GST Question Bank (Inter)

GST IN INDIA-AN INTRODUCTION
CHAPTER NO -1
GST IN INDIA-AN INTRODUCTION
Q.1 In case of local supply of goods/ services, the supplier would charge dual GST i.e., CGST and SGST at
specified rates on the supply.
1. Supply of goods/ services by A to B
Amount (in `)
Value charged for supply of goods/ services 10,000
Add: CGST @ 9% 900
Add: SGST @ 9% 900
Total Price charged by A from B for local 11,800
supply of goods/services
The CGST & SGST charged on B for supply of goods/services will be remitted by A to the appropriate
account of the Central and State Government respectively.
A is the first stage supplier of goods/services and hence, does not have credit of CGST, SGST or IGST.
2. Supply of goods/services by B to C – Value addition @ 20%
B will avail credit of CGST and SGST paid by him on the purchase of goods/ services and will utilise
such credit for being set off against the CGST and SGST payable on the supply of goods/services
made by him to C.
Amount (in `)
(`10,000 × 120%)
Add: CGST @ 9% 1080
Add: SGST @ 9% 1080
Total Price charged by B from C for local 14,160
Computation of CGST, SGST payable by B to Government
Amount (in `)
CGST payable 1080
Less: Credit of CGST 900
CGST payable to Central Government 180
CGST payable 1080
Less: credit of SGST 900
SGST payable to State Government 180
Note: Rates of CGST and SGST have been assumed to be 9% each for the sake of simplicity.
Statement of revenue earned by Central and State Government
Transaction Revenue to Revenue to
Central State
Government Government
(`) (`)
Supply of goods/services by A to B 900 900
Supply of goods/services by B to C 180 180
Total 1080 1080
CA Final SCMPE Question Bank – CA. Riddhi Baghmar 1

CHARGE OF GST
Q.2 In case of inter-State supply of goods/ services, the supplier would charge IGST at specified rates on the
supply.
1. Supply of goods/services by X of State 1 to A of State 1
Amount (in `)
Add: CGST @ 9% 900
Add: SGST @ 9% 900
Total Price charged by A from B for local 11,800
X is the first stage supplier of goods/services and hence, does not have any credit of CGST, SGST or
IGST.
2. Supply of goods/services by A of State 1 to B of State 2 – Value addition @ 20%
Amount (in `)
Value charged for supply of goods/services 12,000
(`10,000 × 120%)
Add: IGST @ 18% 2,160
Total price charged by A from B for inter- 14,160
State supply of goods/services
Computation of IGST payable to Government
Amount (in `)
IGST payable 2,160
Less: Credit of CGST 900
Less: Credit of SGST 900
IGST payable to Central Government 360
The IGST charged on B of State 2 for supply of goods/services will be remitted by A of State 1 to the
appropriate account of the Central Government. State 1 (Exporting State) will transfer SGST credit
of ` 900 utilised in the payment of IGST to the Central Government.
3. Supply of goods/services by B of State 2 to C of State 2 – Value addition @ 20%
B will avail credit of IGST paid by him on the purchase of goods/services and will utilise such credit
for being set off against the CGST and SGST payable on the local supply of goods/services made by
him to C.
Amount (in `)
(`12,000 × 120%)
Add: CGST @ 9% 1,296
Add: SGST @ 9% 1,296
Total price charged by B from C for local 16,992
Computation of CGST, SGST payable to Government
Amount (in `)
CGST payable 1,296
Less: Credit of IGST 1,296
CGST payable to Central Government Nil
SGST payable 1,296
Less: Credit of IGST (`2,160-`1,296) 864
SGST payable to State Government 432
Central Government will transfer IGST credit of ` 864 utilised in the payment of SGST to State 2
(Importing State).
2 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CHARGE OF GST
Note: Rates of CGST, SGST and IGST have been assumed to be 9%, 9% and 18% respectively for the
sake of simplicity.
Statement of revenue earned by Central and State Governments
Transaction Revenue to Revenue to Revenue to

Central Government Government
Government of State 1 of State 2
(`) (`) (`)
Supply of goods/ services by X to A 900 900
Supply of goods/services by A to B 360
Transfer by State 1 to Centre 900 (900)
Supply of goods/ services by B to C 432
Transfer by Centre to state 2 (864) 864
Total 1,296 Nil 1,296
Q.3 Differentiate between direct and indirect taxes.

Ans. Difference between direct taxes and indirect taxes:
Direct Taxes Indirect Taxes

The person paying the tax to the The person paying the tax to the
Government directly bears the Government collects the same from the
incidence of the tax. ultimate consumer. Thus, incidence of the
tax is shifted to the other person.
Progressive in nature - high rate of Regressive in nature - All the consumers
taxes for people having higher equally bear the burden, irrespective of
ability to pay. their ability to pay.
Q.4 Enumerate major direct and indirect taxes.

Ans. Major indirect taxes are goods and services tax and customs duty and direct tax is income tax.
Q.5 Explain the salient features of indirect taxes.

Ans. Salient features of indirect taxes are:
(i) An important source of revenue: Indirect taxes are a major source of tax revenues for Governments
worldwide and continue to grow as more countries move to consumption oriented tax regimes. In
India, indirect taxes contribute more than 50% of the total tax revenues of Central and State
Governments.
(ii) Tax on commodities and services: It is levied on commodities at the time of supply or manufacture
or purchase or sale or import/export thereof. Hence, it is also known as commodity taxation. It is
also levied on supply of services.
(iii) Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes. For example,
GST paid by the supplier of the goods is recovered from the buyer by including the tax in the cost of
the commodity.
(iv) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the price of the
commodity, most of the time the tax payer/consumer pays the same without actually knowing that
he is paying tax to the Government. Thus, tax payer does not perceive a direct pinch while paying
indirect taxes.
(v) Inflationary: Tax imposed on commodities and services causes an all- round price spiral. In other
words, indirect taxation directly affects the prices of commodities and services and leads to
inflationary trend.
(vi) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base. Majority of the products

CHARGE OF GST
or services are subject to indirect taxes with low thresholds.

(vii) Promotes social welfare: Higher taxes are imposed on the consumption of harmful products (also
known as ‘sin goods’) such as alcoholic products, tobacco products etc. This not only checks their
consumption but also enables the State to collect substantial revenue.
(viii) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich and the poor
have to pay the same rate of indirect taxes on certain commodities of mass consumption. This may
further increase the income disparities between the rich and the poor.
Q.6 Write a short note on various Lists provided under Seventh Schedule to the Constitution of India.
Ans. Seventh Schedule to Article 246 of the Constitution contains three lists which enumerate the matters
under which the Union and the State Governments have the authority to make laws.
(i) List -I (UNION LIST): It contains the matters in respect of which the Parliament (Central
Government) has the exclusive right to make laws.
(ii) List -II (STATE LIST): It contains the matters in respect of which the State Government has the
exclusive right to make laws.
(iii) List -II (CONCURRENT LIST): It contains the matters in respect of which both the Central & State
Governments have power to make laws.
Q.7 Discuss the deficiencies in the existing indirect taxes which led to the need for ushering into GST regime.
Ans. Deficiencies in the erstwhile indirect tax regime:
(a) Certain transactions were subject to double taxation and were taxed as both goods and services,
since under the earlier regime, distinction between goods and services was often blurred.
(b) CENVAT did not include chain of value addition in the distributive trade after the stage of
production. Similarly, in the State-level VAT, CENVAT load on the goods was not removed leading to
the cascading of taxes.
(c) Though CENVAT and State-Level VAT were essentially value added taxes, set off of one against the
credit of another was not possible as CENVAT was a central levy and State-Level VAT was a State
levy.
(d) There were several taxes in the States, such as, Luxury Tax, Entertainment Tax, etc. which were not
subsumed in the VAT. Hence for a single transaction, multiple taxes in multiple forms were required
to be paid.
(e) VAT on goods was not integrated with tax on services, at the State level, to remove the cascading
effect of service tax. With service sector being the fastest growing sector in the economy, the
exclusion of services from the tax base of the States potentially eroded their tax- buoyancy.
(f) CST was another source of distortion in terms of its cascading nature since it was non-VATABLE.
Being an origin based tax, CST was also against one of the basic principles of consumption taxes that
tax should accrue to the jurisdiction where consumption takes place.
Q.8 Discuss the dual GST model as introduced in India.
Ans. India has adopted a Dual GST model in view of the federal structure of the country. Consequently, Centre
and States simultaneously levy GST on taxable supply of goods or services or both, which takes place within
a State or Union Territory. Thus, tax is imposed concurrently by the Centre and States, i.e. Centre and
States simultaneously tax goods and services. Now, the Centre also has the power to tax intra-State sales
& States are also empowered to tax services.GST extends to whole of India including the State of Jammu
and Kashmir.
Q.9 List the Central and State levies which have been subsumed in GST in India.
Ans. Central levies that are subsumed in GST are as follows:
 Central Excise Duty & Additional Excise Duties
 Service Tax
 Excise Duty under Medicinal & Toilet Preparation Act
 CVD & Special CVD

CHARGE OF GST
 Central Sales Tax

 Central surcharges & Cesses in so far as they relate to supply of goods & services
State levies that are subsumed in GST are as follows:
 State surcharges and cesses in so far as they relate to supply of goods & services
 Entertainment Tax (except those levied by local bodies)
 Tax on lottery, betting and gambling
 Entry Tax (All Forms) & Purchase Tax
 VAT/ Sales tax
 Luxury Tax
 Taxes on advertisements
Q.10 Discuss the functions of the common GST portal.

Ans. GST being a destination-based tax, the inter-State trade of goods and services (IGST) needed a robust
settlement mechanism amongst the States and the Centre. A Common Portal was needed which could act
as a clearing house and verify the claims and inform the respective Governments to transfer the funds.
This was possible only with the help of a strong IT Infrastructure.
Resultantly, Common GST Electronic Portal – www.gst.gov.in – a website managed by Goods and Services
Network (GSTN) [a company incorporated under the provisions of section 8 of the Companies Act, 2013]
is set by the Government to establish a uniform interface for the tax payer and a common and shared IT
infrastructure between the Centre and States.
The functions of the 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 Governments based on the taxpayer return
information; providing analysis of taxpayers' profile.
Q.11 Briefly explain the leviability of GST or otherwise on petroleum crude, diesel, petrol, Aviation Turbine Fuel
(ATF) and natural gas.
Ans. Petroleum crude, diesel, petrol, ATF and natural gas are presently not leviable to GST. GST will be levied
on these products from a date to be notified on the recommendations of the GST Council. Till such date,
central excise duty continues to be levied on manufacture/production of petroleum crude, diesel, petrol,
ATF and natural gas and inter-State/intra-State sale of the same is subject to CST/ VAT respectively.
Q.12 Elaborate the principles that were borne in mind while subsuming various central, State and local levies,
under GST.
Ans. The various central, state and local levies were examined to identify their possibility of being subsumed
under GST. While identifying, the following principles were kept in mind:
(i) Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the
supply of goods or on the supply of services.
(ii) Taxes or levies to be subsumed should be part of the transaction chain which commences with
import/ manufacture/ production of goods or provision of services at one end and the
consumption of goods and services at the other.
(iii) The subsuming of taxes should result in free flow of tax credit in intra and inter-State levels. The
taxes, levies and fees that are not specifically related to supply of goods & services should not be
subsumed under GST.
(iv) Revenue fairness for both the Union and the States individually would need to be attempted.
Q.13 GST is a simplified tax structure. Justify the statement.

Ans. GST is a simplified tax structure. The statement is justified. Simpler tax regime with fewer exemptions
along with reduction in multiplicity of taxes under GST has led to simplification and uniformity in tax
structure. The uniformity in laws, procedures and tax rates across the country makes doing business easier.

CHARGE OF GST
Common system of classification of goods and services across the country ensures certainty in tax
administration across India.
Q.14 List the advantages that GST accrues to the trade and industry.
Ans. GST accrues following advantages to the trade and industry
(i) Benefits to industry: GST has given more relief to industry, trade and agriculture through a more
comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of
several Central and State taxes in the GST and phasing out of CST. The transparent and complete
chain of set-offs which results in widening of tax base and better tax compliance also leads to
lowering of tax burden on an average dealer in trade and industry.
(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 helps in mitigating the ill effects of cascading, improving competitiveness and improving
liquidity of the businesses.
(iii) Benefits to small traders and entrepreneurs: GST has increased the threshold for GST registration
for small businesses. Further, single registration is needed in one State. Small businesses have also
been provided the additional benefit of composition scheme. With the creation of a seamless
national market across the country, small enterprises have an opportunity to expand their national
footprint with minimal investment.
Q.15 List the special category States as prescribed in Article 279A of the Constitution of India.
Ans. There are 11 Special Category States, namely, States of Arunachal Pradesh, Assam, Jammu and Kashmir,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Q.16 Discuss the leviabilty of GST or otherwise on tobacco.

Ans. Tobacco is within the purview of GST, i.e. GST is leviable on tobacco. However, Union Government has also
retained the power to levy excise duties on tobacco and tobacco products manufactured in India.
Resultantly, tobacco is subject to GST as well as central excise duty.

CHARGE OF GST
CHAPTER NO -2
SUPPLY UNDER GST
Q.1 Meghraj & Co. wishes to commence the business of supplying ready-made garments within Punjab and in
the neighbouring States of Delhi and Haryana. Kindly state as to what is the taxable event under GST and
leviability of CGST, SGST/UTGST and IGST on the same?
Ans. Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be levied on
intra-State supplies. IGST will be levied on inter-State supplies.
Q.2 Damodar Private Ltd., registered in Delhi, has transferred some goods to its branch, registered in West
Bengal, so that the goods can be sold from the branch. The goods have been transferred without any
consideration. The company believes that the transaction undertaken by it does not qualify as supply as
no consideration is involved. Ascertain whether the transfer of goods by Damodar Private Ltd. to its
branch office qualifies as supply.
Ans. As per Schedule I, 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, is deemed as supply
even if made without consideration. In the given case, since the Damodar Private Ltd. and its branch
located in another State are distinct persons, supply of goods between them qualifies as supply.
Q.3 Prithvi Associates is engaged in supply of taxable goods. It enquires from its tax advisor as to whether any
activity can be treated as supply even if made without consideration in accordance with the provisions.
You are required to enumerate such activities, if any.
Ans. Section 7 stipulates that the supply should be for a consideration and should be in the course or
furtherance of business. However, Schedule I enumerates the cases where an activity is treated as supply,
even if the same is without consideration. These are as follows:
(i) Permanent transfer or disposal of business assets where input tax credit has been availed on such
assets.
(ii) 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.
However, gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both.
(iii) 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.
(iv) Import of services by a person from a related person or from any of his other establishments
outside India, in the course or furtherance of business.
Q.4 Composite supply is treated as supply of that particular goods or services which attracts the highest rate
of tax. Examine the validity of the statement.
Ans. The statement is not correct. Composite supply is treated as supply of the principal supply. It is the mixed
supply that is treated as supply of that particular goods or services which attracts the highest rate of tax.
Q.5 Transfer of title and/or possession is necessary for a transaction to constitute supply of goods. Examine.
Ans. 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). In some cases, possession may be transferred immediately, but title may be transferred

CHARGE OF GST
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.
Q.6 Examine whether the following activities would amount to supply under section 7 read with Schedule I:
(a) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these establishments
are registered in respective States. Finished goods are sent from factory in Delhi to the Mumbai
depot without consideration so that the same can be sold.
(b) Raman is an architect in Chennai. His brother who is settled in London is a well-known lawyer. Raman
has taken legal advice from him free of cost with regard to his family dispute.
(c) Would your answer be different if in the above case, Raman has taken advice in respect of his
business unit in Chennai?
Ans. (a) Schedule I, inter alia, stipulates that supply of goods or services or both between related persons or
between distinct persons as specified in section 25, is supply even without consideration provided it
is made in the course or furtherance of business. Further, a person who has obtained more than one
registration, whether in one State/Union territory or more than one State/Union territory shall, in
respect of each such registration, be treated as distinct persons [Section 25(4)].
In view of the same, factory and depot of Sulekha Manufacturers are distinct persons. Therefore,
supply of goods from Delhi factory of Sulekha Manufacturers to Mumbai Depot without
consideration, but in course/furtherance of business, is supply under section 7 read with Schedule I.
(b) Schedule I, inter alia, stipulates that import of services by a taxable person from a related person
located outside India, without consideration is treated as supply if it is provided in the course or
furtherance of business. Explanation to section 15, inter alia, provides that persons shall be deemed
to be “related persons” if they are members of the same family. Further, as per section 2(49), family
means, —
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.
In the given case, Raman has received free of cost legal services from his brother. However, in view
of section 2(49)(ii) above, Raman and his brother cannot be considered to be related as Raman’s
brother is a well- known lawyer and is not wholly/mainly dependent on Raman. Further, Raman has
taken legal advice from him in personal matter and not in course or furtherance of business.
Consequently, services provided by Raman’s brother to him would not be treated as supply under
section 7 read with Schedule I.
(c) In the above case, if Raman has taken advice with regard to his business unit, services provided by
Raman’s brother to him would still not be treated as supply under section 7 read with Schedule I as
although the same are provided in course or furtherance of business, such services have not been
received from a related person.
Q.7 State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule II:
(a) Renting of immovable property.
(b) Goods forming part of business assets are transferred or disposed of by/under directions of person
carrying on the business.
(c) Transfer of right in goods without transfer of title in goods.
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a future
date.
Ans. (a) Supply of services
(b) Supply of goods
(c) Supply of services
(d) Supply of goods

CHARGE OF GST
Q.8 Determine whether the following supplies would be treated as supply of goods or supply of services as
per Schedule II:
(a) Temporary transfer or permitting use or enjoyment of any intellectual property right.
(b) Any treatment or process which is applied to another person's goods.
(c) Transfer of title in goods.
Ans. (a) Supply of services
(b) Supply of services
(d) Supply of goods
Q.9 The goods supplied on hire purchase basis will be treated as supply of services. Examine the validity of
the statement.
Ans. The statement is not correct. Supply of goods on hire purchase shall be treated as supply of goods as there
is transfer of title, albeit at a future date.
Q.10 Examine whether the activity of import of service in the following independent cases would amount to
supply under section 7:
(i) Miss Shriniti Kaushik received interior decoration 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 interior decoration services for her residence located at Bandra,
Mumbai from her brother, Mr. Varun residing in Sydney (Australia) [wholly dependent on Miss
Shriniti]. Further, Miss Shriniti did not pay any consideration for the said service.
(iii) Will your answer change if in the above case, if Miss Shriniti has taken interior decoration services
with regard to her business premises and not her residence?
Ans. (i) Supply, under section 7, 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 interior decoration services have been availed in respect of
residence], it would amount to supply.
(ii) Schedule I, inter alia, stipulates that import of services by a taxable person from a related person
located outside India, without consideration is treated as supply if it is provided in the course or
furtherance of business. Explanation to section 15, inter alia, provides that persons shall be deemed
to be “related persons” if they are members of the same family. Further, as per section 2(49), family
means, —
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person Uif they are wholly or mainly
dependent on the said personU.
In the given case, Miss Shriniti Kaushik has received interior decoration services from her brother. In
view of section 2(49)(ii) above, Miss Shriniti and her brother shall be considered to be related as Miss
Shriniti’s brother is wholly dependent on her.
However, Miss Shrinti has taken interior decoration services for her residence and not in course or
furtherance of business. Consequently, services provided by Miss Shrinti’s brother to her would not
be treated as supply under section 7 read with Schedule I.
(iii) In the above case, if Miss Shriniti has taken interior decoration services with regard to her business
premises, services provided by Miss Shriniti’s brother to her would be treated as supply under
section 7 read with Schedule I.
Q.11 Determine whether the following supplies amount to composite supplies:

(a) A hotel provides 4 days-3 nights package wherein the facility of breakfast and dinner is provided

CHARGE OF GST
alongwith the room accommodation.

(b) A toothpaste company has offered the scheme of free soap alongwith the toothpaste.
Ans. Under composite supply, two or more taxable supplies of goods or services or both, or any combination
thereof, are naturally bundled and supplied in conjunction with each other, in the ordinary course of
business, one of which is a principal supply [Section 2(30)]. In view of the same,
(a) since supply of breakfast and dinner with the accommodation in the hotel are naturally bundled,
said supplies qualify as ‘composite supply’.
(b) since supply of soap alongwith the toothpaste are not naturally bundled, said supplies do not
qualify as ‘composite supply’.
Q.12 Dumdum Electronics has sold the following electronic items to Akbar Retail Store.
(i) Refrigerator (500 litres) taxable @ 18%
(ii) Stabilizer for refrigerator taxable @ 12%
(iii) LED television (42 inches) taxable @ 12%
(iv) Split air conditioner (2 Tons) taxable @ 28%
(v) Stabilizer for air conditioner taxable @12%
Dumdum Electronics has issued a single invoice, indicating price of each of the above items separately in
the same. Akbar Retail Store has given a single cheque of ` 1,00,000/- for all the items as a composite
discounted price. State the type of supply and the tax rate applicable in this case.
Ans. In the given case, the items supplied by Dumdum Electronics are not naturally bundled in the ordinary
course of business. Therefore, such supply is not a composite supply. Further, although Akbar Retail Store
has paid a composite discounted price for these goods, Dumdum Electronics has not charged a single price
for the said supply. Therefore, said supply is also not a mixed supply.
Supply of these goods is, therefore, supply of individual items which are taxable at the respective rates
applicable to them.
Q.13 Manikaran, a registered supplier of Delhi, has supplied 20,000 packages at

` 30 each to Mukhija Gift Shop in Punjab. Each package consists of 2 chocolates, 2 fruit juice bottles and
a packet of toy balloons. Determine the rate(s) of GST applicable in the given case assuming the rates of
GST to be as under:
Goods/services supplied GST rate

Chocolates 18%
Fruit juice bottles 12%
Toy balloons 5%
Ans. As per section 2(74), 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 chocolates, fruit juice bottles and a packet of toy balloons is a mixed supply
as each of these items can be supplied separately and is not dependent on any other. Further, as per
section 8(b), the mixed supply is treated as a supply of that particular supply which attracts the highest
rate of tax. Thus, in the given case, supply of packages is treated as supply of chocolates [since it attracts
the highest rate of tax] and the rate of GST applicable on the package of ` 6,00,000 (20,000 × ` 30) is 18%
Q.14 Gagan Engineering Pvt. Ltd., registered in Haryana, is engaged in providing maintenance and repair
services for heavy steel machinery. For carrying out the repair work, Gagan Engineering Pvt. Ltd. sends
its container trucks equipped with items like repair equipments, consumables, tools, parts etc. from
Haryana workshop to its own repairing centres (registered under GST law) located in other States across
India where the clients' machinery are being brought and are being repaired.

CHARGE OF GST
Discuss the leviability of GST on the inter-State movement of trucks from the workshop of Gagan
Engineering Pvt. Ltd. in Haryana to its own repairing centres located in other States across India.
Ans. As per section 25(4)27, 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 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, when made in the course or furtherance of business is one such activity included in Schedule I under
para 2.
However, as per CBIC circular, the inter-State movement of various modes of conveyance including, inter
alia, trucks, carrying goods or passengers or both or for repairs and maintenance, between ‘distinct
persons’ as specified in section 25(4), not involving further supply of such conveyance, 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 dated 07.07.2017].
Thus, in the given case, inter-State movement of trucks from the workshop of Gagan Engineering Pvt. Ltd.
located in Haryana to its repair centres located in other States is ‘neither a supply of goods nor supply of
service’.
Q.15 PTL Pvt. Ltd. is a retail store of merchandise located in 25 States/UTs in the country. For the purpose of
clearance of stock of merchandise and to attract consumers, PTL Pvt. Ltd. launched scheme of "Buy One
Get One Free" for the same type of merchandise, for instance, one shirt to be given free with purchase of
one shirt. Determine how the taxability of the goods supplied under "Buy One Get One Free" scheme is
determined.
Ans. As per section 7(1)(a), the goods or services which are supplied free of cost (without any consideration)
are not treated as “supply” except in case of activities mentioned in Schedule I. Under “Buy One Get One
Free” scheme, it may appear at first glance that in case of offers like “Buy One, Get One Free”, one item is
being “supplied free of cost” without any consideration. However, it is not an individual supply of free
goods, but a case of two or more individual supplies where a single price is being charged for the entire
supply. It can at best be treated as supplying two goods for the price of one.
Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed
supply and the rate of tax shall be determined accordingly.
Q.16 Sarvanna & Sons wishes to start supplying alcoholic liquor in the State of Tamil Nadu. Therefore, it applies
for license to the Tamil Nadu Government for selling liquor for which the State Government has charged
specified fee from it. Examine whether the grant of alcoholic liquor license by the Tamil Nadu Government
to Sarvanna & Sons qualifies as supply.
Ans. Services by way of grant of alcoholic liquor license by the State Governments have been notified to be
treated neither as a supply of goods nor as a supply of service. Such licence is granted against
consideration in the form of licence fee or application fee or by whatever name it is called.
This special dispensation is applicable only to supply of service by way of grant of liquor licenses by the
State Governments as an agreement between the Centre and States and is not applicable/has no
precedence value in relation to grant of other licenses and privileges for a fee in other situations, where
GST is payable.
Thus, in the given case, the grant of alcoholic liquor license by the Tamil Nadu Government to Sarvanna &
Sons is neither a supply of goods nor a supply of service.

CHARGE OF GST
CHAPTER NO -3
CHARGE OF GST
Q.1 Taxpayer ‘Tolaram’ is a manufacturer who has opted for composition levy for goods, having one unit – A1
in UP and another unit – A2 in MP. Total turnover of two units in last FY was ` 115 lakh (` 85 lakh + ` 30
lakh). Turnover of units A1 and A2 in the first quarter of current financial year is ` 5 lakh and ` 10 lakh
respectively. Compute the amount payable under composition levy under section 10(1) & 10(2) of the CGST
Act, 2017 by ‘Tolaram’.
Ans.
Unit Location Turnover in Turnonver in 1st Total Tax
previous Fy quarter of this FY (@ 1%)
A1 U.P. `85 lakh `5 lakh `5,000
A2 M.P. ` 30 lakh `10 lakh `10,000
Total `115 lakh ` 15 lakh `15,000
Q.2 Taxpayer ‘Bholaram’ is a trader (who has opted for composition levy for goods) of both taxable and
exempted goods (goods exempted by way of a notification).
It has one retail showroom – A1 in Punjab and another retail showroom – A2 in Rajasthan, both selling
taxable as well as exempted goods. Total turnover (including taxable and exempted goods) of the two
showrooms in last FY was ` 115 lakh (` 85 lakh + ` 30 lakh).
Turnover of showrooms A1 and A2 in the first quarter of current financial year is
` 35 lakh [A1 - ` 15 lakh (` 5 lakh from sale of taxable goods and ` 10 lakh from sale of exempted goods)
and A2 - ` 20 lakh (` 10 lakh from sale of taxable goods and ` 10 lakh from sale of exempted goods)].
Compute the amount payable under composition levy under section 10(1) & 10(2) of the CGST Act, 2017
by ‘Bholaram’.
Ans.
Retail Location Turnover in Taxable turnover* in Total Tax
st
Showroom previous Fy 1 quarter of this FY (@ 1%)
A1 Punjab `85 lakh `5 lakh `5,000
A2 Rajasthan ` 30 lakh `10 lakh `10,000
Total `115 lakh ` 15 lakh `15,000
Note: A supplier, other than manufacturer and restaurant service provider, eligible for composition levy
under section 10(1) & 10(2) has to pay tax @ 1% (CGST+ SGST) of the turnover of only taxable supplies of
goods and services in the State.
Q.3 Taxpayer ‘Padmavati’ is a salon stylist, who has opted for composition levy for services, having one branch
– B1 in Vasant Kunj, Delhi and another branch – B2 in Gurgaon, Haryana. Total turnover of two branches
in last FY was ` 45 lakh (` 25 lakh + ` 20 lakh). Turnover of branches B1 and B2 in the first quarter of current
financial year is ` 5 lakh and ` 10 lakh respectively. Compute the amount payable under composition levy
under section 10(2A) of the CGST Act, 2017 by ‘Padmavati’.
Ans.
Branch Location Turnover in Turnover in 1st Total Tax
previous Fy quarter of this FY (@ 6%)
B1 Delhi `25 lakh `5 lakh `30,000
A2 Haryana ` 20 lakh `10 lakh `60,000
Total `45 lakh ` 15 lakh `90,000

CHARGE OF GST
As seen above, since the tax under composition scheme has to computed as a specified % of the turnover
in State or turnover in Union territory, it is pertinent to understand what is turnover in State or turnover
in Union territory.
Q.4 State the person liable to pay GST in the following independent cases provided recipient is located in the
taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to a registered business
entity.
Ans. (a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity
located in the taxable territory is payable under reverse charge, in the given case, GST is payable by
the recipient - business entity.
(b) GST on sponsorship services provided by any person to any body corporate or partnership firm
located in the taxable territory is payable under reverse charge. Since in the given case, services
have been provided to an individual, reverse charge provisions will not be attracted. GST is payable
under forward charge by the supplier – company.
(c) GST on services supplied by Central Government, State Government, Union territory or local
authority by way of renting of immovable property to a person registered under CGST Act, 2017 is
payable under reverse charge. Therefore, in the given case, GST is payable under reverse charge by
the recipient – registered business entity.
Q.5 Vivek Goyal, an independent director of A2Z Pvt. Ltd., has received sitting fee amounting to ` 1 lakh from
A2Z Pvt. Ltd for attending the Board meetings. Who is the person liable to pay tax in this case?
Ans. 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.
Q.6 Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP. Determine the
person liable to pay tax in this case.
Ans. In case of services provided by any person by way of sponsorship to any body corporate or partnership
firm, GST is liable to be paid under reverse charge by such body corporate or partnership firm located in
the taxable territory. Further, for the reverse charge purposes, Limited Liability Partnership formed and
registered under the provisions of the Limited Liability Partnership Act, 2008 is also be considered as a
partnership firm. Therefore, in the given case, WE-WIN Cricket Academy is liable to pay GST under
reverse charge.
Q.7 'Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm, which is not
registered under GST. Determine the person liable to pay tax in this case.
Ans. 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.
Q.8 Legal Fees is received by Sushrut, an advocate, from M/s. Tatva Trading Company having turnover of ` 50
lakh in preceding financial year Who is the person liable to pay tax in this case?
Ans. GST on legal services supplied by an advocate [Mr. Sushrut] to any business entity [M/s. Tatva Trading
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., M/s. Tatva Trading
Company.

CHARGE OF GST
Q.9 State the person liable to pay GST in the following independent cases provided recipient is located in the
taxable territory:
(a) Services supplied by an insurance agent to an insurance company.
(b) Services supplied by a recovery agent to a car dealer.
(c) Security services (services provided by way of supply of security personnel) provided to a registered
person.
Ans. (a) GST on services supplied by an insurance agent to any person carrying on insurance business
located in the taxable territory is payable under reverse charge. Therefore, in the given case, GST is
payable under reverse charge by the recipient – Insurance Company.
(b) GST on services supplied by a recovery agent to a banking company or a financial institution or a
non- banking financial company located in the taxable territory is payable under reverse charge.
However, since, in the given case, services are being supplied by a recovery agent to a car dealer,
GST is payable under forward charge by the service provider - recovery agent.
(c) GST on security services (services provided by way of supply of security personnel) provided to a
registered person, located in the taxable territory is payable under reverse charge. Therefore, in the
given case, GST is payable under reverse charge by the recipient – registered person receiving the
services.
Q.10 Sultan & Sons, a partnership firm, in Nagpur, Maharashtra is a wholesaler of a taxable product 'P' and
product 'Q' exempt by way of a notification, in the State of Maharashtra. Its aggregate turnover in the
preceding financial year is ` 130 lakh. The firm wishes to opt for composition scheme under sub- sections
(1) & (2) of section 10. However, its accountant is of the view that a person engaged in making supply of
exempt goods is not eligible for the said scheme. Discuss.
Note: Assume that Sultan & Sons is not engaged in manufacture of goods as notified under section
10(2)(e).
Ans. The view taken by the accountant of Sultan & Sons is not valid in law. A registered person with an
aggregate turnover in a preceding financial year up to ` 1.5 crore is eligible for composition levy, under
section 10(1) & 10(2), in Delhi. Further, such person must not be engaged in making any supply of goods
or services which are not leviable to tax under this Act and must not be engaged in making any inter-State
outward supplies of goods or services, for being eligible to pay tax under said scheme.
In the given case, the aggregate turnover of Sultan & Sons does not exceed
` 1.5 crore. Further, it is engaged in making only intra-State supply of goods and Product P supplied by it
is taxable and Product Q supplied by it is leviable to tax, though exempted by way of notification.
Therefore, it is eligible for composition levy under section 10(1) & 10(2) in the current year.
Q.11 A person availing composition scheme, under sub-sections (1) & (2) of section 10, in Haryana during a
financial year crosses the turnover of ` 1.5 crore in the month of December. Will he be allowed to pay tax
under composition scheme for the remainder of the year, i.e. till 31st March? Please advise.
Ans. No. The option to pay tax under composition scheme lapses from the day on which the aggregate turnover
of the person availing composition scheme for goods during the financial year exceeds the specified limit
(` 1.5 crore). Once he crosses the threshold, he is required to file an intimation for withdrawal from the
scheme in prescribed form within 7 days of the occurrence of such event.
Every person who has furnished such an intimation, may electronically furnish at the common portal, a
statement in prescribed form containing details of the stock of inputs and inputs contained in semi-
finished or finished goods held in stock by him on the date on which the option is
withdrawn, within a period of 30 days from the date from which the option is withdrawn.
Q.12 Determine whether the suppliers in the following cases are eligible for composition levy, under section
10(1) & 10(2), provided their turnover in preceding year does not exceed ` 1.5 crore:
(i) Mohan Enterprises is engaged in trading of pan masala in Rajasthan and is registered in the same

CHARGE OF GST
State.
(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in
neighbouring States.
Ans. (i) A supplier engaged in the manufacture of goods as notified under section 10(2)(e), during the
preceding FY is not eligible for composition scheme under section 10(1) and 10(2). Ice cream and
other edible ice, whether or not containing cocoa, Pan masala, Tobacco and manufactured tobacco
substitutes and aerated waters are notified under this category. However, in the given case, since
Mohan Enterprises is engaged in trading of pan masala and not manufacture and his turnover does
not exceed ` 1.5 crore, he is eligible for composition scheme subject to fulfilment of specified
conditions.
(ii) Since supplier of inter-State outward supplies of goods or services is not eligible for composition
levy, Sugam Manufacturers is not eligible for composition levy.
Q.13 Subramanian Enterprises has two registered places of business in Delhi. Its aggregate turnover for the
preceding year for both the places of business was
` 120 lakh. It wishes to pay tax under composition levy, under section 10(1) & 10(2), for one of the places
of business in the current year while under normal levy for other. You are required to advice Subramanian
Enterprises whether he can do so?
Ans. A registered person with an aggregate turnover in a preceding financial year up to ` 1.5 crore is eligible
for composition levy, under section 10(1) & 10(2), in Delhi. Since the aggregate turnover of Subramanian
Enterprises does not exceed ` 1.5 crore, it is eligible for composition levy in the current year. However, all
registered persons having the same Permanent Account Number (PAN) have to opt for composition
scheme. If one such registered person opts for normal scheme, others become ineligible for composition
scheme. Thus, Subramanian Enterprises either have to opt for composition levy for both the places of
business or under normal levy for both the places of business.
Q.14 Mr. Ajay has a registered repair centre where electronic goods are repaired/serviced. His repair centre is
located in State of Rajasthan and he is not engaged in making any inter-State supply of services. His
aggregate turnover in the preceding financial year (FY) is ` 45 lakh.
With reference to the provisions of the CGST Act, 2017, examine whether Mr. Ajay can opt for the
composition scheme under section 10(1) &10(2) in the current financial year? Or whether he is eligible to
avail benefit of composition scheme under section 10(2A)? Considering the option of payment of tax
available to Mr. Ajay, compute the amount of tax payable by him assuming that his aggregate turnover in
the current financial year is` 35 lakh.
Will your answer be different if Mr. Ajay procures few items required for providing repair services from
neighbouring State of Madhya Pradesh?
Ans. Section 10(1) provides that a registered person, whose aggregate turnover in the preceding financial year
did not exceed ` 1.5 crore (` 75 lakh in Special Category States except Assam, Himachal Pradesh and
Jammu and Kashmir), may opt to pay, in lieu of the tax payable by him, an amount calculated at the
specified rates. However, as per proviso to section 10(1), person who opts to pay tax under composition
scheme may supply services other than restaurant services, of value not exceeding 10% of the turnover in
a State or Union territory in the preceding financial year or ` 5 lakh, whichever is higher.
In the given case, since Mr. Ajay is an exclusive supplier of services other than restaurant services [viz.
repair services], he is not eligible for composition scheme under section 10(1) & 10(2).
However, section 10(2A) provides an option to a registered person (subject to certain conditions) whose
aggregate turnover in the preceding financial year is upto ` 50 lakh and who is not eligible to pay tax
under composition scheme under section 10(1) & 10(2), to pay tax @ 3% [Effective rate 6% (CGST+
SGST/UTGST)] of the turnover of supplies of goods and services in the State or Union territory.
Thus, in view of the above-mentioned provisions, Mr. Ajay is eligible to avail the composition scheme under
section 10(2A) as his aggregate turnover in the preceding FY does not exceed ` 50 lakh and he is not

CHARGE OF GST
eligible to opt for the composition scheme under section 10(1) & 10(2).
Thus, the amount of tax payable by him as per the composition scheme under section 10(2A) is ` 2,10,000
[6% of ` 35 lakh].
A registered person cannot opt for composition scheme under section 10(2A), if, inter alia, he is engaged
in making any inter-State outward supplies. However, there is no restriction on inter-State procurement
of goods. Hence, answer will remain the same even if Mr. Ajay procures few items from neighboring State
of Madhya Pradesh.
Q.15 M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in the State of
Karnataka. Their aggregate turnover in the preceding financial year by way of supply of appliances was `
120 lakh.
The firm also expects to provide repair and maintenance service of such appliances from the current
financial year.
With eference to the provisions of the CGST Act, 2017, examine:
(i) Whether the firm can opt for the composition scheme, under section 10(1) and 10(2), for the current
financial year, as the turnover may include supply of both goods and services?
(ii) If yes, up to what amount, the services can be supplied?
Ans. (i) The registered persons, whose aggregate turnover in the preceding financial year did not exceed `
1.5 crore, may opt to pay tax under composition levy, under section 10(1) and 10(2).
The scheme can be availed by an intra-State supplier of goods and supplier of restaurant service.
However, the composition scheme permits supply of marginal services (other than restaurant
services) for a specified value along with the supply of goods and restaurant service, as the case may
be.
Thus, M/s United Electronics can opt for composition scheme for the current financial year as its
aggregate turnover is less than ` 1.5 crore in the preceding financial year and it is not engaged in
inter- State outward supplies.
(ii) The registered person opting for composition scheme, under section 10(1) and 10(2), can also
supply services (other than restaurant services) for a value up to 10% of the turnover in the
preceding year or ` 5 lakh, whichever is higher, in the current financial year.
Thus, M/s United Electronics can supply repair and maintenance services up to a value of ` 12 lakh
[10% of ` 120 lakh or ` 5 lakh, whichever is higher] in the current financial year.

EXEMPTIONS FROM GST
CHAPTER NO -4
EXEMPTIONS FROM GST
Q.1 Sukhiya Das is enaged in providing following services. With the help of information given below, determine
which of the services provided by Sukhiya Das are exempt from GST:
(1) Packaging of the onions purchased from village farmers into small packets of 1 kg each, in Sukhiya
Das warehouse, so that same can be sold in a nearby city mall.
(2) Warehousing of jaggery and tea.
(3) Renting of warehouse for storage of agricultural produce.
Ans. (1) Entry 54, inter alia, exempts the processes/operations carried out at an agricultural farm on the
agricultural produce which do not alter the essential characteristics of agricultural produce, but
make it marketable only for the primary market. In the given case, though the packaging of onions
does not alter their essential characteristic, it makes them marketable for retail market and not for
the primary market and further, such packaging is being done at the warehouse of Sukhiya Das and
not at an agricultural farm. Hence, said services are not exempt.
(2) Entry 54, inter alia, exempts the warehousing of agricultural produce. However, entry 24B exempts
warehousing of certain specified items some of which are not agricultural produce. Although
jaggery and tea do not qualify as agricultural produce, their warehousing is specifically exempt
under entry 24B.
(3) Entry 54, inter alia, exempts the services of loading, unloading, packing, storage or warehousing of
agricultural produce. Thus, warehousing of agricultural produce, per se, is exempt. However, in the
given case, services being provided are not warehousing services but renting of immovable
property services. Such services are not exempt.
Q.2 Good Health Medical Centre, a clinical establishment, offers the following services:
(i) Reiki healing treatments.
(ii) Plastic surgeries. One such surgery was conducted to repair cleft lip of a new born baby.
(iii) Air ambulance services to transport critically ill patients from distant locations to the Medical
Centre.
(iv) Palliative care for terminally ill patients. On request, such care is also provided to patients at their
homes. (Palliative care is given to improve the quality of life of patients who have a serious or life-
threatening disease but the goal of such care is not to cure the disease).
(v) Alternative medical treatments by way of yoga.
Good Health Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells.
Good Health Medical Centre is of the view that since it is a clinical establishment, all the service
provided by it as well as all the services provided to it are exempt from GST.
You are required to examine the situation in the light of relevant statutory provisions.
Ans. Health care services provided by a clinical establishment, an authorised medical practitioner or para-
medics are exempt from GST under Entry 74. In light of the same, the eligibility to exemption in respect of
each service offered by Good Health Medical Centre is examined below:
(i) Not Exempt. Since reiki healing is not a recognized system of medicine in terms of section 2(h) of
Clinical Establishments Act, 2010, it would not be exempt and thus, GST would be payable thereon.
(ii) Exempt. Health care service does not include, inter alia, cosmetic or plastic surgery, except when
undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital
defects, developmental abnormalities, injury or trauma.
Therefore, plastic surgeries will not be entitled to the said exemption and thus, GST would be
payable thereon. However, plastic surgery conducted to repair a cleft lip will be eligible for

EXEMPTIONS FROM GST
exemption as it reconstructs anatomy or functions of body affected due to congenital defects

(cleft lip).
(iii) Exempt. Health care service includes services by way of transportation of the patient to and from a
clinical establishment. Thus, air ambulance service to transport critically ill patients to Good Health
Medical Centre would be eligible for exemption under the said notification.
(iv) Exempt. Health care service means any service by way of diagnosis or treatment or care for illness,
injury, deformity, abnormality or pregnancy in any recognized system of medicines in India. It is
immaterial whether such service is provided at the clinical establishment or at the home of the
patient or at any other place. Thus, palliative care for terminally ill patients is exempt.
(v) Exempt. Since Yoga is a recognized system of medicine in terms of section 2(h) of Clinical
Establishments Act, 2010, the same would be eligible for exemption under the said notification.
Further, 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 under Entry 73. Therefore, services provided in relation
to preservation of stem cells by the cord blood bank operated by Good Health Medical Centre will be
exempt from GST.
It is important to note that Entry 74 of the exemption notification grants exemption to health care services
provided BY a clinical establishment and not to services provided TO a clinical establishment.
Therefore, Good Health Medical Centre’s contention that since it is a clinical establishment, all the services
provided to it are also exempt from GST is not correct in law.
Q.3 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
A Transportation of milk ` 20,000
B Transportation of books on a consignment `3,000
transported in a single goods carriage
C Transportation of chairs for a single consignee `600
in the goods carriage
Ans.
Customer Nature of services provided Taxability
A Transportation of milk Exempt. Transportation of milk by goods transport
agency is exempt.
B Transportation of books on a GST is payable. Exemption is available for
consignment transported in transportation of goods only where the
a single goods carriage consideration for transportation of goods on a
consignment transported in a single goods carriage
does not exceed ` 1,500.
C Transportation of chairs for a Exempt. Transportation of goods where
single consignee in the consideration for transportation of all goods for a
goods carriage single consignee does not exceed ` 750 is exempt.
Q.4 M/s. Apna Bank Limited, a scheduled commercial bank, has furnished the following details for the month
of August:
Particulars Amount [` in crores
excluding GST]
Extended housing loan to its customers 100
Processing fees collected from its customers on sanction of loan 20
Commission collected from its customers on bank guarantee 30

EXEMPTIONS FROM GST
Interest income on credit card issued by the bank 40

Interest received on housing loan extended by the bank 25
Minimum balance charges collected from current account and 01
saving account holder
Compute the value of taxable supply.
Ans. Computation of value of taxable supply of M/s. Apna Bank Limited for the month of August:
Particulars Amount in crores
(`)
Housing loan extended to customers Nil
[Since money does not constitute goods, extending housing loan is not a supply.]
Processing fee collected on sanction of loan 20
[Interest does not include processing fee on sanction of the loan. Hence, the
same is taxable.]
Commission collected on bank guarantee 30
[Any commission collected over and above interest on loan, advance or deposit
are not exempt.]
Interest income on credit card issued by the bank 40
[Services by way of extending loans in so far as the consideration is represented
by way of interest are exempt from tax. However, interest involved in credit card
services is specifically excluded from this exemption entry.]
Interest received on housing loan Nil
[Services by way of extending loans in so far as the consideration is represented
by way of interest are exempt from tax.]
Minimum balance charges collected from current account and saving account 01
holder
[Any charges collected over and above interest on loan, advance or deposit are
not exempt.]
Value of taxable supply 91
Q.5 Determine the GST payable, if any, in each of the following independent cases, assuming that the rate of
GST is 18% and that the service providers are registered:
(a) Bollywood dance performance by a film actor in a film and consideration charged is ` 1,45,000.
(b) Carnatic music performance by a classical singer to promote a brand of readymade garments and
consideration charged is ` 1,30,000.
(c) Carnatic music performance by a classical singer in a music concert and consideration charged is `
1,55,000.
(d) Kathak dance performance by a classical dancer in a cultural programme and consideration charged
is ` 1,45,000.
Ans. (a) Bollywood Dance performance by a film actor in a film is not exempt from GST even though the
consideration charged is less than threshold limit of ` 1,50,000. The reason for the same is that the
dance performance by an artist is exempt only if it is a performance in folk or classical art forms of
dance.
(b) Carnatic music performance by a classical singer to promote a brand of readymade garments is not
exempt from GST even though, the consideration charged is less than threshold limit of ` 1,50,000
and it is a performance in classical art forms of music. The reason for the same is that the said
exemption is not applicable to service provided by such artist as a brand ambassador.
(c) Carnatic music performance by a classical singer in a music concert is not exempt from GST even
though it is a performance in classical art forms of music. The reason for the same is the
consideration charged for the service exceeds ` 1,50,000. Consequently, entire consideration

EXEMPTIONS FROM GST
charged is subject to GST as follows:

= ` 1,55,000 × 18% = ` 27,900
(d) Kathak dance performance by a classical dancer in a cultural programme is exempt from GST as it is
a performance in classical art forms of dance and consideration charged does not exceed ` 1,50,000
[i.e. ` 1,45,000].
Q.6 Exempt supply includes supply of any goods or services or both which attracts nil rate of tax and which
may be wholly exempt from tax, but excludes non-taxable supply. Discuss the validity of the statement.
Ans. The statement is not fully valid in law. Exempt supply has been defined as supply of any goods or services
or both which attracts nil rate of tax or which may be wholly exempt from tax and includes non-taxable
supply.
Q.7 Services provided by an entity registered under section 12AA of the Income-tax Act, 1961 are exempt from
GST if such services are provided by way of charitable activities. Elaborate the term ‘charitable activities’.
Ans. The term ‘charitable activities’ mean activities relating to-
(i) public health by way of-
(A) care or counseling of
(I) terminally ill persons or persons with severe physical or mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a dependence-forming substance such as narcotics drugs or
alcohol; or
(B) public awareness of preventive health, family planning or prevention of HIV infection;
(ii) advancement of religion, spirituality or yoga;
(iii) advancement of educational programmes/skill development relating to,-
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests & wildlife.
Q.8 Examine which of the following independent services are exempt from GST:
(a) Food supplied by the canteen run by a hospital to the in-patients as advised by the doctors.
(b) An RWA, registered under GST, collects the maintenance charges of ` 6,500 per month per member.
Ans. (a) Services by way of health care services by a clinical establishment, an authorised medical practitioner
or para-medics are exempt from GST. Food supplied to the in-patients by a canteen run by the
hospital, as advised by the doctor/nutritionists, is a part of composite supply of healthcare and not
separately taxable. Thus, said services are exempt from GST.
(b) Supply of service by a RWA (unincorporated body or a non- profit entity registered under any law)
to its own members by way of reimbursement of charges or share of contribution up to an amount
of ` 7500 per month per member for providing services and goods for the common use of its
members in a housing society/a residential complex are exempt from GST. Hence, in the given case,
services provided by the RWA are exempt from GST since the maintenance charges collected per
month per member do not exceed ` 7500.
Q.9 An individual acts as a referee in a football match organized by Sports Authority of India. He has also acted
as a referee in another charity football match organized by a local sports club, in lieu of a lump sum
payment. Discuss whether any GST is payable on the activities undertaken by him.
Ans. Services provided to a recognized sports body by an individual, inter alia, as a referee in a sporting event
organized by a recognized sports body is exempt from GST.
Since in the first case, the football match is organized by Sports Authority of India, which is a recognized
sports body, services provided by the individual as a referee in such football match will be exempt.

EXEMPTIONS FROM GST
However, when he acts as a referee in a charity football match organized by a local sports club, he would
not be entitled to afore-mentioned exemption as a local sports club is not a recognized sports body and
thus, GST will be payable in this case.
Q.10 RXL Pvt. Ltd. manufactures a 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 `
1,20,000 will be donated to a charitable organization.
Examine whether Ms. Ahana Kapoor will be required to pay any GST.
Ans. Services by an artist by way of a performance in folk or classical art forms of (i) music, or (ii) dance, or (iii)
theatre are exempt from GST, if the consideration charged for such performance is not more than `
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.
Q.11 Determine the GST payable @ 18% with respect to each of the following independent services provided
by the registered persons:
Particulars Gross amount
charged
(`)
Fees charged for yoga camp conducted by a charitable trust 50,000
registered under section 12AA of the Income-tax Act, 1961
Amount charged by business correspondent from banking 1,00,000
company for the services provided to the rural branch of a
bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem 5,00,000
cells
Amount charged for service provided by selectors to a 5,20,000
recognized sports body
Ans.
Computation of value of taxable supply
Particulars Amount (`) GST Payable @
18% (`)
Fees charged for yoga camp conducted by a charitable trust Nil Nil
registered under section 12AA of the Income-tax Act, 1961
[Note-1]
Amount charged by business correspondent for the services Nil Nil
provided to the rural branch of a bank with respect to
Savings Bank Accounts [Note-2]
Amount charged by cord blood bank for preservation of Nil Nil
stem cells [Note-3]
Service provided by selectors to a recognized sports body 5,20,000 5,20,000
[Note-4]
Notes:
1. Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable
activities are exempt from GST. The activities relating to advancement of yoga are included in the

EXEMPTIONS FROM GST
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/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 selectors are liable to GST.
Q.12 Examine whether GST is exempted on the following independent supplies of services:
(i) Service provided by a private transport operator to Scholar Boys Higher Secondary School in relation
to transportation of students to and from the school.
(ii) Services provided by way of vehicle parking to general public in a shopping mall.
Ans. (i) Yes. Services provided TO an educational institution by way of transportation of students are
exempted from GST.
(ii) No. Services provided by way of vehicle parking to general public are not exempted from GST.
Therefore, GST is payable on the same.
Q.13 A State Transport Undertaking has hired motor vehicles meant to carry 8 - 10 passengers from Fast Cab
Renting, a motor vehicle renting company. Give your comments as to whether any GST is payable in this
case.
Ans. Services by way of giving on hire, inter alia, to a State Transport Undertaking, a motor vehicle meant to
carry more than 12 passengers is exempt from GST.
Since the motor vehicles given on hire by Fast Cab Renting to the State Transport Undertaking are meant
to carry 8-10 passengers, the same would not be eligible for exemption and would thus, be liable to GST.
Q.14 Indiana Engineering College, a recognised educational institution, has conducted an entrance test
examination for various courses run by it and charged entrance fees from the applicants. Determine
whether Indiana Engineering College is liable to pay GST on the same.
Ans. 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.
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.
Q.15 Ram, 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 ` 6,000. He seeks your
advise on the taxability or otherwise of the service so availed by him.
Ans. Services by way of fumigation in a warehouse of agricultural produce are exempt from GST. In the present
case, since Gupta Pest Control Co. provides services by way of fumigation in the warehouse of sugarcane
[being an agricultural produce], said services are exempt and GST is not payable on the same.
Q.16 Poorva acts as a team manager for Indian Sports Authority (ISA), a recognised sports body, for a tennis
tournament organised by a multinational company and received a remuneration of ` 2,00,000. Determine
whether GST is payable on the remuneration received by Poorva.
Ans. Services provided by a team manager to a recognised sports body for participation in a sporting event are
exempt from GST provided said sporting event is organised by a recognized sports body.
In the given case, the services are being provided by a team manager to a recognised sports body, but the
sporting event is not organised by a recognised sports body. Therefore, the services provided by Poorva
are not exempt from GST.

EXEMPTIONS FROM GST
Q.17 Babloo Transporters, a Goods Transport Agency, transported relief materials meant for victims of Kerala
floods, a natural disaster, by road from Delhi to Ernakulam, for a company. Babloo Transporters is of the
view that it is not liable to pay GST on the said services provided as said services are exempt. You are
required to advice it on the said issue.
Ans. Services provided by a goods transport agency, by way of transport in a goods carriage of relief materials
meant for victims of, inter alia, natural or man-made disasters, calamities, are exempt from GST. Therefore,
services provided by Babloo Transporters will be exempt from GST.
Q.18 Keyan Enterprises, an event organizer, provided services to Breathing Wall Ltd. by way of organizing
business exhibition in New Delhi as part of Make in India initiative. Keyan Enterprises claims that it is not
required to pay GST as the services provided by way of organizing business exhibition are exempt from
GST. Examine the technical veracity of the claim of Keyan Enterprises, in the given case.
Ans. No, the claim made by Keyan Enterprises that it is not required to pay GST is not correct. Services provided
by an organiser to any person in respect of a business exhibition are exempt from GST only when such
business exhibition is held outside India. However, since in the given case, the exhibition is being organized
in India, the services of organization of event by Keyan Enterprises will not be exempt from GST.
Q.19 Ekta Charitable trust, registered under section 10(23C)(v) of the Income-tax
Act, 1961, manages a temple in Rohini, Delhi. It has given on rent a community hall, located within temple
premises, to public for celebration of Teej Mela. Rent charged is ` 9,500. You are required to determine
whether the services provided by Ekta Charitable trust are liable to GST.
Ans. Services by a person by way of renting of precincts of a religious place meant for general public, owned or
managed by an entity registered as a trust or an institution under section 10(23C)(v) of the Income-tax Act
are exempt provided renting charges of premises, community halls, kalyanmandapam or open area are not
` 10,000 or more per day. Thus, in the given case, renting of community hall by Ekta Charitable Trust is
exempt from GST, as rent is less than ` 10,000 per day.
Q.20 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 ` 7,500 per truck per day. Examine whether GST is payable in the given
case.
Ans. GST is not payable in case of hiring of trucks to Titu Transporters since services by way of giving on hire,
inter alia, to a goods transport agency, a means of transportation of goods are exempt.

TIME AND VALUE OF SUPPLY
CHAPTER NO -5
UNIT -I
Q.1 A machine has to be supplied at site. It is done by sourcing various components from vendors and
assembling the machine at site. The details of the various events are:
17th September Purchase order with advance of ` 50,000 is received for machine worth ` 12 Lakh
and entry duly made in the seller’s books of account
20th October The macine is assembled, tested at site, and accepted by buyer
rd
23 October Invoice raised
4th November Balance payament of ` 11,50,000 received
Determine the time of supply(ies) in the above scenario for the purpose of payment of tax.
Ans. As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition supplier)
has to pay GST on the outward supply of goods at the time of supply as specified in section 12(2)(a) i.e.,
date of issue of invoice or the last date on which invoice ought to have been issued in terms of section 31.
Therefore, the time of supply for the purpose of payment of tax for the entire amount of ` 12,00,000 is
20th October which is the date on which the goods were made available to the recipient as per section
31(1)(b), and the invoice should have been issued on this date [Section 12(2)(a)].
Q.2 Gas is supplied by a pipeline to the recipient. The supply is to be made for a period of one year. Monthly
payments are to be made by the recipient as per the contract. The details of the payment made are:
July 5, August 5, September 5 Payment of ` Lakh made in each month
Determine the time of supply for the purpose of payment of tax.
has to pay GST on the outward supply of goods at the time of supply as specified in section 12(2)(a), i.e.
date of issue
of invoice or the last date on which invoice ought to have been issued in terms of section 31. As per section
31(4), in case of continuous supply of goods, where successive statements of accounts or successive
payments are involved, the invoice is issued before or at the time of each such statement is issued or, as
the case may be, each such payment is received. Therefore, invoices should be issued for ` 2 lakh each on
or before July 5, August 5 and September 5, when monthly payments of ` 2 lakh are received.
Thus, assuming that the invoice is issued on July 5, August 5 and September 5, the time of supply for the
purpose of payment of tax will be July 5, August 5 and September 5 respectively for goods valued at ` 2
lakh each.
Q.3 Determine the time of supply from the given information.

May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days from
the date of issuance of invoice elapse on June 3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment
Ans. Here, May 12 will be the time of supply, being the earliest of the three stipulated dates namely, receipt
of goods, date of payment and date immediately following 30 days of issuance of invoice [Section 12(3)].
(Here, date of invoice is relevant only for calculating thirty days from that date.)


May 4 Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days from
the date of issuance of invoice elapse on June 3)
June 12 Pillar & Co receive the goods, which were held up in transit
July 3 Payment made for the goods
Ans Here, June 4, 31st day from the date of supplier’s invoice, will be the time of supply, being the earliest of
the three stipulated dates namely, receipt of goods, date of payment and date immediately following 30
days of issuance of invoice [Section 12(3)].
Q.5 Determine the time of supply from the following particulars:

6th May Booking of convention hall, sum agreed ` 15000, advance of ` 3000 received
15th September Function held in convention hall
th
27 October Invoice issued for ` 15000, indicating balance of ` 12000 payable
3rd November Balance payment of ` 12000 received
Ans. As per section 31(2) read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply
of service. In the given case, the invoice is not issued within the prescribed time limit. As per section
13(2)(b), in a case where the invoice is not issued within the prescribed time, the time of supply of service
is the date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of ` 3,000 is 6th May as the date of payment of `
3000 is earlier than the date of provision of service. The time of supply of service to the extent of the
balance ` 12,000 is 15th September which is the date of provision of service.
Q.6 Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an apartment
complex, for which the Apartment Owners’ Association showed a payment in cash on 4th April to them
against work of this description. The dates of the work are not clear from the records of ABC & Co. ABC &
Co have not issued invoice or entered the payment in their books of account.
Ans. The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13(2) as
neither the invoice has been issued nor the date of provision of service is available as also the date of
receipt of payment in the books of the supplier is also not available. Therefore, the time of supply will be
determined vide clause (c) of section 13(2) i.e., the date on which the recipient of service shows receipt of
the service in his books of account.
Thus, time of supply will be 4th April, the date on which the Apartment Owners’ Association records the
receipt of service in its books of account.
Q.7 Determine the time of supply from the given information. (Assume that service being supplied is taxable
under reverse charge)
4th May The supplier of service issues invoice for service provided. There is a dispute about
amount payable, and payment is delayed.
21 August Payment made to the supplier of service
Ans. Here, July 4 will be the time of supply, being the earliest of the two stipulated dates namely, date of
payment and date immediately following 60 days since issue of invoice.

4th May A German company issues email informing its associated company ABC Ltd. of the
cost of technical services provided to it.
2 July ABC Ltd transfers the amount to the account of the German company
Ans. As there is no prior entry of the amount in the books of account of ABC Ltd., July 2 will be the time of
supply, being the date of payment in terms of second proviso to section 13(3).

Q.9 Explain the significance of time of supply under GST law.

Ans. GST is payable on supply of goods or services. Time of supply indicates the point in time when the liability
to pay tax arises. However, it is important to note that though the liability to pay tax arises at the time of
supply, the same can be paid to the Government by the due date prescribed with reference to the said
‘time of supply’. The CGST Act provides separate provisions for time of supply for goods and services vide
sections 12 and 13.
Q.10 GST is payable on advance received for supply of goods and services taxable under forward charge.
Do you agree with the statement? Support your answer with legal provisons.
Ans. The statement is not correct. While GST is payable on advance received for supply of services taxable under
forward charge, the same is not payable in case of advance received for supply of goods taxable under
forward charge.
As per section 13, the time of supply of services taxable under forward charge is –
 Date of issue of invoice or date of receipt of payment, whichever is earlier, if the same is issued
within 30 days from the date of supply of service;
OR
 Date of provision of service or date of receipt of payment, whichever is earlier, if the invoice is not
issued within 30 days from the date of supply of service.
Thus, in case of services, if the supplier receives any payment before the provision of service or before the
issuance of invoice for such service, the time of supply gets fixed at that point in time and the liability to
pay tax on such payment arises. However, the tax can be paid by the due date prescribed with reference
to such time of supply.
As regards time of supply of goods taxable under forward charge is concerned, Notification No. 66/2017
CT dated 15.11.2017 provides that a registered person (excluding composition supplier) should pay GST
on the outward supply of goods at the time of supply as specified in section 12(2)(a), i.e. date of issue of
invoice or the last date on which invoice ought to have been issued in terms of section 31. Therefore, in
case of goods, tax is not payable on receipt of advance payment.
Q.11 Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
S. No Date of receipt of Date of payment by the Date of issue of invoice by the

goods rceipent of goods supplier of good
(i) July 1 August 10 June 29
(ii) July 1 June 25 June 29
(iii) July 1 Part payment made on June 30 June 29
and balance amount paid on
July 20
(iv) July 5 Payment is entered in the June 1
books of account on June 28
and debited in recipient’s bank
account on June 30
(v) July 1 Payment is entered in the June 29
books of account on June 30
and debited in recipient’s bank
account on June 26
(vi) August August 10 June 29
Ans.

S. No. Date of Date of Payment by Date of Date Time of supply of

receipt of the recipient of issue of immediately goods [Earlier of
goods goods invoice by following 30 (1), (2) & (4)]
the supplier days from the
of goods date of invoice
(1) (2) (3) (4) (5)
(i) July 1 August 10 June 29 July 30 July 1
(ii) July 1 June 25 June 29 July 30 June 25
(iii) July 1 Part payment made June 29 July 30 June 30 for part
on June 30 and payment made and
balance amount paid july 1 for balance
on July 20 amount
(iv) July 5 Payment is entered in June 1 July 2 June 28 (i.e., when
the books of account payment is entered
on June 28 and in the books of
debited in recipient’s account of the
bank account on June recipient)
30
(v) July 1 Payment is entered in June 29 July 30 June 26 (i.e., when
the books of account payament is
on June 30 and debited in the
debited in recipient’s recipient’s bank
bank account on june account)
26
(vi) August 1 August 10 June 29 July 30 July 30 (i.e., 31st
day from issuance
of invoice)
Q.12 Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
S. No Date of payment by the rceipent of Date of issue of invoice by

goods the supplier of good
(i) August 10 June 29
(ii) June 25 June 1
(iii) Part payment made on June 30 and June 29
balance amount paid on September 1
(iv) Payment is entered in the books of June 1
account on June 28 and debited in
recipient’s bank account on June 30
(v) Payment is entered in the books of June 29
account on June 30 and debited in
recipient’s bank account on June 26
Ans.
S. No. Date of Payment by Date of Date Time of supply of

the recipient of issue of immediately goods [Earlier of (1)
Supply of services invoice by following 60 & (4)]

the supplier days from the

of services invoice
(1) (2) (3)
(i) August 10 June 29 August 29 August 10
(ii) August 10 June 1 August 1 August 1
(iii) Part payment made June 29 August 29 June 30 for part
on June 30 and payment and
balance amount paid August 29 for
on September 1 balance amount
(iv) Payment is entered in June 1 August 1 June 28 (i.e., when
the books of account payment is entered
on June 28 and in the books of
debited in recipient’s account of the
bank account on June recipient)
30
(v) Payment is entered in June 29 August 29 June 26 (i.e., when
the books of account payament is
on June 30 and debited in the
debited in recipient’s recipient’s bank
bank account on june account)
26
Q.13 Kabira Industries Ltd engaged the services of a transporter for road transport of a consignment on 17th
June and made advance payment for the transport on the same date, i.e. 17th June. However, the
consignment could not be sent immediately on account of a strike in the factory, and instead was sent on
20th July. Invoice was received from the transporter on 22nd July.
What is the time of supply of the transporter’s service?
Ans. Time of supply of service taxable under reverse charge is the earlier of the following two dates in terms
of section 13(3):
• Date of payment
• 61st day from the date of issue of invoice
In this case, the date of payment precedes 61st day from the date of issue of invoice by the supplier of
service. Hence, the date of payment, i.e. 17th June, will be treated as the time of supply of service [Section
13(3)(a)].
Q.14 Raju Pvt Ltd. receives the order and advance payment on 5th January for carrying out an architectural
design job. It delivers the designs on 23rd April. By oversight, no invoice is issued at that time, and it is
issued much later, after the expiry of prescribed period for issue of invoice.
When is the time of supply of service?
Ans. Since the invoice has not been issued within the prescribed time period, time of supply of service will be
the earlier of the following two dates in terms of section 13(2)(b):
• Date of provision of service
• Date of receipt of payment
The payment was received on 5th January and the service was provided on 23rd April. Therefore, the date
of payment, i.e. 5th January is the time of supply of the service in this case.
Q.15 Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2nd August but no invoice
was raised and the transaction (dispatch of cartons) were not entered in the accounts. There was no
evidence of receipt of payment.
What is the time of supply of 150 cartons for the purpose of payment of tax?

In this case since the invoice has not been issued, the time of supply for the purpose of payment of tax will
be the last date on which the invoice is required to be issued.
Q.16 An order is placed on Ram & Co. on 18th August for supply of a consignment of customized shoes. Ram &
Co. gets the consignment ready and informs the customer and issues the invoice on 2nd December. The
customer collects the consignment from the premises of Ram & Co. on 7th December and electronically
transfers the payment on the same date, which is entered in the accounts on the next day, 8th December.
What is the time of supply of the shoes for the purpose of payment of tax?
In this case, the invoice is issued before the removal of the goods and is thus, within the time limit
prescribed under section 31(1). Therefore, the time of supply for the purpose of payment of tax is the date
of issue of invoice, which is 2nd December.
Q.17 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?
Ans. 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).
Q.18 A firm of advocates issues invoice for services to ABC Ltd. on 17th Feb. The payment is contested by ABC
Ltd. on the ground that on account of negligence of the firm, the company’s case was dismissed by the
Court for non-appearance, which necessitated further appearance for which the firm is billing the
company. The dispute drags on and finally payment is made on 3rd November.
Identify the time of supply of the legal services.
Ans. Tax on services supply by a firm of advocates by way of legal services to any business entity is payable
under reverse charge by such firm of advocates. Time of supply of services that are taxable under reverse
charge is earliest of the following two dates in terms of section 13(3):
• Date of payment [3rd November]
• 61st day from the date of issue of invoice [19th April]
The date of payment comes subsequent to the 61st day from the issue of invoice by the supplier of service.
Therefore, the 61st day from the date of supplier’s invoice has to be taken as the time of supply. This fixes
19th April as the time of supply.
Q.19 Modern Security Co. provides service of testing of electronic devices. In one case, it tested a batch of
devices on 4th and 5th September but could not raise invoice till 19th November because of some dispute
about the condition of the devices on return. The payment was made in December.
What is the method to fix the time of supply of the service?
Ans. The time of supply of services, if the invoice is not issued in time, is the date of payment or the date of
provision of service, whichever is earlier [Section 13(2)(b)]. In this case, the service is provided on 5th
September but not invoiced within the prescribed time limit. Therefore, 5th September, the date of
provision of service, being earlier than the date of payment, will be the time of supply.
Q.20 XYZ & Co., a firm of Chartered Accountants, issued invoice for services rendered to Mr. A on 7th

September. Determine the time of supply in the following independent cases:

(1) The provision of service was completed on 1st August and payment was received on 28th
September.
(2) The provision of service was completed on 14th August and payment was received on 28th
September.
(3) Mr. A made the payment on 3rd August. However, provision of service was remaining to be
completed at that time.
(4) Mr. A made the payment on 15th September. However, provision of service was remaining to be
completed at that time.
Ans. The time of supply of services is the date of issue of invoice if the same is issued within 30 days from the
date of supply of service OR the date of receipt of payment, whichever is earlier [Section 13(2)(a)].
In case the invoice is not issued within 30 days from the date of supply of service, time of supply is the date
of provision of service OR the date of receipt of payment, whichever is earlier [Section 13(2)(b)].
In accordance with the aforesaid provisions, the time of supply in the four independent cases will be:
(1) 1st August since the invoice is not issued within 30 days of supply of service.
(2) 7th September since the invoice is issued within 30 days of supply of service and the payment is
received after the issuance of invoice.
(3) 3rd August viz., earlier of date of issuance of invoice (7th September) or date of receipt of payment
(3rd August)
(4) 7th September viz., earlier of date of issuance of invoice (7th September) or date of receipt of
payment (15th September)
Q.21 M/s Pranav Associates, a partnership firm, provided recovery agent services to Newtron Credits Ltd., a
non-banking financial company and a registered supplier, on 15th January. Invoice for the same was issued
on 7th February and the payment was made on 18th April by Newtron Credits Ltd. Bank account of the
company was debited on 20th April.
Determine the following:
(i) Person liable to pay GST
(ii) Time of supply of service
Ans. (i) Tax on services supplied by a recovery agent to, inter alia, a non- banking financial company (NBFC)
is payable under reverse charge by such non-banking financial company.
Therefore, in the given case, person liable to pay GST is the NBFC - Newton Credits Ltd.
(ii) As per section 13(3), the time of supply of service on which GST is payable under reverse charge is
earlier of the following:-
• Date of payment as entered in the books of account of the recipient (18th April) or the date
on which the payment is debited in his bank account (20th April), whichever is earlier;
• Date immediately following 60 days since issue of invoice by the supplier, i.e. 9th April.
Thus, time of supply of service is 9th April.
Q.22 Mr. X supplied goods for ` 50,000 to its customer Miss Diyana on 1st January on the condition that
payment for the same will be made within a week. However, Miss Diyana made payment for the said goods
on 2nd February and thus, paid interest amounting to ` 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?
Ans. As per section 12(6), the time of supply with regard to an addition in value on account of interest, late fee
or penalty or delayed payment of consideration is 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. 2nd February.

Q.23 Mansh & Vansh Trading Company, a registered supplier, is liable to pay GST under forward charge. It has
furnished the following information:
(i) Goods were supplied on 3rd October
(ii) Invoice was issued on 5th October
(iii) Payment received on 9th October
Determine the time of supply of goods for the purpose of payment of tax.
Further, a registered person is required to issue a tax invoice before or at the time of removal of goods for
supply to the recipient. Thus, in the given case, the invoice for supply of goods should have been issued on
or before the removal of goods i.e., on 3rd October.
However, since the invoice has not been issued within the prescribed time, the time of supply for the
purpose of payment of tax will be the last date on which the invoice is required to be issued i.e., 3rd
October.
UNIT -II
Q.1 Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it to Colourful
Pvt. Ltd.
Particuarls `
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
Packing charges (not included in price above) 1,000
Black and White Pvt. Ltd. received ` 2,000 as a subsidy from a NGO on sale of such goods. The price of `
50,000 of the goods is after considering such subsidy. Black and White Ltd. offers 2% discount on the list
price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Black and White Pvt. Ltd.
Ans.
Particulars `
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
[Includible in the value as per section 15(2)(a)]
Packing charges [Includible in the value as per section 15(2)(c)] 1,000
Subsidy received from a non-Government body [Since subsidy is 2,000
received from a non-Government body, the same is included in the
value in terms of section 15(2)(e)]
Total 58,000
Less: Discount @ 2% on ` 50,000 [Since discount is known at the 1,000
time of supply and recorded in invoice, it is deductible from the
value in terms of section 15(3)(a)]
Value of taxable supply 57,000
Q.2 Samriddhi Advertisers conceptualised and designed the advertising campaign for a new product launched
by New Moon Pvt Ltd. for a consideration of ` 5,00,000. Samriddhi Advertisers owed ` 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 ` 15,000 as interest. Assume the rate of GST to be 18%.
Determine the value of taxable supply made by Samriddhi Advertisers.
Ans.
Particulars `
Service charges 5,00,000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi 20,000
Advertisers [Liability 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 [Includible in the 12,712
value in terms of section 15(2)(d) – Refer note below] (rounded
off)
Value of taxable supply 5,32,712
Note: The interest for delay in payment of consideration will be includible in the value of supply but the
time of supply of such interest will be the date when such interest is received in terms of section 13(6).
Such interest has been assumed to be inclusive of GST and thus, the value has been computed by making
 int erest 
back calculations  100 . It is also possible to assume the interest to be exclusive of GST. In
100  tax rate 
that case, the value of supply will work out to be ` 5,35,000.
Q.3 Are post-supply discounts eligible for deduction from the value of supplies in all situations? Explain.
Ans. No, the post-supply discounts are not eligible for deduction from the value of supplies in all situations.
Such discounts are allowed as a deduction from the value of supply only in the situations where the
following two conditions are satisfied:
(i) The discount is in terms of an agreement that existed at the time of supply and can be worked out
invoice-wise; and
(ii) Proportionate input tax credit (ITC) is reversed by the recipient - The buyer would have availed ITC
of GST payable on the gross value specified in the invoice. Thus, when a credit note is issued to him
by the supplier for the discount, the buyer will reverse the proportionate credit; consequent to
which, the supplier’s output tax liability will be reduced by the same amount.
If any of the above conditions are not satisfied, post-supply discount is not allowed as a deduction from
the value of supply and consequently, GST liability of the supplier does not get reduced.
Q.4 ‘Consideration under GST law includes both monetary and non-monetary considerations.’
Discuss the correctness or otherwise of the statement with reference to the definition of term
‘consideration’ provided under the CGST Act.
Ans. The statement is correct. As per the definition of the term ‘consideration’ provided under the CGST Act,
consideration under the GST law includes both payment in money or otherwise made by the recipient or
any other person and also takes within its sweep the monetary value of any act or forbearance for the
supply by the recipient or any other person. Further, it includes within its ambit any deposit which is
applied as a consideration for the supply but excludes the subsidies provided by the State or Central
Government.
The term money has also been defined under the CGST Act and it not only includes cash (Indian as well as
foreign currency) but also cheque, promissory note, bill of exchange, letter of credit, draft, pay order,
traveler’s cheque, money order, postal/electronic remittance or any such similar instrument recognized by
RBI. Non-monetary consideration essentially means consideration in kind.
Q.5 Sharp Minds Institute provides coaching for engineering entrance examinations. Monthly fee charged by
the Institute from a student is ` 10,000. The Institute is known for its commitment to provide education

to underprivileged children. It trains 10 students every year for entrance examinations free of cost.
The Institute has received ` 3,00,000 as coaching fees during a month. Nav Jeevan, an NGO working in the
area of education for underprivileged children, has given a subsidy of ` 10,000 (in lumpsum) during the
month to the Institute as it is serving the cause of underprivileged children.
Determine the value of supply of education services made by Sharp Minds Institute during the month.
Ans. As per section 15(2)(e), the value of a supply includes subsidies directly linked to the price, excluding
subsidies provided by the State Governments and the Central Government.
In the given case, though the subsidy is given by a non-Government body, the same is not includible in the
value as it is given in lumpsum and not directly linked to the price of the supply being valued. Therefore,
the value of supply made by Sharp Minds during the month is ` 3,00,000.
Q.6 Furniture Wala is a chain of retail showrooms selling both modern and classic furniture. In order to build
strong customer association, the showroom provides free delivery of the furniture at the premises of the
customers if the distance between the showroom and the customer’s premises is upto 20 kms. Where the
distance is more than 20 kms, the showroom charges a concessional freight of ` 10 for every additional
km.
Ms. Leena Kapoor purchases a double bed, a dressing table and a centre table for ` 2,00,000 from Furniture
Wala. Ms. Leena gets free delivery of the furniture as her residence is located at a distance of 18 km from
the showroom. The showroom incurs an expenditure of ` 1000 for delivering the furniture at Ms. Leena’s
residence.
Determine the value of taxable supply made by Furniture Wala. Will your answer change if residence of
Ms. Leena is 50 km away from the showroom?
Ans. In the given case, the showroom is not charging any amount towards freight from Ms. Leena but incurring
the same out of its own pocket. Therefore, the same should not be added to the value. Hence, the value
of supply will be ` 2,00,000.
However, the answer will change in the second case when the showroom will charge ` 300 for freight
[(50km – 20 km) x ` 10] from Ms. Leena. In this case, the supply will be a composite supply (principle supply
being the supply of furniture) and value thereof will be ` 2,00,300.
Q.7 AKJ Foods Pvt. Ltd. gets an order for supply of processed food from a customer. The customer wants the
consignment tested for gluten and specified chemical residues. AKJ Foods Pvt. Ltd. does the testing
before the supply and charges a testing fee for the same from the customer. AKJ Foods Pvt. Ltd. argues
that such testing fess should not form part of the consideration for the sale as it is a separate activity.
Is the company’s argument correct in the light of section 15?
Ans. Section 15(2) mandates addition of certain elements in the value of supply. Clause (c) of section 15(2)
specifies that amount charged for anything done by the supplier in respect of the supply at the time of or
before delivery of goods or supply of services shall be included in the value of supply.
Since AKJ Foods Pvt. Ltd. does the testing before the delivery of goods, the charges therefor will be
included in the value of the consignment. Therefore, AKJ Foods Pvt. Ltd.’s argument is not correct. The
testing fee should be added to the price to arrive at value of the consignment.
Q.8 A philanthropic association makes a substantial donation each year to a reputed private management
institution to subsidize the education of low-income group students who have gained admission there.
The fee for these individuals is reduced thereby coming to ` 3 lakh a year compared to ` 5 lakh a year for
other students.
What would be the value of the service of coaching and instruction provided by the institution to the low-
income group students?
Ans. As per section 15(2)(e), the value of a supply includes subsidies directly linked to the price, excluding State
Government and Central Government subsidies. In this case, the subsidy is not received from the
Government but from a philanthropic association. Therefore, the subsidy is to be added back to the price
to arrive at the value, which comes to ` 5 lakh a year.

Q.9 Mezda Banners, an advertising firm, gives its customers an interest-free credit period of 30 days for
payment. Its customer ABC paid for the supply 32 days after the supply of service. Mezda Banners waived
the interest payable for delay of two days.
The Department wants to add interest for two days to the value of supply. Should notional interest be
added to the value?
Ans. 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 value of a supply includes
certain elements like interest which are actually payable. Once waived, the interest is not payable and is
therefore, not to be added to the value.
Q.10 Crunch Bakery Products Ltd sells biscuits and cakes through its dealers, to whom it charges the list price
minus standard discount and pays GST accordingly. When goods remain unsold with the dealers, it offered
additional discounts on the stock as an incentive to push the sales.
Can this additional discount be reduced from the price at which the goods were sold, and concomitant tax
adjustments made?
Ans. The discounts were not known or agreed for at the time of supply of goods to the dealers. Therefore, in
terms of section 15(3), such discounts cannot be reduced from the price on which tax had been paid.
Q.11 Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the following
details of taxable inter-State supply made by it during the month of March.
S.No. Particulars Amount (`)
(i) List price of taxable goods supplied inter-state (exclusive of 15,00,000
taxes)
(ii) Subsidy received from the Central Government for supply of 2,10,000
taxable goods to Government School (exclusively related to
supply of goods included at S. No. 1)
(iii) Subsidy received from an NGO for supply of taxable goods 50,000
to an old age home (exclusively related to supply of goods
included at S. No. 1)
(iv) Tax levied by Municipal Authority 20,000
(v) Packing charges 15,000
(vi) Late fee paid by the recipient of supply for delayed payment 6,000
of consideration (Recipient has agreed to pay ` 6,000 in
lump sum and no additional amount is payable by him)
The list price of the goods is net of the two subsidies received. However, the other charges/taxes/fee are
charged to the customers over and above the list price.
Calculate the total value of taxable supplies made by Red Pepper Ltd. during the month of March. Rate
of IGST is 18%.
Ans. Computation of total value of taxable supplies made by Red Pepper Ltd. during the month of March
Particulars Amount (`)
List price of the goods 15,00,000
Subsidy amounting to ` 2,10,000 received from the Nil
Central Government
[Since the subsidy is received from the Government, the same
is not includible in the value in terms of section 15(2)(e)]
Subsidy received from NGO 50,000
[Since the subsidy is received from a non-Government body
and directly linked to the supply, the same is includible in the
value in terms of section 15(2)(e)]
Tax levied by the Municipal Authority 20,000


Packing charges 15,000
[Being incidental expenses, the same are includible in the value
as per section 15(2)(c)]
Late fees paid by recipient of supply for delayed payment 5,085
[Includible in the value as per section 15(2)(d) - As the amount
of interest received is a lump sum amount, the same has to be
taken as inclusive of GST] [` 6,000 x 100/118] rounded off
Total value of taxable supplies 15,90,085
Q.12 M/s. Flow Pro, a registered supplier, sold a machine to BP Ltd. It provides the following information in
this regard: -
(i) Price of the machine [excluding taxes and other charges 25,000
mentioned at S. Nos. (ii) and (iii)]
(ii) Third party inspection charges 5,000
[Such charges were payable by M/s Flow Pro but the same
have been directly paid by BP Ltd. to the inspection agency.
These charges were not recorded in the invoice issued by
M/s Flo Pro.]
(iii) Freight charges for delivery of the machine 2,000
[M/s Flow Pro has agreed to deliver the goods at BP Ltd.’s
premises]
(iv) Subsidy received from the State Government on sale of 5,000
machine under Skill Development Programme
[Subsidy is directly linked to the price]
(v) Discount of 2% is offered to BP Ltd. on the price
mentioned at S. No. (i) above and recorded in the invoice
Note: Price of the machine is net of the subsidy received.
Determine the value of taxable supply made by M/s Flow Pro to BP Ltd.
Ans. Computation of value of taxable supply made by M/s. Flo Pro to BP Ltd.
Price of the machine 25,000
[Since the subsidy is received from the State Government, the
same is not includible in the value of supply in terms of
section 15(2)(e)]
Third party inspection charges 5,000
[Any amount that the supplier is liable to pay in relation to the
supply but has been incurred by the recipient and not included
in the price actually paid or payable for the goods, is includible
in the value of supply in terms of section 15(2)(b)]
Freight charges for delivery of the machine 2,000
[Since arranging freight is the liability of supplier, it is a case
of composite supply and thus, freight charges are added in
the value of principal supply.]
Total 32,000
Less: Discount @ 2% on ` 25,000 being price charged to BP 500
Ltd.

[Discount given before or at the time of supply if duly

recorded in the invoice is deductible from the value of supply
in terms of section 15(3)(a)]
Value of taxable supply 31,500
Q.13 Shri Krishna Pvt. Ltd., a registered supplier, furnishes the following information relating to goods sold by
it to Shri Balram Pvt. Ltd.-
(i) Price of the goods [excluding taxes and other charges 1,00,000
mentioned at S. Nos. (iii), (v) and (vi)]
(ii) Municipal tax 2,000
(iii) Inspection charges 15,000
(iv) Subsidy received from Shri Ram Trust 50,000
[Subsidy is directly linked to the goods supplied]
(v) Late fees for delayed payment inclusive of GST 1,000
[Shri Balram Pvt. Ltd. paid the late fees. However, these
charges were ultimately waived by Shri Krishna Pvt. Ltd. and
the amount was refunded to Shri Balram Pvt. Ltd. during the
same month]
(vi) Weighment charges 2,000
[Such charges were paid by Shri Balram Pvt. Ltd. to Radhe
Pvt. Ltd. on behalf of Shri Krishna Pvt. Ltd.]
Note: Price of the goods is net of the subsidy received.
Determine the value of taxable supply made by Shri Krishna Pvt. Ltd. to Shri Balram Pvt. Ltd.
Ans. Computation of value of taxable supply made by Shri Krishna Pvt. Ltd. to Shri Balram Pvt. Ltd.
Price of the goods 1,00,000
Municipal tax 2,000
Inspection charges 15,000
[Any amount charged for anything done by the supplier in respect
of the supply of goods at the time of/before delivery of goods is
includible in the value as per section 15(2)(c)]
Subsidy received from Shri Ram Trust 50,000
[Since the subsidy is received from a non-Government body and
directly linked to the supply, the same is includible in the value in
terms of section 15(2)(e)]
Late fees for delayed payment Nil
[Not includible since the same is waived off]
Weighment charges paid to Radhe Pvt. Ltd. on behalf of Shri Krishna 2,000
Pvt. Ltd.
[Any amount that the supplier is liable to pay in relation to the
supply but has been incurred by the recipient and not included in
the price actually paid or payable for the goods, is includible in the
value of supply in terms of section 15(2)(b)]
Q.14 Koli Ltd., a registered supplier, has supplied machinery to Ghisa Ltd. (a supplier registered in the same

State). It provides following particulars regarding the same:

(i) Price of machinery (exclusive of taxes and discounts) 5,50,000
(ii) Part fitted in the machinery at the premises of Ghisa Ltd. 20,000
[Amount has been paid by Ghisa Ltd. directly to the supplier.
However, it was Koli Ltd.’s liability to pay the said amount.
The said amount has not been recorded in the invoice issued
by Koli Ltd.)
(iii) Installation and testing charges for machinery, not 25,000
included in price
(iv) Discount @ 2% on price of the machinery mentioned at S.
No. (i) above (recorded in the invoice)
(v) Koli Ltd. provides additional discount @ 1% at year end,
based on additional purchase of other machinery for which
adjustment is made at the end
of the financial year without any change in
individual transactions.
Determine the value of taxable supply made by Koli Ltd. to Ghisa Ltd.
Ans. Computation of value of taxable supply made by Koli Ltd. to Ghisa Ltd.
Price of machinery (exclusive of taxes and discounts) 5,50,000
Amount paid by Ghisa Ltd. directly to the supplier for the part 20,000
fitted in the machinery
[Any amount that the supplier is liable to pay in relation to a
supply but which has been incurred by the recipient of the
supply and not included in the price actually paid or payable for
the goods is includible in the value of supply in terms of section
15(2)(b).]
Installation and testing charges 25,000
[Any amount charged for anything done by the supplier in
respect of the supply of goods at the time of/before delivery
of goods is includible in the value of supply in terms of section
15(2)(c).]
Less: Discount @ 2% on the price of machinery [` 5,50,000 x 11,000
2%]
[Since discount is given at the time of supply of machinery and
recorded in the invoice, the same is deductible from the value
of the supply in terms of section 15(3)(a).]
Less: Additional 1% discount at year end Nil
[Though the additional discount is established before/at the
time of supply, it is not deductible from the value of supply in
terms of section 15(3)(b) as the same is not linked to any
specific transaction and is adjusted by the parties at the end
of the financial year.]

INPUT TAX CREDIT
CHAPTER NO -6
INPUT TAX CREDIT
Q.1 Vijay Sales, a registered supplier, receives 100 invoices (for inward supply of goods/ services) involving GST
of ` 10 lakh, from various suppliers during the month of October. Out of 100 invoices, details of 80 invoices
involving GST of ` 6 lakh have been furnished by the suppliers in their respective GSTR-1s filed on the
prescribed due date therefor.
Compute the ITC that can be claimed by Vijay Sales in its GSTR-3B for
the month of October to be filed by 20th November assuming that GST of ` 10 lakh is otherwise eligible
for ITC.
Ans. ITC to be claimed by Vijay Sales in its GSTR-3B for the month of October to be filed by 20th November will
be computed as under-
Invoices Amount of ITC involved in Amount of ITC that
the invoices (`) can be availed (`)
80 invoices furnished in GSTR-1 6 lakh 6 lakh
[Refer Note 1]
20 invoices not furnished in GSTR-1 4 lakh 0.3 lakh
[Refer Note 2]
Total 10 lakh 6.30 lakh
Notes:
(1) 100% ITC can be availed on invoices furnished by the suppliers in their GSTR-1.
(2) As per rule 36(4), the ITC in respect of invoices not furnished by the suppliers in their GSTR-1s is
restricted to 5% of eligible ITC in respect of invoices furnished in GSTR-1s. Thus, in respect of 20
invoices not furnished in GSTR-1s, the ITC has been restricted to ` 0.30 lakh [5% of ` 6 lakh].
Q.2 Ajay Sales, a registered supplier, receives 100 invoices (for inward supply of goods/ services) involving GST
of ` 10 lakh, from various suppliers during the month of October. Out of 100 invoices, details of 85 invoices
involving GST of ` 9.70 lakh have been furnished by the suppliers in their respective GSTR-1s filed on the
prescribed due date therefor.
Compute the ITC that can be claimed by Ajay Sales in its GSTR-3B for the month of October to be filed by
20th November assuming that GST of ` 10 lakh is otherwise eligible for ITC.
Ans. ITC to be claimed by Ajay Sales in its GSTR-3B for the month of October to be filed by 20th November
will be computed as under-
Invoices Amount of ITC involved Amount of ITC that can
in the invoices (`) be availed (`)
85 invoices furnished in GSTR-1 9.70 lakh 9.70 lakh
[Refer Note 1]
15 invoices not furnished in GSTR-1 0.30 lakh 0.30 lakh
[Refer Note 2]
Total 10 lakh 6.30 lakh
Notes:
(1) 100% ITC can be availed on invoices furnished by the suppliers in their GSTR-1.
(2) As per rule 36(4), the ITC in respect of invoices not furnished by the suppliers in their GSTR-1s is
restricted to 5% of eligible ITC in respect of invoices furnished in GSTR-1s. However, since in this
case, 5% of the eligible ITC in respect of invoices furnished in GSTR-1s [` 0.49 lakh (5% of ` 9.7
lakh)] exceeds the actual ITC [` 0.30 lakh] in respect of 15 invoices not furnished in GSTR-1, ITC
availed should be limited to actual amount of ITC.

INPUT TAX CREDIT
Q.3 ABC Co. Ltd., registered under GST, is engaged in the manufacture of heavy machinery. It procured the
following items during the month of July.
S. No. Items GST (`)
(i) Electrical transformers to be used in the manufacturing 5,20,000
process
(ii) Trucks used for the transport of raw material 1,00,000
(iii) Raw material 2,00,000
(iv) Confectionery items. These items were supplied free of 25,000
cost to the customers in a customer meet organized by
the company
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving necessary
explanations for treatment of various items. Subject to the information given above, assume that all the
other conditions necessary for availing ITC have been fulfille.
Ans.
Computation of ITC available with ABC Co. Ltd. for the month of July
S. No. Items ITC (`)
(i) Electrical transformers 5,20,000
[Being goods used in the course or furtherance of business, ITC
thereon is available in terms of section 16(1)]
(ii) Trucks used for the transport of raw material 1,00,000
[ITC on motor vehicles used for transportation of goods is not
blocked under section 17(5)(a)]
(iii) Raw material 2,00,000
[Being goods used in the course or furtherance of business, ITC
thereon is available in terms of section 16(1)]
(iv) Confectionery items for consumption of customers at Nil
customers meet
[ITC on food or beverages is specifically disallowed unless the
same is used for making outward taxable supply of the same
category or as an element of the taxable composite or mixed
supply-Section 17(5)(b)(i)]
Total ITC 8,20,000
Q.4 XYZ Ltd., registered under GST, is engaged in manufacture of taxable goods. Compute the ITC available
with XYZ Ltd. for the month of October from the following particulars:-
S. No. Inward supplies GST (`) Remarks
(i) Inputs ‘A’ 1,00,000 One invoice on which GST payable was
` 10,000, is missing
(ii) Inputs ‘B’ 50,000 Inputs are to be received in two
instalments. First instalment has been
received in October
(iii) Capital goods 1,20,000 XYZ Ltd. has capitalised the capital
goods at full invoice value inclusive of
GST as it will avail depreciation on the
full invoice value.
(iv) Input services 2,25,000 One invoice dated 20th January on
which GST payable was ` 50,000 has
been received in October

INPUT TAX CREDIT
Note:
(i) Subject to the information given above, assume that all the other conditions necessary for availing
ITC have been fulfilled.
(ii) The annual return for the previous financial year was filed on 15th September.
Ans. Computation of ITC available with XYZ Ltd. for the month of October
S. No. Items ITC (`)
(i) Inputs ‘A’ 90,000
[ITC cannot be taken on missing invoice. The registered person
should have the invoice in its possession to claim ITC-Section
16(2)(a)]
(ii) Inputs ‘B’ Nil
[When inputs are received in instalments, ITC can be availed only
on receipt of last instalment-First proviso to section 16(2)]
(iii) Capital goods Nil
[Input tax paid on capital goods cannot be availed as ITC, if
depreciation has been claimed on such tax component – Section
16(3)]
(iv) Input services 1,75,000
[As per section 16(4), ITC on an invoice cannot be availed after
the due date of furnishing of the return for the month of
September following the end of financial year to which such
invoice pertains or the date of filing annual return, whichever is
earlier.
Since the annual return for the previous financial year has been
filed on 15th September (prior to due date of filing the return
for the month of September, i.e. 20th October), ITC on the
invoice pertaining to previous financial year cannot be availed
after 15th September.
Total ITC 2,65,000
Q.5 XT Pvt. Ltd., a supplier of goods, pays GST under regular scheme. It has made the following outward
taxable supplies in a tax period:
Intra-State supply of goods 8,00,000
Inter-State supply of goods 3,00,000
It has also furnished the following information in respect of purchases made by it in that tax period:
Intra-State purchases of goods 2,00,000
Inter-State purchases of goods 50,000
The company has following ITCs with it at the beginning of the tax period:
CGST 57,000
SGST Nil
IGST 7,000
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.

INPUT TAX CREDIT
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the minimum GST, payable in cash, by XT Pvt. Ltd. for the tax period. Make suitable
assumptions as required.
Ans.
Computation of GST payable on outward supplies
S. No. Particulars CGST @ SGST @ IGST @ Total (`)

9% (`) 9% (`) 18% (`)
(i) Intra-State supply of goods for ` 72,000 72,000 1,44,000
8,00,000
(ii) Inter-State supply of goods for ` 54,000 54,000
3,00,000
Total GST payable 1,98,000
Computation of total ITC
Particulars CGST @ SGST @ IGST @

9% (`) 9% (`) 18% (`)
Opening ITC 57,000 Nil Nil
Add: ITC on Intra-State purchases of goods 18,000 18,000 Nil
valuing ` 2,00,000
Add ITC on inter-State purchases of goods Nil Nil 9,000
valuing Rs. 50,000
Total ITC 75,000 18,000 79,000
Computation of minimum GST payable from electronic cash ledger

Particulars CGST @ SGST @ IGST @ Total (`)
9% (`) 9% (`) 18% (`)
GST payable 72,000 72,000 54,000 1,98,000
Less: ITC [First ITC of IGST should be (Nil) (25,000) (54,000) 79,000
utilized in full - first against IGST IGST IGST IGST
liability and then against CGST and
SGST liabilities in a manner to minimize
cash outflow]
(72,000) (18,000) 90,000
CGST SGST
Minimum GST payable in cash Nil 29,000 Nil 29,000
Note : Since sufficient balance of ITC of CGST is available for paying CGST liability and cross utilization of
ITC of CGST and SGST is not allowed, ITC of IGST has been used to pay SGST (after paying IGST liability) to
minimize cash outflow.
Q.6 What is input tax?

Ans. 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.
Q.7 What are the conditions necessary for availing ITC?

INPUT TAX CREDIT
Ans. Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:
(a) he is in possession of tax invoice or debit note or such other tax paying documents as may be
prescribed;
(b) he has received the goods or services or both;
(c) subject to section 41, 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.
Q.8 Can a person take ITC without payment of consideration for the supply along with tax?
Ans. Yes, the recipient can take ITC. However, he is required to pay the consideration along with tax within 180
days from the date of issue of invoice. This condition is not applicable where tax is payable on reverse
charge basis.
Q.9 What is the time limit for taking ITC and reasons therefor?
Ans. Refer point (vi) “Time limit for availing ITC: Due date of filing return for the month of September of
succeeding financial year or date of filing of annual return, whichever is earlier” under Heading No. 3
“Eligibility and Conditions for Taking Input Tax Credit [Section 16]”.
Q.10 What is the ITC entitlement of a newly registered person?

Ans. A person applying for registration can take input tax credit of inputs held in stock and inputs contained in
semi- finished or finished goods held in stock on the day immediately preceding the date of grant of
registration. If the person was liable to take registration and he has applied for registration within thirty
days from the date on which he became liable to registration, then ITC of inputs held in stock and inputs
contained in semi- finished or finished goods held in stock on the day immediately preceding the date on
which he became liable to pay tax can be taken.
In case of voluntary registration, ITC of such goods held in stock on the day immediately preceding the
date of registration can be taken.
Q.11 What is the tax implication of supply of capital goods by a registered person who had taken ITC on such
capital goods?
Ans. In case of supply of capital goods or plant and machinery on which ITC has been taken, the registered
person shall pay an amount equal to the ITC taken on the said capital goods or plant and machinery
reduced by 5% per quarter or part thereof from the date of invoice or the tax on the transaction value of
such capital goods, whichever is higher.
However, in case of refractory bricks, moulds and dies, jigs and fixtures when these are supplied as scrap,
the person can pay tax on the transaction value.
Q.12 A registered person transfers its business to another person.

Is such registered person allowed to transfer the unutilized ITC lying in its electronic credit ledger to such
transferred business? Discuss.
Ans. As per section 18(3), in case of sale, merger, demerger, amalgamation, transfer or change in ownership of
business etc., the ITC that remains unutilized in the electronic credit ledger of the registered person can
be transferred to the new entity, provided there is a specific provision for transfer of liabilities in such
change of constitution.
The registered person should furnish the details of change in constitution on the common portal and
submit a certificate from practicing Chartered Account/Cost Accountant certifying that the change in
constitution has been done with a specific provision for transfer of liabilities. Upon acceptance of such
details by the transferee on the common portal, the unutilized ITC gets credited to his electronic credit
ledger. The transferee should record the inputs and capital goods so transferred in his books of account.

INPUT TAX CREDIT
Q.13 Swastik Pvt. Ltd. is a manufacturer of taxable goods. It purchased a machinery for ` 8,00,000 on which IGST
of ` 14,400 is paid. The company has claimed depreciation under the Income-tax Act, 1961 on the full value
of the machine, i.e. including the IGST component as also availed ITC of ` 14,400 paid by it as IGST.
Examine if the stand taken by the company is correct in law.
Ans. As per section 16(3), if the person taking the ITC on capital goods and plant and machinery has claimed
depreciation on the tax component of the cost of the said items under the Income-tax Act 1961, the ITC
on the said tax component shall not be allowed.
Since in the given case, Swastik Pvt. Ltd. has claimed depreciation on the tax component of the cost of the
machine, it cannot claim ITC of IGST of ` 14,400 paid by it on the machine. It can either claim depreciation
on the tax component or avail ITC of such tax but cannot avail both the benefits simultaneously.
Q.14 Sigma Consultants, an LLP of finance professionals, provides financial consultancy services. It made an
advance payment of ` 1,18,000 (inclusive of IGST @ 18%) in the month of October to Azuro Computer
Services for developing a software. The software would be used by the LLP to enhance the precision of
the financial advice given by it to various clients. The balance payment is to be made after the successful
test run of the software in the month of December. Sigma Consultants has availed ITC of IGST of ` 18,000
in the month of October.
Do you think Sigma Consultants can avail such ITC? Examine the scenario with reference to the relevant
legal provisions.
Ans. As per section 16(2)(b), tax paid on supply of goods and/or services can be availed as ITC only if such goods
and/or services are received by the registered person.
In the given case, Sigma Consultants has paid IGST of ` 18,000, in the month of October, on advance for IT
services intended to be used in the course or furtherance of business. However, it cannot avail ITC of such
tax in the month of October as the services in relation to which the advance payment has been made have
not been received in that month.
Q.15 A taxable person is in the business of information technology. He buys a car (maximum seating capacity –
5 persons) for use of his Executive Directors.
Can he avail the ITC in respect of GST paid on purchase of such car?
Ans. No. ITC on motor vehicles for transportation of persons with seating capacity of up to 13 persons (including
driver), can be availed only if the taxable person is in the business of transport of passengers or is providing
the services of imparting training on driving such motor vehicles or is in the business of supply of such
motor vehicles.
Q.16 A technical testing agency tests and certifies each batch of machine tools before dispatch by BMT Ltd.
Some of these tools are dispatched to a unit in a SEZ without payment of GST as these supplies are not
taxable.
The finance personnel of BMT Ltd. want to know whether they need to carry out reversal of ITC on the
testing agency’s services to the extent attributable to the SEZ supplies. Give your comments.
Ans. ITC is disallowed only to the extent it pertains to supplies used for non-business purposes or supplies other
than taxable and zero-rated supplies. Supplies to SEZ units are zero rated supplies in terms of section 16(1)
of the IGST Act. Thus, full ITC is allowed on inward supplies of BMT Ltd. used for effecting supplies to the
unit in the SEZ.
Q.17 ‘AB’, a registered person, was paying tax under composition scheme up to 30th July. However, w.e.f. 31st
July, ‘AB’ becomes liable to pay tax under regular scheme.
Is ‘AB’ eligible for any ITC?
Ans. ‘AB’ is eligible for ITC on inputs held in stock and inputs contained in semi-finished or finished goods held
in stock and capital goods as on 30th July. ITC on capital goods will be reduced by 5% per quarter or part
thereof from the date of invoice.

INPUT TAX CREDIT
Q.18 Babla Enterprises is exclusively engaged in making exempt supply of goods and is thus, not registered
under GST. On 1st October, the exemption available on its goods gets withdrawn. On that day, the
turnover of Babla Enterprises was ` 50 lakh.
Examine the eligibility of Babla Enterprises for availing ITC, if any.
Ans. Since the exemption available on goods being supplied by Babla Enterprises gets withdrawn, it becomes
liable to registration as its turnover has crossed the threshold limit on the day when the exemption is
withdrawn.
Assuming that Babla Enterprises applies for registration within 30 days of 1st October and it obtains such
registration, it will 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 on the day immediately preceding the date from
which it becomes liable to pay tax, i.e. 30th September [Section 18(1)(a)]. Input tax paid on capital goods
will not be available as ITC in this case.
Q.19 Mamta Trade Links trades in exempt goods and provides taxable services. It is registered under GST. On
1st October, the exemption available on its goods gets withdrawn.
Analyze the scenario and determine the eligibility of Mamta Trade Links for availing ITC, if any, on inputs
and/or capital goods used in the supply of exempt goods.
Ans. If the exempt supply made by a registered person becomes a taxable supply, provisions of section 18(1)(d)
become applicable. In the given case, since Mamta Trade Links is a registered person, section 18(1)(d) will
be applicable.
As per section 18(1)(d), Mamta Trade Links will 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, i.e. 30th September. ITC on capital goods will be
reduced by 5% per quarter or part thereof from the date of invoice.
Q.20 Harshgeet Pvt. Ltd., a registered supplier, is engaged in the manufacture of taxable goods. The company
provides the following information pertaining to purchases made/services availed by it during the month
of July:
S. No. Particulars GST (`)
(1) Raw material (to be received in the month of September) 2,50,000
(2) Membership of a club availed for employees working in the 1,45,000
factory
(3) Inputs to be received in 5 lots, out of which 3rd lot was 80,000
received during 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 1,50,000
and GST paid on those items is ` 80,000)
Determine the amount of ITC available with Harshgeet Pvt. Ltd. for the month of July by giving the
necessary explanation for treatment of various items. Subject to the information given above, all the other
conditions necessary for availing ITC have been fulfilled.
Ans. Computation of ITC available with Harshgeet Pvt. Ltd. for the month of July
Particulars ITC (`)
Raw Material Nil
[ITC not available as raw material is not received in July]
Membership of a club availed for employees working in the factory Nil
[Blocked credit in terms of section 17(5)]
Inputs to be received in 5 lots, out of which 3rd lot was received Nil
during the month

INPUT TAX CREDIT
[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 [ITC of GST paid on motor 40,000
vehicles used for transportation of goods is allowed
unconditionally]
Capital goods 70,000
[ITC can be availed only on the basis of a valid document (invoice).
Thus, GST paid on items for which invoice is missing, i.e. ` 80,000, is
not available.]
Total ITC 1,10,000
Q.21 Jamku Ltd., a registered person, is engaged in the business of spices. It provides following details in
relation to GST paid on inward supplies procured by it during the month of October.
(1) Raw spices purchase
- Raw spices sold to customers
- Raw spices used for personal use of directors 50,000
20,000
(2) Electric machinery purchased for being used in the 25,000
manufacturing process
(3) Motor vehicle used for transportation of the employee 55,000
(4) Payment made to contractor for construction of staff 1,25,000
quarter
Determine the amount of ITC available with Jamku Ltd. for the month October by giving the necessary
explanation for treatment of various items. Subject to the information given above, all the other
Ans. Computation of ITC available with Jamku Ltd. for the month of October
Particulars ITC (`)
Purchase of raw spices which are sold to customers 50,000
[Every registered person is entitled to take credit of input
tax charged on any supply of goods to him which are used
or intended to be used in the course or furtherance of his
business.]
Purchase of raw spices for personal use of directors Nil
[ITC is not available on goods used for personal
consumption.]
Electric machinery purchased for being used in the 25,000
manufacturing process
[Every registered person is entitled to take credit of input
tax charged on any supply of goods to him which are used
or intended to be used in the course or furtherance of his
business.]
Motor vehicle used for transportation of employee Nil
[ITC on motor vehicles for transportation of persons with
seating capacity ≤ 13 persons (including the driver) is
blocked except when the same are used for (i) making
further taxable supply of such motor vehicles (ii) making
taxable supply of transportation of passengers (iii) making

INPUT TAX CREDIT
taxable supply of imparting training on driving such motor

vehicles.
In the given case, since the supplier is in the business of
spices, ITC on motor vehicle used for transportation of the
employee is blocked credit. ]
Payment made to contractor for construction of staff Nil
quarter
[ITC is not available on 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 when such goods or services or both are
used in the course or furtherance of business.]
Total ITC 75,000
Q.22 Dina Ltd., a registered supplier from Maharashtra, is engaged in the manufacture of passenger autos. The
company provides the following details of purchases made/services availed by it during the month of
March:
(1) Purchase of iron which is used as a raw material 2,50,000
[Goods were received in two instalments - first in March
and the second in April]
(2) Purchase of accessories which were delivered directly to 90,000
the dealers of the company on the direction of Dina Ltd.
[Only invoice was received by Dina Ltd.]
(3) Purchase of bus (seating capacity 15) for the 1,97,000
transportation of employees from their residence to
company and back
(4) General insurance taken on a car used by executives of the 5,200
company for official purposes
You are required to determine the ITC available with Dina Ltd. for the month of March, by giving brief
explanations for treatment of various items. Subject to the information given above, all the other
Ans. Computation of ITC available with Dina Ltd. for the month of March
Particulars ITC (`)
Purchase of iron used as a raw material Nil
[When inputs are received in instalments, ITC can be
availed only on the receipt of last instalment. Hence, since
last instalment is received in April, ITC cannot be availed in
March.]
Purchase of accessories delivered directly to the dealers of 90,000
the company
[Goods delivered to another person on the direction of the
registered person by way of transfer of documents of title
or otherwise, either before or during the movement, are
deemed to have been received by such registered person.
Thus, ITC is available to the registered person, on whose
order/direction the goods are delivered to a third person.]
Bus for the transportation of employees 1,97,000
[ITC on motor vehicles for transportation of persons with

INPUT TAX CREDIT
seating capacity > 13 persons (including the driver) used

for any purpose is allowed.
General insurance taken on car used by executives of the Nil
company for official purpose [ITC on motor vehicles for
transportation of persons with seating capacity ≤ 13
persons (including the driver) is blocked except when the
same are used for (i) making further taxable supply of such
motor vehicles (ii) making taxable supply of transportation
of passengers (iii) making taxable supply of imparting
training on driving such motor vehicles. Further, ITC is not
allowed on services of general insurance relating to such
ineligible motor vehicles.
Since, the car is not used for any of the eligible purposes,
ITC thereon is blocked and thus, ITC on general insurance
taken on such car is also blocked.]
Total ITC 2,87,000
Q.23 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 High-Fi Infotech (P)
Ltd. for ` 11,00,000/- (excluding GST @ 18%) on 28th October. Invoice for service rendered was issued on
5th November.
Comfortable (P) Ltd. made part payment of ` 4,20,000/- on 30th November. Being unhappy with service
provided by High-fi Infotech (P) Ltd., it did not make the balance payment. Deficiency in service rendered
was made good by High-Fi Infotech (P) Ltd. by 15th April of next year. Comfortable (P) Ltd. made the
balance payment on 6th July of next year.
Examine the availability of ITC with Comfortable (P) Ltd. in respect of IT engineering services received by
it from High-Fi Infotech (P) Ltd.
Ans. Every registered person is entitled to take credit of input tax charged on any supply of goods and/or
services which are used or intended to be used in the course or furtherance of his business if, inter alia, he
is in possession of a tax invoice issued by a supplier and he has received the goods and/or services.
The registered person must pay to the supplier, the value of the goods and/or services along with the tax
within 180 days from the date of issue of invoice. In the event of failure to do so, the corresponding credits
availed by the registered person would be added to his output tax liability, with interest. However, once
the recipient makes the payment of value of goods and/or services along with tax, he will be entitled to
avail the credit again without any time limit. In case part-payment has been made, proportionate credit
would be allowed.
In the given case, High-fi Infotech (P) Ltd. provides the service in the month of October and Comfortable
(P) Ltd. receives the invoice in the month of November. Therefore, in view of the above provisions and
assuming all other conditions required for availing ITC having been fulfilled, ITC of ` 1,98,000 (` 11,00,000
x 18%) will be availed by Comfortable (P) Ltd. in the month of November when it receives the invoice
issued by High-fi Infotech (P) Ltd.
However, proportionate ITC amounting to ` 1,33,932 ⇒ [(` 12,98,000 - ` 4,20,000)/118] x 18] will be
added to the output tax liability of Comfortable (P) Ltd. as full payment has not been made within 180
days of issuance of the invoice, i.e. by 4th May of next year. ITC of ` 1,33,932 can, however, be availed
again by Comfortable (P) Ltd. in the month of July next year when it makes the balance payment.
Q.24 M/s. Diwan & Sons of New Delhi, has placed an order for 250 kg of plastic granules @ ` 50 per kg (exclusive
of GST) on M/s. Karim & Bros. of Noida, U.P. M/s. Karim & Bros. has agreed to deliver the goods at the
warehouse of M/s. Diwan & Sons at New Delhi.
While the order was getting packed at the factory of M/s. Karim & Bros., M/s. Diwan & Sons got an order

INPUT TAX CREDIT
from Shubhkamna Sales of Hapur, U.P. for 250 kg of plastic granules @ ` 60 per kg (exclusive of GST). In
order to save on transportation cost, M/s. Diwan & Sons asks M/s. Karim & Bros. to directly deliver the
plastic granules to Shubhkamna Sales at its godown located in Hapur. Accordingly, M/s. Karim & Bros. has
delivered the plastic granules at the godown of Shubhkamna Sales at Hapur.
Examine the availability of ITC with M/s. Diwan & Sons & M/s. Karim & Bros.
Note: All the parties are registered under GST and rate of GST is 18%.
Ans. One of the conditions for availing ITC is that the registered person taking the ITC must have received the
goods and / or services. However, goods delivered to a third person on the direction of the registered
person by way of transfer of documents of title or otherwise, either before or during the movement, are
deemed to have been received by such registered person. So, ITC is available to the registered person, on
whose order the goods are delivered to a third person even though the registered person does not receive
the goods.
In the given case, goods have been delivered by M/s. Karim & Bros. (supplier) to Shubhkamna Sales (third
person) on the direction of M/s. Diwan & Sons (registered person). Therefore, in view of the above
provisions, ITC of ` 2,250 (` 50 x 250 x 18%) will be available to M/s. Diwan & Sons (registered person) on
the purchase of 250 kg of plastic granules @ 50 per kg.
Further, in this case there is another supply between Diwan & Sons (supplier) and Shubhkamna Sales
(recipient). Therefore, Shubhkamna Sales can avail ITC of ` 2,700 (` 60 x 250 x 18%) on the purchase of 250
kg of plastic granules @ 60 per kg.
Q.25 Paritosh & Co., a supplier of goods, pays GST under regular scheme. It has made the following outward
taxable supplies in a tax period:
Intra-State supply of goods 10,00,000
Inter-State supply of goods 8,00,000
It has also furnished the following information in respect of purchases made by it in that tax period:
Intra-State purchases of goods 3,00,000
Inter-State purchases of goods 2,50,000
Paritosh & Co. has following ITCs with it at the beginning of the tax period:
CGST 57,000
SGST 60,000
IGST 1,40,000
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing ITC have been fulfilled.
Compute the minimum GST, payable in cash, by Paritosh & Co. for the tax period and the ITC to be carried
forward to the next month. Make suitable assumptions as required.
Ans. Computation of GST payable on outward supplies
S. No. Particulars CGST @ SGST @ IGST @ Total (`)
9% (`) 9% (`) 18% (`)
(i) Intra-State supply of goods for ` 10,00,000 90,000 90,000 1,80,000
(ii) Inter-State supply of goods for ` 8,00,000 144,000 1,44,000
Total GST payable 3,24,000

INPUT TAX CREDIT
Computation of total ITC
Particulars CGST @ SGST @ IGST @

9% (`) 9% (`) 18% (`)
Opening ITC 57,000 60,000 1,40,000
Add: ITC on Intra-State purchases of goods 27,000 27,000 Nil
valuing ` 3,00,000
Add: ITC on Inter-State purchases of goods Nil Nil 45,000
valuing ` 2,50,000
Total ITC 84,000 87,000 1,85,000
Computation of minimum GST payable from electronic cash ledger
Particulars CGST @ SGST @ IGST @ Total (`)

9% (`) 9% (`) 18% (`)
GST payable 90,000 90,000 1,44,000 3,24,000
Less: ITC [First ITC of IGST should be utilized (38,000) (3,000) (1,44,000) 1,85,000
in full - first against IGST liability and then IGST IGST IGST
against CGST and SGST liabilities in a
manner to minimize cash outflow]
(52,000) (87,000) 1,39,000
CGST SGST
Minimum GST payable in cash Nil Nil Nil Nil
ITC balance to be carried forward next 32,000 Nil Nil 32,000
month
Note : The above computation is one of the many ways to set off the ITC of IGST (` 41,000-after set off
against IGST liability) against CGST and SGST liability to compute minimum GST payable in cash. To
illustrate, IGST of ` 10,000 can be set off against SGST payable and IGST of ` 31,000 can be set off against
CGST payable. In this situation also, the net GST payable will be nil but the ITC of CGST and SGST to be
carried forward will be ` 25,000 and ` 7,000 (totaling to ` 32,000) respectively. However, if the entire ITC
of ` 41,000 is set off against CGST payable, then SGST of ` 3,000 will be payable in cash thus, increasing
the cash outflow. Therefore, such a set off would not be advisable for computing the minimum GST
payable.

REGISTRATION
CHAPTER NO -7
REGISTRATION
Q.1 Examine, with reason, whether registration is required, under CGST Act, in the following independent
cases:
(i) Aadhav Computers of Gujarat is providing computer maintenance service. Aggregate turnover of
Aadhav Computers is ` 15 lakh which comprises both inter-State and intra-State supply.
(ii) Soft Wings of West Bengal, exclusively trading in garments, supplies its taxable goods in various
States of India from its outlet in West Bengal. Aggregate turnover of Soft Wings is ` 35 lakh.
Ans. (i) Registration is compulsory for suppliers engaged in inter-State supply. However, as per Notification
No. 10/2017 IT dated 13.10.2017, threshold exemption of ` 20 lakh [` 10 lakh in case of Special
Category States of Mizoram, Tripura, Manipur and Nagaland] is available in case of inter-State supply
of taxable services.
Therefore, Aadhav Computers (aggregate turnover ` 15 lakh) is not required to obtain registration
even though it is engaged in inter-State supply of taxable services.
(ii) The threshold limit for registration in the State of West Bengal for the persons engaged exclusively
in supply of goods, is ` 40 lakh. However, registration is compulsory if the supplier is engaged inter-
State supply of goods irrespective of the quantum of aggregate turnover. The threshold exemption
is not available in case of inter-State supply of taxable goods. Thus, Soft Wings is required to obtain
registration.
Q.2 Examine whether the liability to register compulsorily under section 24 arises in each of the independent
cases mentioned below:
(1) Meenu, a supplier in Maharashtra, is exclusively engaged in supply of potatoes produced out of
cultivation of her own land, within Maharashtra and also outside Maharashtra.
(2) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Further, it provides services
of refining of oil to customers. Total turnover of supply of machine oil is ` 10 lakh, supply of petrol
is ` 5 lakh and supply of services is ` 6 lakh.
(3) Tilu is working as an agent, he is supplying taxable goods as an agent of Tiku (who is registered
taxable person) and its aggregate turnover does not exceed ` 20 lakh during the financial year.
Ans. (1) Section 24 provides that persons making any inter-State taxable supply of goods are required to
obtain registration compulsorily under GST laws irrespective of the quantum of aggregate turnover.
However, as per section 23, an agriculturist, to the extent of supply of produce out of cultivation of
land, is not liable to registration.
Meenu is exclusively engaged in cultivation and supply of potatoes. Thus, she is not liable to
registration irrespective of the fact that she is engaged in making inter-State supply of goods.
Further, Meenu will not be liable to registration, in the given case, even if her turnover exceeds the
threshold limit.
(2) Section 24 specifies the categories of persons who are required to be
mandatorily registered under GST irrespective of the quantum of their aggregate turnover. In the
given case, Jinu Oils does not fall in any of the specified categories. Therefore, it is not required to
obtain registration compulsorily under GST. However, as per section 22 read with Notification No.
10/2019 CT dated 07.03.2019, a supplier is liable to be registered in the State/Union territory from
where he makes a taxable supply of goods and/or services, if his aggregate turnover in a financial
year exceeds the threshold limit. The threshold limit for a person making supply of both goods and

REGISTRATION
services is ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland and
` 20 lakh for the rest of India. Thus, the applicable threshold limit for the State of Gujarat is ` 20 lakh
for supply of both goods and services. Further,
aggregate turnover includes exempted turnover of goods or services.
Accordingly, Jinu Oils is liable obtain registration since its aggregate turnover [` 21 lakh (including
turnover of exempt supply of petrol)] exceeds the threshold limit of ` 20 lakh. (3) Section 24 provides
that persons who make taxable supply of goods and/or services on behalf of other taxable persons
whether as an agent or otherwise are required to obtain registration compulsorily under GST laws
irrespective of the quantum of aggregate turnover.
Therefore, Tilu will be mandatorily required to obtain registration.
Q.3 Determine the effective date of registration under CGST Act in respect of the following cases with proper
explanation:
(i) The aggregate turnover of Varun Industries of Mumbai has exceeded ` 40 lakh on 1st August.
Varun Industries manufactures LED TVs in Mumbai and sells them in Pune. It submits the
application for registration on 20th August. Registration certificate granted on 25th August.
(ii) Sweta InfoTech Services is the provider of internet services in Pune. Its aggregate turnover exceeds
` 20 lakh on 25th September. It submits the application for registration on 27th October.
Registration certificate is granted on 5th November.
Ans. As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to be
registered in the State/Union territory from where he makes a taxable supply of goods and/or services, if
his aggregate turnover in a financial year exceeds the threshold limit. The threshold limit for a person
making exclusive intra-State taxable supplies of goods is as under:-
(a) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(b) ` 20 lakh for the States of States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana
and Uttarakhand.
(c) ` 40 lakh for rest of India. However, the higher threshold limit of ` 40 lakh is not available to persons
engaged in making supplies of ice cream and other edible ice, whether or not containing cocoa, Pan
masala and Tobacco and manufactured tobacco substitutes.
The threshold limit for a person making exclusive taxable supply of services or supply of both goods and
services is as under:-
(a) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(b) ` 20 lakh for the rest of India.
As per rule 10, where a person submits the application for registration within 30 days of becoming liable
for registration, 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.
In the light of the above provisions, in the given cases, the applicable turnover limit for registration will be
` 40 lakh and ` 20 lakh respectively in case (i) and (ii).
(i) Since Varun Industries applied for registration within 30 days of becoming liable to registration, the
effective date of registration is 1st August.
(ii) Since Sweta InfoTech 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.
Q.4 Determine the effective date of registration in following cases:

(a) The aggregate turnover of Dhampur Footwear Industries of Delhi has exceeded the applicable
threshold limit of ` 40 lakh on 1st September. It submits the application for registration on 20th
September. Registration certificate is granted to it on 25th September.
(b) Mehta Teleservices is an architect in Lucknow. Its aggregate turnover exceeds ` 20 lakh on 25th
October. It submits the application for registration on 27th November. Registration certificate is
granted to it on 5th December.

REGISTRATION
Ans. (a) Every supplier becomes liable to registration if his turnover exceeds the applicable threshold limit
[` 40 lakh in this case] in a finacial year [Section 22 read with Notification No. 10/2019 CT dated
07.03.2019].
Since in the given case, the turnover of Dhampur Industries exceeded ` 40 lakh on 1st September, it
becomes liable to registration on said date.
Further, since the application for registration has been submitted within 30 days from such date, the
registration shall be effective from the date on which the person becomes liable to registration
[Section 25 read with rule 10]. Therefore, the effective date of registration is 1st September.
(b) Since in the given case, the turnover of Mehta Teleservices exceeds the applicable threshold limit [`
20 lakh] on 25th October, it becomes liable to registration on said date.
Further, since the application for registration has been submitted after 30 days from the date such
person becomes liable to registration, the registration shall be effective from the date of grant of
registration. Therefore, the effective date of registration is 5th December.
Q.5 In order to be eligible for grant of registration, a person must have a Permanent Account Number issued
under the Income- tax Act, 1961. State one exception to it.
Ans. A Permanent Account Number is mandatory to be eligible for grant of registration. One exception to this
is a non-resident taxable person. A non-resident taxable person may be granted registration on the basis
of other prescribed documents instead of PAN. He has to submit a self-attested copy of his valid passport
along with the application signed by his authorized signatory who is an Indian Resident having valid PAN
and application will be submitted in a different prescribed form [Section 25(6) & (7)].
Q.6 State which of the following suppliers are liable to be registered:

(a) Agent supplying taxable goods on behalf of some other taxable person and its aggregate turnover
does not exceed the applicable threshold limit during the financial year.
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land and its aggregate
turnover exceeds the applicable threshold limit during the financial year.
Ans. (a) Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds the
applicable threshold limit in a financial year. However, as per section 24, a person making taxable
supply of 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 the applicable
threshold limit during the financial year.
(b) As per section 23, an agriculturist who is only engaged in supply of produce out of cultivation of land
is not required to obtain registration even if his turnover exceeded the applicable threshold limit for
registration.
Q.7 Pure Oils, Delhi has supplied machine oil and high-speed diesel in the month of April as per the details
given in table below. Pure Oils is not yet registered.
S. No. Particulars Amount (`)
(i) Supply of machine oil in Delhi 15,00,000
(ii) Supply of high speed diesel in Delhi 10,00,000
(iii) Supply of machine oil made in Punjab by Pure Oils from its branch located in 10,00,000
Punjab
*excluding GST Determine whether Pure Oils is liable for registration.
(a) ` 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.

REGISTRATION
(b) ` 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) ` 40 lakh for rest of India except persons engaged in making supplies of ice cream and other edible
ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco
substitutes.
The threshold limit for a person making exclusive taxable supply of services or supply of both
goods and services is as under:-
As per section 2(6), 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(2) 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), 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 of Pure Oils for the month of
April is computed as under:
S. No. Particulars Amount
(in `)
(i) Supply of machine oils in Delhi 15,00,000
(ii) Add: Supply of high speed diesel in Delhi 10,00,000
(iii) Add: Supply of machine oil made by Pure Oils 10,00,000
from its branch located in Punjab
Aggregate Turnover 35,00,000
Pure Oils is making exclusive supply of goods and hence the threshold limit for registration would be `
40,00,000. Since the aggregate turnover does not exceed ` 40,00,000, Pure Oils is not liable to be
registered.
Q.8 What will be your answer if in question 8 above, in S.No. (ii), Pure Oils supplies the high speed diesel in
Delhi in the capacity of an agent of Mixed Oils Ltd.?
Ans. In case Pure Oils makes the supply in capacity of an agent of Mixed Oils Ltd.:
Section 24 provides that an agent who is engaged in making taxable supplying of goods on behalf of other
taxable persons, shall be liable to obtain registration irrespective of the threshold turnover limit. However,
in the present case, if Pure Oils supply high speed diesel on behalf of Mixed Oil Ltd. in Delhi as its agent, it
shall still not be liable to obtain registration in Delhi since section 24 comes into play only when agent is
making taxable supply of goods on behalf of principal whereas in the given case, Pure Oils is supplying
non-taxable goods on behalf of Mixed Oils Ltd.
Q.9 Examine whether the supplier of goods is liable to get registered in the following independent cases:-
(i) Raghav of Assam is exclusively engaged in intra-State taxable supply of readymade garments. His

REGISTRATION
turnover in the current financial year (FY) from Assam showroom is ` 33 lakh. He has another
showroom in Tripura with a turnover of ` 11 lakh in the current FY.
(ii) Pulkit of Panjim, Goa is exclusively engaged in intra-State taxable supply of shoes. His aggregate
turnover in the current financial year is ` 22 lakh.
(iii) Harshit of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala. His
aggregate turnover in the current financial year is ` 24 lakh.
(b) ` 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) ` 40 lakh for rest of India except persons engaged in making supplies of ice cream and other edible
ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco
substitutes.
In the light of the afore-mentioned provisions, the answer to the independent cases is as under:-
(i) Raghav is eligible for higher threshold limit of turnover for registration, i.e. ` 40 lakh as he is
exclusively engaged in intra-State supply of goods. However, since Raghav is engaged in supplying
readymade garments from a Special Category State i.e. Tripura, the threshold limit gets reduced to
` 10 lakh. Thus, Raghav is liable to get registered under GST as his turnover exceeds `10 lakh. Further,
he is required to obtain registration in both Assam and Tripura as he is making taxable supplies from
both the States.
(ii) The applicable threshold limit for registration for Pulkit in the given case is ` 40 lakh as he is
exclusively engaged in intra-State taxable supply of goods in Goa. Thus, he is not liable to get
registered under GST as his turnover is less than the threshold limit.
(iii) Harshit being exclusively engaged in supply of pan masala is not eligible for higher threshold limit
of `40 lakh. The applicable threshold limit for registration in this case is `20 lakh. Thus, Harshit is
liable to get registered under GST.
Q.10 Examine whether the supplier is liable to get registered in the following independent cases:-
(i) Ankit of Assam is exclusively engaged in intra-State supply of taxable services. His aggregate
turnover in the current financial year is ` 25 lakh.
(ii) Sanchit of Assam is engaged in intra-State supply of both taxable goods and services. His
aggregate turnover in the current financial year is ` 30 lakh.
making exclusive taxable supply of services or supply of both goods and services is as under:-
(i) Though Ankit is dealing in Assam, he is not entitled for higher threshold limit for registration as the
same is applicable only in case of exclusively supply of goods and he is exclusively engaged in
providing services. Thus, the applicable threshold limit for registration in this case is ` 20 lakh and
hence, Ankit is liable to get registered under GST.
(ii) Since Sanchit is engaged in supply of both taxable goods and services, the applicable threshold
limit for registration in his case is ` 20 lakh. Thus, Sanchit is liable to get registered under GST as his
turnover is more than the threshold limit.

REGISTRATION
Q.11 What are the advantage of taking registration in GST?

Ans. Registration will confer following advantages to the business:
 Legally recognized as supplier of goods or services.
 Proper accounting of taxes paid on the input goods or services which can be utilized for payment
of GST due on supply of goods or services or both by the business.
 Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on
the goods or services supplied to purchasers or recipients.
 Become eligible to avail various other benefits and privileges rendered under the GST laws.
Q.12 Can a person without GST registration collect GST and claim ITC?
Ans. 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.
Q.13 If a person is making taxable supplies from different States, with the same PAN number, can he operate
with a single registration?
Ans. 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 making taxable supplies) provided his aggregate turnover
exceeds applicable threshold limit.
Q.14 Can a person having multiple places of business in a State obtain separate registrations for each place of
business?
Ans. Yes. In terms of the proviso to sub-section (2) of section 25, a person having multiple places of buiness in
a State may obtain a separate registration for each place of business, subject to such conditions as may be
prescribed.
Q.15 Is there a provision for a person to get himself voluntarily registered though he may not be liable to pay
GST?
Ans. Yes. In terms of sub-section (3) of section 25, a person, though not liable to be registered under sections
22 or 24 may get himself registered voluntarily, and all provisions of this Act, as are applicable to a
registered taxable person, shall apply to such person.
Q.16 Can the Department, through the proper officer, suo-moto proceed to register a person under GST?
Ans. Yes. In terms of sub-section (8) of section 25, where a person who is liable to be registered under GST law
fails to obtain registration, the proper officer may, without prejudice to any action which may be taken
under CGST Act, or under any other law for the time being in force, proceed to register such person in the
manner as is prescribed in the CGST Rules.
Q.17 Whether the registration granted to any person is permanent?

Ans. Yes, the registration certificate once granted is permanent unless surrendered, cancelled, suspended or
revoked.
Q.18 Is it necessary for the UN bodies to get registration under GST?

Ans. In terms of section 25(9), 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.

REGISTRATION
Q.19 What is the responsibility of the taxable person making supplies to UN bodies?
Ans. 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).
Q.20 What is the validity period of the registration certificate issued to a casual taxable person and non-
resident taxable person?
Ans. 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.
Q.21 What happens when the registration is obtained by means of willful misstatement, fraud or suppression
of facts?
Ans. In such cases, the registration may be cancelled with retrospective effect by the proper officer [Section
29(2)(e)].
Q.22 Is there an option to take centralized registration for services under GST Law?
Ans. No, the tax paper has to take separate registration in every State from where he makes taxable supply of
services.
Q.23 What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Ans. The transferee or the successor shall be liable to be registered with effect from such transfer or succession
and he will have to obtain a fresh registration with effect from the date of such transfer or succession
[Section 22(3)].
Q.24 At the time of registration, will the assessee have to declare all his places of business?
Ans. Yes. The principal place of business and place of business have been separately defined under section 2(89)
& 2(85) 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.
Q.25 Does cancellation of registration impose any tax obligations on the person whose registration is so
cancelled?
Ans. Yes, as per section 29(5), every registered person whose registration is cancelled 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 or
capital goods or plant and machinery on the day immediately preceding the date of such cancellation or
the output tax payable on such goods, whichever is higher.

TAX INVOICE; CREDIT AND DEBIT NOTES; E-WAY BILL
CHAPTER NO -8
TAX INVOICE; CREDIT AND DEBIT
NOTES; E-WAY BILL
Q.1 Luv & Kush Pvt. Ltd. of Meghalaya engaged in the supply of gifts items and repair services, provides you
the following details:-
S. No. Particualrs Date
st
1. Commencement of the business of supplying goods and services 01 August
2. Turnover exceeds ` 10,00,000 on 15th August
3. Turnover exceeds ` 20,00,000 on 05th September
4. Application for registration made on 28th September
5. Registration certificate granted on 06th October
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.
Ans. A supplier of both goods and services whose aggregate turnover in a financial year exceeds ` 20 lakh in a
State/UT [` 10 lakh in specified Special Category States] is liable to apply for registration within 30 days
from the date of becoming liable to registration (i.e., the date of crossing the threshold limit of ` 20 lakh/
` 10 lakh) in terms of section 22. Since Meghalaya is not a specified Special Category State, applicable
threshold limit is ` 20 lakh.
Further, 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 within 1 month from the date
of issuance of registration certificate in respect of taxable supplies effected during this period i.e. from
the effective date of registration till the date of issuance of registration.
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. 5th September.
Thus, Luv & Kush Pvt. Ltd. may issue revised 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, 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 in respect of all the recipients
located in a State, if the value of a supply exceeds ` 2,50,000.
Q.2 Jain & Sons is a trader dealing in stationery items. It is registered under GST and has undertaken following
sales during the day:
S. No. Particualrs Date
1. Raghav Traders - a registered retail dealer 190
2. Dhruv Enterprises – an unregistered trader 358
3. Gaurav – a painter [unregistered] 500
4. Oberoi Orphanage – an unregistered entity 188
5. Aaradhya – a student [unregistered] 158
None of the recipients require a tax invoice [Raghav Traders being a composition dealer].
Determine in respect of which of the above supplies, Jain & Sons may issue a Consolidated Tax Invoice
instead of Tax Invoice, at the end of the day.

Ans. In the given illustration, Jain & Sons can issue a Consolidated Tax Invoice only with respect to supplies
made to Oberoi Orphanage [worth ` 188] and Aaradhya [worth ` 158] as the value of goods supplied to
these recipients is less than ` 200 as also these recipients are unregistered and don’t require a tax invoice.
As regards the supply made to Raghav Traders, although the value of goods supplied to it is less than `
200, Raghav Traders is registered under GST. So, Consolidated Tax Invoice cannot be issued.
Consolidated Tax Invoice can also not be issued for supplies of goods made to Dhruv Enterprises and
Gaurav although both of them are unregistered. The reason for the same is that the value of goods
supplied is not less than ` 200.
Q.3 Kartik & Co., a registered supplier under GST, provides the following information regarding various tax
invoices issued by it during the month of March:
(i) Value of supply charged in invoice no. 1 was ` 2,50,000 against the actual taxable value of ` 2,30,000.
(ii) Tax charged in invoice no. 4 was ` 32,000 against the actual tax liability of ` 68,000 due to wrong
HSN code being chosen while issuing invoice.
(iii) Value charged in invoice no. 8 was ` 3,20,000 as against the actual value of ` 4,20,000 due to wrong
quantity considered while billing.
Kartik & Co. asks you to answer the following:
(1) Who shall issue a debit/credit note under CGST Act?
(2) Whether debit note or credit note has to be issued in each of the above circumstances?
(3) What is the maximum time-limit available for declaring the credit note in the GST Return?
Ans. (1) The debit/credit note shall be issued by the registered person who has supplied the goods and/or
services, i.e. Kartik & Co.
(2) Yes, debit/credit note need to be issued in each of the circumstances as under:
(i) A credit note is required to be issued as the taxable value in invoice no. 1 exceeds the actual
taxable value.
(ii) A debit note is required to be issued as the tax charged in the invoice no. 4 is less than the
actual tax payable.
(iii) A debit note is required to be issued as the value of supply charged in the invoice no. 8 is less
than the actual value.
(3) The details of the credit note cannot be declared later than the return for the month of September
following the end of the financial year in
which such supply was made or the date of furnishing of the relevant annual return, whichever is
earlier.
Q.4 Sultan Industries Ltd., Delhi, entered into a contract with Prakash Entrepreneurs, Delhi, for supply of spare
parts of a machine on 7th September. The spare parts were to be delivered on 30th September. Sultan
Industries Ltd.
removed the finished spare parts from its factory on 29th September. Determine the date by which invoice
must be issued by Sultan Industries Ltd. under GST law.
Ans. As per the provisions of section 31, invoice shall be issued before or at the time of removal of goods for
supply to the recipient, where the supply involves movement of goods. Accordingly, in the given case, the
invoice must be issued on or before 29th September.
Q.5 MBM Caretakers, a registered person, provides the services of repair and maintenance of electrical
appliances. On April 1, it has entered into an annual maintenance contract with P for its Air Conditioner
and Washing Machine. As per the terms of contract, maintenance services will be provided on the first day
of each quarter of the relevant financial year and payment for the same will also be due on the date on
which service is rendered. During the year, it provided the services on April 1, July 1, October 1, and
January 1 in accordance with the terms of contract. When should MBM Caretakers issue the invoice for the
services rendered?

Ans. Continuous supply of service means, inter alia, supply of any service which is provided, or agreed to be
provided continuously or on recurrent basis, under a contract, for a period exceeding 3 months with the
periodic payment obligations.
Therefore, the given situation is a case of continuous supply of service as repair and maintenance services
have been provided by MBM Caretakers on a quarterly basis, under a contract, for a period of one year
with the obligation for quarterly payment. In terms of section 31, in case of continuous supply of service,
where due date of payment is ascertainable from the contract (as in the given case),
invoice shall be issued on or before the due date of payment.
Therefore, in the given case, MBM Caretakers should issue quarterly invoices on or before April 1, July 1,
October 1, and January 1.
Q.6 The aggregate turnover of Sangri Services Ltd., Delhi, exceeded ` 20 lakh on 12th August. He applied for
registration on 3rd September and was granted the registration certificate on 6th September. You are
required to advice Sangri Services Ltd. as to what is the effective date of registration in its case. It has also
sought your advice regarding period for issuance of Revised Tax Invoices.
Ans. As per section 25 read with CGST Rules, where an applicant submits application for registration within 30
days from the date he becomes liable to registration, effective date of registration is the date on which
he becomes liable to registration. Since, Sangri Services Ltd.’s turnover exceeded ` 20 lakh on 12th August,
it became liable to registration on same day. Further, it applied for registration within 30 days of so
becoming liable to registration, the effective date of registration is the date on which he becomes liable
to registration, i.e. 12th August.
As per section 31 read with CGST Rules, 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 certificate
of registration. Revised Tax Invoices shall be issued within 1 month from the date of issuance of
registration in respect of taxable supplies effected during the period starting from the effective date of
registration till the date of issuance of certificate of registration.
Therefore, in the given case, Sangri Services Ltd. has to issue the Revised Tax Invoices in respect of taxable
supplies effected during the period starting from the effective date of registration (12th August) till the
date of issuance of certificate of registration (6th September) within 1 month from the date of issuance
of certificate of registration, i.e. on or before 6th October.
Q.7 Shyam Fabrics has opted for composition levy scheme in the current financial year. It has approached you
for advice whether it is mandatory for it to issue a tax invoice. You are required to advise him regarding
same.
Ans. A registered person paying tax under the provisions of section 10 [composition levy] shall issue, instead of
a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed [Section
31(3)(c) read with CGST Rules, 2017].
Therefore, in the given case, Shyam Fabrics cannot issue tax invoice. Instead, it shall issue a Bill of Supply.
Q.8 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. For the occasion, it gets the
service by way of makeover of its models from Aura Beauty Services Ltd., Ashok Vihar, for which a
consideration is ` 5,00,000 (excluding GST) has been charged. Aura Beauty Services Ltd. issued a duly
signed tax invoice on 10th February showing the lumpsum amount of ` 5,90,000 inclusive of CGST and
SGST @ 9% each for the services provided. Answer 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.

Ans.
(i) As per section 31 read with the CGST Rules, 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 3rd February. However,
the invoice has been issued on 10th February.
(ii) Section 31 read with the CGST Rules, inter alia, provides that tax invoice in addition to other
mandatory details shall also contain the amount of tax charged in respect of taxable goods or
services (central tax, State tax, integrated tax, Union territory tax or cess). Further, 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.
The objection raised by the tax consultant of Royal Fashions suggesting that the amount of tax
charged in respect of the taxable supply of makeover services should be shown separately in the
invoice raised by Aura Beauty Services Ltd., is valid in law.
Q.9 Kidzee Toys Ltd., a wholesaler of toys registered in Chandigarh, is renowned in the local market for the
variety of toys and their reasonable prices. Kidzee Toys Ltd. makes supply of 100 pieces of baby’s learning
laptops and chat learning phones to Nancy General Store on 25th September by issuing a tax invoice
amounting to ` 1,00,000.
However, the said toys were returned by Nancy General Store on 30th September. Discuss which
document Kidzee Toys Ltd. is required to issue in such a case?
Ans. Kidzee Ltd. is required to issue a credit note in such a case.
As per section 34, where one or more tax invoices have been issued for supply of any goods or services or
both and the goods supplied are returned by the recipient the registered person, who has supplied such
goods or services or both, may issue to the recipient one or more credit notes for supplies made in a
financial year containing such particulars as may be prescribed. Therefore, Kidzee Ltd. is required to issue
a credit note to Nancy General Store for the good returned.
Q.10 Rana Sanga Ltd., a registered supplier, has made following taxable supplies to its customer Babur in the
quarter ending 30th June.
Date Bill No Particulars Invoice value (including GST) (`)
5th April 102 Note books [10 in numbers] 1,200
th
10 May 197 Chart Paper [4 in number] 600
20th May 230 Crayon colors [2 packets] 500
nd
2 June 254 Poster colors [5 packets] 900
22nd June 304 Pencil box [4 sets] 700
Goods in respect of bill no. 102, 230 and 254 have been returned by Babur. You are required to advise Rana
Sanga Ltd. whether it can issue a consolidated credit note against all the three invoices?
Ans. Where one or more tax invoices have been issued for supply of any goods and/or services and
(a) the taxable value/tax charged in that tax invoice is found to exceed the taxable value/tax payable in
respect of such supply, or
(b) where the goods supplied are returned by the recipient, or
(c) where goods and/or services supplied are found to be deficient,
the registered person, who has supplied such goods and/or services, may issue to the recipient one or
more credit notes for supplies made in a financial year containing prescribed particulars.
Thus, one (consolidated) or more credit notes can be issued in respect of multiple invoices issued in a

financial year without linking the same to individual invoices.

Hence, in view of the above-mentioned provisions, Rana Sanga Ltd. can issue a consolidated credit note
for the goods returned in respect of all the three invoices.
Q.11 Chidanand Products Pvt. Ltd. is a registered supplier who has opted for composition levy in the current
financial year. He wishes to know whether the issue of a bill of supply can be dispensed with under any
circumstances. You are required to advise him.
Ans. Yes. Chidanand Products Pvt. Ltd. may not issue a bill of supply if the value of the goods or services or
both supplied is less than ` 200 subject to the condition that:
(a) the recipient is not a registered person; and
(b) the recipient does not require such bill of supply, and he shall issue a consolidated bill of supply for
such supplies at the close of each day in respect of all such supplies.
Q.12 A registered person has to mandatorily issue separate invoices for taxable and exempted goods when
supplying both taxable as well as exempted goods to an unregistered person. Examine the validity of the
statement.
Ans. The statement is not valid in law. As per the CGST Rules, 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.
Q.13 A non-banking financial company can issue a consolidated tax invoice at the end of every month for the
supply made during that month. Examine the validity of the statement.
Ans. The said statement is valid in law. A customer may avail numerous services from a non-banking financial
company in a given tax period. It may issue a consolidated tax invoice/ statement/ advice, any other
document in lieu thereof, by whatever name called may be issued/ made available, physically/
electronically, for supply of services made during a month at the end of the month.
Q.14 Sakthi Enterprises, Kolkata entered into a contract with Suraj Enterprises, Surat for supply of goods and
the delivery shall be made on or before 31st October. The goods were removed from the factory at Kolkata
on 11th October. As per the agreement, the goods were to be delivered on or before 31st October. Suraj
Enterprises has received the goods on 14th October. Determine the time of issue of invoice as per the
provisions of CGST Act.
Ans. A registered person supplying taxable goods shall issue a tax invoice, before or at the time of removal of
goods for supply to the recipient, where the supply involves movement of goods.
Therefore, in the given case, invoice has to be issued on or before, 11th October (the time of removal of
goods).
Q.15 Trust and Fun Ltd., an event management company, has provided its services for an event at Kapoor Film
Agencies, Mumbai on 5th June. Payment for the event was made on 19th June. Determine the time of
issue of invoice as per the provisions of CGST Act.
Ans. A registered person [other than an insurer/banking company/financial institution, including an NBFC]
supplying taxable services shall issue a tax invoice before or after the provision of service, but within a
period of 30 days from the date of supply of service.
Thus, in the given case, invoice has to be issued within 30 days of 5th June (date of supply of service), i.e.
on or before, 5th July.
Q.16 Udai Singh, a registered supplier, has received advance payment with respect to services to be supplied to
Sujamal. His accountant asked him to issue the receipt voucher with respect to such services to be
supplied. However, he is apprehensive as to what would happen in case a receipt voucher is issued, but
subsequently no services are supplied. You are required to advise Udai Singh regarding the same.

Ans. Udai Singh is required to issue a receipt voucher at the time of receipt of advance payment with respect
to services to be supplied to Sujamal. A receipt voucher is a document evidencing receipt of advance
money towards a supply of goods and/or services or both. A registered person, on receipt of advance
payment with respect to any supply of goods or services or both, shall issue a receipt voucher or any other
document, evidencing receipt of such payment.
Where, on receipt of advance payment with respect to any supply of goods or services or both the
registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued
in pursuance thereof, the said registered person may issue to the person who had made the payment, a
refund voucher against such payment. Therefore, in case subsequently no services are supplied by Udai
Singh, and no tax invoice is issued in pursuance thereof, Udai Singh may issue a refund voucher against
such payment to Sujamal.
Q.17 Bhoj Raj, a registered person, has availed GTA services on which he is liable to pay tax under reverse charge.
He wishes to know whether he is required to issue an invoice. Please advise him discussing the relevant
provisions under CGST Act and rules thereunder.
Ans. Bhoj Raj is required to issue an invoice with regard to the GTA services availed by him. A registered person
who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 (i.e. where the recipient is liable
to discharge GST on reverse charge basis) shall issue an invoice in respect of goods or services or both
received by him from the supplier on the date of receipt of goods or services or both.
Q.18 Sitaram Textiles has to send cloth for dyeing to its job-worker. It wishes to know whether it needs to issue
a tax invoice at the time of sending the goods to job-worker. Please advise him with reference to the
provisions of the CGST Act.
Ans. Sitaram Textiles has to issue a delivery challan and not the tax invoice at the time of sending the goods to
job-worker. Rule 55, inter alia, stipulates that for the purposes of transportation of goods for job work,
the consignor may issue a delivery challan, serially numbered, in one or multiple series, in lieu of invoice at
the time of removal of goods for transportation, containing the following details, namely:-
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of
the consignee, if registered;
(iv) Harmonised System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where
the transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature.
The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner,
namely:–
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.

PAYMENT OF TAX
CHAPTER NO -9
PAYMENT OF TAX
Q.1 M/s. Daksha Enterprises has made a cash deposit of ` 10,000 under minor head 'tax' of major head 'SGST’.
It has a liability of ` 2,000 for minor head "Interest" under the major head "SGST".
State whether M/s. Daksha Enterprises can utilise the amount available for payment of interest.
Ans. The Registered person is allowed to transfer the amount available under any minor head of a major head
to any of the minor head of the same or other major head as per Section 49(10) of the CGST Act vide Form
PMT-09.
Therefore, in the given case, amount of ` 10,000 available under minor head ‘tax’ of major head ‘SGST’ can
be utilised for payment of liability of ` 2,000 under minor head ‘interest’ of the same major head, after
making a due transfer entry using Form GST PMT-09 from the minor head of ‘tax’ to ‘interest’.
Q.2 Mr. Alok, a registered supplier of taxable goods, filed GSTR 3B for the month of January, 2021 on 15thApril,
2021. The prescribed due date to file the said GSTR3B was 20thFebruary, 2021. The amount of net GST
payable, in Cash i.e. Electronic Cash Ledger on supplies made by him for the said month worked out to be
` 36,500 which was paid on 15thApril, 2021. Briefly explain the related provisions and compute the amount
of interest payable under the CGST Act, 2017 by Mr. Alok. Ignore the effect of leap year, if applicable in
this case.
Ans. Interest is payable in case of delayed payment of tax @ 18% per annum from the date following the due
date of payment to the actual date of payment of tax.
Thus, the amount of interest payable by Mr. Alok is as under:-
Period of delay = 21st February, 2021 to 15th April, 2021 = 54 days
Hence, amount of interest = ` 36,500 x 18% x 54/365 = ` 972
Q.3 ABC Ltd., have filed their GSTR3B for the month of July, 2021 within the due date prescribed under Section
39 i.e. 20.08.2021. Post filing of the return, the registered person has noticed during September 2021 that
tax dues for the month of July, 2021 have been short paid for ` 40,000. ABC Ltd., has paid the above
shortfall of ` 40,000, through GSTR3B of September 2021, filed on 20.10.2021 [payment through Cash
ledger - ` 30,000 and Credit ledger ` 10,000]. Examine the Interest payable under the CGST Act, 2017.
What would be your answer if, GSTR3B for the month of July 2021 has been filed belatedly on 20.10.2021
and the self-assessed tax of ` 40,000/- has been paid on 20.10.2021 [payment through electronic cash
ledger - ` 30,000 and electronic credit ledger ` 10,000]
Notes:
 There exists adequate balance in Electronic Cash & Credit ledger as on 31.07.2021 for the above
short fall
 No other supply has been made nor tax payable for the month of July, 2021 other than ` 40,000/-
missed out to be paid on forward charge basis
 Ignore the effect of leap year, if applicable in this case.
Ans. Interest is payable under Section 50 of the CGST Act, 2017 in case of delayed payment of tax @ 18% per
annum from the date following the due date of payment to the actual date of payment of tax. As per
proviso to sub-section (1) of Section 50, interest is payable on the net tax liability paid in cash, only if the
return to be filed for a tax period under Section 39, has been filed after the due date to furnish such return.
In the above scenario, ABC Ltd., has defaulted in making the payment for ` 40,000 on self-assessment basis
in the return for the month of July, 2021.
Accordingly, interest is payable on the gross liability and proviso of sub-section 50(1) shall not be
applicable.
Thus, the amount of interest payable by ABC Ltd., is as under:-

PAYMENT OF TAX
Period of delay = 21st August, 2021 to 20th October, 2021 = 61 days

Hence, amount of interest = ` 40,000 x 18% x 61/365 = ` 1,203
Alternatively, if ABC Ltd., have filed the return for the month of July, 2021 on 20.10.2021, beyond the
stipulated due date of 20.08.2021 and if the self-assessed tax for July, 2021 has been paid on 20.10.2021,
Interest under proviso to Section 50(1) shall be payable on the tax paid through Electronic Cash Ledger
only. Hence Interest is payable from 21st August 2021 till 20th October 2021 = 61 days Amount of Interest
= ` 30,000 x 18% x 61/365 = ` 902
Q.4 Examine the authority vested under CGST Act, 2017 for preventing a registered person from utilising the
input tax credit availed in a fraudulent manner?
Ans. Every registered person, shall avail the input tax credit through a return filed under Section 39 of CGST
Act, 2017. Input Tax credit availed shall be credited to electronic credit ledger under section 41 of the
CGST Act, 2017 on a provisional basis. As per provisions contained in Rule 86A, In case the Commissioner
or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, has reasons
to believe that ITC available in the electronic credit ledger has been fraudulently availed or is ineligible, he
may prohibit use of ITC for discharge of any liability under section 49 or for claim of any refund of any
unutilised amount.
Q.5 Mr. A has deposited a sum of ` 30,000 under minor head of “Interest” column for the major head “IGST”.
At the time of filing GSTR-3B for a particular tax period, he noticed that there is no sufficient amount under
the minor head ‘Tax’ towards payment of ` 30,000. When approached with the Jurisdictional Tax officer,
Mr. A was guided to deposit the tax amount under proper head of account and claim a refund for the
remittance of amount deposited under head ”interest”. Examine the relevant provisions of CGST Act, 2017
towards payment of tax and compliance with the law.
Ans. Provisions of Section 49(10) of CGST Act, 2017 permit a registered person for transferring the amount
deposited under any of the minor head i.e. tax, interest, penalty, fees or others to any of the heads under
IGST/CGST/SGST/UTGS and make the payment of taxes there upon. Accordingly, Mr. A need not deposit
the tax amount under head “ tax” and claim a refund for the remittance of amount deposited under head
”interest. Rather, using the Form GST PMT 09, such amount can be transferred suo-moto on the common
portal from “interest” to “tax” head and tax liability be paid
Q.6 PPC Ltd., has availed Input Tax credit for ` 54,000/- IGST during February 2021 on a particular purchase.
Accounting records for the above purchase, indicate that IGST paid to the supplier is ` 45,000/- as per the
bill received. GSTR1 uploaded by the supplier for the above supply indicates ` 45,000/- as tax paid. Examine
as per GST provisions, what value shall be updated in the ledgers maintained on behalf of PPC Ltd., on the
common portal?
Ans. PPC Ltd., have accounted and paid ` 45,000/- as IGST to the supplier concerned. However, availment of
input tax credit has been made for ` 54,000/-.
As per Section 49(2) of CGST Act, 2017 ”The input tax credit as self-assessed in the return of a registered
person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in
such manner as may be prescribed.”
Accordingly, electronic credit ledger of PPC Ltd., shall be updated with a value of ` 54,000/- as per self-
assessed return to be filed for February 2021, though the input tax credit shown by the supplier is only
for ` 45,000/-.
Q.7 M/s ABC & Co., have defaulted in filing the return under Section 39 of CGST Act, 2017 i.e. GSTR-3B for the
month of March, 2021 within the specified due date . Reason for such delay is attributable to delay in
closure of Books for March 2021, which have been finalised during May 2021. The GST Common portal
prompted for payment of late fees payable under Section 47 of CGST Act, 2017 for a sum of ` 2,000 under
CGST and SGST each. Accountant, of M/s ABC & Co., sought your confirmation for payment of such late

PAYMENT OF TAX
fees through the balance available in Electronic Credit Ledger for the late fees. Give your guidance in this
regard
Ans. Section 49(3) of the CGST Act, 2017 provides that the amount available in the electronic cash ledger may
be used for making any payment towards tax, interest, penalty, fees or any other amount payable under
the provisions of this Act or the rules made there under in prescribed manner.
Further, section 49(4) provides that the amount available in the electronic credit ledger may be used for
making any payment towards output tax under this Act or under the Integrated Goods and Services Tax
Act in prescribed manner.
Accordingly, as per the combined reading of the above provisions, late fees shall be paid only through
electronic cash ledger and not possible through electronic credit ledger. Thus, contention of the
accountant of M/s ABC & Co., is not correct and the above amount shown on the common portal has to be
deposited in Electronic Cash Ledger under appropriate minor head, through any of the specified modes .
Q.8 How many types of electronic ledger/register are there?

Ans.
(a) Electronic cash ledger
(b) Electronic credit ledger
(c) Electronic liability register
Q.9 What are the main features of GST payment process?

Ans. The main features of GST payment process are as follows:-
(a) Electronically generated challan from GSTN common portal in all modes of payment and no use of
manually prepared challan;
(b) Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of payment of tax;
(c) Convenience of making payment online;
(d) Realtime data for tax collection in electronic format;
(e) Faster remittance of tax revenue to the Government Account;
(f) Paperless transactions;
(g) Speedy Accounting and reporting;
(h) Electronic reconciliation of all receipts;
(i) Simplified procedure for banks;
(j) Warehousing of Digital Challan.
Q.10 Are principles of unjust enrichment applicable for payment made under GST?
Ans. 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.
Q.11 State the name of output tax under GST, where any of the input tax credit under GST can be availed?
Ans. IGST. IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output tax liability known as
IGST.
Q.12 Sahil is a supplier of taxable goods in Karnataka. He got registered under GST in the month of September,
2021 and wishes to pay his IGST liability for the month. Since he is 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?
Ans. electronic cash ledger can be made through any of the following modes, namely:-

PAYMENT OF TAX
(i) Internet Banking through authorised banks;

(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 ten thousand rupees per
challan per tax period, by cash, cheque or demand draft.
Thus, offline mode is also permitted under GST subject to specified conditions.
(a) Manual or physical Challans are not allowed under the GST regime. It is mandatory to generate
Challans online on the GST Portal.
(b) Challan is valid for a period of 15 days.
(c) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee
or any other amount available in the electronic cash ledger under the CGST Act, 2017 to the
electronic cash ledger for integrated tax, central tax, State tax or Union territory tax or cess.
Q.13 Suhasini is a registered software consultant. On account of her ill health, she could not provide any services
during the month of October. However, she had to incur all the expenses relating to her office. She paid `
75,000 to various vendors. The total input tax involved on the goods and services procured by her is `
13,500. Out of the total bills paid by her, one bill for ` 15,000 relates to security services availed for security
of her office, tax on which is payable under reverse charge. Input tax involved in such bill is ` 2,700. Suhasini
is of the opinion that for the month of October, no GST is payable from electronic cash ledger as she has
sufficient balance of ITC for payment of GST under reverse charge on security services. Do you think
Suhasini is right? Explain with reasons.
Ans. The amount available in the electronic credit ledger, i.e. ITC may be used for making any payment
towards output tax [Section 49(4)]. Output tax in relation to a taxable person, means the tax chargeable
on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by
him on reverse charge basis [Section 2(82)].
Therefore, ITC cannot be used to pay the tax liability under reverse charge. The same is always required
to be paid through electronic cash ledger and not electronic credit ledger. Thus, Suhasini is wrong and
she will need to pay the GST of ` 2,700 on security service through electronic cash ledger.

RETURNS
CHAPTER NO -10
RETURNS
Q.1 Ms. Pragya, a taxpayer registered under regular scheme (Section 9), files GSTR-3B for the month of
October on 20th November. After filing the return, she discovers that the value of a taxable supply has
been under-reported therein.
Ms. Pragya now wants to file a revised GSTR-3B. Examine the scenario and give your comments.
Ans. Under GST law, a return once filed cannot be revised. However, the details of those transactions that are
required to be amended can be changed in any of the future GSTR- 1s. For this purpose, specific tables are
provided in GSTR-1 to amend previously declared details.
Thus, Ms. Pragya cannot revise GSTR-3B filed by her for the month of October. However, she can amend
the details of the taxable supply, which was under-reported, in GSTR-1 for the month of November. The
tax payable on account of such error will be paid along with interest in GSTR-3B for the month of
November.
Q.2 Mr. X, a registered taxpayer under regular scheme, did not make any taxable supply during the month of
July. Is he required to file a GSTR-3B?
Ans. A registered taxpayer is required to furnish a return u/s 39 for every month even
if no supplies have been effected during such period. In other words, filing of Nil GSTR-3B is also
mandatory.
Therefore, Mr. X is required to file GSTR-3B even if he did not make any taxable supply during the month
of July.
Q.3 If a return has been filed, how can it be revised if some changes are required to be made?
Ans. 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 amendment in the details
of those individual details of those transactions (invoices or debit/credit notes) that are required to be
amended. They can be amended in any of the future GSTR- 1 in the tables specifically provided for the
purposes of amending previously declared details.
As per section 39(9), omission or incorrect particulars discovered in the returns filed u/s 39 can be rectified
in the return to be filed for the month during which such omission or incorrect particulars are noticed. Any
tax payable as a result of such error or omission will be required to be paid along with interest. The
rectification of errors/omissions is carried out by entering appropriate particulars in “Amendment Tables”
contained in GSTR-1. However, no such rectification of any omission or incorrect particulars is allowed after
the due date for furnishing of return for the month of September or second quarter (in case of quarterly
filers) following the end of the financial year to which such details pertain, or the actual date of furnishing
of relevant annual return, whichever is earlier
Q.4 M/s Cavenon Enterprises, a registered supplier of designer wedding dresses under regular scheme, has
aggregate annual turnover of ` 30 lakh in the preceding financial year. It is of the view that in the current
financial year, it is permitted to file its 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.
Ans. Section 37 stipulates that GSTR-1 for a particular month is required to be filed on or before the 10th day
of the immediately succeeding month, i.e. on a monthly basis.
However, presently, as a measure of easing the compliance requirement for small taxpayers, the details
of outward supplies of goods or services or both to a registered person can be furnished, for the first and
second months of a quarter, up to a cumulative value of fifty lakh rupees in each of the months, using

RETURNS
invoice furnishing facility (IFF) electronically on the common portal, from the 1st day of the month
succeeding such month till the 13th day of the said month. The taxpayers opting for furnishing details of
outward supply on quarterly basis can file GSTR 1 on quarterly basis. The option to file return on quarterly
basis is available for taxpayers having aggregate turnover up to ` 5 crores in preceding financial year.
In view of the same, M/s Cavenon Enterprises can file its GSTR-1 on quarterly basis if it has opted to furnish
the outward supply related details on quarterly basis and filing IFF on monthly basis as its aggregate
turnover does not exceed ` 5 crore in the preceding financial year.
Q.5 Mr. Kohli is a registered supplier in the State of Gujarat. He is filing GSTR-1 every month. During the month
of February, he went out of India and thus, could not do any business transaction during that month. He
believes that as there is no transaction, there is no need to file GSTR-1 for the month of February.
Is he correct? Explain.
Ans. No, Mr. Kohli is not correct. GSTR-1 needs to be filed even if there is no business activity in the tax period.
Therefore, in the given case, even though Mr. Kohli was out of India and thus, could not do any business
transaction during the month of February, he is still required to file GSTR-1 for that month.
Q.6 Mr. Kalpesh is a registered dealer in Kerala paying tax under composition levy from 1st April. However, he
opts to pay tax under regular scheme from 1st December.
Is he liable to file GSTR-4 for the month of November? Discuss.
Ans. Where a taxpayer opts to withdraw from the composition scheme, he has to file GSTR-4 for the period
prior to his opting for payment of tax under regular scheme. Therefore, in the given case, Mr. Kalpesh is
liable to file GSTR-4 for the month of November since he was paying tax under composition scheme during
the month of November.
Q.7 Mrs. Zarina, a registered dealer in Rajasthan, did not file GSTR-3B for the month of June but she wants to
file GSTR-3B for the month of July.
Is it possible? Answer with reference to section 39 of the CGST Act.
Ans. As per section 39(10), a registered person is not allowed to furnish a return for a tax period if the return
for any of the previous tax periods has not been furnished by him
Therefore, in the given case, Mrs. Zarina cannot file GSTR-3B for July if she has not filed GSTR-3B for the
preceding month, i.e., June.
Q.8 X has not made any outward supply during the month of September. However, X has procured certain
input services during the month. X is of the opinion that he can file Nil GSTR-3B for the month of
September through SMS.
Whether the understanding of X is correct? Explain.
Ans. Nil GSTR-3B means that the return has nil or no entry in all its Tables. Since in the present case X has
received certain input services, he cannot file Nil GSTR-3B through SMS as the said input services will need
to be disclosed in the Table for Eligible ITC in GSTR-3B.
Q.9 A is a chartered accountant in practice and is registered under GST. On a query regarding return filing
process by a potential client, A has represented him as a GST practitioner. A is of the view that since he is
a qualified chartered accountant with a GST registration in the name of his proprietorship firm, he also
qualifies as GST practitioner.
Is the understanding of A correct? Discuss.
Ans. The understanding of A is not correct.
A chartered accountant can become a GST practitioner (GSTP). However, holding a certificate of practice
as a chartered accountant and having GST registration does not imply that such chartered accountant is a
GST practitioner as well. For becoming a GSTP, even a chartered accountant in practice has to follow the
enrolment process of GSTP as provided under the GST law and only upon approval of such enrolment can

RETURNS
a chartered accountant represent himself as a GSTP.
Q.10 Quicktax, a GST return filing service provider, has asked its clients to provide the scanned copies of the tax
invoices issued to B2B customers for uploading on the GST portal and filing the return.
Whether the process followed by Quicktax is correct?
Ans. No, the process followed by Quick tax is not correct.
The registered persons supplying goods or services to B2B customers are required to upload the invoice
wise details of supplies made during the tax period. However, there is no requirement to upload the
scanned copies of the invoices issued to the customers on the GST portal at the time of filing returns. Only
information required as per GST returns is to be captured in the return filing utility and the same is to be
uploaded on the GST portal and not the scanned copies of the actual invoices.
Q.11 X Ltd. is winding up its business in Rajasthan. The Tax Consultant of X Ltd. has suggested that X Ltd. will
have to file either the annual return or the final return at the time of voluntary cancellation of registration
in the state of Rajasthan. Do you agree with the stand taken by Tax Consultant of X Ltd.? Offer your
comments.
Ans. No, the stand taken by Tax Consultant of X Ltd. is not correct.
Annual return is required to be filed by every registered person paying tax as a normal taxpayer. Final
return is filed by the registered persons who have applied for cancellation of registration within three
months of the date of cancellation or the date of cancellation order.
In the given case, X Ltd., a registered person, is winding up its business and has thus, applied for
cancellation of registration. Therefore, it is required to file both annual return and final return.

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GST IN INDIA-AN INTRODUCTION

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 1

2 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

Transaction Revenue to Revenue to Revenue to

Q.3 Differentiate between direct and indirect taxes.

Direct Taxes Indirect Taxes

Q.4 Enumerate major direct and indirect taxes.

Q.5 Explain the salient features of indirect taxes.

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 3

or services are subject to indirect taxes with low thresholds.

4 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

 Central Sales Tax

Q.10 Discuss the functions of the common GST portal.

Q.13 GST is a simplified tax structure. Justify the statement.

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 5

Q.16 Discuss the leviabilty of GST or otherwise on tobacco.

6 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 7

8 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

Q.11 Determine whether the following supplies amount to composite supplies:

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 9

alongwith the room accommodation.

Q.13 Manikaran, a registered supplier of Delhi, has supplied 20,000 packages at

Goods/services supplied GST rate

10 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 11

12 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 13

14 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 15

16 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 17

exemption as it reconstructs anatomy or functions of body affected due to congenital defects

18 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

Interest income on credit card issued by the bank 40

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 19

charged is subject to GST as follows:

20 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 21

22 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 23

Q.3 Determine the time of supply from the given information.

24 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

Q.4 Determine the time of supply from the given information.

Q.5 Determine the time of supply from the following particulars:

Q.8 Determine the time of supply from the given information.

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 25

Q.9 Explain the significance of time of supply under GST law.

S. No Date of receipt of Date of payment by the Date of issue of invoice by the

26 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

S. No. Date of Date of Payment by Date of Date Time of supply of

S. No Date of payment by the rceipent of Date of issue of invoice by

S. No. Date of Payment by Date of Date Time of supply of

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 27

the supplier days from the

28 CA Final SCMPE Question Bank by CA. Riddhi Baghmar

CA Final SCMPE Question Bank – CA. Riddhi Baghmar 29

September. Determine the time of supply in the following independent cases:

30 CA Final SCMPE Question Bank by CA. Riddhi Baghmar