied to it is less than Rs.200, C
Ltd. is registered under GST. Thus, Consolidated Tax Invoice cannot be issued.
Question 12: Revised Tax Invoice

The aggregate turnover of VK Ltd. supplying both goods and services exceeded Rs.20 lakhs on 25th
November. It applied for registration on 15th December and was granted the registration certificate on
20th December. You are required to advice VK 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.
What would be your answer if VK Ltd. has applied for registration on 28th December and registration
is granted on 10th January?
Solution:

(a) Registration applied within 30 days from the date of liable to get registered
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, VK Ltd.’s turnover exceeded Rs.20 lakhs on 25th
November, 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. 25th November.
As per Section 31 read with CGST Rules, 2017, every registered person who has been granted
registration with effect from a date earlier than the date of issuance of certificate of registration to him,
may issue Revised Tax Invoices.
Revised Tax Invoices shall be issued within 1 month from the date of issuance of registration in respect
of taxable supplies effected during the period starting from the effective date of registration till the date
of issuance of certificate of registration.
Therefore, in the given case, VK Ltd. has to issue the Revised Tax Invoices in respect of taxable supplies
effected during the period starting from the effective date of registration (25th November) till the date
of issuance of certificate of registration (20th December) within 1 month from the date of issuance of
certificate of registration, i.e. on or before 20th January.
(b) Registration applied after 30 days from the date of liable to get registered
As per Section 25 read with CGST Rules, 2017, where an applicant submits application for registration
after 30 days from the date he becomes liable to registration, effective date of registration is the date on
of grant of registration. Since, VK Ltd.’s turnover exceeded Rs.20 lakhs on 25th November, it became
liable to registration on same day. Further, it applied for registration after 30 days of so becoming liable
to registration, the effective date of registration is the date of grant of registration, i.e. 28th December.
As per Section 31 read with CGST Rules, 2017, only a registered person who has been granted
registration with effect from a date earlier than the date of issuance of certificate of registration to him,
may issue Revised Tax Invoices. However, as VK Ltd. has got registration effective from date of grant
of registration, it cannot issue Revised Tax invoices.

Question 13: Revised Tax Invoice
Chidanand Products Pvt. Ltd. started its business of supply of goods on 1 st August. It’s turnover
exceeds Rs.40,00,000 on 5th September. It applied for registration on 28th September and granted
registration certificate on 6th October. Guide the company regarding invoices to be issued between 5th
September to 6th October to registered dealers. Further it had also made supplies to unregistered dealers
in that period. How it can raise invoices?
Solution:
A supplier whose aggregate turnover in a financial year exceeds Rs.40 lakhs / Rs.20 lakhs / Rs.10 lakhs
in a State/UT 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) vide Section 22 and Section 23 read with NN
10/2019-CT.
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.
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 view of the aforesaid provisions, Chidanand Products (P) Ltd may issue revise tax invoices against
the invoices already issued during the period between effective date of registration (5th September) and
the date of issuance of registration certificate (6th October), within 1 month from 6th October.

Further, Chidanand Products (P) 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.

Question 14: Documents – Revised Tax Invoice
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 01.06.20XX
2. Turnover exceeds Rs.10,00,000 on 20.07.20XX
5. Application for registration made on 28.09.20XX
6. 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.
Solution:
Nagaland.
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. As it is supplying goods (gift
items), it is eligible for NN 10/2019-CT assuming that other conditions are satisfied and thus, threshold
of Rs.40 lakhs is applicable. 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.
( ICAI – IPCC [Old Syllabus – 5 Marks] – May 2018 Exam)


Question 15: Debit Note and Credit Note
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 of goods
and/or services, or
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.

REGISTRATION
Question 1: Basics of Registration – PAN Based Registration
In order to be eligible for grant of registration, a person must have a Permanent Account Number issued
under the Income- tax Act, 1961. Are there any exceptions to it?
Solution:
A Permanent Account Number is mandatory to be eligible for grant of registration.
(i) One exception is Unique Identification Number (UIN). As per Section 25(9) of the CGST Act, 2017
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.
(ii) Another exception to this is Tax Deducted at Source (TDS) registration. As per Section 51 of the
CGST Act, 2017, department / establishment of the Central Government / State Government, Local
Authority, Governmental Agencies and other notified persons are required to take TDS
registration.
(iii) Another exception to this is registration allotted to Non-Resident Taxable Person. As per Section
25(6) & Section 25 (7), 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 shall be an Indian
Resident having valid PAN. The application will be submitted in a different prescribed form.

Question 2: Basics of Registration – State Based Registration
Amit, a taxable person, is operating in Tamil Nadu, Punjab and West Bengal, with the same PAN. Can
he operate with a single registration in West Bengal?
Solution:
No, Amit cannot operate with a single registration in West Bengal if he is making taxable supplies from
Tamil Nadu and Punjab also. 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.
However, if he is not making taxable supplies from Tamil Nadu and Punjab, he can operate with a
single registration West Bengal.
Question 3: Basics of Registration – Various Aspects of Registration

Answer the following:
(i) Is there an option to take centralized registration for services under GST Law?
(ii) Can a person operating in different States with the same PAN number operate with a single
registration?
(iii) Can a person having multiple place of business in the same State obtain separate registrations for
each place of business?
(iv) Whether the registration granted to any person is permanent?
(v) Can a person without GST registration collect GST and claim ITC?
Solution:
(i) No, the tax payer has to take separate registration in every State from where he makes taxable
supplies.
(ii) 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 in each of those States

(iii) Yes, in terms of the proviso to Section 25(2), a person having multiple place of business in a State
may, at his option, obtain a separate registration for each place of business, subject to such
conditions as may be prescribed.
(iv) Yes, the registration certificate once granted is permanent unless surrendered, cancelled,
suspended or revoked.
(v) 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.
Question 4: Basics of Registration – Advantages of Registration

What are the advantage of taking registration in GST?
Solution:
Registration will confer following advantages to the business:
(i) Legally recognized as supplier of goods or services.
(ii) 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.
(iii) 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.
(iv) Become eligible to avail various other benefits and privileges rendered under the GST laws.

Question 5: Application for Registration – Turnover based Registration under Section 22
There is dairy farm selling milk and milk products in Delhi. The turnover of his dairy farm is as below:
(i) Milk (Exempted): Rs.19,90,000
(ii) Butter (Taxable): Rs.50,000
What is the registration liability under GST for the above mentioned person assuming he has same
PAN? What would have been the answer if the state is Telengana?
Solution:
Nagaland.
Further, aggregate turnover, inter alia, means the aggregate value of all taxable supplies as well as
exempt supplies.
In the given case, aggregate turnover = Rs.19,90,000 + Rs.50,000 = Rs.20,40,000. If dairy farm is in Delhi,
it is not liable for registration as per Section 23 read with NN 10/2019-CT as it is supplying only goods
and its aggregate turnover is up to Rs.40 lakhs. However, if the dairy farm is in Telengana, it is liable
for registration as per Section 22as its aggregate turnover is more than Rs.20 lakhs.
Question 6: Application for Registration – Turnover based Registration under Section 22

Mr. X of Maharashtra has effected following supplies within the state of Maharashtra. You are
requested to determine whether he is required to obtain registration under GST law.

1. Intra state supply of goods agriculture produce grown out of cultivation of 15,00,000
land by family members
2. Intra state supply of goods and services which are wholly exempt from GST 6,00,000
under Section 11 of CGST Act, 2017
3. Intra state supply of goods and services chargeable with GST @ 5% 8,50,000
Solution:
Computation of Aggregate Turnover for Registration
1. Intra state supply of goods agriculture produce grown out of cultivation of land Nil
by family members
2. Intra state supply of goods which are wholly exempt from GST under Section 11 6,00,000
of CGST Act, 2017
3. Intra state supply of goods chargeable with GST @ 5% 8,50,000
Aggregate Turnover for Registration 14,50,000
Notes:
(i) As per Section 23 of CGST Act, 2017, an agriculturalist is not liable to obtain registration to the
extent to supply of produce out of cultivation of land. Thus, intra-state supply of goods agricultural
produce grown out of cultivation of land by family members shall not be included in computing
aggregate turnover.
(ii) Intra-state supply of goods and services which are wholly exempt from GST under Section 11 of
CGST Act, 2017 shall be included in computing aggregate turnover as the same is specifically
included in the definition of aggregated turnover.
(iii) Intra-state supply of goods and services chargeable with GST @ 5% shall be included in computing
aggregate turnover.
Since, the aggregate turnover does not exceed Rs.20 lakhs, Mr. X is not required to obtained registration
as per Section 22 of CGST Act, 2017.
Author’s Note: It is important to note that that threshold exemption for registration of Rs.40 lakhs as
per Section 23 read with NN 10/2019-CT is not applicable as the supplier is supplying goods as well as
services.

Question 7: Application for Registration – Persons Not Liable for Registration under Section 23
State the persons who are not liable for registration as per provisions of Selection 23 of CGST Act, 2017.
Solution:
As per provision of Section 23 of CGST Act, 2017, the persons who are not liable for registration are as
under:
(i) Person engaged exclusively in supplying goods/services/both that are wholly exempt from tax.
(ii) Person engaged exclusively in supplying goods/services/both that are not liable to tax.
(iii) Agriculturist to the extent of supply of produce out of cultivation of land.
(iv) Any Other Notified Persons
(a) Persons only engaged in making supplies of taxable goods or services or both liable to reverse
charge.
(b) Persons making inter-State supplies of taxable services up to an aggregate turnover of Rs.20
lakhs (Rs.10 lakhs in case of special category States except Jammu and Kashmir).
(c) Casual taxable Persons making taxable supplies of specified handicraft goods up to an
aggregate turnover of Rs.20 lakhs (Rs.10 lakhs in case of special category States except Jammu
and Kashmir) subject to specified conditions.

(d) Persons making inter-State supplies of specified handicraft goods up to an aggregate turnover
of Rs.20 lakhs (Rs.10 lakhs in case of special category States except Jammu and Kashmir) subject
to specified conditions.
(e) Job workers making inter-State supply of services to a registered person up to an aggregate
turnover of Rs.20 lakhs (Rs.10 lakhs in case of special category States except Jammu and
Kashmir) subject to specified conditions.
(f) Persons making supplies of services through an electronic commerce operator (other than
supplies under Section 9(5) of the CGST Act) up to an aggregate turnover of Rs.20 lakhs (Rs.10
lakhs in case of special category States except Jammu and Kashmir).
Question 8: Application for Registration – Persons Not Liable for Registration under Section 23 and
Compulsory Registration under Section 24
State which of the following suppliers are liable to be registered:
(i) Agent supplying goods on behalf of some other taxable person and its aggregate turnover does not
exceed Rs.20 lakhs during the financial year.
(ii) An agriculturist who is only engaged in supply of produce out of cultivation of land.
Solution:
(i) Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds Rs.20
lakhs / Rs.10 lakhs in a State / UT in a Financial Year. However, as per Section 24, a person supplying
goods/services or both on behalf of other taxable persons, whether as an agent or not, is liable to be
compulsorily registered even if its aggregate turnover does not exceed Rs.20 lakhs / Rs.10 lakhs
during the financial year.
(ii) 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.
Question 9: Application for Registration – Compulsory Registration under Section 24 and Time
Limit for obtaining Registration
State the time-period within which registration needs to be obtained in each of the following
independent cases:
(1) Casual Taxable Person
(2) Person making Inter-State Taxable Supply
Solution:
Section 25(1) of the CGST Act stipulates the time-period within which registration needs to be obtained
in various cases. It provides the following time-limits:
In case of Time limit for obtaining Registration
A person who is liable to be registered under ▪ within 30 days from the date on which he becomes
Section 22 or Section 24 liable to registration
A casual taxable person or a non-resident taxable ▪ at least 5 days prior to the commencement of
person business
In view of the aforesaid provisions:
(1) As per Section 24 of the CGST Act, casual taxable person is liable to get compulsorily registered. A
casual taxable person must obtain registration at least 5 days prior to the commencement of its
business.
(2) As per Section 24 of the CGST Act, person making inter-State taxable supply is liable to get
compulsorily registered. Therefore, such person must obtain registration within 30 days from the
date on which he becomes liable to registration.

Question 10: Application for Registration – Effective Date of Registration
The aggregate turnover of Vikas Enterprise of Mumbai (Maharashtra) supplying both goods and
services has exceeded Rs.20 lakhs on 25th January, 2019. It submits the application for registration on
15th February, 2019. Registration certificate is granted on 20th February, 2019. Determine the effective
date of registration under CGST Act, 2017.
Solution:
Nagaland.
As per Section 22, where the application is submitted within the said period, the effective date of
registration is the date on which the person become liable to registration; otherwise it is the date of
grant of registration.
In the given case, the applicable turnover limit for registration will be Rs.20 lakhs for Vikas Enterprise
as per Section 22 as it is supplying both goods and services in Maharashtra.
Since Vikas Enterprise applied for registration within 30 days of becoming liable to registration, the
effective date of registration is 25th January, 2019.
(ICAI – IPCC [Old Syllabus & New Syllabus – 4 Marks] (Adapted) – MTP 1 – May 2018)
Tirupati Box Manufacturing Co. started manufacturing corrugated boxes in Andhra Pradesh on
25.01.20XX. On 06.05.20XX, its aggregate turnover exceeded Rs.10 lakhs, on 10.08.20XX, its aggregate
turnover exceeded Rs.20 lakhs and 01.11.20XX, its aggregate turnover exceeded Rs.40 lakhs. Tirupati
Box Manufacturing Co. applied for registration on 28.11.20XX and got the registration certificate on
05.12.20XX. Determine the effective date of registration elaborating the relevant provisions.
Solution:
Nagaland.
In the given case, the applicable turnover limit for registration will be Rs.40 lakhs as per Section 23 read
with NN 10/2019-CT for Tirupati Box Manufacturing Co. as it is supplying only goods and it is in the

state of Andhra Pradesh. The aggregate turnover of Tirupati Box Manufacturing Co. exceeded Rs.20
lakhs on 01.11.20XX. Thus, it is liable to get registered by 01.12.20XX [30 days] in the State of Andhra
Pradesh.
Since Tirupati Box Manufacturing Co. applied for registration on 28.11.20XX i.e. before the expiry of 30
days from the date on which it becomes so liable to registration, the effective date of registration is date
when assesse becomes liable for registration i.e. 01.11.20XX.
Determine the effective date of registration in the following instances:
(i) The aggregate turnover of Ganesh Ltd., engaged in taxable supply of services in the state of Punjab,
exceeded Rs.20 lakhs on 25th August, 2019. It applies for registration on 19th September, 2019 and is
granted registration certificate on 29th September, 2019.
(ii) What will be your answer, if in the above scenario Ganesh Ltd. submits the application for
registration on 27th September, 2019 and granted registration on 5th October, 2019?
Solution:
Nagaland.
In the given case, the applicable turnover limit for registration will be Rs.20 lakhs for Ganesh Ltd. as
per Section 22 as it is supplying services in Punjab.
(i) Since Ganesh Ltd. applied for registration within 30 days of becoming liable to registration, the
effective date of registration is 25th August, 2019.
(ii) 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 5 th October, 2019.

( ICAI – IPCC [Old Syllabus – 4 Marks] (Adapted) – May 2018 Exam)
Determine the effective date of registration under CGST Act, 2017 in respect of the following cases with
explanation:
(i) The aggregate turnover of Varun Industries of Mumbai supplying goods has exceeded Rs.40 lakhs
on 1st August, 2019. It submits the application for registration on 20 th August, 2019. Registration
certificate granted on 25th August, 2019.
(ii) Sweta Infotech Services are the provider of internet services in Pune. The aggregate turnover of
them exceeds Rs.20 lakhs on 25th September, 2019. It submits the application for registration on 27th
October, 2019. Registration certificate is granted on 5 th November 2019.

Solution:
Nagaland.
In the given case, the applicable turnover limit for registration will be Rs.40 lakhs for Varun Industries
as per Section 23 read with NN 10/2019-CT as it is supplying only goods in Maharashtra and Rs.20
lakhs for Sweta Infotech Services as per Section 22 as it is supplying services in Maharashtra.
(i) Since Varun Industries applied for registration within 30 days of becoming liable to registration,
the effective date of registration is 1st August, 2019.
(ii) Since Sweta Info Tech Services applied for registration after the expiry of 30 days from the date of
becoming liable to registration, the effective date of registration is 5th November, 2019.
Question 14: Application for Registration – Effective Date of Registration in case of Transfer of
Business
What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Solution:
As per Section 22(3), 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.

Question 15: Application for Registration – Voluntary Registration
Can a person get himself voluntarily registered though he may not be liable to pay GST?
Solution:
Yes. a person, though not liable to be registered under Section 22 or Section 24 of CGST Act, 2017 may
get himself registered voluntarily. Once a person obtains voluntary registration, he has to pay tax even
though his aggregate turnover does not exceed Rs.20 lakhs / Rs.10 lakhs.

Mr. Rishabh is not liable for registration, but he has taken voluntary Registration. He supplies for a
consideration. Will the supply of goods attracts GST.
Solution:
Yes. Supply to attract GST should be made by a taxable person. A ‘taxable person’ is a person who is
registered or liable to be registered under Section 22 or Section 24 of CGST Act, 2017. Therefore, even a
person not liable to be registered, but has taken voluntary registration and got himself registered is also
a taxable person. Thus, supply of goods by Mr. Rishabh would be liable to GST.

LMN & Co, an unregistered supplier under GST wants to claim input tax credit and collect tax. Can it
do so?
Solution:
No, LMN & Co. cannot claim input tax credit and collect tax. A person without GST registration can
neither collect GST from his customers nor can claim any input tax credit of GST paid by him. However,
if LMN & Co. nevertheless wants to claim input tax credit and collect tax, it can apply for voluntary
registration under Section 25(3) of CGST Act, 2017.
Question 18: Application for Registration – Suo-Moto Registration
Explain whether the Department, through the proper officer, suo-moto proceed to register of a person?
Solution:
Yes, in terms of Section 25(8), where a person who is liable 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.
Question 19: Application for Registration – Voluntary Registration and Suo-Moto Registration
(i) Can a person to get himself voluntarily registered though he may not be liable to pay GST?
(ii) Can the Department, through the proper officer, suo-moto proceed to register of a person?
Solution:
(i) Yes, in terms of Section 25(3), a person, though not liable to be registered under Section 22 or Section
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.
(ii) Yes, in terms of Section 25(8), 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.
Question 20: Application for Registration – Online Process of Registration

What will be the time limit for the decision on the on-line registration application? What will be the
time of response by the applicant if any query is raised in the online application?
Solution:
(i) If the information and the uploaded documents are found in order, the proper officer has to
respond to the application within 3 working days.
(ii) 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 working days.
(iii) If he communicates any deficiency or discrepancy in the application within such time, then the
applicant will have to remove the discrepancy / deficiency within 7 working days of such
communication.
(iv) Thereafter, for either approving the application or rejecting it, the proper officer has 7 working
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.
Question 21: Application for Registration – Various Aspects

Solution the following:
(i) At the time of registration, will the assessee have to declare all his places of business? Which place
will should be declared as principal place of business?
(ii) What is the validity period of the registration certificate issued to a casual taxable person and non-
resident taxable person?
(iii) Is it necessary for the UN bodies to get registration under GST? What is the purpose of the same?
(iv) What is the responsibility of the taxable person making supplies to UN bodies?
Solution:
(i) Yes. The principal place of business and place of business have been separately defined under
Section 2(89) & Section 2(85) of the CGST Act, 2017 respectively. The taxpayer will have to declare
the principal place of business as well as the details of additional places of business in the
registration form. The taxpayer can declare any place as principal place of business and all other
places of business should be declared as additional place of businesses.
(ii) As per 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.
(iii) 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.
(iv) 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.

Question 22: Application for Registration – CTP and NRTP
What is the difference between casual and non- resident taxable persons?
Solution:
Casual and Non-resident taxable persons are separately defined in the CGST Act in Sections 2(20) and
2(77) respectively. Some of the differences are outlined below:
Casual Taxable Person Non-Resident Taxable Person
Occasionally undertakes transactions involving Occasionally undertakes transactions involving
supply of goods or services or both in a State or supply of goods or services or both, but has no
Union territory where he has no fixed place of fixed place of business or residence in India.
business.
Has a PAN Number Do not have a PAN Number; A non- resident
person, if having PAN number may take
registration as a casual taxable person
Same application form for registration as for Separate application form for registration by
normal taxable persons. nonresident taxable person.

Has to undertake transactions in the course or Business test is absent in the definition.
furtherance of business
Can claim input tax credit of all inward supplies. Can get input tax credit only in respect of
import of goods.
Question 23: Application for Registration – Advance Tax for Registration for CTP and NRTP
Mr. Neerav Kothari of Jaipur often participates in the jewellery exhibition at Trade Fair in Delhi, which
is organized every year in the month of February. Mr. Neerav Kothari 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. Neerav Kothari.
You are required to examine whether any advance tax is to be paid by Mr. Neerav Kothari at the time
of obtaining registration?
Solution:
Yes, advance tax is to be paid by Mr. Neerav Kothari at the time of obtaining registration. Since Mr.
Neerav Kothari occasionally undertakes supply of goods in the course of 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.
Question 24: Application for Registration – Validity of Registration for CTP and NRTP
Explain how long will the registration certificate issued to casual taxable person and non-resident
taxable person be valid?
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.

Question 25: Application for Registration – Various Aspects of CTP and NRTP
Mr. Allan, a non-resident person, wishes to provide taxable supply of goods. He has no fixed place of
business or residence in India. He seeks your advise on the following aspects, relating to CGST Act,
2017:
(i) When shall he apply for registration?
(ii) Is PAN mandatory for this registration?
(iii) What is the period of validity of RC granted to him?
(iv) Will he be able to extend the validity of his registration? If yes, what will be the period of extension?

Solution:
(i) Allan, being a non-resident person, should apply for registration, irrespective of the threshold limit,
at least 5 days prior to the commencement of business.
(ii) No, PAN is not mandatory for this registration.
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.
However, in case of a business entity incorporated or established outside India, the application for
registration shall be submitted along with its identification number or unique number on the basis
of which the entity is identified by the Government of that country or its PAN, if available.
(iii) Registration Certificate granted to Mr. Allan will be valid for:
(a) Period specified in the registration application, or
(b) 90 days from the effective date of registration
(iv) Yes, Mr. Allan can get the validity of his registration extended. Registration can be extended further
by a period not exceeding 90 days.

Question 26: Application for Registration or Amendment of Registration
State with reason whether following statement is true or false:
“When the 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:
The said statement is FALSE.
When a change in constitution of a business results in change of PAN of the 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.

Question 27: Cancellation of Registration – Cancellation by Assessee and Cancellation by
Department
Discuss the circumstances where registration is liable to be cancelled.
Solution:
Cancellation by Assessee
Section 29(1) of the CGST Act, 2017 provides that the proper officer may, either on his own motion or
on an application files 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 registered under Section 25(3), is no longer liable to be
registered under Section 22 or Section 24
Cancellation by Department
Further, Section 29(2) of the CGST Act, 2017 provides that the proper officer may cancel the registration
of a person from such date, including any retrospective date, as he may deem fit, where, -
(a) A registered person has contravened such provisions of the Act or the rules made thereunder as
may be prescribed; or

(b) A person paying tax under Section 10 has not furnished returns for three consecutive tax periods;
or
(c) Any registered person, other than a person specified in clause (b), has not furnished returns for a
continuous period of six months; or
(d) Any person who has taken voluntary registration under Section 25(3) has not commenced business
within six months from the date of registration; or
(e) Registration has been obtained by means of fraud, willful misstatement or suppression of facts
Further, the proper officer shall not cancel the registration without giving the person an opportunity of
being heard.
Question 28: Cancellation of Registration – Suo-Moto Cancellation

What happens when the registration is obtained by means of willful misstatement, fraud or suppression
of facts?
Solution:
As per Section 29(2), when the registration is obtained by means of willful misstatement, fraud or
suppression of facts, the registration may be cancelled with retrospective effect by the proper officer.
(ICAI – IPCC [Old Syllabus – 1.5 Marks] – Nov. 2018 Exam)

Question 29: Cancellation of Registration – Suo-Moto Cancellation
Determine with brief reasons, whether the following statements are True or False:
Registration under the CGST Act, 2017 can be cancelled by the proper officer, if the voluntarily
registered person has not commenced the business within 3 months from the date of registration.
Solution:
The said statement is False. Registration under the CGST Act, 2017 can be cancelled by the proper
officer, if the voluntarily registered person has not commenced the business within six months from
the date of registration.
Question 30: Cancellation of Registration – Payment of Amount
Does cancellation of registration impose any tax obligations on the person whose registration is so
cancelled? Discuss.
Solution:
Yes, as per Section 29(5) of the CGST Act, 2017, every registered taxable person whose registration is
cancelled shall pay an amount, by way of debit in the electronic cash ledger, equivalent to the
(a) 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
(b) the output tax payable on such goods,

PAYMENT
Question 1: Payment – Time of Supply and Time of Liability
The time of liability to pay GST is independent of the time of supply of goods / services. Discuss the
correctness of the statement?
Solution:
The said statement is not correct. Liability to pay arises at the time of supply of goods as explained in
Section 12 and at the time of supply of services as explained in Section13 of CGST Act.
The time is generally the earliest of one of the three events, namely receiving payment, issuance of
invoice or completion of supply. Different situations envisaged and different tax points have been
explained in the aforesaid sections.
Question 2: Payment – Non-Payment of Self-Assessed Tax while filing Return

Shiva Ltd. filed the return for GST under Section 39(1) for the month of August on 19th September
showing self-assessed tax of Rs.5,00,000 but the same was not paid. Explain what are the implications
for Shiva Ltd.?
Solution:
As per Section 2(117) of CGST Act, 2017, “valid return” means a return furnished under Section 39(1)
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.

Question 3: Payment – Due-Date of Payment
LP Ltd., obtains registration for paying taxes under Section 9 of CGST Act. He asked his tax manager
to pay taxes on quarterly basis. However, LP Ltd.’s tax manager advised the Co.to pay taxes on monthly
basis. You are required to examine the validity of the advice 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.
Question 4: Payment – Types of Electronic Ledgers and Utilization of Electronic Credit Ledger
Solution the following:
(i) How many types of electronic ledger are there?
(ii) State the name of output tax under GST, where any of the input tax credit under GST availed can
be utilized?
Solution:

(i) Electronic Cash Ledger, Electronic Credit Ledger and Electronic Liability Ledger are the types of
electronic ledger in GST
(ii) Integrated GST. All input tax credit availed (i.e. IGST, CGST, SGST, UTGST) can be utilized against
output tax liability known as Integrated GST.

Question 5: Payment – Utilization of Electronic Credit Ledger
Ms. Jimmy wants to adjust input tax credit for payment of interest, penalty and payment of tax under
reverse charge. Explain whether she can do so.
Solution:
The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic
credit ledger which may be used for making any payment towards output tax. “Output tax” inter alia
excludes tax payable on reverse charge basis.
Thus, Ms. Jimmy cannot adjust input tax credit for payment of interest, penalty as also for payment of
tax under reverse charge.
(ICAI – IPCC [Old Syllabus – 1.5 Marks] – Nov. 2018 Exam)

Question 6: Payment – Utilization of Electronic Cash Ledger
Determine with brief reasons, whether the following statements are True or False:
Electronic cash ledger balance of Rs.5,000 under the major head of IGST can be utilized for discharging
the liability of major head of CGST.
Solution:
The said statement is False. Amount available under one major head cannot be utilised for discharging
the liability under any other major head.
Question 7: Payment – Utilization of Electronic Credit Ledger or Electronic Cash Ledger – Order of
Payment
Explain the order in which liability of taxable person has to be discharged under GST laws.
Solution:
Section 49(8) of CGST Act, 2017 prescribes the chronological order in which the liability of a taxable
person has to be discharged:
(a) Self-assessed tax and other dues for the previous tax periods have to be discharged first.
(b) Self-assessed tax and other dues for the current tax 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 is 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.
The expression “other dues” referred above mean interest, penalty, fee or any other amount payable
under the Act or the rules made thereunder.
(ICAI – IPCC [Old Syllabus & New Syllabus – 3 Marks] – MTP 1– May 2018)
Question 8: Payment – Electronic Cash Ledger
What is an electronic cash ledger? Enumerate the modes of making deposit in the electronic cash ledger.
Solution:
As per Section 49 of the CGST Act read with rule 87 of the CGST Rules, Electronic Cash Ledger is
maintained in prescribed form for each person, liable to pay tax, interest, penalty, late fee or any other

amount, on the common portal for crediting the amount deposited and debiting the payment therefrom
towards tax, interest, penalty, fee or any other amount.
The deposit can be made through any of the following modes, namely:
(i) Internet Banking through authorised banks;
(ii) Credit card or Debit card through the authorised bank;
(iii) NEFT or RTGS from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to Rs.10,000 per challan per
tax period, by cash, cheque or demand draft.

Question 9: Payment – Electronic Cash Ledger
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?
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:
(i) Internet Banking through authorised bank;
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to Rs.10,000 per challan per
tax period, by cash, cheque or demand draft.
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 any Minor head (Tax, Interest, Penalty, etc.) and Major Head (CGST, IGST,
SGST/UTGST) of the Electronic Cash Ledger can be utilized only for that liability. Cross-utilization
among Major and Minor heads is not possible.
Question 10: Payment – Various Aspects of Payment

(i) Can one use input tax credit for payment of interest, penalty, late fees and payment under reverse
charge?
(ii) Are principles of unjust enrichment applicable for payment made under GST?
Solution:
(i) 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, late fees and payment
under reverse charge.
(ii) Yes, as per Section 49(9) of the CGST Act, 2017, every person who has paid the tax on goods or
services or both under this Act shall, unless the contrary is proved by him, be deemed to have
passed on the full incidence of such tax to the recipient of such goods or services or both.

Question 11: Payment – Various Aspects of Payment
Answer the following with reference to GST Laws:
(i) What is CIN?
(ii) When is interest payable?
(iii) How does the new payment system benefit the taxpayer & the commercial Tax Department?
Solution:
(i) CIN is Challan Identification Number. It is generated by the banks indicating that the payment has
been realized and credited to the appropriate government account against a generated challan.
(ii) Interest is payable in the following cases in terms of section 50 of CGST Act, 2017:
(a) Delay / failure to pay tax, in full or in part within the prescribed period
(b) undue or excess claim of input tax credit
(c) undue or excess reduction in output tax liability.
(iii) The new payment system benefits the taxpayer and the commercial tax departments in the
following ways:-
Benefits to Taxpayer:
(a) No more queues and waiting for making payments as payments can be made online 24 × 7.
(b) Electronically generated challan from GSTN common portal in all modes of payment and no
use of manually prepared challan. Paperless transactions.
(c) Instant online receipts for payments made online.
(d) Tax consultants can make payments on behalf of the clients.
(e) Single challan form to be created online, replacing the three or four copy Challan.
(f) Greater transparency.
(g) Online payments made after 8 pm will be credited to the taxpayer’s account on the same day.
Benefits to the Commercial Tax Department:
(a) Revenue will come earlier into the Government Treasury as compared to the old system.
(b) Logical tax collection data in electronic format.
(c) Speedy accounting and reporting.
(d) Electronic reconciliation of all receipts.
(e) Warehousing of digital challan.
Note: Any two points each may be mentioned far Tax payer and Commercial Tax Department.
Question 12: Interest on Delayed Payment
Explain the provisions relating to interest on delayed payment of tax as prescribed under Section 50 of
CGST Act, 2017?
Solution:
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules
made thereunder, but fails to pay the tax or any part thereof to the Government within the
prescribed period, shall for the period for which the tax or any part thereof remains unpaid, pay,
on his own, interest at such rate, not exceeding 18% as may notified by the Government on the

recommendations of the Council. Notification No. 13/2017 CT has notified the rate of interest as
18% per annum.
(2) The period of interest will be from the date following the due date of payment to the actual date of
payment of tax.
(3) A taxable person who makes an undue or excess claim of input tax credit under Section 42(10) or
undue or excess reduction in output tax liability under Section 43(10), shall pay interest on such
undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not
exceeding 24% as may be notified by the Government on the recommendations of the Council.
Notification No. 13/2017 CT has notified the rate of interest as 24% per annum.
When shall the interest be payable by a registered person under Section 50 of the CGST Act, 2017 and
what is the maximum rate of interest chargeable for the same?
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 under of excess claim of input tax credit or undue or excess reduction in output
tax liability.

Parvathi Ltd. filed the return for GST under Section 39(1) for the month of August on 20th November
showing self-assessed tax of Rs.5,00,000 and paid the same on the same date. Compute the interest for
Parvathi Ltd.? What would have been the answer if assessee had output tax payable of Rs.5,00,000 and
input tax credit of Rs.4,00,000?
Solution:
As per Section 50 of CGST Act, 2017, if tax is not paid on or before the due-date of payment (which is
the same as due-date of filing of return), then the assessee has to pay tax along with interest @ 18% p.a.
for the period of delay.
Computation of Interest Payable
Particulars Amount
(i) Due-date of payment 20 September
th
(ii) Actual date of payment 20th November

(iii) Period of Delay i.e. No. of days from next day after due-date of filing August 61 days
months return (i.e. 21st September) till the date of payment (i.e. 20th November)
(iv) Amount of GST Rs.5,00,000
(v) Rate of Interest 18% p.a.
(vi) Amount of Interest = (iii * iv * v) / 365 days Rs.15,041
Even if assessee had output tax payable of Rs.5,00,000 and input tax credit of Rs.4,00,000, interest would
have been the same as computed above as interest is computed on gross output liability and not on net
output liability.

M/s Salty & Spicy Limited reduce the amount of Rs.1,50,000 from the output tax liability in
contravention of provisions of Section 42(10) of the CGST Act, 2017 for the month of April 20XX, which
is ineligible credit. A show cause notice was issued by the Tax Department to pay tax along with interest
M/s Salty & Spicy Limited paid the tax and interest on 31 st July, 20XX. Calculated Interest liability
(Ignore Penalty).
Solution:
A taxable person who makes an under or excess claim of input tax credit shall pay interest @ 24% p.a.
on such undue or excess claim in terms of Section 50 of CGST Act, 2017. The period of interest will be
from the date following the due date of payment to the actual date of payment of tax.
Due date of payment is 20th May, 20XX.
Period for which interest is due = 21th May, 20XX to 31th July, 20XX = 72 days
Thus, interest liability = Rs.1,50,000 * 24% * 72/365 = Rs.7,101 (approx.)

RETURNS
Question 1: Basics of Return Filing – Key Features of Return
What are the key features of return mechanism in GST?
Solution:
The basic features of the return mechanism in GST include electronic filing of returns, uploading of
invoice level information and auto-population of information relating to ITC from returns of supplier
to that of recipient, invoice level information matching and auto-reversal of ITC in case of mismatch.
The returns mechanism is designed to assist the taxpayer to file returns and avail ITC.
Question 2: Basics of Return Filing – Default in Payment and Return

What will be the availment of input tax credit in case of default in filing of return and payment of tax?
Solution:
If there is default in payment of tax and filing of returns, input tax credit will become ineligible as per
Section 16(2)(d) of the CGST Act, and interest will be calculated on gross tax payable.
Question 3: Basics of Return Filing – GST Network
Discuss any two functions of GSTN.
Solution:
The functions of the GST Network (GSTN) include:
➔ Facilitating registration;
➔ Forwarding the returns to Central and State authorities;
➔ Computation and settlement of IGST;
➔ Matching of tax payment details with banking network;
➔ Providing various MIS reports to the Central and the State Government based on the taxpayer
return information;
➔ Providing analysis of taxpayers’ profile; and running the matching engine for matching, reversal
and reclaim of input tax credit.
Note: Any two points may be mentioned.
Question 4: Basics of Return Filing

Is it compulsory for a taxpayer to file return by himself?
Solution:
No. A registered taxpayer can also get his return filed through a Goods and Services Tax Practitioner.

Question 5: Regular Taxable Person and Casual Taxable Person – Filing of Return for Outward
Supplies – GSTR-1
What kinds of invoice details of outward supplies are required to be furnished in GSTR-1 for outward
supplies?
Solution:

The invoice details of outward supplies required to be furnished in GSTR-1 are – name of Buyer, GSTN
of buyer, invoice no., date, value, taxable value, rate of tax, amount of tax, HSN code in respect of
supply of goods, accounting code in respect of supply of services and place of supply.
Further, following invoice details of outward supplies are required to be furnished invoice wise in
GSTR-1
(i) Intra-State Supplies made to the registered persons.
(ii) Inter-State Supplies made to the registered persons;
(iii) Inter-State Supplies made to the unregistered persons with invoice value exceeding Rs.2,50,000.
Note: The question may be answered either on the basis of invoice details of outward supplies required
to be furnished in GSTR-1 or on the basis of invoice details of outward supplies required to be furnished
invoice wise in GSTR-1.

Supplies – GSTR-1
A tax payer can file GSTR-1 under CGST Act, 2017, only after the end of the current tax period. State
exceptions to this.
Solution:
A taxpayer can file GSTR-1 under CGST Act, 2017, only after the end of the current tax period. However,
following are the exceptions to this rule:
(i) Casual taxpayers, after the closure of their business.
(ii) Cancellation of GSTIN of a normal taxpayer.

Supplies – GSTR-1
M/s Cavenon Enterprises, a registered supplier of designer wedding dresses under regular scheme, has
aggregate annual turnover of Rs.30 lakhs 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, owning 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 Enterprise.
Solution:
Section 37 of the CGST Act, 2017 stipulates that GSTR-1 for a particular month is required to be field
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 GSRTR-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 exceed 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.

Author’s Note: Whether GSTR-1 is filed on monthly basis or quarterly basis, payment and filing of
GSTR-3B is always on monthly basis for Regular Taxable Person and Casual Taxable Person.
Question 8: Final Return
Who is required to furnish Final Return under CGST Act, 2017 and what is the time limit for the same?
Discuss.
Solution:
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.

Question 9: Annual Return
Explain the provision relating to filing of Annual Return under Section 44 of CGST Act, 2017 and Rules
there under.
Solution:
Every registered person, other than
➔ an Input Service Distributor,
➔ a person deducting/collecting tax at source,
➔ a casual taxable person and
➔ a non-resident taxable person,
shall furnish an annual return for every financial year electronically in prescribed form on or before 31 st
December following the end of such financial year.
Every registered person who is required to get his accounts audited under Section 35(5) of the CGST
Act, 2017 shall furnish the annual return electronically along with a copy of the audited annual accounts
and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the
financial year with the audited annual financial statement, and other prescribed particulars.
Question 10: Annual Return & Final Return

(i) Who are required to file Annual Return?
(ii) Whether an Annual Return and a Final Return are one and the same?
Solution:
(i) All taxpayers filing return in GSTR-1 & GSTR-3B (regular tax payer) or GSTR-4 (composition tax
payer) are required to file an annual return. Regular tax payer has to file Annual Return in Form
GSTR-9 and Composition tax payer has to file Annual Return in Form GSTR-9A.
However, casual tax payers, non-resident taxpayers, ISDs and persons authorized to deduct /
collect tax at source are not required to file annual return.
(ii) No. Annual Return has to be filed by every registered person paying tax as a normal taxpayer
(regular tax payer and composition tax payer). Final Return has to be filed only by those registered
persons (regular tax payer and casual taxable person) who have applied for cancellation of

registration. Final return has to be filed within 3 months of the date of cancellation or the date of
cancellation order.
Question 11: Return Filing by ISD

Whether Input Service Distributors (ISDs) need to file separate statement of outward and inward
supplies with their return?
Solution:
No, the ISDs need to file only a return in Form GSTR-6 and the return has the details of credit received
by them from the service provider and the credit distributed by them to the recipient units. Since their
return itself covers these aspects, there is no requirement to file separate statement of inward and
outward supplies.
(ICAI – IPCC [Old Syllabus & New Syllabus – 2 Marks] (Adapted) – MTP 1 – May 2018)
(ICAI – IPCC [Old Syllabus – 3 Marks] (Adapted) – MTP 1 – Nov 2018)
Question 12: Return Filing in case of Nil Transactions
Examiner whether the following statement is true or false giving brief reasons:
A composition tax payer, who has not rendered any taxable supply during a year, is not required to file
any return.
Solution:
The given statement is false. Composition Taxable Person is required to furnish return under Section
39 on yearly basis once even if no supplies have been effected during such period. In other words, filing
of Nil return is also mandatory.
Author’s Note: It is important to note that Composition Taxable Person has to make the payment on
quarterly basis whereas it has to file the return on yearly basis.
Question 13: Revision of Return or Amendment of details in Return
If a return has been filed, how can it be revised if some changes are required to be made? Whether
revision of return possible of a particular month?
Solution:
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 along with amendment in GSTR-3B.
As per Section 39(9), 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. The rectification of errors/omissions is carried out by entering appropriate
particulars in “Amendment Tables” contained in GSTR-1.
Question 14: Late Fees for Late Filing of Return

Mr. AB, a registered person, has filed its GSTR-3B for the month of August on 19th November.
Determine the amount of late fee payable, if any, by Mr. AB.
Solution:

As per Section 47 of CGST Act, 2017, any registered person who fails to furnish, inter alia, the returns
required under Section 39 by the due date is required to pay a late fee of Rs.100 for every day during
which such failure continues subject to a maximum amount Rs.5,000. The same late fees has to be paid
under SGST law as well. i.e. Late Fees for late filing is
(a) CGST - Rs.100 / day during which failure continues OR Rs.5,000, whichever is lower
(b) SGST - Rs.100 / day during which failure continues OR Rs.5,000, whichever is lower
Due-date of filing GSTR-3B for August is 20th September. Thus, there is a delay of 60 days [10 + 31 + 19]
by Mr. AB in filing of GSTR-3B for the month of August. Hence, late fee of CGST of Rs.5,000 (lower of
Rs.6,000 [Rs.100 / day * 60 days] OR Rs.5,000) shall be payable by Mr. AB if there are any outward
supplies. The same late fees has to be paid under SGST law as well.

E-WAY BILL
Question 1: E-Way Bill – For Movement of Goods
Under what all cases a registered person has to generate e-way bill?
Solution:
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, before commencement of such movement, furnish information relating to the said goods in Part
A of FORM GST EWB-01, electronically, on the common portal. However, the registered person or, as
the case may be, the transporter may, at his option, generate and carry the e-way bill even if the value
of the consignment is less than Rs.50,000.
It means, the consignor or consignee, as a registered person or a transporter of the goods can generate
the e-way bill.
Question 2: E-Way Bill – Stock Transfers of Goods

What is the treatment of E way bill for Stock Transfers?
Solution:
EWB is required to be generated for every movement of goods either in relation to supply or for
purpose other than supply. Therefore, EWB is to be generated for every Inter and Intra -State transfers,
where the value of consignment exceeds the Rs.50,000 in case of inter State movement or the threshold
prescribed in each State in respect of intra State movement.
Question 3: E-Way Bill – Stock Transfers of Goods

Whether an EWB is required to be generated for movement of goods from one unit of the company to
another unit through own vehicle located within 10 km?
Solution:
Yes, EWB is required to be generated even in case of movement of goods within 10 km (Subject to
relaxation in Rule 138(14)(d) for movement of goods in notified areas).
However, it is to be noted that the exemption from generating the EWB is granted only in such case
where the goods are to be transported up to a distance of 20 Kms. from the place of business of the
consignor to a weighment bridge or from weighbridge back to the place of such consignor. Further such
exemption is subject to a condition that such movement is accompanied by a delivery challan.
Furthermore, such exemption needs to be differentiated with the relaxation provided under Proviso to
Rule 138(3), which is for updating the Part- B (vehicle details) of the FORM GST EWB-01. The relaxation
is given only in cases, where the goods are to be transported from the place of business of consignor to
the business of transporter up to 50 kms for further movement of such goods.
Therefore, in all other cases, where goods are being transported in motorized vehicle EWB needs to be
generated even if the distance to be covered is less than 10 km.
Question 4: E-Way Bill – Display of Goods in Exhibition

If the goods are taken from one State to another for the purpose of display in exhibition, whether EWB
is required to be generated?

Solution:
EWB would be required to be generated, where the value of the consignment exceeds Rs.50,000/- There
is separate sub heading which has specific reference of exhibition/display for generation of EWB.
Question 5: E-Way Bill – Sales Return of Goods, Rejection of Goods, etc.

Whether EWB needs to be generated for sales returns, rejection etc.?
Solution:
Yes, EWB needs to be generated for any movement of goods including sales return and sales rejection
etc. It may be noted that, in relation to sales returns, EWB can be generated in following ways:
(a) Where the goods are returned on tax invoice: Where the goods are returned back from the
customer on tax invoice, EWB shall be generated by the customer as outward movement of goods
for the purpose of supply.
(b) Where the goods are returned back on credit note: Where the goods are returned/ rejected back
on the basis of credit note issued by the Company, EWB shall be generated on the basis of such
credit note giving reference to “Sale Returns” as the reason for inward movement of goods.
Question 6: E-Way Bill – E-Way Bill based on Consignment Value

Whether E-way bill may be generated if the consignment value is less than Rs.50,000/-?
Solution:
Yes, the registered person or the transporter, as the case may be may generate E-way bill voluntarily
even if the value of consignment is less than Rs.50,000/-.
However, Proviso 3 and Proviso 4 to Rule 138(1) of the CGST Rules 2017 mandatorily requires a
registered person to generate an EWB irrespective of the value of consignment where:
(a) the goods are to be sent by the principal located in one State or Union Territory to a job worker in
other State or Union Territory.
(b) handicraft goods are transported from one State or Union territory to another State or Union
territory by a person who has been exempted from the requirement of obtaining registration under
clauses (i) and (ii) of Section 24 of the CGST Act.

What is meaning of the term consignment value to determine the threshold of Rs.50,000 and whether
the same needs to be computed with taxes or without taxes?
Solution:
As per Notification No. 12/2018 – CT, the term "Consignment Value", means value determined as per
Section 15 of the CGST Act as mentioned on the invoice, bill of supply or delivery challan as the case
may be including the applicable tax thereon. However, such consignment value shall exclude the value
of exempted supply, where the invoice is issued in respect of both exempt and taxable supply of goods.

What if the same invoice contains both categories of goods i.e. ones exempted for the purpose of EWBs
and taxable, then whether EWB needs to be generated?
Solution:
It is to be noted that the explanation to the Rule 138(1) provides that consignment value for the purpose
of EWB shall be the value, determined in accordance with the provisions of Section 15, declared in
invoice or delivery challan or bill of supply as the case may be. However, it shall exclude the value of
exempt supply where the invoice is issued in respect of both exempted and taxable supply of goods.
Therefore, the value of taxable goods only shall be considered for the purpose of consignment value.
Question 9: E-Way Bill – Transport by Principal in One State to Job Worker in Other State –
Mandatory E-Way Bill irrespective of Consignment Value
Is it compulsory to raise E-way bill in case of transportation of goods by principal to job worker
irrespective of the value of consignment?
Solution:
Proviso 3 to Rule 138 (1) of the CGST Rules 2017 provides that, where goods are sent by principal
located in one State or Union Territory to job worker located in another State or Union Territory, EWB
shall be generated either by the principal or the job worker, if registered, irrespective of the value of the
consignment.
This indicates that there is compulsory requirement to generate EWB in case of inter-State movement
of goods for job work purpose. However, there is no such condition in case of goods sent for job work
in an intra-State movement. Hence, for sending goods to job worker within State, EWB is required to
be generated only if the value exceeds the threshold prescribed in respective State.
Question 10: E-Way Bill – Transport of Handicraft Goods – Mandatory E-Way Bill irrespective of
Consignment Value
What is the requirement of EWB in case of Handicraft goods?
Solution:
Proviso 4 to Rule 138(1) requires that where the handicraft goods are transported from one State to
another by a person who has been exempted from the requirement of obtaining registration under
clauses (i) and (ii) of Section 24, the EWB shall be generated by the said person irrespective of the value
of the consignment.
Question 11: E-Way Bill – Mandatory E-Way Bill by Transporter

If goods are supplied in same truck, whether EWB would have to be generated even if value of each
invoice individually is less than the threshold limit of Rs.50,000 but overall it crosses Rs.50,000?
Solution:
Rule 138 (7) of the CGST Rules provide that if consignor or consignee, in case of inter-State supply have
not generated the EWB and aggregate of consignment value of goods carried in the conveyance is more
than Rs.50,000/-, the transporter has to generate EWB based on the documents (invoice, bill of supply,
delivery challan, as the case may be). Further, transporter may generate CEWB on the basis of multiple
separate EWB generated. However, the conditions to raise EWB in this manner is not applicable on the
railway, air and vessel.
However, it may be noted that till the time Rule 138(7) has not been notified. So EWB in such
circumstances shall be required to be generated only after Rule 138(7) gets notified.
Question 12: E-Way Bill – Generation of E-Way Bill by Consignor, Consignee or Transporter
Who all can generate e-way bill?
Solution:
Every registered person who causes movement of goods of consignment value exceeding Rs.50,000 or
the threshold prescribed (in each State/Union Territory) in relation to supply; or reasons other than
supply; or inward supply from unregistered person shall generate EWB. It means, the consignor or
consignee, as a registered person or a transporter of the goods can generate the EWB.

Who is cast with the ultimate responsibility of generating e-way bills? Consignor, consignee or the
transporter?
Solution:
The primary responsibility to generate EWB shall be of the registered person who causes the movement
of goods, i.e. the consignor or the consignee, as the case may be. However, if such consignor or
consignee doesn’t generate the EWB, it may be generated by transporter as well, if authorized by the
registered person.
Also, in case of supply of goods by an unregistered person to registered person and recipient is known
before commencement of movement of goods the recipient, the liability to generate EWB is on the
recipient.
How e-way bill needs to be generated in case of supply of goods by an unregistered person to a
registered person?
Solution:
If the recipient registered person is known at the time of commencement of movement of goods, then
as per first explanation to Rule 138(3) it shall be deemed that movement has been caused by recipient
and accordingly liability to generate EWB shall be of recipient.
However, if movement is caused by unregistered person and at the time of commencement of
movement of goods the recipient is not known as per second proviso to Rule 138(3), it is optional at the
part of transporter to generate EWB.
Question 15: E-Way Bill – Generation of E-Way Bill by Courier Agency

Is EWBs system applicable even for movement of goods as a courier?
Solution:
Yes. In case of movement of goods through courier, EWB may be generated either by consignor of
goods or by courier agency, based on authorization by consignor to such courier agency to generate
EWB.
Question 16: E-Way Bill – Generation of E-Way Bill by E-Commerce Operator

What is the liability of generation of EWB in case of transportation of goods through e-commerce?
Solution:
Generally, in case of an E-Commerce business model, the logistics is handled by an independent third
party logistic service provider. So, in such a case 4 parties are involved in the transaction (seller, buyer,
logistic service provider and E- Commerce operator). Therefore, in such cases where the goods are to
be transported through an e-commerce operator, on an authorization from consignor, Part A of the
EWB may be furnished by the E-Commerce operator and Part B of the EWB may be furnished either by
the E-Commerce operator or by the third party logistic service provider.
Question 17: E-Way Bill – Generation of E-Way Bill in case of Bill To Ship To
Who shall generate E-Way Bill in a “Bill To Ship To” model of supply, where there are three persons
involved in a transaction, namely:
‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’.
‘B’ is the person who is sending goods directly to ‘C’ on behalf of ‘A’.
‘C’ is the recipient of goods.
Solution:
In this complete scenario. two supplies are involved and accordingly two tax invoices are required to
be issued:
Invoice -1: which would be issued by ‘B’ to ‘A’.
Invoice -2: which would be issued by ‘A’ to ‘C’.
It is clarified that as per the CGST Rules, 2017, either A or B can generate the E-Way Bill but it may be
noted that only one E-Way Bill is required to be generated.
Question 18: E-Way Bill – Transport by Own Vehicle or Public Conveyance

Whether e-way bill would be required if transportation is done in one's own vehicle or through a public
transport?
Solution:
Yes, as per Rule 138 (2), it has been provided that EWB shall be required to be generated, in case the
goods are transported by consignor or consignee in his own vehicle or in a hired one or a public
conveyance, by road. In such case, the registered person causing the movement of goods may raise the
EWB after furnishing the vehicle no. in Part B of FORM GST EWB – 01 if the value of goods being
transported is more than Rs.50,000.
Question 19: E-Way Bill – Transport by Air, Ship or Rail

Whether EWB is not required to be generated for transport of goods by way of air, ship or rail?
Solution:
EWB is required to be generated for every movement of goods caused by any mode of transport be it
road, rail, air or ship. However, a relaxation has been granted that in case the goods are to be
transported by way of rail or air or vessel, the registered person may not be required to carry the EWB
and can generate such EWB after the commencement of movement of goods. However, the railways
cannot deliver the goods unless the EWB is procured at the time of delivery.
Question 20: E-Way Bill – Updation of Part B of E-Way Bill

How many times can Part-B or Vehicle number be updated for an EWB?
Solution:
The user can update Part-B (Vehicle details) for each change in the vehicle or mode of transport used
in the course of movement of consignment up to the destination point. However, the updating should
be done within overall validity period of EWB. There is no upper cap on the number of Updation of
vehicle in Part B.
Question 21: E-Way Bill – Modification of E-Way Bill

In case any information is wrongly submitted in EWB. Can the EWB be modified or edited?
Solution:
EWB once generated cannot be edited or modified except Part-B of FORM GST EWB-01. In such a
situation, EWB generated with wrong information has to be cancelled and should be generated afresh
again. The cancellation is required to be done within twenty-four hours of generation.
Question 22: E-Way Bill – Deletion of E-Way Bill

Can the EWB be deleted?
Solution:
The EWB once generated cannot be deleted. However, it can be cancelled by the generator within 24
hours of its generation. If it has been verified by any proper officer within 24 hours, then it cannot be
cancelled. Further, EWB can be cancelled if, either goods are not transported or are not transported as
per the details furnished in the EWB. A recipient has right to cancel/ reject the EWB within 72 hours of
its generation or actual receipt of goods, whichever is earlier.
Question 23: E-Way Bill – Validity of E-Way Bill

How shall one calculate the distance and validity of goods in case of supply through multi-modal
transport?
Solution:
The distance and the validity of EWB shall remain the same even if the goods are supplied through a
multi-modal transport. In order to calculate the validity of the EWB, the distance to be covered by all
the modes combined together must be taken into consideration. The validity provided in the CGST
Rules is as under:
Distance Validity Period from Relevant Date
For a distance up to One day in cases other than over dimensional cargo
100km
For every 100km or part One additional day in cases other than over dimensional cargo
thereof thereafter
Upto 20 km One day in case of Over Dimensional cargo
For every 20 km or part One additional day in case of Over Dimensional Cargo
thereof thereafter
Wherein the “relevant date” shall mean the date on which the e -way bill has been generated and the
period of validity shall be counted from the time at which the e-way bill has been generated and each
day shall be counted as the period expiring at midnight of the day immediately following the date of
generation of e-way bill. For E.g.:
(a) Suppose e-Way bill is generated at 4 AM on 4th March. Then first day would end on 12:00 midnight
of 5-6 March and the second day would end on 12:00 midnight of 6-7 March.
(b) Suppose e-Way bill is generated at 11:50 PM on 6th April. Then first day would end on 12:00
midnight of 7-8 April and the second day would end on 12:00 midnight of 8-9 April.
Question 24: E-Way Bill – Exemption for Movement of Jewellery

Whether EWB is required to be generated in case of movement of jewellery?
Solution:
Jewellery is covered in the list of exempted categories of goods as given in Annexure to the Rule 138.
Hence, there is no need to generate EWB when it entails movement of jewellery notwithstanding that
such jewellery is otherwise taxable under GST.
Question 25: E-Way Bill – Exemption for Movement of Empty Containers

Whether it is required to generate EWB in case of movement of empty containers?
Solution:
It is to be noted that exemption has been granted by way of Notification No. 12/2018 which provides
that a registered person is not required to generate an EWB where the empty cargo containers are being
transported. This exemption may be applicable in case of transportation of empty bins or containers
which are returned to the original supplier by customer.
Question 26: E-Way Bill – Exemption for Movement of Household Goods

A person has been shifting his households from one State to another on account of job change. Whether
EWB is required to be generated?

Solution:
Used personal and household effects have been covered in the Annexure to the Rule 138 in respect of
which EWB is not required to be generated. Hence, such person is not required to generate EWB in
such cases.
Question 27: E-Way Bill – Exemption for Movement of Exempted Goods

Whether EWB is required to be generated for movement of exempted goods also?
Solution:
Notification No. 12/2018 has provided that EWB is not required to be generated for movement of goods
covered under Notification No. 2/2017- Central Tax (Rate) dated June 28, 2017 (including any
amendments made to such notification from time to time). This Notification covers all exempted
categories of goods. Hence, there is no need to generate EWB when a person is causing movement of
exempted category of goods except de-oiled cake. In addition to such exempted goods, EWB is not
required for following goods:
(a) Non-GST goods i.e. alcoholic liquor for human consumption, petroleum crude, high speed diesel
oil, motor spirit, natural gas, aviation turbine fuel,- Goods being transported are not considered as
supply under Schedule III of the CGST Act,2017 (“the CGST Act”)
(b) Goods covered under Annexure to Rule 138 i.e. LPG, Kerosene, Postal baggage, jewellery, precious
metals, stones, currency, used and personal household effects etc.
Question 28: E-Way Bill – Movement between places in Customs Control

Whether EWB is required to be generated for the movement of goods between CFS /ICD to port in the
course of importation and exportation of goods?
Solution:
Rule 138(14) of the CGST Rules 2018, provides that no EWB is required to be generated in respect of:
(i) Movement of goods from the port, airport, air cargo complex and land customs station to an ICD
or a CFS for clearance by Customs in the course of importation.
(ii) where the goods are being transported—
(a) under customs bond from an ICD or a CFS to a customs port, airport, air cargo complex and
land customs station, or from one customs station or customs port to another customs station
or customs port, or
(b) under customs supervision or under customs seal
Therefore, EWB is not required for movement of goods between CFS/ICD to port or vice versa in the
course of importation and exportation of goods.
Question 29: E-Way Bill – Exemption for Movement to Weighbridge

How to generate the EWB in case goods are to be moved to a weighbridge situated outside the factory
and invoice cannot be issued unless goods are weighed?
Solution:
EWB is not required to be generated where the goods are to be transported up to a distance of 20 kms
for the purpose of weighment from the place of business of consignor to a weighbridge, or, from the
weighbridge back to place of consignor. However, such movement should be along with delivery
challan to be covered under relaxation of EWB generation.
Question 30: E-Way Bill – Tax Invoice, Bill of Supply, Delivery Challan or Bill of Entry along with
E-Way Bill

Whether any other document needs to be provided to the transporter in addition to EWB, for movement
of goods?
Solution:
In accordance with Rule 55A read with Rule 138A of the CGST Rules, the person in-charge of
conveyance shall carry
(a) Tax Invoice or Bill of Supply or Delivery Challan or Bill of Entry, as the case may be; and
(b) a copy of the EWB in physical form or the EWB number in electronic form or mapped to a Radio
Frequency Identification Device embedded on to the conveyance in such manner as may be notified
by the Commissioner:
EWB is an additional document and not a substitute for Tax Invoice or Bill of Supply or Delivery
Challan or Bill of Entry or any other prescribed document for the said transaction.
Question 31: E-Way Bill – Report of Verification by Proper Officer

What is the time limit given to the proper officer to report the details of verification where the
conveyance is intercepted by him for inspection and verification of goods?
Solution:
The Commissioner or an officer empowered by him in this behalf may authorize the proper officer to
intercept any conveyance to verify the EWB in physical or electronic form for all inter-State and intra-
State movement of goods. In relation to such verification the proper officer is liable to:
(a) Prepare a summary report of every inspection of goods in transit in Part-A of FORM GST EWB-03
within 24 hours of inspection.
(b) Submit a final report in Part-B of FORM GST EWB-03 within 3 days of inspection. Provided that
where the circumstances so warrant, the Commissioner, or any officer authorised by him, may, on
sufficient cause being shown, extend the time for recording of the final report in Part B of FORM
EWB-03, for a further period not exceeding three days.
Question 32: E-Way Bill – Detention of Goods

What happens if the goods are detained without any sufficient reasons?
Solution:
If the goods or the vehicle of the taxpayer or transporter has been detained by the tax officers without
proper reason for more than 30 minutes, then the transporter can generate “Report of Detention” in
form GST EWB-04 giving details of office in-charge.
Question 33: E-Way Bill – Consequences of Non-Generation of E-Way Bill or Partial Declaration in
E-Way Bill
If the goods are moving without EWB or partially declared, what are consequences if these get traced
on the way to transportation?
Solution:
The proper officer, as authorized by commissioner or any other person as empowered by him, has the
power to make physical verification of conveyance and the EWB or EWB number in case of all Inter or
Intra-State movement of goods. Further, in case any goods are moving without EWB or where the
details are partially declared, the proper officer has proper authority to detain or seize such conveyance
or goods, and such shall be released after the payment of applicable tax or penalty as provided under
Question 34: E-Way Bill – Consequences of Non-Generation of E-Way Bill

What are the consequences of non-issuance of EWB?
Solution:
If EWBs, wherever required, are not issued in accordance with the provisions contained in Rule 138,
the same will be considered as contravention of rules. Below penalty provisions may get attracted for
not complying with EWB rules:
(a) As per Section 122(1) (xiv) of CGST Act a taxable person who transports any taxable goods without
the cover of specified documents (e-waybill is one of the specified document) shall be liable to a
penalty of Rs.10,000 or tax to be avoided, whichever is greater.
(b) Any person who acquires possession of, or in any way concerns himself in transporting, removing,
depositing, keeping, concealing, supplying of any goods which he knows or has reasons to believe
are liable to confiscation under this Act shall be liable to a penalty which may extend upto Rs.25,000
(c) Section 129 of the CGST/SGST Act provides that where any person transports any goods while they
are in transit in contravention of Act or Rules made thereunder, such goods shall be liable to
detention and seizure and shall be released on:
Description Taxable Goods Exempted Goods
Payment of applicable tax Penalty of 2% of the value of
Owner of goods
AND penalty equal to 100% goods or Rs.25,000, whichever is
comes forward for
of tax payable on such less
payment
goods
Payment of applicable tax Payment of 5% of the value of
Owner of goods does
AND penalty equal to 50% goods or Rs.25,000, whichever is
not come forward for
of value of goods reduced by less
payment
tax amount paid thereon

JOB WORK
Question 1: Job-Work and Accounts
(i) Who is responsible for the maintenance of proper accounts related to job work?
(ii) What happens when the inputs or capital goods are not received back or supplied from the place
of business of job worker within prescribed time period?
Solution:
(i) It is completely the responsibility of the principal to maintain proper accounts of job work related
inputs and capital goods.
(ii) If the inputs or capital goods are not received back by the principal or are not supplied from the
place of business of job worker within the prescribed time limit, it would be deemed that such
inputs or capital goods had been supplied by the principal to the job worker on the day when the
said inputs or capital goods were sent out by the principal (or on the date of receipt by the job
worker where the inputs or capital goods were sent directly to the place of business of job worker).
Thus the principal would be liable to pay tax accordingly with interest.
Question 2: Direct Supply from Job-Worker’s Premises

Under what circumstances can the principal directly supply goods from the premises of job worker?
Solution:
The goods can be supplied directly from the place of business of job worker in circumstances:
(a) Principal can declare job-worker’s premises as additional place of business or
(b) Job worker gets registered under GST law or
(c) Principal is engaged in supply of such goods as may be notified by the Commissioner.

P Ltd. sends the goods/inputs to JB & Co. for further processing on 30-08-2018. The value of goods sent
for Job work is Rs.1,00,000. What are the tax implications in following cases, if GST @ 18% is levied?
(c) JB & Co. sends the processed goods back to P Ltd on 30-10-2018
(d) JB & Co. sends the processed goods back to P Ltd on 30-10-2019
Solution:
As per Section 19 read along with Section 143 of the CGST Act, 2017, principal can remove the goods
without payment of tax and take input tax credit provided inputs sent for job work are returned back
within 1 year (+ 1 year extension) of removal. Otherwise, it shall be treated as supply from principal to
Job worker as on 30-08-2018 and subject to tax along with interest.
(c) JB & Co. sends the processed goods back to P Ltd. on 30-10-2018:
In the present case, the inputs are received back by P Ltd. before completion of 1 year on 30-10-2018
and hence, no tax is payable.
(d) JB & Co. sends the processed goods back to P Ltd. on 30-10-2019:
In the present case, the inputs are received back by P Ltd. after completion of 1 year on 30-10-2019 and
hence, P Ltd. needs to pay the tax along with the interest on the supply made by him to JB & Co. i.e. it
would be deemed that P Ltd. supplied the goods to JB & Co. on 30-08-2018. Hence, P Ltd. have to pay
CGST – Rs.9,000 and SGST – Rs.9,000 along with interest @ 18% p.a. from the due-date of payment (i.e.
20-09-2018) till the date of payment.

A Ltd. of Tamil Nadu sends the machinery to B & Co. of Karnataka for fixing of some technical issue
and intendance on 15-09-2018. The value of machinery sent to B & Co. is Rs.10,00,000. What are the tax
implications in following cases, if GST @ 18% is levied?
(a) B & Co. sends the machinery back to A Ltd. on 30-12-2019.
(b) B & Co. sends the machinery back to A Ltd. on 30-10-2021
Solution:
As per Section 19 read along with Section 143 of the CGST Act, 2017, principal can remove the capital
goods without payment of tax and take input tax credit provided capital goods sent for job work are
returned back within 3 years (+ 2 years extension) of removal. Otherwise, it shall be treated as supply
from principal to Job worker as on 15-09-2018 and subject to tax along with interest.
(a) B & Co. sends the processed goods back to A Ltd. on 30-12-2019:
In the present case, the capital goods are received back by A Ltd. before completion of 3 years on 30-
12-2019 and hence, no tax is payable.
(b) B & Co. sends the processed goods back to A Ltd. on 30-10-2021:
In the present case, the capital goods are received back by A Ltd. after completion of 3 years on 30-10-
2021 and hence, A Ltd. needs to pay the tax along with the interest on the supply made by him to B &
Co. i.e. it would be deemed that A Ltd. supplied the goods to B & Co. on 15-09-2018. Hence, A Ltd.
have to pay IGST – Rs.1,80,000 along with interest @ 18% p.a. from the due-date of payment (i.e. 20-10-
2018) till the date of payment.

Satya Manufacturers received some inputs on 15-07-18 and immediately availed input tax credit of the
CGST and SGST of Rs.1,20,000 paid on those inputs. On 20-07-2018 it sent the inputs to a job worker
outside its factory for carrying out machining on the inputs and same were received by the Job worker
on 22-07-2018. The job worker returned the inputs on 05-07-2019 after carrying out the machining work
on the inputs. Discuss whether Satya Manufacturers is required to take any further action with respect
to the Input tax credit availed by it.
What would your answer be if such inputs were received back from Job worker on 15-10-2019.
Solution:
As per Section 19(3) read with Section 143 of CGST Act, 2017, if any inputs are sent to a job worker for
further processing and are received back in the factory within 1 year of their being sent to a job worker,
input tax credit in respect of such inputs is allowed to the manufacturer. However, if the inputs are not
received back within 1 year (+ 1 year extension), then it shall be deemed that inputs are supplied to job
worker on the day when inputs are sent out. Manufacturer shall pay an amount equivalent to the input
tax credit attributable to the inputs by debiting the Electronic Credit Ledger or Electronic Cash Ledger,
as the case may be. Manufacturer can take the credit again when the inputs are received back in his
factory.
(a) Satya Manufacturers receives back the processed goods on 05-07-2019:
In the given case, the inputs sent on 20-07-2018 should have been received back latest by 20-08-2019.
Here, since the inputs have been received back from the job worker within 1 year (i.e. on 05-07-2019),
Satya Manufacturers is not required pay any amount.
(b) Satya Manufacturers receives back the processed goods on 15-10-2019:
In case it receives the inputs after machining on 15-10-2019, such inputs have not been received within
1 year of their being sent out. In such a case, it will be deemed that inputs have been supplied by
manufacturer to job worker on the day when they were sent to job worker i.e. on 20-07-2018. Hence,
Satya Manufacturers is required to pay tax on such deemed supply of inputs.

However, Satya Manufacturers can take the credit again when the processed inputs are received back
in its factory i.e. on 15-10-2019.

What would your answer be in above case if inputs are sent directly to premises of registered job worker
without being first taken to stock by Satya Manufacturers. The goods were cleared from the supplier
on 20-07-2018 but received by Job worker on 26-07-2018. The job worker carried out the job work of
machining and supplied the goods after machining to ABC Traders on 23-07-2019 on payment of tax
on direction of Satya Manufacturers. Discuss ITC implications.
Solution:
As per Section 19(2) of the CGST Act, 2017, the principal shall be entailed to take credit of input tax on
inputs even if the inputs are directly sent to a job work without being first brought to his place of
business. Therefore, Satya Manufacturers can claim input tax credit of Rs.1,20,000 on receipt of inputs
by the job workers from the supplier i.e. on 26-07-2018.
As per Section 143(1)(b) of the CGST Act, 2017, the job-worker can clear the goods after completion of
processing with payment of tax in India or without payment of tax for export outside India provided
that the principal has included job worker’s premises as an additional place of business in his
registration or provided that job worker is registered under Section 25 of this Act. Such supply from
job-worker’s premises is to be made within 1 year (+ 1 year extension) from date of receipt of goods by
job worker.
In the instant case, since the supply of goods are made to ABC Traders on 23-07-2019 which is within 1
year from the date of receipt of goods by job worker i.e. 26-07-2018, no reversal of input tax credit is
required.

RMS Ltd. bought some inputs which are sent directly to the premises of registered job worker without
being first taken to stock by RMS Ltd. RMS Ltd. immediately availed input tax credit of the CGST and
SGST of Rs.1,50,000 paid on those inputs. The goods were cleared from the supplier on 15-11-2018 but
received by job worker on 21-11-2018.
The job worker carried out the job work of machining and supplied the goods after machining to KJ
Traders on 17-11-2019 on payment of tax on directions of RMS Ltd. Discuss the implications on input
tax credit availed by RMS Ltd.
Solution:
As per Section 19(2), the principal shall be entitled to take credit of input tax on inputs even if the inputs
are directly sent to a job worker for job work without being first brought to his place of business.
Therefore, RMS Ltd. can claim input tax credit of Rs.1,50,000 on receipt of inputs by the job worker
from the supplier.
As per Section 143(1)(b), the job worker can clear the goods after completion of processing with
payment of tax in India or without payment of tax for export outside India provided the principal has
declared job worker's premises as an additional place of business in registration or job worker is
registered under Section 25 of this Act. Such supply is to be made within 1 year (+ 1 year extension)
from date of receipt of goods by job worker.
In the instant case, since the supply of goods are made to KJ Traders on 17-11-2019 which is within 1
year from the date of receipt of goods by job worker i.e. 21-11-2018, no reversal of input tax credit is
required.

Shyam Manufacturers, a registered person, instructs the supplier to send the capital goods directly to
Mr. Ghanshyam, a job worker outside its factory premises for carrying out the certain operations on
the goods. The goods were sent by the supplier on 20-11-2018 and were received by Mr. Ghanshyam
on 26-11-2018. The job worker, Mr. Ghanshyam, carried out the job work but did not return the capital
goods to his Principal Shyam Manufacturers. Discuss whether Shyam Manufacturers are eligible to
retain the input tax credit availed by them on the capital goods. What action under the GST Act is
required to be taken by Shyam Manufacturers.
What would your answer be if in place of capital goods, jigs and fixtures are supplied to the job worker
and the same has not been returned to the Principal.
Solution:
As per Section 19(5) of the CGST Act, 2017, the principal shall be entitled to take credit of input tax on
capital goods even if the capital goods are directly sent to a job worker for job work without being first
brought to his place of business. However, as per Section 19(6) where the capital goods sent for job
work are not received back by the principal within a period of 3 years (+ 2 years extension) of being
sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker
on the day when the said capital goods were sent out and in case of direct dispatch to the job worker,
the period of 3 years shall be counted from the date of receipt of capital goods by the job worker.
In the instant case, Shyam Manufacturers can take input tax credit on such capital goods even if they
are sent directly to Mr. Ghanshyam. a job worker's premises. Here, the period of 3 years shall be counted
from the date of receipt of the capital goods by the job worker, i.e. 26-11-2018. Hence, the capital goods
should be returned before 26-11-2021; otherwise it shall be treated as deemed supply of the capital
goods by the principal to the job worker as on 26-11-2018.
Thus, in the instant case as the capital goods are not returned within the above mentioned time by the
job worker, Shyam Manufacturers will have to pay tax along with interest on such deemed supply of
capital goods to Mr. Ghanshyam.
As per Section 19(7), the time limit of 3 years as given in Section 19(3) shall not apply in case of moulds,
dies, jigs and fixtures or tools sent to the job worker. Therefore, Shyam Manufacturers is not required
to pay tax even if Mr. Ghanshyam does not return the moulds and dies, jigs and fixtures, or tools.

Raees Ltd., registered person under GST, is engaged in the manufacture of final products. It purchased
following items during the month of January 2018:
Jigs 2,00,000
Fixtures 1,50,000
Moulds and Dies 1,00,000
GST paid on above 90,000
It sent above-mentioned jigs, fixtures, moulds and dies to job-worker for the production of goods
according to his specification. Will Raees Ltd. get input tax credit in respect of aforementioned jigs,
fixtures, moulds and dies?
Solution:
According to Section 19 of CGST Act, 2017, the input tax credit shall be allowed in respect of jigs,
fixtures, moulds, dies and tools sent by a manufacturer of final products to a job worker for the
production of goods on his behalf according to his specification. The time limit of bringing inputs /
capital goods within 1 year (+ 1 year extension) / 3 years (+ 2 years extension) respectively of their being
sent to job-workers premises shall not apply to moulds and dies, jigs and fixtures, or tools sent out to a
job worker for job work.
Since, in the given case Raees Ltd. has sent jigs, fixtures, moulds and dies to job-worker for the
production of goods according to its specification, it is entitled to get input tax credit in respect of GST
of Rs.90,000 in accordance with the provisions of Section 19 of CGST Act, 2017.

ECO
Question 1: ECO and Supplier through ECO – Registration
(i) Is it mandatory for e-commerce operator to obtain registration?
(ii) Whether a supplier of goods or services supplying through e-commerce operator would be entitled
to threshold exemption?
Solution:
(i) Yes. The benefit of threshold exemption is not available to e-commerce operators who is required
to collect TCS under Section 52 and they would be liable to be registered irrespective of the value
of supply made by them as per Section 24.
Author’s Note: ECO who are not required to collect TCS under Section 52 shall get registered only
after crossing threshold exemption as per Section 22.
(ii) Generally, No. The threshold exemption is not available to such suppliers and they would be liable
to be registered irrespective of the value of supply made by them as per Section 24. This
requirement, however, is applicable only if the supply is made through such electronic commerce
operator who is required to collect TCS under Section 52.
In case of supply of notified services through such electronic commerce operator, where electronic
commerce operator is liable to pay tax instead of supplier of notified services under Section 9(5) of
CGST Act, 2017 / Section 5(5) of IGST Act, 2017, then such supplier need not be registered
irrespective of the turnover as well TCS will not be collected by electronic commerce operator.
Also, in case of supply of other services through such electronic commerce operator, supplier of
services need not get registered till their aggregate turnover does not exceeds Rs.20 lakhs / Rs.10
lakhs (as the case may be) as per Section 23 read with Notification No. 65/2017-CT.
Question 2: Supply of Notified Services through ECO – Payment

(i) Will an e-commerce operator be liable to pay tax in respect of supply of goods or services made
through it, instead of actual supplier?
(ii) Will threshold exemption be available to electronic commerce operators liable to pay tax on notified
services?
Solution:
(i) Yes, but only in case of certain notified services under Section 9(5) of CGST Act, 2017 / Section 5(5)
of IGST Act, 2017. In such cases tax shall be paid by the electronic commerce operator if such
services are supplied through it and all the provisions of the Act shall apply to such electronic
commerce operator as if he is the person liable to pay tax in relation to supply of such services.
(ii) No. Threshold exemption is not available to e-commerce operator who are require to pay tax on
notified services provided through them under Section 9(5) / Section 5(5). However, such supplier
of notified services through electronic commerce operator need not be registered as well TCS will
not be 2collected by electronic commerce operator till such notified services are covered under
Section 9(5) / Section 5(5) and ECO is paying GST.

IGST ACT, 2017

[incl. Place of Supply]
Question 1: POS for Goods (Domestic)
What is the place of supply where goods are removed?
Solution:
As per Section 10(1)(a) of the IGST Act, the place of supply of goods shall be location of the goods at
the time at which the movement of goods terminates for delivery to the recipient.

What will be the place of supply if the goods are delivered by the supplier to a person on the direction
of a third person?
Solution:
As per Section 10(1)(b) of the IGST Act, it would be deemed that the third person has received the goods
and the place of supply of such goods shall be the principal place of business of such person.

What is the place of supply where the goods or services are supplied on board a conveyance, such as a
vessel, an aircraft, a train or a motor vehicle?
Solution:
As per Section 10(1)(e) of the IGST Act, in respect of goods, the place of supply shall be the location at
which such goods are taken on board.
However, in respect of services, the place of supply shall be the location of the first scheduled point of
departure of that conveyance for the journey in terms of sections 12(10) and 13(11) of the IGST Act.
Question 4: POS for Services (Domestic)

The place of supply in relation to immovable property is the location of immovable property. Suppose
a road is constructed from Delhi to Mumbai covering multiple states. What will be the place of supply
of construction services?
Solution:
As per Explanation to Section 12(3) of the IGST Act, 2017, where the immovable property is located in
more than one State, the supply of service is treated as made in each of the States in proportion to the
value for services separately collected or determined, in terms of the contract or agreement entered into
in this regard or, in the absence of such contract or agreement, on such other reasonable basis as may
be prescribed in this behalf.

What would be the place of supply of services provided by an event management company for
organizing a sporting event for a Sports Federation which is held in multiple States?
Solution:
As per Section 12(7) of the IGST Act, 2017, in case of an event, if the recipient of service is registered,
the place of supply of services for organizing the event shall be the location of such person.

However, as per Explanation to Section 12(7) of the IGST Act, 2017, if the recipient is not registered, the
place of supply shall be the place where event is held. Since the event is being held in multiple states
and a consolidated amount is charged for such services, the place of supply will be taken as being in
each state in proportion to the value of services so provided in each state.
Question 6: POS for Services (Domestic & International)

What is the place of supply of services by way of transportation of goods, including mail or courier?
Solution:
In case of Domestic Supply:
As per Section 12(8) of the IGST Act, 2017, if the recipient is registered, the place of supply shall be the
location of registered recipient. However, if the recipient is not registered, the place of supply shall be
the place where the goods are handed over for transportation. And, where the transportation of goods
is to a place outside India, POS shall be destination of such goods
In case of International Supply:

As per Section 13(9) of the IGST Act, 2017, the place of supply of transport services, other than the
courier services, shall be the destination of goods.
As per Section 13(3) and Section 13(6) of the IGST Act, 2017, the place of supply for courier services
shall be location where the services are actually performed. However, if the courier services are
performed even partially in India, the place of supply is deemed as India.

What will be the place of supply of passenger transportation service, if a person travels from Mumbai
to Delhi and back to Mumbai?
Solution:
As per Section 12(9) of IGST Act, 2017, if the person is registered, the place of supply shall be the location
of recipient.
If the person is not registered, the place of supply for the forward journey from Mumbai to Delhi shall
be the place where he embarks i.e. Mumbai. However, for the return journey, the place of supply shall
be Delhi as the return journey has to be treated as separate journey [Explanation to section 12(9) of the
IGST Act].

What is the place of supply for mobile connection? Can it be the location of supplier?
Solution:
For Domestic Supplies:
The place of supply for mobile connection would depend on whether the connection is on postpaid or
prepaid basis.
(a) In case of postpaid connections, the place of supply shall be the location of billing address of the
recipient of service.
(b) In case of pre-paid connections, the place of supply shall be the place where payment for such
connection is received or such pre-paid vouchers are sold. If the recharge is done through
internet/e-payment, the location of recipient of service on record will be the taken as the place of
service. However in residual cases, the place of supply shall be the address of the recipient as per
the records of the supplier of services and where such address is not available, the place of supply
shall be location of the supplier of services.
For International Supplies:

As per Section 13 of IGST Act, 2017, the place of supply of telecom services shall be the location of the
recipient of service.

A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in Manali. What
is the place of supply?
Solution:
As per Section 12 of IGST Act, 2017, for banking and financial services including stock broking services
to any person, the place of supply shall be the location of recipient on the records of the supplier i.e.
Mumbai. However, if the location of recipient is not on the records of the supplier, the place of supply
shall be the location of supplier i.e. Manali.

An unregistered person from Gurugram travels by Air India flight from Mumbai to Delhi and gets his
travel insurance done in Mumbai. What is the place of supply of insurance services?
Solution:
As per Section 12(13) of the IGST Act, 2017, when insurance service is provided to an unregistered
person, place of supply shall be the location of the recipient of services on the records of the supplier of
insurance services i.e. Gurugram.

CAJ Ltd. of Pune acquires the business of Sys Inc. at London. CAJ Ltd. entered into a contract with M/s.
Square Tree Architects, Mumbai to do the interiors of the building of new business at London. What is
the place of supply of services of interior decoration?
Solution:
As per Section 12(3) of the IGST Act, 2017, in respect of services provided directly in relation to
immovable property, the place of supply shall be the location at which the immovable property is
located. However, if the location of the immovable property is outside India, the place of supply shall
be the location of recipient. In this case the place of supply shall be the location of the recipient i.e. Pune.
However, since branch in London is a separate person and if contract with interior decoration is placed
by branch in London, then provisions of Section 13(4) of the IGST Act, 2017 shall apply and the place
of supply shall be location of immovable property i.e. London.
Question 12: POS for Services (Domestic) and Levy of GST

Mr. DK has a permanent residence at Ahmedabad. He has a savings bank account with Ahmedabad
Branch of Lena & Dena Bank. On 1st June 2018, Mr. DK opened a safe deposit locker with the
Ahmedabad Branch of Lena & Dena Bank. Mr. DK went to New Zealand for official work in October
2018 and has been residing there since then. Mr. DK contends that since is a non-resident during the
year 2019-20 in terms of the Income Tax Act, 1961, GST cannot be levied on the locker fee charged by
Lena & Dena Bank for the year 2019-20. Examine the correctness of the contention of Mr. DK.
Solution:
The contention of Mr. DK is not correct. Under GST law the taxability of any service depends upon the
provisions of Section 9 of the CGST Act, 2017 / Section 5 of the IGST Act, 2017 and not in terms of
Income Tax Act, 1961. The fact that Mr. DK is a non-resident is irrelevant for determining the taxability
of services received by him.
As per Section 12(12), the place of supply of banking and other financial services including stock
broking services to any person shall be the location of the recipient of services on the records of the
supplier of services. In this case as the location of recipient as per the records of banking company is in
Ahmedabad, the place of supply of service would be Ahmedabad and accordingly leviable to GST.
Since the location of supplier is Ahmedabad and place of supply is also Ahmedabad, it is an intra-state
supply.
Author’s Note: Even if it is considered that the location of recipient of services on records of the supplier
is New Zealand, then in such a case place of supply shall be in accordance with Section 13(8)(a) and
accordingly the place of supply shall be the location of the supplier i.e. Ahmedabad and accordingly
leviable to GST. Since the location of supplier is Ahmedabad and place of supply is also Ahmedabad,
it is an intra-state supply.
Question 13: POS for Services (Domestic) and Levy of GST

Determine the place of supply of service in each of the following independent cases and state whether
GST is payable in each of these cases:
(i) Mr. Ghumakar (an unregistered person) travelled on a Cherrapunji – Bangalore – Singapore –
Bangalore – Cherrapunji flight where a single ticket with no stopover has been issued by Kings-
Queens Airlines.
(ii) Mr. Kapil Sharma (an unregistered person), a well-known comedian from Delhi, organizes a stage-
show in New York. For organizing the stage-show, he takes the services from a Mumbai based
event organizer. What shall be the place of supply for the event organizer.
Solution:
The place of supply of service as well as their taxability is as under-
(i) As per Section 12(9) of IGST Act, 2017, the place of supply in respect of a passenger transportation
service supplied to unregistered person shall be the place where the passenger embarks on the
conveyance for a continuous journey. As per Section 2(3) of IGST Act, 2017, the journey in the given
case is a continuous journey as a single ticket has been issued for the entire journey. Thus, the place
of supply of service is Cherrapunji and the service is taxable in India.
However, no GST would be payable for air transportation of passengers embarking or terminating
from Cherrapunji airport located in Meghalaya as the same is exempted by virtue of EN 12/2017-
CT (Rate) / EN 9/2017-IT (Rate).
(ii) As per Section 12(7)(a) of IGST Act, 2017, the place of supply of services provided by way of
organization of an entertainment event in India supplied to an unregistered person shall be the
place where event is actually held. However, if event is held outside India then the place of supply
shall be location of the recipient. Thus, in the given case since the event is held in New York, the
place of supply of service is Delhi and the service is taxable in India.

Question 14: POS for Goods (Domestic) and POS for Services (Domestic)
(i) Parth of Pune, Maharashtra enters into an agreement to sell goods to Bakul of Bareilly, Uttar
Pradesh. While the goods were being packed in Pune godown of Parth, Bakul got an order from
Shreyas of Shimoga, Karnataka for the said goods. Bakul agreed to supply the said goods to Shreyas
and asked Parth to deliver the goods to Shreyas at Shimoga.
You are required to determine the place of supply (ies) in the above situation.
(ii) Damani Industries has recruited Super Events Pvt. Ltd., an event management company of Gujarat,
for organising the grand party for the launch of its new product at Bangalore. Damani Industries is
registered in Mumbai. Determine the place of supply of the services provided by Super Events Pvt.
Ltd. to Damani Industries.
Will your answer be different if the product launch party is organised at Dubai?
Solution:

(i) The supply between Parth (Pune) and Bakul (Bareilly) is a “bill to ship to” supply where the goods
are delivered by the supplier [Parth] to a recipient [Shreyas (Shimoga)] or any other person on the
direction of a third person [Bakul]. The place of supply in case of bill to ship to supply of goods is
determined in terms of Section 10(1)(b) of IGST Act, 2017.
As per Section 10(1)(b) of IGST Act, 2017, where the goods are delivered by the supplier to a
recipient or any other person on the direction of a third person, whether acting as an agent or
otherwise, before or during movement of goods, either by way of transfer of documents of title to
the goods or otherwise, it shall be deemed that the said third person has received the goods and
the place of supply of such goods shall be the principal place of business of such person.
Thus, in the given case, it is deemed that the Bakul has received the goods and the place of supply
of such goods is the principal place of business of Bakul. Accordingly, the place of supply between
Parth (Pune) and Bakul (Bareilly) will be Bareilly, Uttar Pradesh.
This situation involves another supply between Bakul (Bareilly) and Shreyas (Shimoga). The place
of supply in this case will be determined in terms of Section 10(1)(a) of IGST Act, 2017.
Section 10(1)(a) of IGST Act, 2017 stipulates that where the supply involves movement of goods,
whether by the supplier or the recipient or by any other person, the place of supply of such goods
shall be the location of the goods at the time at which the movement of goods terminates for
delivery to the recipient.
Thus, the place of supply in second case is the location of the goods at the time when the movement
of goods terminates for delivery to the recipient (Shreyas) i.e., Shimoga, Karnataka.
(ii) Section 12(7)(a)(i) of IGST Act, 2017 stipulates that when service by way of Damani Industries
(registered in Mumbai), place of supply is the location of Damani Industries i.e., Mumbai.
Since, in the given case, the product launch party at Bangalore is organized for Damani Industries
(registered in Mumbai), place of supply is the location of Damani Industries i.e., Mumbai.
In case the product launch party is organised at Dubai, the answer will remain the same, i.e. the
place of supply is the location of Damani Industries – Mumbai.
Question 15: POS for OIDARS by Supplier in India (Domestic)

From the following information determine GST liability, if any and person liable to pay GST in context
of “Online Information and Database Access or Retrieval Services” (OIDAR Services).
Mr. Tech of Mumbai provides online gaming services. He earns Rs.20,00,000 from user of India
(including Rs.2,00,000 from Jammu & Kashmir users) and Rs.5,00,000 from foreign users. Assume that
rate of GST is 18%.
Solution:
Determination of Place of Supply and Computation of GST liability
(i) OIDARS supplied by Supplier in India to Users in India: 20,00,000
As per Section 12 of IGST Act, 2017, place of supply for OIDARS services
provided to users in India (including Jammu & Kashmir users) shall be
location of recipient of service if he is registered or his location is available.
In case, recipient is not registered and his location is also not available, then
place of supply shall location of supplier of service. Since, both supplier and
recipient are in India, such service is taxable in India.
GST will be paid by Mr. Tech of Mumbai as he is in Taxable Territory.
(ii) OIDARS supplied by Supplier in India to Users outside India: -
provided to users outside India shall be location of recipient of service. The
service may amount to export of services if conditions of Section 2(6) of the
IGST Act, 2017 are satisfied.

No GST will be paid assuming that it is export and Bond or Letter of
Undertaking is furnished by Mr. Tech.
GST (Rs.20,00,000 * 18%) 3,60,000
Question 16: POS for OIDARS by Supplier outside India (International)

From the following information determine GST liability, if any and person liable to pay GST in context
of “Online Information and Database Access or Retrieval Services” (OIDAR Services).
Mr. Tech of London provides online advertisement services. He earns Rs.20,00,000 from users of India
(including Rs.2,00,000 from Jammu & Kashmir users), Rs.50,00,000 from companies in India (being
business users who further provides such services) and Rs.5,00,000 from foreign users. Assume that
rate of GST is 18%.
Solution:
Determination of Place of Supply and Computation of GST liability
(i) OIDARS supplied by Supplier outside India to Users in India (i.e. Non- 20,00,000
Taxable Online Recipient):
provided to users in India shall be location of recipient of service. Since, the
GST will be paid by Mr. Tech of London though he is in Non-Taxable
Territory or by his authorized representative in Taxable Territory or by a
person appointed by him in Taxable Territory
(ii) OIDARS supplied by Supplier outside India to Business Users in India: 50,00,000
provided to users in India shall be location of recipient of service. Since, the
However, GST will be paid by Companies (i.e. Business Users) in India
under Reverse Charge by virtue of NN 10/2017 (IT) – Rate.
(iii) OIDARS supplied by Supplier outside India to Users outside India: -
provided to users outside India shall be location of recipient of service. The
same is not taxable as both location of supplier and place of supply are
outside India. Moreover, such service is also exempted by virtue of EN
12/2017-CT (Rate) / EN 9/2017-IT (Rate)
GST (Rs.70,00,000 * 18%) 12,60,000
Question 17: POS for Services (International)

What would be the place of supply of service in the following independent cases?
(i) V&N Co. of Bangalore are appointed as commission agent by foreign company for sale of its goods
to Indian customers. In lieu of their services, V&N Co. receive a fixed percentage of commission
from the concerned foreign company.
(ii) D&K Manufacturers of Gujarat has temporarily imported certain good from its customer located
in US for repairs. The said goods have been re-exported to US after carrying out the necessary
repairs without being put to any use in Gujarat.
(iii) Kings-Queens Airlines, an airlines located in Mumbai, has hired aircrafts from a Foreign Airlines
for a period of 15 days.

Solution:
(i) As per Section 13(8) of IGST Act 2017, the place of supply of intermediaries of goods is the place of
location of supplier of service. Thus, the place of supply of services provided or agreed to be
provided by V&N Co. (as commission agent of goods) to foreign company will be location of
service supplier i.e., Bangalore and will be liable to GST.
(ii) As per Section 13(3)(a) of IGST Act, 2017, the place of supply of services supplied in respect of
goods which are required to be made physically available by the recipient of services to the supplier
of services, or to a person acting on behalf of the supplier of services in order to provide the
services., is the location where the services are actually performed.
However, services supplied in respect of goods which are temporarily imported into India for
repairs and are exported after repairs without being put to any other use in India, than that which
is required for such repairs, the above provision shall not apply and place of supply shall be
determined as per general rule i.e. Section 13(2) i.e. location of the recipient of service.
In the given case, goods have been temporarily imported by D&K Manufacturers and have been
re-exported after the repairs without being put to any use in Gujarat. Therefore, place of supply of
repair services carried out by D&K Manufacturers will be the location of service recipient i.e. US
and may amount to export of services if conditions of Section 2(6) of the IGST Act, 2017 are satisfied.
(iii) As per Section 13(8)(c) of IGST Act, 2017, place of supply of services consisting of hiring of means
of transport, including yachts but excluding aircrafts and vessels, up to a period of 1 month is the
location of the supplier of service. Therefore, services of hiring of aircraft and vessel (except yachts).
irrespective of the period of hire, will be covered under Section 13(2) of the IGST Act, 2017 and
place of supply shall be location of the recipient of service. Thus, the place of supply of aforesaid
hiring services will be location of recipient of service i.e. Mumbai.
Question 18: POS for Services (International) and Levy of GST

The supplier of service is abroad. He renders service to a subsidiary of an Indian Company located
abroad. Payment to the supplier is done by the holding Indian Company. Does it attract GST?
Solution:
GST is levied on ‘supply’ of goods or services or both, in India including the state of Jammu and
Kashmir. GST is a destination based tax on consumption of goods and service. In this case, GST will
not be attracted as location of supplier of service is abroad and supply of service is also outside India.
It is irrelevant that the payment for service is made from India.

Write a brief note on the applicability of GST in the following cases:
(i) Whether the representation service provided by an Indian bank to a foreign MTSO (Money Transfer
Service Operator) in relation to money transfer to a beneficiary in India falls in the category of
intermediary service.
(ii) Whether GST is leviable on the services provided as mentioned in (i) above by an
intermediary/agent located in India to MTSO’s located outside in India.
Solution:
(i) In terms of Section 2(13) of IGST Act 2017, intermediary means a broker, an agent or any other
person who arrange / facilitates the supply of service (hereinafter called the ‘main service’) between
two / more persons, but does not include a person who supplies such service on his own account.
An Indian bank, acting as an agent to foreign MTSO, facilitates the provision of money transfer
service by the foreign MTSO to a beneficiary in India and receives commission or free in return.
Hence, the Indian Bank falls in the category of intermediary and representation service provided
by such Bank is intermediary service. Hence, the said service is liable to GST.

(ii) Yes, GST is leviable on the said service. As per Section 13(8) of IGST Act, 2017, the place of supply
of intermediary service is the location of supplier of service. Since the intermediary is located in
taxable territory, place of supply is taxable territory and thus, the said service is liable to GST.

Write a brief note on the applicability of GST in the following cases:
(i) Whether the representation service provided by an Indian bank to a foreign MTSO (Money Transfer
Service Operator) in relation to money transfer to a beneficiary in India falls in the category of
intermediary service.
(ii) Whether GST is leviable on the services provided as mentioned in (i) above by an
intermediary/agent located in India to MTSO’s located outside in India.
Solution:
(i) In terms of Section 2(13) of IGST Act 2017, intermediary means a broker, an agent or any other
person who arrange / facilitates the supply of service (hereinafter called the ‘main service’) between
two / more persons, but does not include a person who supplies such service on his own account.
An Indian bank, acting as an agent to foreign MTSO, facilitates the provision of money transfer
service by the foreign MTSO to a beneficiary in India and receives commission or free in return.
Hence, the Indian Bank falls in the category of intermediary and representation service provided
by such Bank is intermediary service. Hence, the said service is liable to GST.
(iii) Yes, GST is leviable on the said service. As per Section 13(8) of IGST Act, 2017, the place of supply
of intermediary service is the location of supplier of service. Since the intermediary is located in
taxable territory, place of supply is taxable territory and thus, the said service is liable to GST.

Determine the place of supply of services as well as their taxability in each of the following independent
cases:
(i) Mr. Ranka, a US based architect provides his professional services in respect of property which is
intended to be located in Mumbai.
(ii) A US based company possessing specialization in building construction has been awarded a
contract for construction of Temples in respect of specific sites in US by a Tamil Nadu based Mr.
Ramanathan.
Solution:
The place of supply of services as well as their taxability is as under:
(i) As per Section 13(4) of IGST Act, 2017, in respect of services provided directly in relation to
immovable property, the place of supply shall be the place where the immovable property is
located or intended to be located. In this case, place of supply of services shall be Mumbai as the
concerned property is intended to be located in Mumbai which falls within the ambit of ‘Taxable
Territory’ and thus, these services will be taxable.
(ii) As per Section 13(4) of IGST Act, 2017, in respect of services provided directly in relation to
immovable property, the place of supply shall be the place where the immovable property is
located or intended to be located. In this case, since specific sites in respect of which construction
of Temples is to be carried out are located in US, the place of supply of services will be US. Since
the location of supplier and the place of supply of service is outside India, there is no levy of GST.
Author’s Note: Students shall note that there is no levy of GST only where both location of supplier
and place of supply is outside India. In case if location of supplier of service is inside India and
place of supply is outside India, levy of GST is there; however the benefits of zero-rating could be
availed if conditions are satisfied.

Question 22: POS for Services (International) and Nature of Supply
ABC Pvt. Ltd. New Delhi, provide support services to foreign customers in relation to procuring goods
from India. The company identifies the prospective vendor, reviews product quality and pricing and
then shares the vendor details with the foreign customer.
The foreign customer then directly places purchase order on the Indian vendor for purchase of the
specified goods. ABC Pvt. Ltd. charges its foreign customer cost plus 10% mark up for services
provided by it.
For the month of December, 2018, the company has charged US $ 1,00,000 (exclusive of GST) to its
foreign customer. With reference to the provisions of GST law, examine whether the company is liable
to pay IGST or CGST and SGST.
Note: GST @ 18% is applicable on supply of the support services provided by ABC Pvt. Ltd. Rate of
exchange of Rs.65 per US $.
Solution:
Section 2(13) of the IGST Act, 2017 defines “intermediary” to mean a broker, an agent or any other
person, by whatever name called, who arranges or facilitates the supply of goods or services or both,
or securities, between two or more persons, but does not include a person who supplies such goods or
services or both or securities on his own account.
In this case, since ABC Pvt. Ltd. is arranging for facilitating supply of goods between the foreign
customers and the Indian vendor, the said services can be classified as intermediary services.
If the location of the supplier of services or the location of the recipient of service is outside India, the
place of supply is determined in terms of Section 13 of the IGST Act, 2017. Since, in the given case, the
recipient of supply is located outside India, the provisions of supply of intermediary services will be
determined in terms of Section 13 of the IGST Act, 2017.
As per Section 13(8)(b), the place of supply in case of intermediary services is the location of the
supplier, i.e. the location of ABC Pvt. Ltd. which is New Delhi. Further, as per Section 8 (2) of the IGST
Act, 2017, supply of services where the location of the supplier and the place of supply of services are
in the same State is treated as intra- State supply.
Therefore, since in the given case, both the location of ABC Pvt. Ltd. and the place of supply of the
services provided by it are in New Delhi, the supply of service will be an intra- State supply leviable to
CGST & SGST.
Assuming that the given rate of exchange is prevailing on the date of time of supply of services, the
CGST and SGST liability will be worked out as under:
➔ CGST= Rs.5,85,000 (1,00,000 * 65 * 9%)
➔ SGST= Rs.5,85,000 (1,00,000 * 65 * 9%)
Question 23: POS for Services (Domestic & International) and Levy of GST
Determine the place of supply of service as well as their taxability in each of the following independent
cases:
(i) A Chennai based builder has been provides construction services to Bangalore based company in
respect of construction of its new building in Dubai.
(ii) An interior decorator of Mumbai provides of landscaping of space in Srinagar.
(iii) A New York based company has been awarded mineral exploration contract in respect of specific
sites in Canada by a Delhi based company.
Solution:
immovable property, the place of supply will be place where the immovable property is located or
intended to be located. However, if the immovable property is located or intended to be located
India, the place of supply will be location of the recipient.

In this case, as services provided in relation to immovable property located in Dubai, the place of
supply will be location of the recipient i.e. Bangalore, this service will be liable to GST.
Author’s Note: An alternative view could be taken that since branch in Dubai is a separate person
and if contract with interior decoration is placed by branch in Dubai, then provisions of Section
13(4) of the IGST Act, 2017 shall apply and the place of supply shall be location of immovable
property i.e. Dubai. Since the place of supply is outside India, in case if other conditions of export
of service are satisfied, the benefit of zero rating could be availed.
immovable property, the place of supply shall be place where immovable property is located or
intended to be located. Therefore, in the given case, the place of supply of service will be Srinagar.
Moreover, GST applies on whole of India including the state of Jammu and Kashmir, which falls
within the ambit of ‘Taxable Territory’ and thus, this service will be liable to GST.
(iii) As per Section 13(4) of IGST Act, 2017, in respect of services provided directly in relation to
immovable property, the place of supply shall be place where the immovable property is located
or intended to be located. In this case, since specific sites in respect of which mineral exploration is
to be carried out are located in Canada, the place of supply of service will be Canada which does
not fall within the ambit of taxable territory and thus, this service will not be liable to GST.
Question 24: POS for Services (Domestic & International) and Levy of GST
Determine the place of services as well as their taxability in each of the following cases with brief
reasons:
(i) Tech Test Ltd. agrees to provide ‘technical inspection and certification service’ in respect of a newly
developed product of an overseas firm (for a newly launched motorbike which has to meet
emission standards in different states or countries). The overseas firm has provided its newly
developed product to Tech Test Ltd. for the purpose of testing. The testing is carried out in Delhi
(25%), Mumbai (25%) and Hong Kong (50%).
(ii) A movie on demand is provided as on-board entertainment during the Chennai-Delhi leg of a
London-Chennai-Delhi Flight.
Solution:
The place of supply of services as well as their taxability is as under-
(i) As per Section 13(3) of IGST Act, 2017, where any service supplied in respect of goods which are
required to be made physically available by the recipient of services to supplier of services, the
place of supply of services shall be the location where the service is actually performed.
As per Section 13(6) of IGST Act, 2017, where performance based services are supplied at more than
one location, including a location in the taxable territory, its place of supply shall be the location in
the taxable territory. The place of supply for the entire 100% of the services (even for 50% services
provided in Hong Kong) shall be India.
Further, as per Section 13(7) of IGST Act, 2017, where performance based services are supplied in
more than one state or Union territory, place of supply of such services shall be taken as being in
each of the respective states or Union territories.
Hence a combined reading of both infers that the place of supply of testing services (including that
of Hong Kong) shall be Delhi & Mumbai in the proportion of 25:25 respectively and would be liable
to GST.
Author’s Note: However, in case if a separate contract is entered for Hong Kong, Section 13(6) shall
not apply and accordingly as per Section 13(3), the place of supply shall be Hong Kong. Since the
location of supplier is in India and place of supply is outside India it shall be an inter-state supply
i.e. leviable to GST; however benefit of zero-rating could be availed in case other conditions for
export of service are satisfied.
(ii) As per Section 12(10) of IGST Act, 2017, the place of supply of services provided on board a
conveyance during the course of a passenger transport operation, including services intended to
be wholly or substantially consumed while on board shall be location of the first scheduled point
of departure of that conveyance for the journey. The first scheduled departure of the conveyance is
London. Hence, the place of supply of service shall be in London i.e. in the non-taxable territory.
Hence, GST liability shall not arise.
Question 25: POS for Services (Domestic & International), Levy of GST and Nature of Supply
Determination the place of supply of services as well as their taxability in each of the following
independent cases:
(i) Mr. DK, the owner of an immovable property located in Gujarat gives on rent the said property to
Mr. SJ of Maharashtra for commercial purposes.
(ii) Mr. Praboo, a Chennai based architect provides his professional services in respect of property
which is intended to be located in Haryana.
(iii) A US based company possessing specialization in mineral exploration has been awarded a contract
for mineral exploration in respect of specific sites in Canada by Delhi based Mr. Sanjay Singhal.
(iv) Mr. VK, a consulting engineer provides his professional consultancy services to an Australian
based company in respect of its three properties located in UK, USA and Dubai.
(v) A Chennai based builder provides construction services to Mumbai based company in respect of
construction of its new building in Dubai.
(vi) Mr. Prashanth, a Bangalore based professional valuer, provides his professional services of
valuation of immovable properties (vide a single contract for a consolidated consideration) to
Mumbai based Reliance Industries Ltd., in respect of its four properties located in Delhi, Jammu,
Chennai and New York. Mr. Prashanth performed 20%, 30%, 25% and 25% of his total services in
foregoing four cities respectively.
Solution:
The aforesaid cases have been discussed herein below:
intended to be located. Therefore, in the given case, the place of supply of service shall be Gujarat
and the said service will be liable to GST as intra state supply.
intended to be located. In this case, it is assumed that location of service recipient is in India and
thus, Section 12 is applied. The place of supply services shall be Haryana as the concerned property
is intended to be located in Haryana and the said service will be liable to GST as inter-state supply
(iii) As per Section 13(4) of IGST Act, 2017, in respect of services provided directly in relation to
intended to be located. In this case, since specific sites in respect of which mineral exploration is to
be carried out are located in Canada, the place of supply of service will be Canada. Since the
location of supplier and the place of supply of service is outside India, there is no levy of GST.
(iv) As per Section 13(4) of IGST Act, 2017, in respect of services provided directly in relation to
intended to be located i.e. UK, USA and Dubai.
(v) As per Section 12(3) of IGST Act, 2017, in respect of services provided directly in relation to
immovable property, the place of supply shall be place where the immovable property is located
or intended to be located. However, if the immovable property is located or intended to be located
outside India, the place of supply shall be location of the recipient. In this case, services provided
in relation to immovable property located in Dubai, the place of supply shall be location of the
recipient i.e. Mumbai and this service will be liable to GST as inter-state supply.
Author’s Note: However, if property in Dubai is a separate person and if contract is with Dubai
company, then provisions of Section 13(4) of the IGST Act, 2017 shall apply and the place of supply
shall be location of immovable property i.e. Dubai It is leviable to GST, however in case if other
conditions are satisfied of export of services, then the benefit of zero rating can be availed.
(vi) As per Section 12(3) of IGST Act, 2017, in respect of services provided directly in relation to
immovable property, the place of supply will be place where immovable property is located or
intended to be located. However, if the immovable property is located or intended to be located
outside India, the place of supply will be location of the recipient.
Where the immovable property is located in more than one State or Union territory, the supply of
service shall be treated as made in each of the respective States or Union territory, in proportion to
the value for services separately collected or determined in terms of the contract or agreement
entered into in this regard.
In this case, place of supply for services provided in three properties located in Delhi (20%), Jammu
(30%) and Chennai (25%) will be in each of the states where the service is supplied.
For the services provided in relation to immovable property located in New York (25%), place of
supply will be location of the recipient i.e. Mumbai and thus, the same will also be liable to pay
GST.

Question 26: POS for Goods and Services (Domestic & International) and Nature of Supply
(i) Mr. Z, a supplier registered in Hyderabad (Telangana), procures goods from China and directly
supplies the same to a customer in US. With reference to the provisions of GST law, examine
whether the supply of goods by Mr. Z to customer in US is an inter- State supply?
(ii) RST Inc. a corn chips manufacturing company based in USA, intends to launch its products in India.
However, the company wishes to know the taste and sensibilities of Indians before launching its
products in India. For this purpose, RST Inc. has approached ABC Consultants, Mumbai
(Maharashtra) to carry out a survey in India to enable it to make changes, if any, in its products to
suit Indian taste.
The survey is to be solely based on the oral replies of the surveyees, they will not be provided any
sample by RST Inc. to taste. ABC Consultants will be paid in convertible foreign exchange for the
assignment.
With reference to the provisions of GST law, determine the place of supply of the service. Also,
explain whether the said supply will amount to export of service?
Solution:
(i) The transactions undertaken by Mr. Z is neither import nor export of goods in terms of Customs
Act, 1962. These types of transactions are referred as Drop Shipment and there is no levy of GST on
the same as per Section 7 read with Schedule III of CGST Act, 2017.
Author’s Note: Although, as per Section 7(5)(a) of the IGST Act, 2017 when the supplier is located
in India and the place of supply is outside India, such supply shall be inter-State supply of goods
or services, as there is no levy of GST the fact that it is inter-state supply is of no relevance.
(ii) As per Section 13(2) of the IGST Act, 2017, in case where the location of the supplier of services or
the location of the recipient of services is outside India, the place of supply of services except the
services specified in sub-sections (3) to (13) shall be the location of the recipient of services. Sub-
sections (3) to (13) provide the mechanism to determine the place of supply in certain specific
situations.
The given case does not fall under any of such specific situations and thus, the place of supply in
this case will be determined under sub-section (2) of Section 13. Thus, the place of supply of services
in this case is the location of recipient of services, i. e. USA.
As per Section 2(6) of the IGST Act, 2017, export of services means the supply of any services when-
(a) The supplier of service is located in India.
(b) The recipient of service is located outside India.
(c) The place of supply of service is outside India.
(d) The payment for such service has been received by the supplier of service in convertible foreign
exchange, and
(e) The supplier of service and the recipient of service are not merely establishments of a distinct
person in accordance with Explanation 1 in section 8.
Since all the above five conditions are fulfilled in the given case, the same will be considered as an
export of service.
Question 27: POS for Services and Value of Supply

XYZ Ltd. of Delhi, engaged in various businesses has provided the following services in the month of
December 2018, whose values are listed below. Compute its taxable value for the purpose of GST
liability:
(1) Service of interior decoration in respect of immovable property located in Jammu: Rs.5 lakhs;
(2) Service of renting of commercial buildings in Delhi: Rs.10 lakhs;
(3) Architectural services to an Indian Hotel Chain which has business establishment in Mumbai for
its newly acquired property in Sydney: Rs.15 lakhs;
(4) Services provided as an Indian agent undertaking marketing in India of goods of a foreign seller:
Rs.15 lakhs;
(5) XYZ Ltd. has provided beautification and fashion designing services to a pageant based at Mumbai.
The services are in nature of personalized services: Rs.15 lakhs;
(6) Freight forwarding services: Rs.12 lakhs profits earned on buying and selling cargo space on
airlines for export of goods. In some other cases, commission of Rs.3 lakhs earned from airlines on
acting as intermediary in arranging cargo space on airlines for export of goods.
(7) Online information and database access and retrieval services provided to clients in UK: Rs.5 lakhs;
(8) Other services provided: Rs.4 lakhs to persons located in Srinagar, Rs.2 lakhs to persons located in
US and Rs.15 lakhs to persons located in Delhi.
Solutions:
Service of interior decoration in respect of immovable property located in Jammu: 5,00,000
As per Section 12(3) of IGST Act, 2017, in respect of services provided directly in
relation to immovable property, the place of supply shall be the location of
immovable property. Therefore, in the given case, the place of supply of service will
be in Jammu.
Service of renting of commercial buildings in Delhi: 10,00,000
relation to immovable property, the place of supply shall be location of immovable
property. Therefore, in the given case, the place of supply of service will be Delhi.
Architectural services to an Indian Hotel Chain which has business establishment 15,00,000
in Mumbai for its newly acquired property in Sydney:
relation to immovable property, the place of supply shall be location of immovable
property. However, if the location of the immovable property is outside India, then
the place of supply shall be the location of recipient. Therefore, in the given case, the
place of supply of service will be Mumbai.
Author’s Note: If property in Sydney amounts to a fixed establishment of service
recipient, then location of service recipient would be Sydney. As per Section 13(4),
place of supply shall be Sydney.

Services provided as an Indian agent undertaking marketing in India of goods of 15,00,000
a foreign seller:
As per Section 13(8) of IGST Act, 2017, the place of supply of intermediary of goods
shall be the place of location of supplier. Therefore, in the given case, the place of
supply of service will be in Delhi.
Beautification and fashion designing services: 15,00,000
As per Section 12(4) of IGST Act, 2017, the place of supply of beautification and
fashion designing services shall be the place where the services are actually
performed. Therefore, in the given case, the place of supply of service will be in
Mumbai.
Freight forwarding services: 12,00,000
As per Section 12(8) of IGST Act, 2017, the place of supply for transportation services
shall be the location of the exporter of India assuming that the services are provided
to registered person. Hence, it will be taxable.
Intermediary services: 3,00,000
As per Section 12(2) of IGST Act, 2017, the place of supply of intermediary services
shall be the location of registered person assuming that the services are provided to
registered person. Hence, it will be taxable.
Online information database access and retrieval services: Nil
As per provisions of Section 13(12) of IGST Act, 2017, the place of supply of OIDARS
shall be the location of the recipient of services i.e. UK. Since it is outside taxable
territory and assuming that other conditions of export of services are satisfied, it shall
be zero-rated and not be taxable assuming that Bond or Letter of Undertaking has
been executed.
Other services in Delhi and Srinagar: 19,00,000
As per Section 12(2) of IGST Act, 2017, the place of supply of other services shall be
the location of registered person assuming that the services are provided to registered
person. Hence, it will be taxable if the same is provided in India (including in
Srinagar).
Other services in US: Nil
As per Section 13(2) of IGST Act, 2017, the place of supply of service shall be the
location of the recipient of services i.e. US. Since it is outside taxable territory and
assuming that other conditions of export of services are satisfied, it shall be zero-
rated and not be taxable assuming that Bond or Letter of Undertaking has been
executed.
Total Value of Taxable Supply 94,00,000

ACCOUNTS & RECORDS

Question 1: List of Records by Regular Scheme Dealer
Anugraha Groups has started its manufacturing activities. You are required to advice it about the
accounts and records required to be maintained by it as required under Section 35(1) of the CGST Act,
2017.
Solution:
Section 35(1) of the CGST Act, 2017 stipulates that a true and correct account of following is to be
maintained:
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid
(f) goods or services imported into India or exported from India
(g) supplies of goods or services attracting reverse charge mechanism
(h) names and complete addresses of suppliers from whom the goods or services are received
(i) wherever required, names and complete addresses of the persons to whom goods or services are
supplied
(j) address of the premises where goods are stored, including goods stored during transit along with
the particulars of the stock stored therein.
(k) register of tax invoice / bill of supply, credit notes & debit notes, delivery challan, receipt vouchers
& refund vouchers and payment vouchers issued and received during any tax period
(l) Details of advances received, paid and adjustments made thereto
(m) Such other particulars as may be prescribed.
Question 2: List of Records by Composition Scheme Dealer

Yari Restaurant has opted for composition scheme in the current financial year. Discuss the records
which are not to be maintained by a supplier opting for composition levy as enumerated in Rule 56 of
the CGST Rules, 2017.
Solution:
Following records are not required to be maintained by a supplier who has opted for composition
scheme as per Rule 56(2) and Rule 56 (4) of the CGST Rules, 2017:
(a) Stock of goods
(b) Details of input tax credit
Question 3: List of Records by Agent

AJ Ltd. engages RJ & Sons as an agent to sell goods on its behalf. For the purpose, AJ Ltd. has supplied
the goods to RJ & Sons located in Haryana. Enumerate the accounts required to maintained by RJ &
Sons as per Rule 56(11) of the CGST Rules, 2017
Solution:
Rule 56(11) of the CGST Rules, 2017 provides that every agent shall maintain accounts depicting the
(a) particulars of authorization received by him from each principal to receive or supply goods or
services on behalf of such principal separately;

(b) particulars including description, value and quantity (wherever applicable) of goods or services
received on behalf of every principal;
(c) particulars including description, value and quantity (wherever applicable) of goods or services
supplied on behalf of every principal;
(d) details of accounts furnished to every principal; and
(e) tax paid on receipts or on supply of goods or services effected on behalf of every principal.
Question 4: Time Limit for Maintaining Records

Jain & Jain Ltd. is a supplier of management consultancy services. It has approached you to ascertain
the period for which the books of accounts or other records need to be maintained?
Solution:
Section 36 of the CGST Act, 2017 stipulates that every registered person required to keep and maintain
books of account or other records in accordance with the provisions of Section 35(1) of the CGST Act,
2017 shall retain them until the expiry of 72 months from the due date of furnishing of annual return
for the year pertaining to such accounts and records.
However, a registered person, who is a party to an appeal or revision or any other proceedings before
any Appellate Authority or Revisional Authority or Appellate Tribunal or Court, whether filed by him
or by the Commissioner, or is under investigation for an offence under Chapter XIX, shall retain the
books of account and other records pertaining to the subject matter of such appeal or revision or
proceedings or investigation for a period of 1 year after final disposal of such appeal or revision or
proceedings or investigation, or for the period specified above, whichever is later.

ASSESSMENT & AUDIT

Question 1: Self-Assessment and Scrutiny of Returns
What recourse may be taken by the officer in case proper explanation is not furnished for the
discrepancy detected in the return filed, while conducting scrutiny under Section 61 of CGST ACT?
Solution:
If the taxable person does not provide a satisfactory explanation within 30 days of being informed
(extendable by the officer concerned) or after accepting discrepancies, fails to take corrective action in
the return for the month in which the discrepancy is accepted, the Proper Officer may take recourse to
any of the following provisions:
(i) Proceed to conduct audit under Section 65 of the Act;
(ii) Direct the conduct of a special audit under Section 66 which is to be conducted by a Chartered
Accountant or a Cost Accountant nominated for this purpose by the Commissioner; or
(iii) Undertake procedures of inspection, search and seizure under Section 67 of the Act; or
(iv) Initiate proceeding for determination of tax and other dues under Section 73 or Section 74 of the
Act
Author’s Note: Self-assessment by assessee is followed by scrutiny of returns by proper officer in
certain cases.

Question 2: Provisional Assessment and Final Assessment
Kulbhushan & Sons has entered into a contract to supply two consignments of certain taxable goods.
However, since it is unable to determine the value of the goods to be supplied by it, it applies for
payment of tax on such goods on a provisional basis along with the required documents in support of
its request.
On 12.01.20XX, the Assistant Commissioner of Central Tax issues an order allowing payment of tax on
provisional basis indicating the value on the basis of which the assessment is allowed on provisional
basis and the amount for which the bond is to be executed and security is to be furnished.
Kulbhushan & Sons complies with the same and supplies both the consignments of goods on
25.01.20XX thereafter paying the tax on provisional basis in respect of both the consignments on
19.02.20XX.
Consequent to the final assessment order passed by the Assistant Commissioner of Central Tax on
21.03.20XX, a tax of Rs.1,80,000 becomes due on 1 st consignment whereas a tax on Rs.4,20,000 becomes
refundable on 2nd consignment.
Kulbhushan & Sons pays the tax due on 1st consignment on 09.04.20XX and applies for the refund of
the tax on 2nd consignment same day. Tax was actually refunded to it on 05.06.20XX.
Determine the interest payable and receivable, if any, by Kulbhushan & Sons in the above case.
Solution:
Section 60(4) of the CGST Act, 2017 stipulates that where the tax liability as per the final assessment is
higher than under provisional assessment i.e. tax becomes due consequent to order of final assessment,
the registered person shall be liable to pay interest on tax payable on supply of goods but not paid on
the due date, at the rate specified under Section 50(1) [18% p.a], from the first day after the due date of
payment of tax in respect of the goods supplied under provisional assessment till the date of actual
payment, whether such amount is paid before / after the issuance of order for final assessment.
In the given case, due date for payment of tax on goods cleared on 25.01.20XX under provisional
assessment is 20.02,20XX.

In view of the provisions of Section 60(4), in the given case, Kulbhushan & Sons is liable to pay following
interest in respect of 1st consignment:
= Rs.1,80,000 * 18% * 48/365
= Rs.4,261 (rounded off)
Further, Section 60(5) of the CGST Act, 2017 stipulates that where the tax liability as per the final
assessment is less than in provisional assessment i.e. tax becomes refundable consequent to the order
of final assessment, the registered person shall be paid interest at the rate specified under Section 56
[6% p.a.] from the date immediately after the expiry of 60 days from the date of receipt of application
under Section 54(1) till the date of refund of such tax.
However, since in the given case, refund has been made (05.06.20XX) within 60 days from the date of
receipt of application of refund (09.04.20XX), interest is not payable to Kulbhushan & Sons on tax
refunded in respect of 2nd consignment.
Question 3: Summary Assessment

Is summary assessment order to be necessarily passed against the taxable person?
Solution:
No. In certain cases, like when goods are under transportation or are stored in a warehouse, and the
taxable person in respect of such goods cannot be ascertained, the person in charge of such goods shall
be deemed to be the taxable person and will be assessed to tax.
Question 4: Best Judgment Assessment and Summary Assessment

(i) Whether principal of natural justice is must to be followed before passing assessment order against
the taxable person?
(ii) In what cases, assessment order passed by proper officer may be withdrawn?
Solution:
(i) Yes, principal of natural justice is must to be followed before passing assessment order against the
taxable person seeking to impose any financial burden on him.
Author’s Note: However, in an exceptional case in summary assessment under Section 64 of CGST
Act, 2017, assessment order can be passed even without following principles of natural justice.
However, later on principles of natural justice is followed by allowing the taxable person to apply
for withdrawal of such summary assessment order.
(ii) Assessment Order passed by proper officer may be withdrawn in the following cases:-
(a) Assessment of Non-filers of Return: The best judgment order passed by the Proper Officer
under Section 62 of CGST Act shall automatically stand withdrawn if the taxable person
furnishes a valid return for the default period (i.e. files the return and pays the tax as assessed
by him), within 30 days of the receipt of the best judgment assessment order
(b) Summary Assessment: A taxable person against whom a summary assessment order has been
passed can apply for its withdrawal to the jurisdictional Additional/Joint Commissioner within
30 days of the date of receipt of the order. If the said officer finds the order erroneous, he can
withdraw it and direct the proper officer to carry out determination of tax liability in terms of
Section 73 or Section 74 of CGST Act. The Additional/Joint Commissioner can follow a similar
course of action on his own motion if he finds the summary assessment order to be erroneous.
Question 5: Audit
Who can conduct audit of taxpayers?
Solution:
There are 3 types of audit prescribed in the GST Act(s) as explained below:

(i) Audit by Chartered Accountant or a Cost Accountant: Every registered person whose turnover
exceeds the prescribed limit, shall get his accounts audited by a chartered accountant or a cost
accountant. (Section 35(5) of the CGST Act)
(ii) Audit by Department: The Commissioner or any officer of CGST or SGST or UTGST authorized
by him by a general or specific order, may conduct audit of any registered person. The frequency
and manner of audit will be prescribed in due course. (Section 65 of the CGST Act)
(iii) Special Audit: If at any stage of scrutiny, inquiry, investigations or any other proceedings, if
department is of the opinion that the value has not been correctly declared or credit availed is not
with in the normal limits, department may order special audit by chartered accountant or cost
accountant, nominated by department. (Section 66 of the CGST Act)
Question 6: Audit by CA / CWA

V & N Ltd., a registered supplier of goods, has crossed turnover of Rs.2 crore in current financial year.
Discuss whether V & N Ltd. is required to get its accounts audited by the Chartered Accountant or Cost
Accountant under GST law.
Solution:
Section 35(5) of the CGST Act read with Rule 80 of the CGST Rules, 2017 provides that every registered
person must get his accounts audited by a Chartered Accountant or a Cost Accountant if his aggregate
turnover during a FY exceeds Rs.2 Crores. Since the turnover of V & N Ltd. has exceeded Rs.2 Crores
in current financial year, it has to get its accounts audited by a Chartered Accountant / Cost Accountant.
Author’s Note: Books of Accounts of the Central Government, State Government or Local Authority
would NOT be subject to audit by CA / CWA if the same are subject to audit by CAG of India or any
Statutory Auditor appointed for auditing the accounts of Local Authorities.
Question 7: Audit by CA / CWA

V & N Ltd., a registered supplier of goods, has turnover of Rs.1.5 crore and Rs.70 lakhs in Tamil Nadu
and Karnataka in current financial year. Discuss whether V & N Ltd. is required to get its accounts
audited by the Chartered Accountant or Cost Accountant under GST law.
Solution:
Section 35(5) of the CGST Act read with Rule 80 of the CGST Rules, 2017 provides that every registered
person must get his accounts audited by a Chartered Accountant or a Cost Accountant if his aggregate
turnover during a FY exceeds Rs.2 Crores. Since the aggregate turnover (i.e. PAN India turnover) of V
& N Ltd. has exceeded Rs.2 Crores in current financial year, it has to get its accounts audited by a
Chartered Accountant / Cost Accountant in both Tamil Nadu and Karnataka.

INSPECTIN, SEARCH &

SEIZURE AND
CONFISCATION
Question 1: Inspection
Who can order for carrying out “Inspection” and under what circumstances? Can any premises be
inspected by CGST officers?
Solution:
As per Section 67 of CGST Act, 2017 read with Rule 139 of CGST Rules, 2017, an officer authorized in
writing by Proper Officer not below the rank of Joint Commissioner can order for carrying out
“Inspection”.
A Proper Officer not below the rank of Joint Commissioner can give such authorization only when he
has reasons to believe that:
(i) A taxable person has done the following:
(a) suppressed any transaction relating to supply of goods or services or both OR
(b) suppressed the stock of goods in hand OR
(c) has claimed ITC in excess of his entitlement OR
(d) has indulged in contravention of this Act or Rules to evade payment of tax
(ii) Transporter of goods or Owner / Operator of a Warehouse / Godown / Any Other Place:
(a) is keeping goods which have escaped payment of tax OR
(b) has kept his accounts or goods in such a manner as is likely to cause evasion of tax
As per Section 71 of CGST Act, 2017, the authorized officer shall have access to any place of business
of a registered person
(a) to inspect Books of Account, Documents, Computers, Computer Programs, Computer Software
whether installed in a computer or otherwise and such other things as he may require and which
may be available at such place,
(b) for the purposes of carrying out any Audit, Scrutiny, Verification and Checks as may be necessary
to safeguard the interest of revenue
Question 2: Search & Seizure

Who can order for search and seizure under the provisions of CGST Act?
Solution:
As per Section 67 of CGST Act, 2017 read with Rule 139 of CGST Rules, 2017, an officer authorized in
writing by Proper Officer not below the rank of Joint Commissioner can order for carrying out “search
and seizure”.
A Proper Officer not below the rank of Joint Commissioner can give such authorization only in the
following cases:
(i) Where PO ≥ JC, based on inspection carried out or otherwise, has reasons to believe that
(a) goods liable to confiscation OR
(b) any documents / books / things which shall be relevant for any proceedings under this Act,
are secreted in any place, the officers could search and seize such goods OR documents / books /
things.
(ii) Where the Proper Officer has reasons to believe that any person has evaded or is attempting to
evade the payment of any tax, Proper Officer, for reasons to be recorded in writing,
(a) may seize the accounts, registers or documents produced before him and

(b) shall grant a receipt for the same, and
(c) shall retain the same for so long as may be necessary in connection with any proceedings under
this Act or the rules made thereunder for prosecution.
Question 3: Search & Seizure

What powers can be exercised by an officer during valid search?
Solution:
As per Section 67 of CGST Act, 2017 read with Rule 140 and Rule 141 of CGST Rules, 2017
(i) An officer carrying out a search has the power to search for and seize
(a) Goods, which are liable to confiscation AND
(b) Documents / Books / Things, relevant for any proceedings under the Act from the premises
searched.
However, if it is not practicable to seize any such goods then the same may be detained.
(ii) During search, the officer has the power to
(a) break open the door of the premises authorized to be searched if access to the same is denied.
(b) break open any almirah or box if access to such almirah or box is denied and in which any
goods, account, registers or documents are suspected to be concealed.
(c) seal the premises if access to it denied.
(iii) The seized documents / books / things shall be retained ONLY till the time the same are required
for examination / enquiry / proceedings. If these are not relied on for the case, then the same shall
be returned within 30 days from the issuance of show cause notice.
Question 4: Summons
What are the duties of the person to whom summons has been issued? What are the consequences of
non-appearance to summons?
Solution:
As per Section 70 of CGST Act, 2017, Proper Officer shall have power to summon any person whose
attendance he considers necessary
(a) to give evidence or
(b) to produce a document or
(c) any other thing
in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the
Code of Civil Procedure, 1908.
A person who is issued summon is legally bound
(a) to attend either in person or by an authorized representative and
(b) to state the truth before the officer who has issued the summon upon any subject which is the
subject matter of examination and
(c) to produce such documents and other things as may be required.
Every such inquiry shall be deemed to be a “judicial proceedings” within the meaning of Section 193
and Section 228 of the Indian Penal Code (IPC).
(a) If a person does not appear on the date when summoned without any reasonable justification, he
can be prosecuted under Section 174 of the IPC.
(b) If he absconds to avoid service of summons, he can be prosecuted under Section 172 of the IPC
(c) If he does not produce the documents or electronic records required to be produced, he can be
prosecuted under Section 175 of the IPC.
(d) If he gives false evidence, he can be prosecuted under Section 193 of the IPC.
In addition, if a person does not appear before a CGST / SGST officer who has issued the summon, he
is liable to a penalty upto Rs.25,000 under Section 122(3)(d) of CGST Act.

Question 5: Arrest
What is meant by the term “arrest”? When can the proper officer authorize ‘arrest’ of any person under
CGST Act?
Solution:
The term ‘arrest’ has not been defined in the GST Act. However, as per judicial pronouncements, it
denotes ‘the taking into custody of a person under some lawful command or authority’. In other words,
a person is said to be arrested when he is taken and restrained of his liberty by power or colour of
lawful warrant.
As per Section 69 of CGST Act, 2017, where the Commissioner has reasons to believe that a person has
committed offences specified in Section 132(1)(a)/(b)/(c)/(d) which is punishable under Section
132(1)(i)/(ii) OR Section 132(2), he may, by order, authorize any officer to arrest such person. However,
essentially a person can be arrested only:
(a) where the tax evasion is more than Rs.2 crore
(b) repeat offender of the specified offences can be arrested irrespective of the tax amount involved in
the case.

DEMAND & RECOVERY

Question 1: Time Limit for SCN and Order
Discuss briefly the time limit for issue of show cause notice and adjudication order as contained under
Section 73 and Section 74 of the CGST Act, 2017.
Solution:
The provisions relating to ‘relevant date’ as contained in CGST Act, 2017 are as under:
(i) In case of Section 73 (cases other than fraud/suppression of facts/willful misstatement), the time-
limit for issuance of SCN is 2 years and 9 months from the due date of filing Annual Return for the
Financial Year to which the demand pertains or from the date of erroneous refund.
In case of section 73 (cases other than fraud/suppression of facts/willful misstatement), the time
limit for adjudication of cases is 3 years from the due date for filing of Annual Return for the
financial year to which demand relates to.
(ii) In case of Section 74 (cases involving fraud/suppression of facts/willful misstatement), the time-
limit for issuance of SCN is 4 years and 6 months from the due date of filing of Annual Return for
the Financial Year to which the demand pertains or from the date of erroneous refund.
In case of section 74 (cases of fraud/suppression of facts/willful misstatement), the time limit for
adjudication is 5 years from the due date for filing of Annual Return for the financial year to which
demand relates to.

Question 2: Time Limit for SCN and Order
Rajul has been issued a show cause notice (SCN) on 31.12.2021 under Section 73 (1) of the CGST Act,
2017 on account of short payment of tax during the period between 01.07.2017 and 31.12.2017. He has
been given an opportunity of personal hearing on 15.01.2022. Advice Rajul as to what should be the
written submission in the reply to the SCN issued to him.
Solution:
The written submissions in reply to SCN issued to Rajul are as follows:
(i) the show cause notice (SCN) issued for normal period of limited under Section 73 (1) of the CGST
Act, 2017 is not sustainable.
(ii) the SCN under Section 73(1) of the CGST Act, 2017 can be issued at least 3 months prior to the time
limit specified for issuance of order under Section 73(10) of the CGST Act, 2017. The adjudication
order under Section 73(10) of the CGST Act, 2017 has to be issued within 3 years from the due date
for furnishing of annual return for the financial year to which the short- paid tax relates to.
As per Section 44 of the CGST Act, 2017, the due date for furnishing annual return for a financial
year is on or before the 31st day of December following the end of such financial year. Thus, SCN
under Section 73 (1) of the CGST Act, 2017 can be issued within 2 years and 9 months from the due
date for furnishing of annual return for the financial year to which the short- paid tax relates to.
(iii) The SCN has been issued for the period between 01.07.2017 to 31.12.2017 which falls in the financial
year (FY) 2017-18. Due date for furnishing annual return for the FY 2017-18 is 31.12.2018 and 3 years
period from due date of filing annual return lapses on 31.12.2021. Thus, SCN under Section 73(1)
ought to have been issued latest by 30.09.2021.
(iv) Since the notice has been issued after 30.09.2021, the entire proceeding is barred by limitation and
deemed to be concluded under Section 75(10) of the CGST Act, 2017.
Question 3: Reduction of Penalty

Mr. Mallaya is chargeable with tax in case of fraud. He decides to pay the amount of demand along
with interest before issue of notice. Is there any immunity available to such person?
Solution:
Yes. As per Section 74, person chargeable with tax, shall have an option to pay the amount of tax along
with interest and penalty equal to 15% per cent of the tax involved, as ascertained either on his own or
ascertained by the proper officer, and on such payment, no notice shall be issued with respect to the
tax so paid.
Question 4: Payment of Surplus Amount

VN & Co. is entitled for exemption from tax under GST law. However, it collected tax from its buyers
worth Rs.1,00,000 in the month of October 2018. It has not deposited the said amount collected as GST
with the Government. You are required to brief to VN & Co. the consequences of collecting tax, but not
depositing the same with Government as provided under Section 76 of the CGST Act, 2017.
Solution:
As per Section 76 of CGST Act, 2017, it is mandatory to pay amount, collected from other person
representing tax under GST law, to the Government. Every person who has collected from any other
person any amount as representing the tax under GST law, and has not paid the said amount to the
Government, shall forthwith pay the said amount to the Government, irrespective of whether the
supplies in respect of which such amount was collected are taxable or not. For any such amount not so
paid, proper officer may issue SCN for recovery of such amount and penalty equivalent to amount
specified in notice.
The proper officer shall, after considering the representation, if any, made by the person on whom SCN
is served, determine the amount due from such person and thereupon such person shall pay the
amount so determined along with 100% penalty & interest at the rate specified under Section 50 from
the date such amount was collected by him to the date such amount is paid by him to the Government.
It should also be noted that there is no benefit of reduced penalty under Section 76 of CGST Act, 2017
unlike Section 73 and Section 74

Question 5: Payment of Surplus Amount
Subharti Enterprises collected GST on the goods supplied by it from its customers on the belief that
said supply is taxable. However, later it discovered that goods supplied by it are exempt from GST.
The accountant of Subharti Enterprises advised it that the amount mistakenly collected by Subharti
Enterprise representing as tax was not required to be deposited with Government. Subharti Enterprises
has approached you for seeking the advice on the same. You are required to advise it elaborating the
relevant provisions.
Solution:
The provisions of Section 76 of the CGST Act, 2017 make it mandatory on Subharti Enterprises to pay
amount collected from other representing tax under this Act, to the Government.
Section 76 of the CGST Act, 2017 stipulates that notwithstanding anything to the contrary contained in
any order or direction of any Appellate Authority or Appellate Tribunal or Court or in any other
provisions of the CGST act or the rules made thereunder or any other law for the time being in force,
every person who has collected from any other person any amount as representing the tax under this
Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the
Government, irrespective of whether the supplies in respect of which such amount was collected are
taxable or not.
Where any amount is required to be paid to the Government as mentioned above, and which has not
been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring
him to show cause as to why the said amount as specified in the notice, should not be paid by him to
the Government and why a penalty equivalent to the amount specified in the notice should not be
imposed on him under the provisions of this Act.
The proper officer shall, after considering the representation, if any, made by the person on whom show
cause notice (SCN) is served, determine the amount due from such person and thereupon such person
shall pay the amount so determined.
The person who has collected any amount as representing the tax, but not deposited the same with the
government shall in addition to paying the said amount determined by the proper officer shall also be
liable to pay interest thereon. Interest is payable at the rate specified under Section 50. Interest is payable
from the date such amount was collected by him to the date such amount is paid by him to the
Government.
The proper officer shall issue an order within 1 year [excluding the period of stay order] from the date
of issue of the notice. The proper officer, in his order, shall set out the relevant facts and the basis of his
decision.
Question 6: Modes of Recovery

Briefly discuss the modes of recovery of tax available to the proper officer.
Solution:
The proper officer may recover the dues in following manner:
(a) Deduction of dues from the amount owned by the tax authorities payable to such person.
(b) Recovery by way of detaining and selling any goods belonging to such person;
(c) Recovery from other person, from whom money is due or may become due to such person or who
holds or may subsequently hold money for or on account of such person, to pay to the credit of the
Central or a State Government;
(d) Distrain any movable or immovable property belonging to such person, until the amount payable
is paid. If the dues not paid within 30 days, the said property is to be sold and with the proceeds of
such sale the amount payable and cost of sale shall be recovered.
(e) Through the Collector of the district in which such person owns any property or resides or carries
on his business, as if it was an arrear of land revenue.
(f) By way of an application to the appropriate Magistrate who in turn shall proceed to recover the
amount as if it were a fine imposed by him.
(g) By enforcing the bond/instrument executed under this Act or any rules or regulations made
thereunder.
(h) CGST arrears can be recovered as an arrear of SGST and vice versa [Section 79].

LIABILITY TO PAY IN
CERTAIN CASES
Question 1: Liability in case of Sale of Business
DK Industries, a registered person under GST, has sold whole of its business to VK Industries.
Determine the person liable to pay GST, interest or any penalty under GST law [determined before sale,
but still unpaid] due from DK Industries upto the time of such transfer.
Solution:
Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in part, by
sale, gift, lease, leave and license, hire or in any other manner whatsoever, the taxable person and the
person to whom the business is so transferred shall, jointly and severally, be liable wholly or to the
extent of such transfer, to pay the tax, interest or any penalty due from the taxable person upto the time
of such transfer, whether such tax, interest or penalty has been determined before such transfer, but
has remained unpaid or is determined thereafter.
Thus, in the given case, DK Industries and VK Industries shall, jointly and severally, be liable wholly
or to the extent of such transfer, to pay GST, interest or any penalty [determined before sale, but still
unpaid] due from DK Industries upto the time of such transfer.
Question 2: Liability in case of Principal-Agent

AJ Ltd. engages RJ & Co. as an agent to sell goods on its behalf. RJ & Co. sells goods to DS Ltd. on behalf
of AJ Ltd. Determine the liability to pay GST payable on such goods as per the provisions of Section 89
of the CGST Act.
Solution:
Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his
principal shall, jointly and severally, be liable to pay the tax payable on such goods under this Act.
Thus, in the given case, AJ Ltd. and RJ & Sons shall, jointly and severally, be liable to pay GST payable
on such goods

Question 3: Liability in case of Amalgamation / Demerger
Discuss the liability to pay in case of an amalgamation / merger under Section 87 of the CGST Act, 2017.
Solution:
Section 87 of the CGST Act, 2017 stipulates that when two or more companies are amalgamated or
merged in pursuance of an order of court or to Tribunal or otherwise and the order is to take effect from
a date earlier to the date of the order and any two or more of such companies have supplied or received
any goods or services or both to or from each other during the period commencing on the date from
which the order takes effect till the date of the order, then such transactions of supply and receipt shall
be included in the turnover of supply or receipt of the respective companies and they shall be liable to
pay tax accordingly.
Notwithstanding anything contained in the said order, for the purposes of the CGST Act, 2017, the said
two or more companies shall be treated as distinct companies for the period up to the date of the said
order. The registration certificates of the said companies shall be cancelled with effect from the date of
the said order

Question 4: Liability of Court of Wards
What happens to the GST liability when the estate of a taxable person is under the control of Court of
Wards?
Solution:
Where the estate of a taxable person owning a business in respect of which any tax, interest or penalty
is payable is under the control of the Court of Wards/Administrator General/Official Trustee/Receiver
or Manager appointed under any order of a Court, the tax, interest or penalty shall be levied and
recoverable from such Court of Wards/Administrator General/Official Trustee/Receiver or Manager to
the same extent as it would be determined and recoverable from a taxable person.
Question 5: Liability in case of Death

A person, liable to pay GST, interest and penalty under GST law, dies. Determine the person liable to
pay the GST, interest and penalty due from such person under GST law determined after his death if
the business carried on by such person is continued after his death by his legal representative.
Would your answer be different if the business carried on by the person who has died, is discontinued
after his death.
Solution:
Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person, liable to pay
tax, interest or penalty under this Act, dies, then if a business carried on by the person is continued after
his death by his legal representative or any other person, such legal representative or other person,
shall be liable to pay tax, interest or penalty due from such person under this Act, whether such tax,
interest or penalty has been determined before his death but has remained unpaid or is determined
after his death.
Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person, liable to pay
tax, interest or penalty under this Act, dies, then if a business carried on by the person is discontinued,
whether before or after his death, his legal representative shall be liable to pay, out of the estate of the
deceased, to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty
due from such person under this Act, whether such tax, interest or penalty has been determined before
his death but has remained unpaid or is determined after his death.

REFUND
Question 1: Refund of Unutilized ITC
With reference to section 54 (3) of the CGST Act, 2017, mention the cases where refund of unutilised
input tax credit is allowed.
Solution:
As per Section 54(3) of the CGST Act, 2017, a registered person may claim refund of unutilised input
tax credit at the end of any tax period in the following cases:
(i) Zero Rated Supplies: Supply of goods/services/both to an SEZ developer/ unit or export of goods
or services or both. However, refund of unutilized input tax credit shall not be allowed if:
(a) the goods exported out of India are subjected to export duty
(b) the supplier of goods or services or both claims refund of the IGST paid on such supplies.
(ii) Accumulated ITC on account of Inverted Duty Structure: Where the credit has accumulated on
account of rate of tax on inputs being higher than the rate of tax on output suppliers (other than nil
rated or fully exempt suppliers), except suppliers of goods or services or both as may be notified
by the Government on the recommendations of the Council.
Question 2: Refund of Unutilized ITC

(i) DiKi ViKi & Co. wishes to claim refund of ITC accumulated on account of inverted duty structure.
Can it do so? If yes, specify the time-limit within which the refund can be claimed by DiKi ViKi &
Co. as provided under the CGST Act.
(ii) Whether your answer will be the same if the accumulated ITC is on account of higher rate of tax on
input services than rate of tax on outward supply of goods or services.
Note: Output supplies of DiKi ViKi & Co. are not nil rated/fully exempt supplies.
Solution:
(i) As per Section 54(3), where the credit has accumulated on account of rate of tax on inputs being
higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except
supplies of goods or services or both as may be notified by the Government on the
recommendations of the Council, refund of the unutilized ITC is allowed. Thus, in the given case,
DiKi ViKi & Co. is entitled to refund.
Further, a person claiming refund is required to file an application before the expiry of 2 years from
the relevant date. The term relevant date as explained in the Explanation to Section 54 of the CGST
Act, inter alia, stipulates that in case of refund of unutilized ITC on account of inverted duty
structure is relevant date is due-date for filing return under Section 39 for period in which such
claim of refund arises.
(ii) In case, accumulated ITC is on account of higher rate of tax on input services than rate of tax on
outward supply of goods or services, then refund of accumulated ITC is not allowed as per Section
54(3) as this provision covers refund for inverted duty structure only if the rate of tax of inputs (and
not that of input services) is higher than rate of tax on outward supplies of goods or services.
Question 3: Refund of Tax Paid on Notified Inward Supplies

List the persons entitled to refund under Section 55 of the CGST Act, 2017.
Solution:

As per Section 55 of the CGST Act, 2017, Government may, on the recommendation of the Council, by
notification, specify:
(i) Any specialized agency of the United Nation Organization; or
(ii) Any Multinational Financial Institution and Organization notified under the United Nations
(Privileges and Immunities) Act, 1947; or
(iii) Consulate or Embassy of Foreign Countries; and
(iv) Any other person or class of persons as may be specified in this behalf,
NN 6/2017-CT (Rate) & NN 6/2017-IT (Rate): Canteen Stores Department under Ministry of
Defense is notified to claim a refund of 50% CGST / 50% IGST paid by it on all inward supplies of
goods received by it for the purposes of subsequent supply of such goods
(a) TO Unit Run Canteens of Canteen Stores Department OR
(b) TO authorized customers of the Canteen Stores Department
who shall subject to such conditions and restrictions as may be prescribed, be entitled to claim a refund
of taxes paid on the notified inward supplies of goods or services or both received by them.
Question 4: Refund of Advance Tax deposited by CTP or NRTP

Discuss the provisions relating to refund of the amount of advance tax deposited by a casual taxable
person or non-resident taxable person under Section 27(2) of the CGST Act, 2017.
Solution:
As per Section 54(13) of the CGST Act, 2017, the amount of advance tax deposited by a casual taxable
person or non-resident taxable person under Section 27(2), shall be refunded only when such person
has, in respect of the entire period for which the certificate of registration granted for him had remained
in force, furnished all the returns required under Section 39.
Further, as per fourth proviso to Rule 89(1) of the CGST Rules, 2017, refund of any amount, after
adjusting the tax payable by the applicant out of the advance tax deposited by him under Section 27 at
the time of registration, shall be claimed in the last return required to be furnished by him.
Question 5: Refund of Wrong Tax Paid

A taxable person has mistakenly paid CGST and SGST for an inter-State supply. Subsequently, when
he discovers the same, can he adjust the IGST liability against the wrongly paid CGST and SGST?
Solution:
Section 77, inter alia, stipulates that a registered person who has paid the Central Tax and State Tax /
Union Territory Tax on a transaction considered by him to be an Intra-State Supply, but which is
subsequently held to be an Inter-State Supply, shall be refunded the amount of taxes so paid in such
manner and subject to such conditions as may be prescribed.
The IGST liability cannot be adjusted against the CGST and SGST wrongly paid. First, the taxable
person should pay IGST liability and thereafter claim refund of wrongly paid CGST and SGST.
However, the taxable person is not required to pay interest on IGST liability.
Question 6: Doctrine of Unjust Enrichment

(i) Explain the concept of Doctrine of Unjust Enrichment.
(ii) State the exceptions to the principle of unjust enrichment as applicable to refund claims.
Solution:
(i) Amount of refund is generally credited to the Consumer Welfare Fund assuming that the incidence
of tax has been passed by the supplier to the recipient. This is based on Doctrine of Unjust
Enrichment (DOUE).
DOUE implies one cannot become rich at the cost of the other person i.e. Refund can’t be given to
applicant if he had passed on duty incidence to other person. It shall be presumed that payer of
GST has passed on FULL incidence of GST to recipient. However, it is rebuttable presumption (i.e.
it can be challenged).
(ii) The principle of unjust enrichment is applicable in all cases of refund except in following cases:-
(a) Refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input
services used in making such zero-rated supplies.
(b) Unutilized input tax credit in respect of 1. Zero Rated Supplies without payment of tax or; 2.
Where the credit has accumulated on account of rate of tax on inputs being higher that the rate
of tax on output supplies
(c) Refund of tax paid on a supply which is not provided, either wholly or partially, and for which
invoice has not been issued.
(d) Refund of tax in pursuance of Section 77 of CGST/SGST Act i.e. tax wrongfully collected and
paid to Central Government or State Government.
(e) If the incidence of tax or interest paid has not been passed on to any other person.
(f) Such other class of persons who has borne the incidence of tax as the Government may notify.

Question 7: Refund of Unutilized ITC on account of Inverted Duty Structure
Super Engineering Works, a registered supplier in Haryana, is engaged in supply of taxable goods
within the State. Given below are the details of the turnover and applicable GST rates of the final
products manufactured by Super Engineering Works as also the input tax credit (ITC) availed on inputs
used in manufacture of each of the final products and GST rates applicable on the same, during a tax
period.
Products Turnover * (Rs.) Output GST Rates ITC availed (Rs.) Input GST Rates
A 500,000 5% 54,000 18%
B 350,000 5% 54,000 18%
C 100,000 18% 10,000 18%
*excluding GST
Determine the maximum amount of refund of the unutilized input tax credit that Super Engineering
Works is eligible to claim under Section 54(3)(ii) of the CGST Act, 2017 provided that Product B is
notified as a product, in respect of which no refund of unutilized input tax credit shall be allowed under
said section.
Solution:
Section 54(3)(ii) of the CGST Act, 2017 allows refund of unutilized input tax credit (ITC) at the ned of
any tax period to a registered person where the credit has accumulated on account of inverted duty
structure i.e. rate of tax on inputs being higher than the rate of tax on output supplies (other than nil
rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the
Government on the recommendations of the Council.
In the given case, the rates of tax on inputs used in Products A and B (18% each) are higher than rates
of tax on output supplies of Products A and B (5% each). However, Product B is notified as a product,
in respect of which no refund of unutilized ITC shall be allowed under Section 54(3)(ii) of the CGST
Act, 2017. Therefore, only Product A is eligible for refund under section 54(3)(ii).
Computation of Maximum Refund of ITC in respect of Inverted Duty Structure as per Rule 89(5)
(i) Net ITC = Input tax credit availed on inputs = Rs.54,000 + Rs.54,000 + 1,18,000
Rs.10,000
Note: Net ITC availed during the relevant periods needs to be considered
irrespective of whether the ITC pertains to inputs eligible for refund of
inverted rated supply of goods or not.
(ii) Turnover of Inverted Rated Supply of Goods & Services = Rs.5,00,000 5,00,000

(iii) Adjusted Total Turnover = Aggregate turnover of goods and services in a 9,50,000
State excluding the value of exempt supplies but including Zero-Rated
Supplies = Rs.5,00,000 + Rs.3,50,000 + Rs.1,00,000
(iv) Tax payable on Inverted Rated Supply of Goods & Services (Product A) = 25,000
Rs.5,00,000 * 5%
(v) Maximum Refund = [(i) * (ii) / (iii)] – (iv) 37,105
Question 8: Refund of Unutilized ITC on account of Inverted Duty Structure

From the following information you are required to determine the maximum amount of refund
admissible on account of inverted duty structure.
Input tax credit availed on inputs (taxable @ 18%) 7,00,000
Input tax credit availed on input services 60,000
Turnover of inverted rated supply of goods (taxable @ 5%) 50,00,000
Turnover of other supplies of goods 20,00,000
Solution:
Computation of Maximum Refund of ITC in respect of Inverted Duty Structure as per Rule 89(5)
(i) Net ITC = Input tax credit availed on inputs 7,00,000
(ii) Turnover of Inverted Rated Supply of Goods & Services = Rs.50,00,000 50,00,000
(iii) Adjusted Total Turnover = Aggregate turnover of goods and services in a 70,00,000
State excluding the value of exempt supplies but including Zero-Rated
Supplies = Rs.50,00,000 + Rs.20,00,000
(iv) Tax payable on Inverted Rated Supply of Goods & Services = Rs.50,00,000 2,50,000
* 5%
(v) Maximum Refund = [(i) * (ii) / (iii)] – (iv) 2,50,000
Question 9: Refund of Unutilized ITC on account of Zero Rated Supplies

Kaala Exporters Ltd. furnishes following information and requests you to compute the maximum
refund eligible in respect of zero-rated supplies for the relevant period:
Input tax credit availed on inputs 3,00,000
Input tax credit availed on input services 1,50,000
Input tax credit availed on capital goods 2,50,000
Taxable value of goods exported without payment of tax 25,00,000
Taxable value of goods supplied within India 50,00,000
Payments received towards services supplied for exports (includes Rs.1,00,000 6,00,000
of advance towards services to be exported after the current relevant period)
Taxable value of services supplied within India 10,00,000
Solution:
Computation of Maximum Refund of ITC in respect of Zero-Rated Supplies as per Rule 89
(i) Net ITC = Input tax credit availed on inputs and input services = Rs.3,00,000 4,50,000
+ Rs.1,50,000
(ii) Turnover of Zero-Rated Supply of Goods = Value of zero-rated supply of 25,00,000
goods without payment of tax under bond or letter of undertaking =
Rs.25,00,000

(iii) Turnover of Zero-Rated Supply of Services = Payment received for zero- 5,00,000
rated supply of services – Advances received for zero-rated supply of
services for which supply has not been completed = Rs.6,00,000 – Rs.1,00,000
(iv) Adjusted Total Turnover = Aggregate turnover of goods and services in a 90,00,000
State including Zero-Rate Supplies (as computed above) = Rs.50,00,000 +
Rs.10,00,000 + Rs.25,00,000 + Rs.5,00,000
(v) Maximum Refund = [(ii) + (iii)] * (i) / (iv) 1,50,000

Kaala Exporters Ltd. furnishes following information and requests you to compute the maximum
refund eligible in respect of zero-rated supplies for the relevant period:
Input tax credit availed on inputs (including ITC availed for which refund is 3,00,000
claimed under Rule 89(4A) – Rs.50,000)
Input tax credit availed on input services 1,50,000
Input tax credit availed on capital goods 2,50,000
Taxable value of goods exported without payment of tax 25,00,000
Taxable value of goods exported on payment of tax 10,00,000
Taxable value of goods exported under Rule 89(4A) 4,00,000
Taxable value of goods supplied within India 50,00,000
Payments received towards services supplied for exports (includes Rs.1,00,000 6,00,000
of advance towards services to be exported after the current relevant period)
Taxable value of services supplied within India 10,00,000
Solution:
(i) Net ITC = Input tax credit availed on inputs and input services other that 4,00,000
ITC for which refund is claimed under Rule 89(4A) = Rs.3,00,000 – Rs.50,000
+ Rs.1,50,000
(ii) Turnover of Zero-Rated Supply of Goods = Value of zero-rated supply of 25,00,000
goods without payment of tax under bond or letter of undertaking =
Rs.25,00,000
(iii) Turnover of Zero-Rated Supply of Services = Payment received for zero- 5,00,000
rated supply of services – Advances received for zero-rated supply of
services for which supply has not been completed = Rs.6,00,000 – Rs.1,00,000
(iv) Adjusted Total Turnover = Aggregate turnover of goods and services in a 1,00,00,000
State including Zero-Rate Supplies (as computed above) = Rs.50,00,000 +
Rs.10,00,000 + + Rs.10,00,000 + Rs.25,00,000 + Rs.5,00,000
(v) Maximum Refund = [(ii) + (iii)] * (i) / (iv) 1,20,000

DK Ltd. manufactures 100 units of a product whose value is Rs.25,000 per piece. SGST and CGST
payable is 9% each. Input tax credit on inputs and input services is Rs.1,00,000 each of CGST and SGST.
DK Ltd. exports 75 pieces under LUT and sells 25 pieces in India. Determine refund.
Solution:

(i) Net ITC = Input tax credit availed on inputs and input 1,00,000 1,00,000
services
(ii) Turnover of Zero-Rated Supply of Goods = Value of zero- 18,75,000 18,75,000
rated supply of goods without payment of tax under letter of
undertaking = Rs.25,000 / piece * 75 pieces
(iii) Adjusted Total Turnover = Aggregate turnover of goods in a 25,00,000 25,00,000
State including Zero-Rate Supplies (as computed above) =
Rs.25,000 / piece * 100 pieces
(iv) Maximum Refund = (i) * (ii) / (iii) 75,000 75,000
Computation of Unutilized ITC after utilization for Gross GST Payable

(i) Gross Tax Payable
➔ Domestic Sales = (Rs.25,000 / piece * 25 pieces) * 9% each 56,250 56,250
➔ Export Sales under LUT = 0 0 0
(ii) Input Tax Credit 1,00,000 1,00,000
(iii) Unutilized ITC after utilization of ITC for Gross Tax 43,750 43,750
Payable = (ii) – (i)
Refund of unutilized ITC is lower of

(a) Refund of ITC in respect of Zero-Rated Supplies as per Rule 89 of CGST Rules, 2017 or
(b) Unutilized ITC after utilization for Gross GST Payable (i.e. Balance in Electronic Credit Ledger)
i.e. Refund will be CGST - Rs.43,750 and SGST - Rs.43,750. And after the refund application will be
made, balance in Electronic Credit Ledger will be 0 in this case.

Ascertain whether the refund of GST paid on input services can be claimed in the following case:
(1) Input tax credit on input services during relevant period – Rs.50,000
(2) Total turnover of output services during relevant period – Rs.1,00,000
(3) Output service exported under LUT without payment of IGST during relevant period – Rs.2,00,000
(Payment of Rs.50,000 is not received for the service exported during relevant period and payment
of Rs.10,000 received in relevant period for the service exported during previous period)
(4) Rate of GST – 18%
Solution:
(i) Net ITC = Input tax credit availed on input services during relevant period 50,000
(ii) Turnover of Zero-Rated Supply of Services = Zero-rated supply of services 1,60,000
– Services exported during relevant period but payment not received in
relevant period + Services exported during previous period but payment in
relevant period = Rs.2,00,000 – Rs.50,000 + Rs.10,000
(iii) Adjusted Total Turnover = Aggregate turnover of services in a State 2,60,000
including Zero-Rate Supplies (as computed above) during relevant period =
Rs.1,00,000 + Rs.1,60,000
(iv) Maximum Refund = (i) * (ii) / (iii) 30,769
Computation of Unutilized ITC after utilization for Gross GST Payable

(i) Gross Tax Payable

➔ Domestic Services = Rs.1,00,000 * 18% 18,000
➔ Export Services under LUT = 0 0
(ii) Input Tax Credit 50,000
(iii) Unutilized ITC after utilization of ITC for Gross Tax Payable = (ii) – (i) 32,000
Refund of unutilized ITC is lower of

(a) Refund of ITC in respect of Zero-Rated Supplies as per Rule 89 of CGST Rules, 2017 or
(b) Unutilized ITC after utilization for Gross GST Payable (i.e. Balance in Electronic Credit Ledger)
i.e. Refund will be Rs.30,769. And after the refund application will be made, balance in Electronic Credit
Ledger will be Rs.1,231 (Rs.32,000 – Rs.30,769) in this case.
Question 13: Interest on Delayed Refund

PK & Co. filed an application for refund of tax amounting Rs.10,00,000 on 01-01-2019. The refund was
granted on 04-04-2019. Compute the amount of interest, if any, payable to PK & Co. as per provisions
of Section 56 of the CGST Act, 2017.
Solution:
If any tax ordered to be refunded under Section 54(5) to any applicant, and such tax is not refunded
within 60 days from the date of receipt of application under Section 54(1), interest at 6% p.a. shall be
payable in respect of such refund from the date immediately after the expiry of 60 days of receipt of
application till the date of refund of such tax.
Computation of Interest on Delayed Refund
(i) Amount of Refund Rs.10,00,000
(ii) Period = 61 day from the date of refund application till date of refund i.e. 03-
st 33 days
03-2019 to 04-04-2019
(iii) Rate of Interest 6% p.a.
(iv) Interest on Delayed Refund = [(i) * (ii) * (iii)] / 365 Rs.5,425

ADVANCE RULING
Question 1: Advance Ruling
Ranjan intends to start selling certain goods in Delhi. However, he is not able to determine (i) the
classification of the goods proposed to be supplied by him (as the classification of said goods has been
contentious) and (ii) the place of supply if he supplies said goods from Delhi to buyer in U. S.
Ranjan’s tax advisor has advised him to apply for the advance ruling in respect of these issues. He told
Ranjan that the advance ruling would bring him certainty and transparency in respect of the said issues
and would avoid litigation later. Ranjan agreed with his view, but has some apprehensions.
In view of the information given above, you are required to advise Ranjan with respect of following:
(i) the tax advisor asks Ranjan to get registered under GST law before applying for the advance ruling
as only a registered person can apply for the same. Whether Ranjan needs to get registered?
(ii) Can Ranjan seek advance ruling to determine (a) the classification of the goods proposed to be
supplied by him and (b) the place of supply, if he supplies said goods from Delhi to buyers in U.
S.?
(iii) Ranjan is apprehensive that if at all advance ruling is permitted to be sought, he has to seek it every
year. Whether Ranjan’s apprehension is correct?
(iv) The tax advisor is of the view that the order of Authority for Advance Ruling (AAR) is final and is
not appealable. Whether the tax advisor’s view is correct?
(v) Sambhav- Ranjan’s friend is a supplier registered in Delhi. He is engaged in supply of the goods,
which Ranjan proposes to supply at the same commercial level that Ranjan proposes to adopt.
He intends to apply the classification of the goods as decided in the advance ruling order to be
obtained by Ranjan, to the goods supplied by him in Delhi. Whether Sambhav can do so?
Solution:
(i) As per Section 95 (c) of the CGST Act, 2017, advance ruling under GST can be sought by a registered
person or a person desirous of obtaining registration under GST law. Therefore, it is not mandatory
for a person seeking advance ruling to be registered.
(ii) Section 97 (2) of the CGST Act, 2017 stipulates the questions/matters on which advance ruling can
be sought. It provides that advance ruling can be sought for, inter alia, determining the
classification of any goods or services or both. Therefore, Ranjan can seek the advance ruling for
determining the classification of the goods proposed to be supplied by him.
Determination of place of supply is not one of the specified questions/matters on which advance
ruling can be sought under Section 97 (2). Further, Section 96 of the CGST Act, 2017 provides that
AAR constituted under the provisions of an SGSTR Act/ UTGST Act shall be deemed to be the AAR
in respect of that State/ Union territory under CGST Act also.
Thus, AAR is constituted under the respective State/ Union Territory Act and not the central Act.
This implies that ruling given by AAR will be applicable only within the jurisdiction of the
concerned State/ Union territory. It is also for this reason that the questions on determination of
place of supply cannot be raised with the AAR. Hence, Ranjan cannot seek the advance ruling for
determining the place of supply of the goods proposed to be supplied by him.
Note: The above answer is based on the view taken by the CBEC in its e-flier issued on the subject
of advance ruling. The e-flier is available on the CBEC’s website. However, it can be also be argued
that the question relating to determination of the liability to pay tax on goods and/or services as
provided under Section 96 (2) (e) of the CGST Act, 2017 encompasses within its ambit the question
relating to place of supply. This is so because place of supply is one of the factor to determine as to
whether the supply is leviable to CGST & SGST or IGST.

(iii) Section 103 (2) of the CGST Act, 2017 stipulates that the advance ruling shall be binding unless the
law, facts or circumstances supporting the original advance ruling have changed. Therefore, once
Ranjan has sought the advance ruling with respect to an eligible matter/question, it will be binding
till the time the law, facts and circumstances supporting the original advance ruling remain same.
(iv) No, the tax advisor’s view is not correct. As per Section 100 of the CGST Act, 2017, if the applicant
is aggrieved with the finding of the AAR, he can file an appeal with Appellate Authority for
Advance Ruling (AAAR). Similarly, if the concerned/ jurisdictional officer of CGST/SGST does not
agree with the findings of AAR, he can also file an appeal with AAAR.
Such appeal must be filed within 30 days from the receipt of the advance ruling. The Appellate
Authority may allow additional 30 days for filing the appeal, if it is satisfied that there was a
sufficient cause for delay in presenting the appeal.
(v) Section 103 of the CGST Act provides that an advance ruling pronounced by AAR is binding only
on the applicant who had sought it and on the concerned officer or the jurisdictional officer in
respect of the applicant. This implies that an advance ruling is not applicable to similarly placed
other taxable persons in the State. It is only limited to the person who has applied for an advance
ruling.
Thus, Sambhav will not be able to apply the classification of the goods that will be decided in the
advance ruling order to be obtained by Ranjan, to the goods supplied by him in Delhi.

APPEALS & REVISION

Question 1: Appeals to Appellate Authority by Assessee
Does CGST law provide for any appeal to a person aggrieved by any order or decision passed against
him by an adjudicating authority under the CGST Act? Explain the related provisions under the CGST
Act.
Solution:
Yes. Any person aggrieved by any order or decision passed by an adjudicating authority under the
CGST Act has the right to appeal to the Appellate Authority under Section 107. The appeal should be
filed within 3 months from the date of communication of such order or decision. However, the
Appellate Authority has the power to condone the delay of up to 1 month in filing the appeal if there
is sufficient cause for the delay. The appeal can be filed only when the admitted liability and 10% of the
disputed tax amount is paid as pre-deposit by the appellant.
However, no appeal can be filed against the following orders in terms of Section 121:
(a) an order of the Commissioner or other authority empowered to direct transfer of proceedings from
one officer to another officer;
(b) an order pertaining to the seizure or retention of books of account, register and other documents;
(c) an order sanctioning prosecution under the Act;
(d) an order passed under Section 80 (payment of tax in installments).
Question 2: Appeals to Appellate Authority by Assessee

An assessee received an order of the Assistant Commissioner of CGST dated 20-10-2018 in relation to
adjudication of a demand on 26-10-2018. However, he was aggrieved by the said order, hence he filed
an appeal to Appellate Authority (AA) on 25-01-2019. The AA, in response, rejected the appeal as he
was of the opinion that it was time barred. Discuss.
Solution:
Section 107 of the CGST Act, 2017 provides that an assessee aggrieved by the order of adjusting
authority may appeal to the Commissioner (Appeals) within 3 months from the date of the
communications to him of such decision or order.
In the given case, the assessee received the order of Assistant commissioner on 26-10-2018, hence he
could file the appeal to Commissioner (Appeal) within 3 months from the said date which expires on
25-01-2019. Therefore, the assessee has made the appeal within time and the opinion of the
Commissioner (Appeal) is not tenable.
Question 3: Appeals to Appellate Authority by Department

Describe the provisions relating to Departmental appeal to Appellate Authority under Section 107 of
the CGST Act.
Solution:
Section 107(2) provides that Department can file a review application / appeal with the Appellate
Authority. The Commissioner may, on his own motion, or upon request from the SGST/UTGST
Commissioner, examine the record of any proceedings in which an adjudicating authority has passed
any decision/order to satisfy himself as to the legality or propriety of the said decision/order.
The Commissioner may, by order, direct any officer subordinate to him to apply to the Appellate
Authority within 6 months from the date of communication of the said decision/order for the
determination of such points arising out of the said decision/order as may be specified him.

The AA can condone the delay in filing of appeal by 1 month if it is satisfied that there was sufficient
cause for such delay [Section 107(4)].
Such application shall be dealt with by the AA as if it were an appeal made against the decision/order
of the adjudicating authority [Section 107(3)]. There is no requirement of making a pre-deposit in case
of departmental appeal.

Question 4: Revisional Authority
With reference to Section 108 of the CGST Act, 2017 elaborate whether a CGST/SGST authority can
revise an order passed by his subordinates.
Solution:
Section 2(99) of the CGST Act, 2017 defines “Revisional Authority” as an authority appointed under
the CGST Act for decision or orders referred to in Section 108 of the CGST Act, 2017.
Section 108 of the CGST Act, 2017 authorizes such “Revisional authority” to call for and examine any
order passed by his subordinates and in case he considers the order of the lower authority to be
erroneous in so far as it is prejudicial to revenue and is illegal or improper or has not taken into account
certain material facts, whether available at the time of issuance of the said order or not or in
consequence of an observation by the Comptroller and Auditor General of India, he may, if necessary,
can revise the order after giving opportunity of being heard to the noticee. The “Revisional Authority”
can also stay the operation of any order passed by his subordinates pending such revision.
The “Revisional Authority” shall not revise any order if-
(a) the order has been subject to an appeal under Section 107 (AA) or under Section 112 (GSTAT) or
under Section 117 (HC) or under Section 118 (SC); or
(b) the period specified under Section 107(2) has not yet expired or more than three years have expired
after the passing of the decision or order sought to be revised.
(c) The order has already been taken up for revision under this section at any earlier stage.
(d) The order is a revisional order.
Question 5: Appeal to Appellate Tribunal

The Appellate Tribunal has the discretion to refuse to admit any appeal. Examine the correctness of the
above statement
Solution:
The statement is partially correct.
Though the Appellate Tribunal does have the power to refuse to admit an appeal, it cannot refuse to
admit ANY appeal. It can refuse to admit an appeal where –
(a) the tax or input tax credit involved or
(b) the difference in tax or the difference in input tax credit involved or
(c) the amount of fine, fees or penalty determined by such order, does not exceed Rs.50,000.

Question 6: Appeals to Appellate Tribunal
Mr. A had filed an appeal before the Appellate Tribunal against an order of the Appellate Authority
where the issue involved related to place of supply. The order of Appellate Tribunal is also in favour
of the Department. Mr. A now wants to file an appeal against the decision of the Appellate Authority
as he feels the stand taken by him is correct.
You are required to advise him suitably with regard to filing of an appeal before the appellate forum
higher than the Appellate Tribunal.
Solution:
As per Section 17 (1) of the CGST Act, 2017, and appeal against orders passed by the State Bench or
Area Benches of the Tribunal lies to the High Court if the High Court is satisfied that such an appeal
involves a substantial question of law.
However, appeal against orders passed by the National Bench or Regional Benches of the Tribunal lies
to the Supreme Court and not High Court. As per Section 109 (5) of the Act, only the National Bench or
Regional Benches of the Tribunal can decide the appeals where one of the issued involved relates to the
place of supply.
Since the issue involved in Mr. A’ s case relates to place of supply, the appeal in his case would have
been decided by the National Bench or Regional Bench of the Tribunal. Thus, Mr. A will have to file an
appeal with the Supreme Court and not with the High Court.
Question 7: Computation of Pre-Deposit

Specify the amount of mandatory pre-deposit which should be made along with every appeal before
the Appellate Authority and the Appellate Tribunal. Does making the pre-deposit have any impact on
recovery proceedings?
Solution:
Section 107(6) provides that no appeal shall be filed before the Appellate Authority, unless the appellant
has paid –
(a) full amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted
by him; and
(b) a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned order
subject to maximum of CGST – Rs.25 Crores OR SGST – Rs.25 Crores OR IGST Rs.50 Crores.
Section 112(8) lays down that no appeal can be filed before the Tribunal, unless the appellant deposits
(a) full amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted
by him; and
(b) 20% of the remaining amount of tax in dispute subject to maximum of CGST – Rs.50 Crores OR
SGST – Rs.50 Crores OR IGST Rs.100 Crores, in addition to the amount deposited before the AA,
arising from the said order, in relation to which appeal has been filed.
Where the appellant has made the pre-deposit, the recovery proceedings for the balance amount shall
be deemed to be stayed till the disposal of the appeal.

An order has been issued to M/s. CAJ & Sons in which the Adjudicating Authority has confirmed a tax
demand of Rs.25,00,000 and imposed a penalty of equal amount under Section 122 of the CGST Act,
2017.
M/s. CAJ & Sons intends to file an appeal with the Appellate Authority against the said adjudication
order. Compute the quantum of pre-deposit required to be made by M/s. CAJ & Sons for filing the
appeal with the Appellate Authority.
Solution:
According to Section 107(6) of the CGST Act, 2017, no appeal shall be filed to the Appellate Authority,
unless the appellant has paid
(a) In full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned
order, as in admitted by him; and
(b) A sum equal to 10% of the remaining amount of tax in dispute arising from the said order in relation
to which the appeal has been filed, subject to maximum of CGST – Rs.25 Crores OR SGST – Rs.25
Crores OR IGST Rs.50 Crores.

Therefore, in the given case, though both duty and penalty are in dispute, quantum of pre-deposit will
be 10% of only the disputed tax amount i.e., 10% of Rs.25,00,000 which is Rs.2,50,000.

Compute the quantum of pre-deposit required to be made under section 107 of the CGST Act, 2017 in
each of the following independent cases:
(a) In an order dated 18-10-2018 issued to M/s. RM Ltd., the Joint Commissioner of Central Tax has
confirmed a tax demand of IGST – Rs.500 Crores. M/s. RM Ltd. has admitted Rs.50 Crores as tax
liability and intends to file an appeal with the Appellate Authority against tax demand of Rs.450
Crores.
(b) In an order dated 18-10-2018 issued to M/s. KS Ltd., the Appellate Authority has confirmed a tax
demand of CGST – Rs.550 Crores and imposed a penalty of Rs.50 Crores. M/s. KS Ltd. intends to
file an appeal with the Appellate Authority against the said order.
Solution:
(a) Section 107(6) of the CGST Act, 2017 require an appellant before Appellate Authority to pre-deposit
full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned
order and a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned
order subject to maximum of CGST – Rs.25 Crores OR SGST – Rs.25 Crores OR IGST Rs.50 Crores.
Thus, RM Ltd. has to following pre-deposit:
Pre-Deposit = 100% of Rs.50 Crores (Admitted Tax) + 10% of Rs.450 Crores subject to a maximum
of Rs.50 Crores (Disputed Tax – IGST) = Rs.95 Crores.
(b) Section 112(8) of the CGST Act, 2017 require an appellant before Appellate Tribunal to pre-deposit
full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned
order and a sum equal to 20% of the remaining amount of tax in dispute arising from the impugned
order subject to maximum of CGST – Rs.50 Crores OR SGST – Rs.50 Crores OR IGST Rs.100 Crores.
Thus, KS Ltd. has to following pre-deposit:
Pre-Deposit = 100% of Rs.0 (Admitted Tax) + 20% of Rs.550 Crores subject to a maximum of Rs.50
Crores (Disputed Tax – CGST) = Rs.50 Crores.
Question 10: Computation of Interest on Pre-Deposit

Raghu & Co. deposits the required amount of Rs.5,00,000 as pre-deposit on 01-06-2018 and files an
appeal before the Appellate Tribunal. The said appeal is decided in favor of Raghu & Co. on 30-09-2018.
Raghu & Co. forwards a letter seeking refund of pre-deposit on 10-10-2018 and the same was refunded
on 31-12-2018. Explain whether Raghu & Co. is entitled to payment of interest and compute the amount
of interest payable on refund of such pre-deposit.
Solution:
As per Section 115 of CGST Act, 2017, where an amount paid by the appellant as pre deposit is required
to be refunded consequent to any order of the Appellate Authority or of the Appellate Tribunal, interest
@ 6% p.a. shall be payable in respect of such refund from the date of payment of the amount till the
date of refund of such amount as per Section 54.
(i) Amount of Pre-Deposit Rs.5,00,000
(ii) Period = Date of payment till date of refund i.e. 01-06-2018 to 31-12-2018 213 days
Question 11: Computation of Interest on Pre-Deposit

M/s. SG Associates deposits Rs.8,00,000 as pre-deposit on 15-10-2018 and files an appeal with CESTAT
(Appellate Authority). CESTAT decides the appeal in favor of M/s. SG Associates on 25-12-2018. M/s.
SG Associates submits a letter seeking refund of the pre-deposit on 30-01-2019. The pre-deposit is
refunded to M/s. SG Associates on 28-02-2019. Compute the amount of interest payable on refund of
such pre-deposit, if any.
Solution:
Section 115 of CGST Act, 2017 provides for payment of interest at rate specified in Section 56 i.e. @ 6%
per annum on the refund of such pre-deposit from the date of its payment to the date of refund.
(i) Amount of Pre-Deposit Rs.8,00,000
(ii) Period = Date of payment till date of refund i.e. 15-10-2018 to 28-02-2019 136 days

OFFENCES &
PENALTIES
Question 1: Types of Offences
When an offence is cognizable and non-bailable and when an offence is non-cognizable and bailable?
Solution:
As per Section 69 of CGST Act, 2017, offence can be cognizable offence and non- cognizable offence.
(i) Cognizable Offence:
Generally, cognizable offence means serious category of offences in respect of which a police officer has
the authority to:
(a) make an arrest without a warrant and
(b) to start an investigation with or without the permission of a court.
The offences specified in Section 132(1)(a)/(b)/(c)/(d) which is punishable under Section 132(1)(i) shall
be cognizable and non-bailable i.e. where the amount of tax evaded or the amount of input tax credit
wrongly availed or the amount of refund wrongly taken exceeds Rs.5 Crores. In such cases the bail can
be considered by a Judicial Magistrate only.
In such cases, the officer authorized to arrest the person shall inform such person of the grounds of
arrest and produce him before a Magistrate within 24 hours
(ii) Non-Cognizable Offence:
Non-cognizable offence means relatively less serious offences in respect of which a police officer does
not have the authority to make an arrest without a warrant and an investigation cannot be initiated
without a court order.
All offences, other than offences specified in Section 132(1)(a)/(b)/(c)/(d) which is punishable under
Section 132(1)(i), shall be non-cognizable and bailable
The person shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate
Deputy Commissioner or Assistant Commissioner shall, for the purpose of releasing an arrested person
on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge
of a Police Station.
Question 2: Types of Offences

What are the various type of offences which may be committed by a taxable person liable to penalty?
Solution:
There are 21 offences which may be committed by a taxable person and may be classified into following
categories based upon their nature:
Offences having nexus with invoice
(i) Issue of invoice or bill without making supply;
(ii) Issuing invoice or document using GSTIN of another person;
(iii) Making a supply without invoice or with false/ incorrect invoice;
Offences having nexus with payment of tax

(i) Not paying any amount collected as tax for a period exceeding three months;
(ii) Not paying tax collected in contravention of the CGST/SGST Act for a period exceeding 3 months;
(iii) Non deduction or lower deduction of tax deducted at source or not depositing tax deducted at
source under Section 51;
(iv) Non collection or lower collection of or non- payment of tax collectible at source under Section 52;

(v) Availing/utilizing input tax credit without actual receipt of goods and/or services;
(vi) Availing/distributing ITC by an Input Service Distributor in violation of Section 20;
(vii) Fraudulently obtains any refund of tax;
(viii) Suppressing turnover;
Offences having nexus with Records and related information

(i) Falsification/substitution of financial records or furnishing of fake accounts/ documents or
Furnishing false information/return with intent to evade payment of tax;
(ii) Failure to maintain accounts/documents in the manner specified in the Act or failure to retain
accounts/documents for the period specified in the Act;
(iii) Failure to furnish information/documents required by an officer in terms of the Act/Rules or
furnishing false information/documents during the course of any proceeding;
(iv) Tampering/destroying any material evidence/documents;
(v) Obstructing or preventing any official in discharge of his duty;
Offences having nexus with Registration

(i) Failure to register despite being liable to pay tax;
(ii) Furnishing false information regarding registration particulars either at the time of applying for
registration or subsequently
Offences having nexus with Supply/Transport of goods

(i) Transporting goods without prescribed documents;
(ii) Supplying/transporting/storing any goods liable to confiscation;
(iii) Disposing of /tampering with goods detained/ seized/attached under the Act.
Question 3: Quantum of Penalty

What is the quantum of penalty for an offence mentioned under Section 122(1)?
Solution:
Section 122(1) provides that any taxable person who has committed any of the 21 offences mentioned
thereunder, shall be liable to a penalty which shall be higher of the following amounts:
(a) Rs.10,000; or
(b) An amount equivalent to, any of the following (applicable as the case may be)
(i) Tax evaded; or
(ii) Tax not deducted under Section 51 or short deducted or deducted but not paid to the
Government; or
(iii) Tax not collected under Section 52 or short collected or collected but not paid to the
Government; or
(iv) Input tax credit availed of or passed on or distributed irregularly; or
(v) Refund claimed fraudulently
However, Section 122(2) provides that if a registered person supplying goods or services has not paid
any tax or short paid it or tax has been erroneously refunded to him, or ITC has been wrongly availed
or utilized, for any reason other than the reason of fraud or any wilful misstatement or suppression of
facts to evade tax, penalty shall be leviable for an amount higher of following:
(a) Rs.10,000; or
(b) 10% of the tax due from such person and
Section 122(2) also provides that if a registered person supplying goods or services has not paid any tax
or short paid it or tax has been erroneously refunded to him, or ITC has been wrongly availed or
utilized, for the reason of fraud or any wilful misstatement or suppression of facts to evade tax, penalty
shall be leviable for an amount higher of following:
(a) Rs.10,000 or
(b) the tax due from such person,.
Question 4: Persons liable for Penalty

Is there any penalty prescribed for a person other than the taxable person?
Solution:
Yes, Section 122(3) provides for levy of penalty extending to Rs.25,000/- for any person who
(i) aids or abets any of the 21 offences,
(ii) deals in any way (whether receiving, supplying, storing or transporting) with goods that are liable
to confiscation,
(iii) receives or deals with supply of services in contravention of the Act,
(iv) fails to appear before an authority who has issued a summon,
(v) fails to issue any invoice for a supply or account for any invoice in his books of accounts.
Question 5: Penalty
Mr. X, an unregistered person under GST purchases the goods supplied by Mr. Y who is a registered
person without receiving a tax invoice from Mr. Y and thus helps in tax evasion by Mr. Y. What
disciplinary action may be taken by tax authorities to curb such type of cases and on whom?
Solution:
Both Mr. X and Mr. Y will be offender and will be liable to penalty as under:
(i) Mr. X - Penalty under section 122(3) which may extend to Rs.25,000/-;
(ii) Mr. Y - Penalty under section 122(1), which will be higher of Rs.10,000/- or 100% of tax evaded.
Question 6: Penalty
Suppose, in the above case, a disciplinary action is taken against Mr. X and an adhoc penalty of
Rs.20,000/- is imposed by issue of SCN without describing contravention for which penalty is going to
be imposed and without mentioning the provisions under which penalty is going to be imposed.
Should Mr. X proceed to pay for penalty or challenge SCN issued by department?
Solution:
The levy of penalty is subject to a certain disciplinary regime which is based on jurisprudence,
principles of natural justice and principles governing international trade and agreements. Such general
discipline is enshrined in Section 126 of the Act. Accordingly,
(a) no penalty is to be imposed without issuance of a show cause notice and proper hearing in the
matter, affording an opportunity to the person proceeded against to rebut the allegations leveled
against him,
(b) the penalty is to depend on the totality of the facts and circumstances of the case, the penalty
imposed is to be commensurate with the degree and severity of breach of the provisions of the law
or the rules alleged,
(c) the nature of the breach is to be specified clearly in the order imposing the penalty,
(d) the provisions of the law under which the penalty has been imposed is to be specified.
Since SCN issued to Mr. X suffers from lack of clarity about nature of breach which has taken place and
about provision of law under which penalty has been imposed, SCN issued by department may be
challenged.

Question 7: Penalty
Answer the following questions:
(i) Shagun started supply of goods in Vasai, Maharashtra from 01.01.2018. Her turnover exceeded Rs.
20 lakh on 25.01.2018. However, she didn’t apply for registration. Determine the amount of penalty,
if any, that may be imposed on Shagun on 31.03.2018, if the tax evaded by her, as on said date, on
account of failure to obtain registration of Rs. 1,26,000.
(ii) Sagar, managing director of Telecom Solutions Ltd, is issued a -summon to appear before the
central tax officer to produce the books of accounts of Telecom Solutions Ltd. in an inquiry
conducted on said company. Determine the amount of penalty, if any, that may be imposed on
Sagar, if he fails to appear before the central tax officer.
Solution:
(i) Where the aggregate turnover of a supplier making supplies from a State/UT exceeds Rs.20 lakh in
a financial year, he is liable to be registered in the said State/UT. The said supplier must apply for
registration within 30 days from the date on which he becomes liable to registration. However, in
the give case, although Shagun became liable to registration on 25.01.2018, she didn’t apply for
registration within 30 days of becoming liable to registration.
Section 122 (1) (xi) of the CGST Act, 2017 stipulates that a taxable person who is liable to be
registered under the CGST Act, 2017 but fails to obtain registration shall be liable to pay a penalty
which is higher of:
(a) Rs.10,000 OR
(b) An amount equivalent to the tax evaded (Rs.1,26,000 in the given case)
Thus, the amount of penalty that can be imposed on Shagun is Rs.1,26,000.
(ii) Section 122 (3) (d) of the CGST Act, 2017 stipulates that any person who fails to appear before the
officer of central tax, when issued with a summon for appearance to be evidence or produce a
document in an inquiry is liable to a penalty which may extend to Rs.25,000. Therefore, penalty
upto Rs.25,000 can be imposed on Sagar, in the given case.

Question 8: Penalty
Answer the following questions:
(i) Radhaswamy owns and supplies certain goods costing Rs.30,00,000 in a conveyance hired from
Manikaran Transporters. Market Value of said goods is Rs.40,00,000 and tax chargeable thereon is
Rs.4,80,000.
The goods supplied by Radhaswamy and the conveyance (owned by Manikaran Transporters)
used for carriage of such goods are confiscated since Radhaswamy has supplied said goods in
contravention of the provisions of the CGST Act, 2017 with an intent to evade payment of tax.
However, the proper officer intends to give an option to Radhaswamy and Manikaran Transporters
to pay in lieu of confiscation, a fine leviable under Section 130 of the CGST, Act, 2017.
Determine the maximum amount of the fine in lieu of confiscation on:
(a) the goods liable for confiscation.
(b) the conveyance used for carriage of such goods.
(ii) Raghuraman is a registered supplier in Madhya Pradesh. He failed to pay the GST amounting to
Rs.7,400 for the month of January, 20XX. The proper officer imposed a penalty on Raghuraman for
failure to pay tax. Raghuraman believes that it is a minor breach and in accordance with the
provisions of section 126 of the CGST Act, 2017, no penalty is imposable for minor breaches of tax
regulations. Examine the correctness of Raghuraman’s claim.
Solution:
(i)
(a) In case of goods liable for confiscation, the maximum amount of fine leviable in lieu of
confiscation in terms of first proviso to Section 130(2) of the CGST Act, 2017 is the market value
of the goods confiscated, less the tax chargeable thereon.
Therefore, in the given case, maximum fine leviable:
= Rs.40, 00,000 – Rs.4,80,000 = Rs.35,20,000
(b) In case where conveyance used foe carriage of such goods is liable for confiscation, the
maximum amount of fine leviable in lieu of confiscation in terms of third proviso to Section
130(2) of the CGST Act, 2017 is equal to tax payable on the goods being transported thereon.
Therefore, in the given case, maximum fine leviable = Rs.4,80,000
(ii) No, Raghuraman’s claim is not tenable in law. Section 126(1) of the CGST Act, 2017 provides that
no officer shall impose any penalty under CGST Act, 2017, inter alia, for minor breaches of tax
regulations or procedural requirements. Further, explanation to Section 126(1) of the CGST Act,
2017 stipulates that a breach shall be considered a ‘minor breach’ if the amount of tax involved is
less than Rs.5,000.
In the given case, breach made by Raghuraman is not a ‘minor breach’ since the amount involved
is not less than Rs.5,000. So, penalty is imposable under the CGST Act, 2017.

MISCELLANEOUS
PROVISIONS
Question 1: Anti-Profiteering Authority
Elaborate the duties of Anti-Profiteering Authority.
Solution:
The duties of the Anti-Profiteering Authority are:
(i) to determine whether the reduction in tax rate or the benefit of input tax credit has been passed on
by the seller to the buyer (hereinafter collectively referred to as ‘benefit’) by reducing the prices
(ii) to identify the taxpayer who has not passed on the benefit
(iii) to order
(a) reduction in prices
(b) return to the recipient, an amount equivalent to the amount not passed on by way of
commensurate reduction in prices along with interest at the rate of 18% from the date of
collection of the amount not returned, as the case may be.
If the eligible person does not claim return of the amount or is not identifiable, the amount
must be deposited in the Consumer Welfare Fund;
(c) imposition of penalty
(d) cancellation of registration
(iv) to furnish a performance report to the GST Council by the 10th of the month succeeding each quarter
[Rule 127 of the CGST Rules, 2017].

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CA Final Q-Bank – GST

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From the Desk of VJ & PJ about “The TYB Series”

Why TYB Series?

Stage 2: Revise (After Coaching)

Stage 3: Krack (After Revision)

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How to effectively use TYB Series?

Stage 3: Finally start evaluating the answers:

Result of TYB Series!

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Sure to hear good results from you in January 2020.

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For booking your Multi-Color Module,

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TOTAL – 506 QUESTIONS

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Question 2: Deficiencies in Existing Indirect Taxes and Benefits of GST

(2) Benefits of GST

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Question 4: Taxable Event in GST and Dual Model of GST in India

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Question 7: Constitution and GST

(2) GST in India

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Question 8: Goods and Services Taxable under GST

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LEVY OF GST & SUPPLY

(ICAI – IPCC [Old Syllabus – 5 Marks] – Nov. 2018 Exam)

(ICAI – Questions for Practice – May 2018)

(ICAI – IPCC [Old Syllabus – 5 Marks] – May 2018 Exam)

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(ICAI – RTP – IPCC – November 2018)

Question 6: Actual Supply or Not Supply

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Question 7: Actual Supply or Not Supply

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(ICAI – RTP – IPCC – November 2018)

(ICAI – IPCC [Old Syllabus – 5 Marks] – May 2018 Exam)

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Question 10: Deemed Supply or Not Supply

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Question 11: Deemed Supply

(ICAI – RTP – IPCC – May 2018)

Question 13: Actual Supply, Deemed Supply or Not Supply

Question 10: Actual Supply, Deemed Supply or Not Supply

(ICAI – IPCC [Old Syllabus – 6 Marks] – MTP 1 – May 2018)

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(ICAI – Questions for Practice – May 2018)

Question 13: Nature of Supply – Supply of Goods or Supply of Services

(ICAI – IPCC [New Syllabus – 5 Marks] – Nov. 2018 Exam)

Question 16: Nature of Supply – Supply of Goods or Supply of Services

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(ICAI – RTP – CA Final (Adapted) – May 2018)

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(ICAI – IPCC [Old Syllabus – 5 Marks] – MTP 2 – May 2018)

Question 3: Consideration – Value of Taxable Supply and GST Payable

Question 4: Consideration – Value of Taxable Supply and GST Payable

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(ICAI – Questions for Practice – May 2018)