CA FINAL NEW COURSE (May 2021)

GROUP II – PAPER 8
INDIRECT TAX LAWS
(Series 2)
Time Allowed: - 3 Hours Maximum Marks: 100

This question paper comprises two parts, Part I and Part II.
Part I comprises MCQs and Part II comprises questions which require descriptive type answers.

PART – I (MCQs)
All MCQs are compulsory

Questions no. 1-10 carry 2 Marks each and Questions no. 11-20 carry 1 Mark each.
The following scenario relates to questions 1–5
In the month of July ’19 M/S ‘GO AIR’ Airlines providing transportation of passengers service. (One journey is
originating from Mumbai to UK via Tripura, Delhi & Dubai) M/S ‘GO AIR’ furnishes following information.
M/S Z food supplier (located in Delhi) supplies 100 bottles of water worth Rs.100/- and 100 cup noodles worth
Rs.50/- to ‘GOAIR’ in Delhi. ‘GO AIR’ provides this food to passenger on board on demand. Fly safe & Associates,
an air travel agency appointed by M/S ‘GO AIR’ to sold tickets on his behalf. Fly safe & Associates sold tickets for
different routes as follows:
i) 75 tickets from Mumbai to Delhi worth Rs.15000/- each which includes govt. taxes worth Rs.3000/-
excluding GST and charges commission @500 per ticket.
ii) Sold 20 tickets from Mumbai to Dubai worth Rs.25,000/- ticket including govt. tax Rs.5000/- except taxes
under GST Act and charged commission worth Rs.2200/- ticket.
iii) Sold 25 tickets from Mumbai to UK for Basic Fare Rs.30000/- ticket and charged commission worth
Rs.2800/-per ticket.
 Reliance Ltd. (located and registered in Mumbai, Maharashtra) has clients in Scotland UK and has booked
tickets for 4 of its directors on14/07/2019. The directors boarded the flight from Delhi, the total amount
charged for the business class for all the directors are Rs. 300,000/- including meal.
 Mr. Ram whose wife Sita is upset from him wants to celebrate her birthday at burj khalifa, Dubai booked
ticket worth Rs. 50000/- from ‘GOAIR’ on 14/07/2019 from Delhi to Dubai. While travelling Mr. Ram
purchased video game on rent & meal worth Rs. 500/- & Rs. 2000/- respectively.
 Mr. Shyam from Uttar Pradesh booked ticket for 14/07/2019 from Delhi to UK worth Rs.32000/- including
meal. He caught flight on 14/07/2019 & enjoyed the journey with ‘GO AIR’ including meal and gave feedback
too.
 One of the customer Mr. Ajay booked round trip for Tripura to Delhi and returned back for Rs. 20,000/-
Now ‘GOAIR’ has bought aircraft worth Rs. 1.5 crore and paid GST @5% for Transportation of its passengers.
Also ‘GOAIR’ bought motor vehicle for transportation of goods worth Rs. 18,00,000/- and paid GST @18%.
From the above case, you are required to choose the correct option.

1. Determine POS in case of supply of food by M/S Z

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 (a) Mumbai
(b) Delhi
(c) Dubai
(d) None of the above

2. What will be the value of supply for 75 tickets sold by Fly safe from Mumbai to Delhi?
(a) 45,000
(b) 56,250
(c) 90,000
(d) 1,12,500

3. What will be the value of supply for 20 tickets sold by Fly safe from Mumbai to Dubai?
(a) 44,000
(b) 40,000
(c) 50,000
(d) 20,000

4. What will be the place of supply of video game & meal purchased by Mr. Ram
(a) Delhi
(b) Dubai
(c) Mumbai
(d) Tripura

5. What will be the value of supply for 25 tickets sold by fly safe from Mumbai to UK?
(a) 70,000
(b) 75,000
(c) 80,000
(d) 37,500

The following scenario relates to questions 6–10

Vishal Industries imported goods from U.S.A., CIF value bearing US $ 2600, Air freight 500 US$, insurance cost
100 US $, landing charges are not ascertainable
Date of bill of entry is 25-09-2018 and basic custom duty on this date is 10% and exchange rate notified by
Central Board of Indirect Tax and Customs in US $ 1 = 62 , Rate Notified by RBI = 65
Date of entry inward is 21-10-2018. Basic customs duty on this date is 20% and exchange rate notified by Central
Board of Indirect Tax and Customs is US $ 1 = 60, Rate Notified by RBI = 63
Integrated tax payable us 3(7) of the Customs Tariff Act is 12%, Social Welfare Surcharge is 10% on duty.

6. Determine Rate of Foreign Exchange for conversion of dollar into Indian Rupees
(a) Rs. 65/$
(b) Rs. 62/$
(c) Rs. 63/$
(d) Rs. 60/$

7. FOB Value as per Customs Act,1962 is

(a) $ 2600
(b) $ 3200
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 (c) $ 2000
(d) $ 2500

8. Determine the value of air freight as per Rule 10(2) of Import Valuation Rules, 2007.
(a) $ 400
(b) $ 500
(c) $ 600
(d) None of the above

9. Assessable Value in Indian Rupees is

(a) 1,61,200
(b) 1,56,000
(c) 1,55,000
(d) 1,25,000

10. Determine the value of BCD, SWS, IGST as per Customs Tariff Act, 1975.
(a) BCD 31,000 , SWS 3,100 , IGST 18,600
(b) BCD 31,000 , SWS 3,100 , IGST 22,692
(c) BCD 15,500 , SWS 1,550 , IGST 20,646
(d) None of the above

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

12. Kala Niketan School is an educational institution providing pre-school education and education up to
higher secondary school. Which of the following services are exempt if provided to Kala Niketan School?
(i) Transportation of students, faculty and staff
(ii) Catering services
(iii) Cleaning services performed in such educational institution
(a) (i)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

13. Calculate the amount of eligible input tax credit-

S. No. Particulars GST paid (₹)

1. A Mini bus having seating capacity of 15 persons (including driver) used 15,00,000
for running on hire

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 2. Car having seating capacity of 8 people used for business purposes 1,00,00,000
3. Car having seating capacity of 4 persons used for imparting training on 50,00,000
driving such car
4. Special purpose vehicle having seating capacity of 2 persons used for 60,00,000
transportation of goods
(a) ₹2,25,00,000/-
(b) ₹2,10,00,000/-
(c) ₹1,25,00,000/-
(d) ₹75,00,000/-

14. Mr. Avishkar is a painter registered under GST in Delhi. He sends his artwork for exhibition in Mumbai.
At what point of time, supply is considered to have been made under GST?
(a) When painting is completed.
(b) When painting is sent for exhibition in Mumbai.
(c) When painting is displayed at the exhibition in Mumbai.
(d) When painting is purchased by one of the visitors in the exhibition .

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

16. Which of the following service is not exempt under GST?

(a) Loading and unloading of paddy
(b) Loading and unloading of sugarcane
(c) Loading and unloading of tea bags
(d) Loading and unloading of potato

17. M/s. Comfortable (P) Ltd. is registered under GST in the State of Odisha. It is engaged in the business of
manufacturing of iron and steel products. It has received IT engineering services from M/s. High-Fi Infotech
(P) Ltd. for ₹ 11,00,000/- (excluding GST @ 18%) on 28-Oct-20XX. Invoice for service rendered was issued
on 5-Nov-XX. M/s Comfortable (P) Ltd. made part-payment of ₹ 4,20,000/- on 30-Nov-XX. Being unhappy
with service provided by M/s High-fi Infotech (P) Ltd., it did not make the balance payment. Deficiency in
service rendered was made good by M/s High-Fi Infotech (P) Ltd. by 15-Feb-XY. M/s. Comfortable (P) Ltd.
made payment of ₹ 3,00,000/- on 15-Feb-XY and balance payment was made on 6-June-20XY, i.e. after
180 days of issue of invoice.
Input tax credit available in respect of IT engineering services received from M/s. High-Fi Infotech (P) Ltd.
in financial year 20XX-XY:
(a) ₹ 1,98,000/-
(b) Nil
(c) ₹ 64,068/-
(d) ₹ 1,09,831/-
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18. Mr. Dev Anand is engaged in providing services of facilitating sale and purchase of securities to various
clients. He is also engaged in trading of securities. His turnover details are as follows:
Trading of securities ₹ 40,00,000/-
Brokerage on account of facilitating transactions in securities ₹ 30,00,000/-
You are required to ascertain aggregate turnover of Mr. Dev Anand under GST:
(a) ₹ 30,00,000/-
(b) ₹ 40,00,000/-
(c) ₹ 70,00,000/-
(d) ₹ NIL.

19. Mr. Pappu Singh, commenced his business in Feb-20XX. He has established following units:
1. Unit A (in SEZ) and Unit B (non-SEZ) in the State of Maharashtra
2. Unit C in Delhi
3. Unit D and E in the State of Goa
Mr. Pappu Singh has approached you to help him in determining the States and number of registrations
he is required to take under GST (presuming the fact that he is making taxable supply from each State and
his aggregate turnover exceeds the threshold limit):
(a) Maharashtra-2: Delhi-1, Goa–Optional 1 or 2
(b) Maharashtra-Optional 1 or 2: Delhi-1, Goa-Optional 1 or 2
(c) Maharashtra-1: Delhi-1, Goa-1
(d) Maharashtra-2: Delhi-1, Goa-2

20. A non-resident taxable person is required to apply for registration:

(a) within 30 days from the date on which he becomes liable to registration
(b) within 60 days from the date on which he becomes liable to registration
(c) at least 5 days prior to the commencement of business
(d) None of the above

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 PART – II (Descriptive Answers)
This part comprises 6 questions. Question No. 1 is compulsory. Attempt any 4
questions out of the remaining 5 questions.

1(a) Mr. Vicky Frankyn, an unregistered famous author, received ₹ 3 crore of 5

consideration from Shiv Bhawan Publications (SBP) located in Indore for
supply of services by way of temporary transfer of a copyright covered under
section 13(1)(a) of the Copyright Act, 1957 relating to original literary works of
his new book. He finished his work & made available the book to the publisher,
but has yet not raised the invoice.
Mr. Vicky Frankyn is of the view that SBP is liable to pay tax under reverse
charge on services provided by him. SBP does not concur with his view and is
not ready to deposit the tax under any circumstances.
Examine whether the view of Mr. Vicky Frankyn is correct. Further, if
the view of Mr. Vicky Frankyn is correct, what is the recourse available with
Mr. Vicky Frankyn to comply with the requirements of GST law as SBP has
completely refused to deposit the tax.

1(b) Mr. Gauri Shiva, a registered person in Punjab, supplies goods taxable @ 12% 5
[CGST @ 6%, SGST @ 6% & IGST @ 12%] in the States of Punjab and Haryana.
He has furnished the following details in relation to independent supplies made
by him in the quarter ending June, 20XX:-

Supply Recipient Nature of Value (₹)

supply
1 Mr. A, a registered person Inter-State 2,20,000
2 Mr. B, a registered person Inter-State 2,55,000
3 Mr. C, an unregistered person Intra -State 1,80,000
4 Mr. D, an unregistered person Intra-State 2,60,000
5 Mr. M, an unregistered person Inter-State 3,00,000
6 Mr. N, an unregistered person Inter-State 50,000
7 Mr. O, an unregistered person Inter-State 2,50,000
8 Mr. P, an unregistered person Inter-State 2,80,000
9 Mr. Q, a registered person Intra-State 1,50,000
10 Mr. R, a registered person Intra-State 4,10,000
The aggregate annual turnover of Mr. Gauri Shiva in the preceding financial year
was ₹ 1.20 crore. With reference to rule 59 of the CGST Rules, 2017, discuss the
manner in which the details of above supplies are required to be furnished in
GSTR-1.

1(c) i. Chanchal started providing beauty and grooming services and 4

inaugurated “Care & Care Beauty Centre” in Janak Puri, Delhi on 01st
April, 20XX. She opted to pay tax under Notification No. 2/2019 CT (R)
dated 07.03.2019 in the said financial year. The aggregate turnover of
Care & Care Beauty Centre for the quarter ending 30th June, 20XX was
₹ 20 lakh. Further, for the half year ending 30th September, 20XX, the
turnover reached ₹ 50 lakh. Care & Care Beauty Centre recorded a rapid

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 growth and the turnover reached ₹ 70 lakh by the end of October, 20XX.
Determine the total tax liability of Care & Care Beauty Centre by the end
of October, 20XX.
ii. Care & Care Beauty Centre wishes to opt for composition scheme from the
next financial year. You are required to advise it whether it can do so?
Note: Rate of GST applicable on such services is 18%.

2(a) Hare Krishna Ltd. a manufacturer of heavy machines registered at Jaipur 9

(Rajasthan) supplied one machine to Radhe Krishna Ltd. of Bharatpur
(Rajasthan) on 05-02-2020 under an invoice of the same date. Using the
information given below, compute the value of the machine and the GST payable
(CGST & SGST or IGST as the case may be) in cash for the month of February,
2020 by Hare Krishna Ltd. with appropriate working notes.
Assume Rate of CGST, SGST and IGST on the machine to be 9%, 9% and 18%
respectively.
Sl. Particulars Amount in ₹
No.
(i) The Basic price of the machine (exclusive of taxes 28,50,000
and discount).
(ii) Trade discount is allowed at 3% on the basic price
85,500
and is shown in the invoice.
(iii) Secondary packing (in iron sheets) charges for safe
30,000
transportation of the machine on the request of
buyer.
(iv) Design and engineering charges of the machine 90,000
(v) Tax levied by Municipal Authority on the sale of the 25,000
machine.
(vi) Subsidy received by the supplier from the State
80,000
Government to encourage manufacture of the
machine.
(vii) Pre-delivery inspection charges paid to an
independent agency in terms of the agreement for 22,000
supply. The amount was paid by Radhe Krishna Ltd.
(viii) Interest amount paid by Radhe Krishna Ltd. for
12,000
delay in payment for the machine.
Inward Supplies
(i) IGST paid on food items for consumption by
8,000
employees working in the factory.
(ii) SGST and CGST (₹ 15,000 each) paid on Electrical
30,000
transformer used in the manufacturing process.
Note:
(i) Hare Krishna Ltd. has no input tax credit balance at the beginning of
February, 2020. All the other conditions necessary for availing the eligible
input tax credit have been fulfilled.
(ii) There are no other transactions of supplies during the month of February,
2020.
(iii) Hare Krishna Ltd. and Radhe Krishna Ltd. are not related persons.

(b) MRL Ltd. of Mumbai imported one machine through vessel from Thailand, in the 5
month of September, 2019.
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 The following particulars are made available:

S. Particulars Amount in
No. Thai Baht
(i) Cost upto port of exportation incurred by exporter 6,00,000
(ii) Loading charges at port of exportation 25,000
(iii) Freight charges from port of export to port of import 1,00,000
in India.
Following additional amounts paid by MRL Ltd:-

S. Particulars Amount in
No. Indian
rupees (₹)
(i) Designing charges, necessary for such machine, paid 8,00,000
to consultancy firm in New Delhi
(ii) Commission paid (not the buying commission) to local 1,25,000
agent of exporter.
(iii) Actual landing charges paid at the place of 15,000
importation.
(iv) Actual insurance charges paid to the place of -
importation are not ascertainable.
(v) Lighterage charges paid at the port of importation 20,000
Other Information :

(i) Rate of basic customs duty is 10%

(ii) Rate of social welfare surcharge is 10%
(iii) Integrated tax leviable under section 3(7) of Customs Tariff
Act, 1975 is 12%.
(iv) Ignore GST compensation cess.
(v) Rate of exchange to be taken is 1 Thai Baht = ₹ 0.65
Arrive at the total customs duty, including integrated tax payable under section
3(7) of the Customs Tariff Act, 1975 with appropriate working notes.

3(a) Nexa Ltd., a registered supplier of Bengaluru (Karnataka), is a manufacturer of 5

goods. The company provides the following information pertaining to GST paid
on input supplies during the month of April, 2020:
Sl. Items GST paid in
No. (₹)
(i) Life Insurance premium paid by the company on 4,76,941
the life of factory employees as per the policy of
the company
(ii) Raw materials purchased for which invoice is 1,45,846
missing but delivery challan is available.
(iii) Raw materials purchased which are used for 6,92,417
zero rated outward supply.

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 (iv) Works contractor's service used for repair of 1,54,396
factory building which is debited in the profit
and loss account of company.
(v) Company purchased the capital goods for ₹
4,00,000 and claimed depreciation of ₹ 44,800 (@ 48,000
10%) on the full amount of ₹ 4,48,000 under
Income Tax Act, 1961.
Other Information:-
(i) In the month of September, 2019, Nexa Ltd. availed input tax credit of ₹
2,40,000 on purchase of raw material which was directly sent to job worker's
premises under a challan on 25-09-2019. The said raw material has not
been received back from the Job worker up to 30-04-2019.
(ii) All the above input supplies except (ii) above have been used in the
manufacture of taxable goods.
Compute the amount of net Input Tax Credit available for the month of April,
2020 with necessary explanations for your conclusion for each item. You may
assume that all the other conditions necessary for availing the eligible input
tax credits have been fulfilled.

(b) Saraswati Company imported goods valued at ₹ 10,00,000 vide a Bill of Entry 5
presented before the proper officer on 15 th December, 2018, on which date the
rate of customs duty was 20%. The proper officer decided that the goods should
be subject to chemical or other test and therefore, the same were provisionally
assessed at a value of ₹ 10,00,000 and Saraswati company paid provisional duty
of ₹ 2,00,000 on the same date. Saraswati Company wants to voluntarily pay
duty of ₹ 1,50,000 on 20th January, 2019.
(1) Can Saraswati Company provisionally pay the duty and what are the
conditions which are to be complied before such payment is made?
(2) Determine the amount of interest payable, if any, under section 18 of the
Customs Act, 1962 assuming that the payment of ₹ 1,50,000 as stated
above is made on 20th January, 2019 and that the final duty is assessed
on 31 st January, 2019 at ₹ 4,00,000 and the balance duty is paid on the
same day.

(c) Dev Enterprises is the supplier of water coolers. Dev Enterprises supplied 4
water coolers to Vimal Traders for consideration of ₹ 2,95,000 (inclusive of GST
@ 18%). Vimal Traders also gave some materials to Dev Enterprises as
consideration for such supply whose value was ₹ 10,000 (exclusive of GST).

4(a) From the following particulars, you are required to determine reward under 5
Merchandise Exports from India Scheme (MEIS) under Foreign Trade Policy
2015-2020:
(1) Exports of handloom products through notified courier with FOB value of ₹
5,15,000 per consignment.
(2) Exports of goods which are subject to minimum export price with FOB value
of
₹ 50,000.
(3) Exports of goods where FOB value declared in shipping bill is ₹ 8,00,000.
FOB value realised with exchange gain is ₹ 8,20,000.
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 (4) Exports of books through foreign post office with FOB value of ₹ 4,95,000
per consignment
(5) Biotechnology Park products exported through DTA units of ₹ 3,00,000
(6) Supplies made from DTA units to SEZ units of ₹ 2,00,000
(7) Rate of reward under MEIS is 7%.

(b) Briefly explain the provisions of rule 2(b) of Rules of Interpretation of the First 5
Schedule to the Customs Tariff Act, 1975 on Classification of
Mixtures/Combinations of a Material/Substance with Other
Materials/Substances.

(c) SJT Ltd. has entered to an agreement with a customer for the manufacture 4
and supply of Iron Tor for their exclusive use. SJT Ltd. manufactured the product
but before receiving the inspection certificate, their customer rejected some
quantity of goods on the grounds of quality. As per agreement, the rejected
quantity will be destroyed in front of the customer and shall not be sold. Examine
the issue in the light of statutory provisions and suggest future course of action
to the assessee as to whether any liability arises as per the provisions of GST
law.

5(a) With the help of the following information in the case of M/s Vinayak 5
Enterprises, Jaipur (Rajasthan) for the year 2019-20, determine the aggregate
turnover for the purpose of registration under the CGST Act, 2017.

S. Particulars Amount
No. (₹)
(i) Sale of diesel on which Sale Tax (VAT) is levied by Rajasthan 1,01,233
Government.
(ii) Supply of goods, after completion of job work, from the place 1,13,400
of Vinayak Enterprises directly by principal.
(iii) Export supply to England (U.K.) 6,71,020
(iv) Supply to its own additional place of business in Rajasthan. 7,17,770
(v) Outward supply on which GST is to be paid by recipient 1,10,000
under reverse charge.

All the above amounts are excluding GST.

You are required to provide reasons for treatment of various items given above.

(b) Kavya Ltd. has challenged the imposition of anti-dumping duty retrospectively 5
from the date prior to the date of imposition of anti-dumping duty on the grounds
that it is unconstitutional. Explain whether it would succeed in its contention.

(c) Explain Importer-Exporter Code (IEC). 4

6(a) Discuss briefly the procedure for issue of adjudication order under section 74(9) 5
& (11) and the time limit for passing adjudication order under section 74(10) of
the CGST Act, 2017.

(b) Explain the provisions relating to liability for GST in case of company in 5

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 liquidation.

(c) Explain the constitution of Board of Trade under FTP and reason behind its 4
constitution.

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