CS Professional GST Question Bank PART - 1 by CA VIVEK GABA

VG STUDY HUB GST QUESTION BANK 9318492718, 7703880232
CS - PROFESSIONAL
GST
QUESTION BANK
[ PART – 1 ]
Relevant for : DECEMBER 2022 & JUNE 2023
By
CA VIVEK GABA
Source: ICAI Module & Past Years Questions
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VG STUDY HUB AN INTRODUCTION 9718492718, 7703880232
CHAPTER – 01
GST IN INDIA – AN INTRODUCTION
The seamless flow of credit under GST, in case of intra-State and inter-State supplies, can be better
understood with the help of the following illustrations:
Intra-State Supply
ILLUSTRATION 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 supply of goods/ services 11,800
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)
Value charged for supply of goods/ services (10,000 x 120%) 12,000
Add: CGST @ 9% 1080
Add: SGST @ 9% 1080
Total price charged by B from C for local of goods/ services 14160
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
SGST 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
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Statements of revenue earned by Central and State Government
Transaction Revenue to Central Revenue to State

Government (‘) Government (‘)
Supply of goods/ services by 900 900
A to B
Supply of goods/ services by 180 180
B to C
Total 1080 1080
Inter-State Supply
ILLUSTRATION 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 ‘)
Value charged for supply of goods/ services 10,000
Add: CGST @ 9% 900
Add: SGST @ 9% 900
Total price charged by X from A for intra-State supply of goods/ services 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%
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’)
Value charged for supply of goods// services (12,000 x 120%) 14,400
Add: CGST @ 9% 1,296
Add: SGST @ 9% 1,296
Total price charged by B from C for local supply of goods/ services 16,992
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Computation of CGST, SGST payable to Government
Amount (in’)
CGST payable 1,296
Less: Credit of IGST 1,296
CGGST 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).
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 Central Revenue to Revenue to

Government (‘) Government of state Government of state
1 (‘) 2 (‘)
Supply of goods/ 900 900
Services by X to A
Supply of goods/ 360
services by A to B
Transfer by State 1 to 900 (900)
Centre
Supply of goods/ 432
services by B to C
Transfer by centre to (864) 864
State 2
Total 1,296 Nil 1,296
Questions for Practice

1. Differentiate between direct and indirect taxes.
2. Enumerate major direct and indirect taxes.
3. Explain the salient features of indirect taxes.
4. Write a short note on various Lists provided under Seventh Schedule to the Constitution of
India.
5. Discuss the deficiencies in the existing indirect taxes which led to the need for ushering into
GST regime.
6. Discuss the dual GST model as introduced in India.
7. List the Central and State levies which have been subsumed in GST in India.
8. Discuss the functions of the common GST portal.
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9. Briefly explain the leviability of GST or otherwise on petroleum crude, diesel, petrol,
Aviation Turbine Fuel (ATF) and natural gas.
10. Elaborate the principles that were borne in mind while subsuming various central, State and
local levies, under GST.
11. GST is a simplified tax structure. Justify the statement.
12. List the advantages that GST accrues to the trade and industry.
13. List the special category States as prescribed in Article 279A of the Constitution of India.
14. Discuss the leviabilty of GST or otherwise on tobacco.
ANSWERS/HINTS of Above Questions

1. 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
Government directly bears the incidence collects the same from the ultimate consumer.
of the tax. Thus, incidence of the tax is shifted to the other
person.
Progressive in nature - high rate of taxes Regressive in nature - All the consumers equally
for people having higher ability to pay. bear the burden, irrespective of their ability to pay.
2. Major indirect taxes are goods and services tax and customs duty and direct tax is income tax.
3. 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 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.
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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.
4. 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.
5. 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.
6. 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
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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.
7. 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
 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
8. 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.
9. 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.
10. 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:
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(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.
11. 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. Common system of classification of goods and services
across the country ensures certainty in tax administration across India.
12. 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.
13. 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.
14. 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
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VGSTUDY HUB SUPPLY UNDER GST 9718492718, 7703880232
CHAPTER – 02
SUPPLY UNDER GST
QUESTION FOR PRACTICE
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?
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.
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.
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.
5. Transfer of title and/or possession is necessary for a transaction to constitute supply of goods.
Examine.
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?
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.
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(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a
future date.
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.
9. The goods supplied on hire purchase basis will be treated as supply of services. Examine the
validity of the statement.
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?
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
along with the room accommodation.
(b) A toothpaste company has offered the scheme of free soap along with the toothpaste.
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.
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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%
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.
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.
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.
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.
ANSWERS/HINTS OF ABOVE QUESTIONS

1. Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will
be levied on intra-State supplies. IGST will be levied on inter-State supplies.
2. 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.
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3. 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.
(iii) 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.
4. 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.
5. 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 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.
6. (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
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(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.
7. (a) Supply of services
(b) Supply of goods
(c) Supply of services
(d) Supply of goods
8. (a) Supply of services
(b) Supply of services
(d) Supply of goods
9. 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.
10. (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
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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 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.
11. 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 along with the toothpaste are not naturally bundled, said supplies do not
qualify as ‘composite supply’.
12. 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.
13. 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
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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%
14. 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’.
15. 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 27 Provisions of section 25(4) have been
discussed in detail in Chapter 7 – Registration 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.
16. 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.
15
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.
16
VG STUDY HUB RCM & COMPOSITION 9318492718, 7703880232
CHAPTER – 03
RCM & COMPOSITION SCHEME

1. 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.
2. 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?
3. Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP.

Determine the person liable to pay tax in this case.
4. '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.
5. 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?
6. 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.
17
7. 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).
8. 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.
9. 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
State.
(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in
neighbouring States.
10. 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?
11. 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
18
services from neighboring State of Madhya Pradesh?
12. 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 reference 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?
ANSWERS/HINTS OF ABOVE QUESTION

1.
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.
2. 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.
3. 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
19
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.
4. 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.
5. 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.
6. (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.
7. 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.
20
8. 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.
9. (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.
10. 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.
11. 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
21
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 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.
12. (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.
22
VG STUDY HUB EXEMPTION UNDER GST 9318492718, 7703880232
CHAPTER – 04
EXEMPTION UNDER GST

1. 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.
2. 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’.
3. 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.
4. 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.
5. 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.
6. 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 50,000
charitable trust registered under section 12AA
of the Income-tax Act, 1961
Amount charged by business correspondent 1,00,000
from banking 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 5,00,000
preservation of stem cells
23
Amount charged for service provided by 5,20,000

selectors to a recognized sports body
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
24
15. 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.

1. 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.
2. 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;
(i) advancement of religion, spirituality or yoga;
(ii) 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;
(iii) preservation of environment including watershed, forests & wildlife.
3. (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.
4. 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.
25
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.
5. 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.
6. Computation of value of taxable supply

Particulars Amount (‘) GST payable @ 18% (‘)
Fees charged for yoga camp conducted by a Ni Ni
charitable trust registered under section 12AA
of the Income-tax Act, 1961 [Note-1]
Amount charged by business correspondent for Ni Ni
the services provided to the rural branch of a
bank with respect to Savings Bank Accounts
[Note-2]
Amount charged by cord blood bank for Ni Ni
preservation of stem cells [Note-3]
Service provided by selectors to a recognized 5,20,000 5,20,000
sportsbody [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 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.
26
(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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
27
14. 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.
28
VG STUDY HUB TIME OF SUPPLY 9318492718, 7703880232
CHAPTER – 05
TIME OF SUPPLY
1. Explain the significance of time of supply under GST law.
2. 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 provisions.
3. Determine the time of supply in the following cases assuming that GST is payable under
reverse charge:
S.No Date of Date of payment by the recipient Date of issue of
receipt of of goods invoice by the
goods supplier of goods
(i) July 1 August 10 June 29
(ii) July 1 June 25 June 29
(iii) July 1 Part payment made on June 30 and June 29
balance amount paid on July 20
(iv) July 5 Payment is entered in the books of June 1
account on June 28 and debited in
recipient’s bank account on June 30
(v) July 1 Payment is entered in the books of June 29
account on June 30 and debited in
recipient’s bank account on June 26
(vi) August 1 August 10 June 29
4. Determine the time of supply in the following cases assuming that GST is payable under
reverse charge:
S.No Date of payment by the Date of issue of invoice by
recipient for supply of the supplier of services
services
(i) August 10 June 29
(ii) August 10 June 1
(iii) Part payment made on June June 29
30 and balance amount paid
on September 1
(iv) Payment is entered in the June 1
books of account on June
28 and debited in
recipient’s bank account on
June 30
(v) Payment is entered in the June 29
books of account on June
30 and debited in
recipient’s bank account on
June 26
29
5. 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?
6. 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?
7. 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?
8. 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?
9. 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?
10. 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.
11. 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?
30
12. 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:
a) The provision of service was completed on 1st August and payment was received on 28th
September.
b) The provision of service was completed on 14th August and payment was received on 28th
September.
c) Mr. A made the payment on 3rd August. However, provision of service was remaining to
be completed at that time.
d) Mr. A made the payment on 15th September. However, provision of service was
remaining to be completed at that time.
13. 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
14. 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?
15. 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.

1. 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.
2. 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;
31
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.
3.
S.No Date of Date of payment Date of Date Time of supply
receipt of by the recipient issue of immediate of goods
goods of goods invoice ly [Earlier of
by the following (1),(2) & (4)]
supplier 30 days
of goods from the
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 June 29 July 30 June 28 (i.e.,
made on June 30 when payment
and balance is entered in the
amount paid on books of
July 20 account of the
recipient)
(iv) July 5 Payment is June 1 July 2 June 28 (i.e.,
entered in the when payment
books of account is entered in the
on June 28 and books of
debited in account of the
recipient’s bank recipient)
account on June
30
(v) July 1 Payment is June 29 July 30 June 26 (i.e.,
entered in the when payment
books of account is
on June 30 and debited in the
debited in recipient’s bank
recipient’s bank account)
account on June
26
(vi) August 1 August 10 June 29 July 30 July 30 (i.e.,
31st day from
32
issuance of
invoice)
33
4.
S.No Date of payment by Date of Date Time of supply of goods
the recipient for Issue of immediately Earlier of (1) & (3)]
supply of services invoice following 60
by the days from
supplier invoice
of
services
(1) (2) (3)
(i) August 10 June 29 August 29 August 10
(ii) August 10 June 1 August 1 August 1
(iii) Part payment made on June 29 August 29 June 30 for part payment
June 30 and balance and August 29 for
amount paid on balance amount
September 1
(iv) Payment is entered in June 1 August 1 June 28 (i.e. when
the books of account on payment is entered in the
June 28 and debited in books of account of the
recipient’s bank recipient)
account on June 30
(v) Payment is entered in June 29 August 29 June 26 (i.e. when
the books of account on payment is debited in the
June 30 and debited in recipient’s bank account)
recipient’s bank
account on June 26
5. 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)].
6. 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.
7. As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding

composition supplier) has to pay GST on the outward supply of goods at the time of
supply as specified in section 12(2)(a), i.e. date of issue of invoice or the last date on
which invoice ought to have been issued in terms of section 31.
In this case since the invoice has not been issued, the time of supply for the purpose of
payment of tax will be the last date on which the invoice is required to be issued.
34
The invoice for supply of goods must be issued on or before the dispatch of goods, i.e. on
2nd August. Therefore, the time of supply for the purpose of payment of tax for the goods
will be 2nd August, the date when the invoice should have been issued.

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.
9. 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).
10. 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.
11. 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.
12. 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)
35
4) 7th September viz., earlier of date of issuance of invoice (7th September) or date of
receipt of payment (15th September)
13. (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.
14. 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.
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.
36
VG STUDY HUB VALUATION UNDER GST 9318492718, 7703880232
CHAPTER – 06
VALUATION UNDER GST
1. Are post-supply discounts eligible for deduction from the value of supplies in all situations?
Explain.
2. ‘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.
3. 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.
4. 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?
5. 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?
37
6. 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?
7. 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?
8. 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?
9. 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 Particular Amount (‘)

(i) List price of taxable (exclusive of taxes) goods supplied inter-state 15,00,000
(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 to an 50,000
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 of 6,000
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%.
38
10. 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 [Such charges were payable by 5,000
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 [M/s Flow Pro has 2,000
agreed to deliver the goods at BP Ltd.’s premises]
(iv) Subsidy received from the State Government on sale of machine 5,000
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.
11. 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 mentioned 1,00,000
at S. Nos. (iii), (v) and (vi)]
(ii) Municipal tax 2,000
(iii) Inspection charges 15,000
(iv) Subsidy received from Shri Ram Trust [Subsidy is directly linked 50,000
to the goods supplied]
(v) Late fees for delayed payment inclusive of GST [Shri Balram Pvt. 1,000
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]
(iv) Weighment charges [Such charges were paid by Shri Balram Pvt. 2,000
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.
12. 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. [Amount 20,000
has been paid by Ghisa Ltd. directly to the supplier. However, it
39
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 included in 25,000
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.
1. 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.
2. 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.
3. 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.
40
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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
41
9. Computation of total value of taxable supplies made by Red Pepper Ltd. during the month
of March
Particular Amount (‘)

List price of the goods 15,00,000
Subsidy amounting to `2,10,000 received from the Central NIL
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 [Since the subsidy is received from a 50,000
non-Government body and directly linked to the supply, the same is
includble in the value in terms of section 15(2)(e)]
Tax levied by the Municipal Authority [Includible in the value as per 20,000
section 15(2)(a)]
Packing charges [Being incidental expenses, the same are includible 15,000
in the value as per section 15(2)(c)]
Late fees paid by recipient of supply for delayed payment [Includible 5,085
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
10. Computation of value of taxable supply made by M/s. Flo Pro to BP Ltd.

Price of the machine [Since the subsidy is received from the State 25,000
Government, the same is not includible in the value of supply in terms
of section 15(2)(e)]
Third party inspection charges [Any amount that the supplier is liable to 5,000
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 [Since arranging freight is 2,000
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 Ltd. 500
[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
11. 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
[Includible in the value as per section 15(2)(a)]
Inspection charges 15,000
[Any amount charged for anything done by the supplierin respect of
the supply of goods at the time of/before delivery of goods is includible
42
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 relationto 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)]
Value of taxable supply 1,69,000
12. Computation of value of taxable supply made by Koli Ltd. to Ghisa Ltd.

Price of machinery (exclusive of taxes and discounts) 5,50,000
20,000
Amount paid by Ghisa Ltd. directly to the supplier forthe part
fitted in the machinery
[Any amount that the supplier is liable to pay in relationto a supply
but which has been incurred by the recipientof the supply and not
included in the price actually paidor payable for the goods is includible
in the value of supply in terms of section 15(2)(b).]
11,000
Less: Discount @ 2% on the price of machinery[`
5,50,000 x 2%]
[Since discount is given at the time of supply ofmachinery and
recorded in the invoice, the same is
43
VG STUDY HUB INPUT TAX CREDIT 9318492718, 7703880232
CHAPTER – 07
INPUT TAX CREDIT
ILLUSTRATION 1
ABC Co. Ltd., registered under GST, is engaged in the manufacture of heavymachinery. It
procured the following items during the month of July.
S. No. Items GST (Rs)

(i) Electrical transformers to be used in the manufacturing process 5,20,000
(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 cost to the 25,000
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 fulfiller
ANSWER
Computation of ITC available with ABC Co. Ltd. for the month of July
S. No. Items ITC (Rs)

(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 customers meet Nil
[ITC on food or beverages is specifically disallowed unless the same is
used for making outward taxable supply of the same category or as an
element of the taxable composite or mixed supply-Section 17(5)(b)(i)]
Total ITC 8,20,000
ILLUSTRATION 2
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 (Rs) Remarks

(i) Inputs A 1,00,000 One invoice on which GST payable was Rs 10,000,
is missing
44
(ii) Inputs B 50,000 Inputs are to be received in two installments. First

installment has been received in October
(iii) Capital goods 1,20,000 XYZ Ltd. has capitalized 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 Rs 50,000 has been received in
October
Note:
(i) Subject to the information given above, assume that all the other conditionsnecessary for
availing ITC have been fulfilled.
(ii) The annual return for the previous financial year was filed on 15th September.
ANSWER
Computation of ITC available with XYZ Ltd. for the month of October
S. No. Inward supplies ITC (Rs)

(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) Since the annual return for the previous financial year has been filed on 1,75,000
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
ILLUSTRATION 3
XT Pvt. Ltd., a supplier of goods, pays GST under regular scheme. It has made the following
outward taxable supplies in a tax period:
Particulars Amount (Rs)

Intra-State supply of goods 8,00,000
Inter-State supply of goods 3,00,000
45
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 70,000
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the minimum GST, payable in cash, by XT Pvt. Ltd. for the tax period. Make suitable
assumptions as required.
ANSWER
Computation of GST payable on outward supplies
S. No. Particulars CGST SGST @ IGST @ Total (Rs)

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

9% (Rs) 9% (Rs) 18% (Rs)
Opening ITC 57,000 Nil 70,000
Add: ITC on Intra-State purchases of goods valuing 18,000 18,000 Nil
Rs 2,00,000
Add: ITC on Intra-State purchases of goods valuing Nil Nil 9,000
Rs 50,000
Total ITC 75,000 18,000 79,000
46
Computation of minimum GST payable from electronic cash ledger
Particulars CGST @ SGST @ IGST @ Total

9% (Rs) 9% (Rs) 18% (Rs) (Rs)
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.
QUESTIONS FOR PRACTICE

1. What is input tax?
2. What are the conditions necessary for availing ITC?
3. Can a person take ITC without payment of consideration for the supply along with tax?
4. What is the time limit for taking ITC and reasons therefor?
5. What is the ITC entitlement of a newly registered person?
6. What is the tax implication of supply of capital goods by a registered person who had taken
ITC on such capital goods?
7. 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.
8. Swastik Pvt. Ltd. is a manufacturer of taxable goods. It purchased a machinery for Rs
8,00,000 on which IGST of Rs 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 Rs 14,400 paid by it as IGST.
Examine if the stand taken by the company is correct in law.
9. Sigma Consultants, an LLP of finance professionals, provides financial consultancy services.

It made an advance payment of Rs 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
47
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 Rs 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.
10. 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?
11. 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 agencyRss services to the extent attributable to the SEZ supplies. Give
your comments.
12. RsABRs, a registered person, was paying tax under composition scheme up to 30th July.
However, w.e.f. 31st July, RsABRs becomes liable to pay tax under regular scheme.
Is RsABRs eligible for any ITC?
13. 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 Rs 50 lakh.
Examine the eligibility of Babla Enterprises for availing ITC, if any.
14. 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.
15. 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 (Rs)

(1) Raw material (to be received in the month of September) 2,50,000
48
(2) Membership of a club availed for employees working in the factory 1,45,000
(3) Inputs to be received in 5 lots, out of which 3rd lot was received 80,000
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 and GST 1,50,000
paid on those items is Rs 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.
16. 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.
S.No Particulars GST (Rs)

(1) Raw spices purchase
Raw spices sold to customers 50,000
Raw spices used for personal use of directors 20,000
(2) Electric machinery purchased for being used 25,000
in the manufacturing process
(3) Motor vehicle used for transportation of the 55,000
employee
(4) Payment made to contractor for construction 1,25,000
of staff 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 conditions necessary for availing ITC have been fulfilled.
17. 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:
S.No Particular GST(Rs)

(1) Purchase of iron which is used as a raw material [Goods were 2,50,000
received in two instalments - first in March and the second in April]
(2) Purchase of accessories which were delivered directly to the dealers 90,000
of the company on the direction of Dina Ltd.
49
[Only invoice was received by Dina Ltd.]

(3) Purchase of bus (seating capacity 15) for the transportation of 1,97,000
employees from their residence to company and back
(4) General insurance taken on a car used by executives of the company 5,200
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 conditions necessary for availing ITC have been fulfilled.
18. 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 Rs 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 Rs 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.
19. M/s. Diwan & Sons of New Delhi, has placed an order for 250 kg of plastic granules @ Rs 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 from Shubhkamna Sales of Hapur, U.P. for 250 kg of plastic granules @ Rs 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%.
50
20. Paritosh & Co., a supplier of goods, pays GST under regular scheme. It has made the
following outward taxable supplies in a tax period:
Particulars Amount
(Rs)
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.

1. 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.
2. 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.
51
3. 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.
4. 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 [Section 16]”.
5. A person applying for registration can take 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.
6. In case of voluntary registration, ITC of such goods held in stock on the day immediately
preceding the date of registration can be taken.
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.
7. 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.
8. 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.
9. 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 Rs 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.
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.
52
In the given case, Sigma Consultants has paid IGST of Rs 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.
10. 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.
11. 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.
12. ABRs 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.
13. 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.
14. 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.
15. Computation of ITC available with Harshgeet Pvt. Ltd. for the month of July
Particulars ITC (Rs)

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 during the Nil
month
53
[In case of goods received in lots, ITC can be taken only upon receipt of the
last lot]
Trucks used for transport of raw material 40,000
[ITC of GST paid on motor vehicles used for transportation ofgoods 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. Rs 80,000, is not available.]
Total ITC 1,10,000
16. Computation of ITC available with Jamku Ltd. for the month of October

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 manufacturing process 25,000
[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.]
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 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 quarter Nil
[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
54
17. Computation of ITC available with Dina Ltd. for the month of March

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 the company 90,000
[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 seating capacity > 13
persons (including the driver) used for any purpose is allowed.
General insurance taken on car used by executives of the company for official Nil
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
18. 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 Rs 1,98,000 (Rs 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 Rs 1,33,932 → [(Rs 12,98,000 - Rs 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 Rs
55
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.
19. 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 Rs 2,250 (Rs 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 Rs 2,700 (Rs
60 x 250 x 18%) on the purchase of 250 kg of plastic granules @ 60 per kg.
20. Computation of GST payable on outward supplies
S. No. Particulars CGST SGST @ IGST @ Total (Rs)

@ 9% 18% (Rs) 18% (Rs)
(Rs)
(i) Intra-State supply of goods for 90,000 90,000 1,80,000
Rs 10,00,000
(ii) Inter-State supply of goods 1,44,000 1,44,000
for
Rs 8,00,000
Total GST payable 3,24,000
Computation of total ITC
Particulars CGST @ SGST IGST @

9% (Rs) 9% (Rs)
@ 9%
(Rs)
Opening ITC 57,000 60,000 1,40,000
Add: ITC on Intra-State purchases of goods valuing 27,000 27,000 Nil

Rs 3,00,000
Add: ITC on Inter-State purchases of goods valuing Nil Nil 45,000
Rs 2,50,000
Total ITC 84,000 87,000 1,85,000
56
Computation of minimum GST payable from electronic cash ledger
Particulars CGST @ SGST @ IGST @ Total

9% (Rs) 9% (Rs) 18% (Rs) (Rs)
GST payable 90,000 90,000 1,44,000 3,24,000
Less: ITC [First ITC of IGST should (38,000) (3,000) (1,44,000) 1,85,000
be utilized in full - first against IGST IGST IGST IGST
liability and then 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 32,000 Nil Nil 32,000
next month
Note : The above computation is one of the many ways to set off the ITC of IGST (Rs
41,000-after set off against IGST liability) against CGST and SGST liability to compute
minimum GST payable in cash. To illustrate, IGST of Rs 10,000 can be set off against
SGST payable and IGST of Rs 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 Rs 25,000 and Rs 7,000 (totaling to Rs 32,000) respectively. However, if the entire
ITC of Rs 41,000 is set off against CGST payable, then SGST of Rs 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.
57
VG STUDY HUB REGISTRATION UNDER GST 9318492718, 7703880232
CHAPTER – 08
REGISTRATION UNDER GST
ILLUSTRATION 1
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 Rs 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 Rs 20 lakh on 25th September. It submits the application for registration
on 27th October. Registration certificate is granted on 5th November.
ANSWER
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) Rs 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs 20 lakh for the States of States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) Rs 40 lakh for rest of India. However, the higher threshold limit of Rs 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) Rs 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs 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 Rs 40 lakh and Rs 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.
58

1. 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 Rs 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 Rs 20 lakh on
25th October. It submits the application for registration on 27th November. Registration
certificate is granted to it on 5th December.
2. In order to be eligible for grant of registration, a person must have a Permanent Account Number
issued under the Income- tax Act, 1961. State one exception to it.
3. 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.
4. 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.
Sl. No Particulars Amount

(Rs)*
(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 PureOils from its branch 10,00,000
located in Punjab
*excluding GST
Determine whether Pure Oils is liable for registration.
5. 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.?
6. 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 turnover in the current financial year (FY) from Assam showroom is Rs 33
lakh. He has another showroom in Tripura with a turnover of Rs 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 Rs 22 lakh.
(iii) Harshit of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala. His
59
7. 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 Rs 25 lakh.
(ii) Sanchit of Assam is engaged in intra-State supply of both taxable goods and services. His
8. What are the advantage of taking registration in GST?
9. Can a person without GST registration collect GST and claim ITC?
10. If a person is making taxable supplies from different States, with the same PAN number, can he
operate with a single registration?
11. Can a person having multiple places of business in a State obtain separate registrations for each
place of business?
12. Is there a provision for a person to get himself voluntarily registered though he may not be liable
to pay GST?
13. Can the Department, through the proper officer, suo-moto proceed to register a person under
GST?
14. Whether the registration granted to any person is permanent?
15. Is it necessary for the UN bodies to get registration under GST?
16. What is the responsibility of the taxable person making supplies to UN bodies?
17 What is the validity period of the registration certificate issued to a casual taxable person and non-
resident taxable person?
18. What happens when the registration is obtained by means of willful mis- statement, fraud or
suppression of facts?
19 Is there an option to take centralized registration for services under GST Law?
20. What could be the liabilities (in so far as registration is concerned) on transfer of a business?
21. At the time of registration, will the assessee have to declare all his places of business?
22. Does cancellation of registration impose any tax obligations on the person whose registration is so
cancelled?
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ANSWERS/HINTS FOR ABOVE QUESTIONS

1. (a) Every supplier becomes liable to registration if his turnover exceeds the applicable threshold
limit [Rs 40 lakh in this case] in a financial 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 Rs 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
[Rs 20 lakh] on 25th October, it becomes liable to registration on said date.
Further, since the application for registration has been submitted after 30 days from the date such
person becomes liable to registration, the registration shall be effective from the date of grant of
registration. Therefore, the effective date of registration is 5th December.
2. A Permanent Account Number is mandatory to be eligible for grant of registration. One exception
to this is a non-resident taxable person. A non- resident taxable person may be granted registration on
the basis of other prescribed documents instead of PAN. He has to submit a self-attested copy of his
valid passport along with the application signed by his authorized signatory who is an Indian Resident
having valid PAN and application will be submitted in a different prescribed form [Section 25(6) &
(7)].
3. (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.
4. As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to be
(a) Rs 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) Rs 40 lakh for rest of India except persons engaged in making supplies of ice cream and other
edible ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco
substitutes.
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The threshold limit for a person making exclusive taxable supply of services or supply of both goods
and services is as under:-
(b) Rs 20 lakh for the rest of India.
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. Particular Amount (in Rs)

No
(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 Oilsfrom its branch 10,00,000
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
Rs 40,00,000. Since the aggregate turnover does not exceed Rs 40,00,000, Pure Oils is not liable to be
registered.
5. 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.
6. As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to be
62
(b) Rs 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry,
Sikkim, Telangana and Uttarakhand.
(c) Rs 40 lakh for rest of India except persons engaged in making supplies of ice cream and other
edible ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured
tobacco substitutes.
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. Rs 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 Rs 10 lakh. Thus, Raghav is liable to get registered under GST as his turnover
exceeds Rs10 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 Rs 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 Rs40 lakh. The applicable threshold limit for registration in this case is Rs20 lakh.
Thus, Harshit is liable to get registered under GST.
7. 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 taxable supply of services or supply of both goods and services is as
under:-
a. Rs 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
b. Rs 20 lakh for the rest of India.
(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 Rs 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 Rs 20 lakh. Thus, Sanchit is liable to get registered under GST as
his turnover is more than the threshold limit.
8. 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.
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9. 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.
10. 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.
11. Yes. In terms of the proviso to sub-section (2) of section 25, a person having multiple places of
business in a State may obtain a separate registration for each place of business, subject to such
conditions as may be prescribed.
12. 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.
13. 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.
14. Yes, the registration certificate once granted is permanent unless surrendered, cancelled,
suspended or revoked.
15. 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.
16. 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).
17. 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.
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18. In such cases, the registration may be cancelled with retrospective effect by the proper officer
[Section 29(2)(e)].
19. No, the tax paper has to take separate registration in every State from where he makes taxable
supply of services.
20. 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)].
21. 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.
22. 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.
65
VG STUDY HUB TAX INVOICE 9318492718, 7703880232
CHAPTER – 09
TAX INVOICE, DEBIT NOTE AND CREDIT NOTE
ILLUSTRATION 1
Luv & Kush Pvt. Ltd. of Meghalaya engaged in the supply of gifts items and repair services, provides
you the following details: -
S. No. Particulars Date

1. Commencement of the business of supplying goods and services 01st August
2. Turnover exceeds Rs 10,00,000 on 15th August
3. Turnover exceeds Rs 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.
ANSWER
A supplier of both goods and services whose aggregate turnover in a financial year exceeds Rs 20
lakh in a State/UT [Rs 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 Rs 20 lakh/ Rs 10 lakh) in terms of section 22. Since Meghalaya is not a specified Special
Category State, applicable threshold limit is Rs 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 Rs 2,50,000.
66
ILLUSTRATION 2
Jain & Sons is a trader dealing in stationery items. It is registered under GST and has undertaken
following sales during the day:
S. No. Recipient of supply Amount

(Rs)
1. Raghav Traders - a registered retail dealer 190
2. Dhruv 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 acomposition dealer].
Determine in respect of which of the above supplies, Jain & Sons may issue aConsolidated Tax
Invoice instead of Tax Invoice, at the end of the day.
ANSWER
In the given illustration, Jain & Sons can issue a Consolidated Tax Invoice only with respect to
supplies made to Oberoi Orphanage [worth Rs 188] and Aaradhya [worth Rs 158] as the value of
goods supplied to these recipients is less than Rs 200 as also these recipients are unregistered and
don’t require a tax invoice.
As regards the supply made to Raghav Traders, although the value of goods supplied to it is less than
Rs 200, Raghav Traders is registered under GST. So, Consolidated Tax Invoice cannot be issued.
Consolidated Tax Invoice can also not be issued for supplies of goods made to Dhruv Enterprises and
Gaurav although both of them are unregistered. The reason for the same is that the value of goods
supplied is not less than Rs 200.
ILLUSTRATION 3
Kartik & Co., a registered supplier under GST, provides the followinginformation regarding various
tax invoices issued by it during the month of March:
(i) Value of supply charged in invoice no. 1 was Rs 2,50,000 against the actual taxable value
of Rs 2,30,000.
(ii) Tax charged in invoice no. 4 was Rs 32,000 against the actual tax liabilityof Rs 68,000
due to wrong HSN code being chosen while issuing invoice.
(iii) Value charged in invoice no. 8 was Rs 3,20,000 as against the actual value of Rs 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 abovecircumstances?
(3) What is the maximum time-limit available for declaring the credit notein the GST
Return?
67
ANSWER
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.

1. 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.
2. 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?
3. The aggregate turnover of Sangri Services Ltd., Delhi, exceeded Rs 20 lakh on 12th August.
He applied for registration on 3rd September and was granted the registration certificate on
6th September. You are required to advice Sangri Services Ltd. as to what is the effective date
of registration in its case. It has also sought your advice regarding period for issuance of
Revised Tax Invoices.
4. 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.
5. 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 Rs 5,00,000 (excluding GST) has been
charged. Aura Beauty Services Ltd. issued a duly signed tax invoice on 10th February
68
showing the lumpsum amount of Rs 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.
6. 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 Rs 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?
7. 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)
[Rs ]
5th April 102 Notebooks [10 in 1,200
numbers]
10th May 197 Chart Paper [4 in 600
number]
20th May 230 Crayon colors [2 500
packets]
2nd June 254 Poster colors [5 900
packets]
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?
8. 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.
9. 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.
10. 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.
69
11. 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
12. 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.
13. 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.
14. 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.
15. 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.

1. 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.
2. 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.
3. 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
70
Services Ltd.’s turnover exceeded Rs 20 lakh on 12th August, it became liable to

registration on same day. Further, it applied for registration within 30 days of so
becoming liable to registration, the effective date of registration is the date on which he
becomes liable to registration, i.e. 12th August.
As per section 31 read with CGST Rules, 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.
4. 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.
5. (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.
(iii) 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.
6. 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.
7. Where one or more tax invoices have been issued for supply of any goods and/or services
and
71
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.
8. 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 Rs 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.
9. 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.
10. 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.
11. 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).
12. 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.
13. 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
72
invoice is issued in pursuance thereof, Udai Singh may issue a refund voucher against
such payment to Sujamal.
14. 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.
15. 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.
73
VG STUDY HUB PAYMENT OF GST 9318492718, 7703880232
CHAPTER – 10
PAYMENT OF GST
ILLUSTRATION 1
M/s. Daksha Enterprises has made a cash deposit of Rs 10,000 under minor head 'tax' of major head
'SGST’. It has a liability of Rs 2,000 for minor head "Interest" under the major head "SGST".
State whether M/s. Daksha Enterprises can utilise the amount available for payment of interest.
ANSWER
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 Rs 10,000 available under minor head ‘tax’ of major head
‘SGST’ can be utilised for payment of liability of Rs 2,000 under minor head ‘interest’ of the same
major head, after making a due transfer entry using Form GST PMT-09 from the minor head of ‘tax’
to ‘interest’.
ILLUSTRATION 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 Rs 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.
ANSWER
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 = Rs 36,500 x 18% x 54/365 = Rs 972
ILLUSTRATION 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 Rs 40,000. ABC
Ltd., has paid the above shortfall of Rs 40,000, through GSTR3B of September 2021, filed on
20.10.2021 [payment through Cash ledger - Rs 30,000 and Credit ledger Rs 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 Rs 40,000/- has been paid on 20.10.2021 [payment through
electronic cash ledger - Rs 30,000 and electronic credit ledger Rs 10,000]
Notes:
74
 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 Rs
40,000/- missed out to be paid on forward charge basis
 Ignore the effect of leap year, if applicable in this case.
ANSWER
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 Rs 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:- Period of delay = 21st August, 2021
to 20th October, 2021 = 61 days Hence, amount of interest = Rs 40,000 x 18% x 61/365 = Rs 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
= Rs 30,000 x 18% x 61/365 = Rs 902

1. Examine the authority vested under CGST Act, 2017 for preventing a registered person from
utilising the input tax credit availed in a fraudulent manner?
2. Mr. A has deposited a sum of Rs 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 Rs 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.
3. PPC Ltd., has availed Input Tax credit for Rs 54,000/- IGST during February 2021 on a
particular purchase. Accounting records for the above purchase, indicate that IGST paid to the
supplier is Rs 45,000/- as per the bill received. GSTR1 uploaded by the supplier for the above
supply indicates Rs 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?
75
4. 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 Rs 2,000 under CGST and SGST each.
Accountant, of M/s ABC & Co., sought your confirmation for payment of such late fees
through the balance available in Electronic Credit Ledger for the late fees. Give your
guidance in this regard
5. How many types of electronic ledger/register are there?
6. What are the main features of GST payment process?
7. Are principles of unjust enrichment applicable for payment made under GST?
8. State the name of output tax under GST, where any of the input tax credit under GST can be
availed?
9. 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?
10. 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 Rs 75,000 to various vendors. The total input tax
involved on the goods and services procured by her is Rs 13,500. Out of the total bills paid by
her, one bill for Rs 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 Rs 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.

1. 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
76
amount.
2. 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
3. PPC Ltd., have accounted and paid Rs 45,000/- as IGST to the supplier concerned. However,
availment of input tax credit has been made for Rs 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 Rs
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 Rs 45,000/-.
4. 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 .
5.
(a) Electronic cash ledger

(b) Electronic credit ledger
(c) Electronic liability register
6. 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;
77
(j) Warehousing of Digital Challan.
7. 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.
8. IGST. IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output tax
liability known as IGST.
9. As per the provisions of CGST Act, 2017 read with relevant rules, the deposit in electronic
cash ledger can be made through any of the following modes, namely:-
(i) Internet Banking through authorised banks;
(ii) Credit card or Debit card through the authorised bank;
(iii) 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.
10. 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 Rs 2,700 on security service
through electronic cash ledger.
78
VG STUDY HUB RETURN UNDER GST 9318492718, 7703880232
CHAPTER – 11
RETURN UNDER GST

1. Mr. X, a registered taxpayer under regular scheme, did not make any taxable supply during
the month of July.
2. Is he required to file a GSTR-3B?
3. If a return has been filed, how can it be revised if some changes are required to be made?
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.
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.
5. 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.
6. 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.
7. 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.
8. 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.
9. Quick tax, 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 Quick tax is correct?
10. 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.
79
ANSWERS/HINTS FOR ABOVE QUESTIONS

1. 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.
2. 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
3. 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 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.
4. 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.
5. 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.
80
6. 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.
7. 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.
8. 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 a chartered accountant
represent himself as a GSTP.
9. 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.
10. 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.
81

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VG STUDY HUB GST QUESTION BANK 9318492718, 7703880232

Computation of CGST, SGST payable by B to Government

Statements of revenue earned by Central and State Government

Transaction Revenue to Central Revenue to State

Computation of CGST, SGST payable to Government

Transaction Revenue to Central Revenue to Revenue to

Questions for Practice

ANSWERS/HINTS of Above Questions

Direct Taxes Indirect Taxes

3. Salient features of indirect taxes are:

5. Deficiencies in the erstwhile indirect tax regime:

7. Central levies that are subsumed in GST are as follows:

Resultantly, Common GST Electronic Portal – www.gst.gov.in – a website managed by Goods

12. GST accrues following advantages to the trade and industry

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

ANSWERS/HINTS OF ABOVE QUESTIONS

(iii) Supply of goods —

5. Title as well as possession both have to be transferred for a transaction to be considered as a

(i) the spouse and children of the person, and

7. (a) Supply of services

(b) Supply of goods

(c) Supply of services

(d) Supply of goods

8. (a) Supply of services

(b) Supply of services

(d) Supply of goods

10. (i) Supply, under section 7, inter alia,

 includes import of services for a consideration

(i) the spouse and children of the person, and

QUESTION FOR PRACTICE

3. Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP.

services from neighboring State of Madhya Pradesh?

ANSWERS/HINTS OF ABOVE QUESTION

4. In case of services provided by Goods Transport Agency (GTA) in respect of transportation of

EXEMPTION UNDER GST

QUESTION FOR PRACTICE

Amount charged for service provided by 5,20,000

7. Examine whether GST is exempted on the following independent supplies of services:

ANSWERS/HINTS OF ABOVE QUESTIONS

2. The term ‘charitable activities’ mean activities relating to-

5. Services by an artist by way of a performance in folk or classical art forms of

6. Computation of value of taxable supply

8. Services provided by an educational institution by way of conduct of entrance examination

1. Explain the significance of time of supply under GST law.

ANSWERS/HINTS OF ABOVE QUESTIONS

7. As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding

8. As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding

VALUATION UNDER GST

Is the company’s argument correct in the light of section 15?

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

S.No Particular Amount (‘)

S.No Particular Amount (‘)

Note: Price of the machine is net of the subsidy received.

S.No Particular Amount (‘)

Note: Price of the goods is net of the subsidy received.

S.No Particular Amount (‘)

ANSWERS/HINTS OF ABOVE QUESTIONS

Particular Amount (‘)

Particular Amount (‘)

in the value as per section 15(2)(c)]