CA Final May 2026 Suggested Answers Paper 5 Indirect Tax Laws

FOR CA FINAL EXAM PREPARATION

CA Final 2026
Suggested Answers ·
Paper 5 Indirect Tax
Laws
EXAM YEAR TYPE SUBJECT

CA Final 2026 Suggested Answers Paper 5 Indirect Tax Laws
DATE

May 2026

Notes · Sample Papers · Previous Year Papers · Mock Tests

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PAPER – 5: INDIRECT TAX LAWS
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m PART – I - Multiple Choice Questions c. o
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Integrated Case Scenario - I
l is engaged in providing various supplies. He is registered under GST ata
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g in the State of Kerala.
aKochi,
Pawan

He also acts as a Del-Credere Agent (DCA) of M/s Casual Comforts Ltd., a reputed
garments company of Bengaluru, Karnataka. As a DCA, he issues invoice in his
own name and guarantees for the realization of payments from the customers.
Details of various transactions for the month of October 2025 are reported as
below:

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(i) Intra-State outward supply in his DCA capacity: ` 21,00,000.

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(ii) For the above supply at point (i), interest earned from the customers for the

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short term credit facility provided to them for timely payment of dues:

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` 1,25,000.
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(iii) Services provided in the capacity of independent director to 'ABC Repo
Clearing Exchange Limited' in Kochi: ` 3,00,000.
(iv) Inter-State supply of goods received from M/s Casual Comforts Ltd. Being a
DCA, no consideration was paid. Value of supply ascertained under section
15 of the CGST Act, 2017 is ` 4,00,000.
(v) Received free training (inter-State) from M/s Casual Comforts Ltd. for e-

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invoicing under GST as per DCA agreement. M/s Casual Comforts Ltd.

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charges ` 15,000 when it provides such training to others.
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. in the
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e 2024 (ITC
had reversed an eligible IGST input tax credit (ITC) of ` 20,000
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month of October 2024 in respect of an invoice received in March

l as a g being the supplier

ag did not file his GSTR 3B in respect of said invoice till September 2024. He
came to know that the supplier filed his said GSTR 3B return in September
2025. He wants to claim the ITC again which was reversed earlier.

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FINAL EXAMINATION: MAY 2026

Further in respect of a demand order received for the financial year (FY)
2020-21, appeal was preferred earlier and the said appeal was finally disposed
on 31.10.2025. Annual return (GSTR-9) for the said FY was filed on 31.03.2022
against the due date of 28.02.2022.
Pawan arranged for a marketing training for his executives located in Delhi
through "Magic Market Consultants", based and registered in Mumbai. This
training was held at Manali, Himachal Pradesh for a week in the month of
September 2025.
Pawan also proposes to undertake from the next month following pure labour
contracts with his expertise in construction industry:
(a) Pure labour contracts of construction of original work pertaining to a single
residential unit otherwise than as a part of a commercial complex: ` 5,00,000.
(b) Pure labour contracts of construction of original work pertaining to a single
commercial unit otherwise than as a part of a residential complex: ` 7,00,000.
(c) Pure labour contracts of construction of renovation work pertaining to the
beneficiary led individual house construction PMAY government scheme:
` 9,00,000.
Applicable rate of tax on both inward and outward supplies is 9% each for CGST
and SGST and 18% for IGST unless otherwise provided.
All the amounts given above are exclusive of taxes, wherever applicable.
Subject to the information given above, conditions for availing the input tax credit
are complied with.
From the information provided above, choose the most appropriate answer for
the following questions number 1 to 6:
1. Value of taxable outward supply of Pawan for the month of October 2025 on
which he is liable to pay GST is ` ____________.
(A) 21,00,000
(B) 22,25,000
(C) 24,00,000
(D) 25,25,000 (2 Marks)

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INDIRECT TAX LAWS

2. Amount of eligible gross ITC in respect of transactions made with M/s Casual
Comforts Ltd. for the month of October 2025 is ` ____________.

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(A) Nil

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(B) 2,700
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(C) 72,000
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(D) 74,700 (2 Marks)

a3. In respect of ITC reversed earlier, the most appropriate statement is:
(A) He cannot re-claim ITC beyond November 2024
(B) He can re-claim ITC from September 2025
(C) He should have reversed ITC latest by September 2024
(D) He need not reverse as reflection of ITC in GSTR 2A/2B is sufficient to
claim the same (2 Marks)
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4.
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Pawan seeks your advice regarding the date upto which books of account

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and other records for the financial year 2020-21 need to be retained. Your
advice to Pawan will be:
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(A) 31.10.2031
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(B) 31.03.2028
(C) 28.02.2027
(D) 28.02.2028 (2 Marks)
5. In respect of training arranged by Pawan for his executives, place of supply
will be

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(A) Delhi

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l a (2 Marks)
las (D) Kochi g
a will be ` _____.
ag 6. In respect of proposed pure labour services, exempt supply
(A) 5,00,000
(B) 7,00,000
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FINAL EXAMINATION: MAY 2026

(C) 9,00,000
(D) 14,00,000 (2 Marks)
Integrated Case Scenario - II
M/s Suja & Co (located at Jodhpur), a partnership firm was registered under GST
under composition scheme in the State of Rajasthan. Intra-State outward taxable
supply of the firm for the month of April 2025 was ` 10 lakh, out of which` 3 lakh
was supply of services. In the preceding financial year, the firm was doing trading
of taxable goods only. Turnover of the concern for the previous financial year
was ` 100 lakh.
During the month of May 2025, the firm proposed the following:
(i) To make intra-State supply its goods through the online e-commerce
platforms for better reach.
(ii) To supply the goods to nearby States.
(iii) To deal in new line of products such as building bricks and roof tiles for which
there was good demand.
It awaited the approval of its GST consultant to start these proposed activities.
The firm availed the following services in the month of July 2025 on 20.07.2025
and made payment on the same day.
(a) Took on rent a commercial premise for business purposes for a rent of
` 50,000. Owner of the property was a pensioner and was not registered
under GST.
(b) Availed security services for its godown and paid 30,000 as per bill was raised
by the service provider who was not registered under GST.
Aggregate turnover of the firm crossed the limit of ` 150 lakh on the first order
for the day of 25.08.2025 from which date the firm opted to pay tax under regular
scheme of monthly payment of tax.
On the date liable to pay tax under regular scheme, the firm furnishes the
following information of input tax credit to be claimed under section 18 of the
CGST Act, 2017 read with rule 40 of the CGST Rules, 2017:

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GST paid on input As on the end of As on the end of
24.08.2025 the 25.08.2025

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Held in stock 30,000 1,00,000
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Contained in semi-finished goods 50,000 2,00,000

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stock

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Contained in finished goods stock 60,000 3,00,000
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g the month of October 2025, the firm made a contract of supply of goods
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Kamala Limited registered in Kanpur (Uttar Pradesh). Consignment was sent
to Dubai (outside India) as per instruction of Kamala Limited and this
consignment was sent through Green Dot couriers, registered at Jaipur. Goods
were handed over for shipment at Jaipur.
One of the partners of the firm retired on 30.09.2025. GST consultant was advised
to report the same to the GST authority by filing necessary amendment within 10

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days. But the firm missed by oversight and filed the amendment by 28.10.2025.

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Assume all the amounts given above are exclusive of taxes, wherever applicable.

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All the supplies referred above are intra-State unless specified otherwise.
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Conditions for claiming ITC are duly complied subject to the information given
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above.
Also assume normal (regular) rate of GST as 9% each under CGST and SGST and
18% under IGST for all the inward and outward supplies involved.
From the information provided above, choose the most appropriate answer for
the following question numbers 7 to 12:
7. Tax liability of Suja & Co related to the month of April 2025 is ` ________.

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(A) 5,000 each under CGST and SGST

m (C) 10,000 each under CGST and SGST
(B) 12,500 each under CGST and SGST
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(D) 30,500 each under CGST and SGST

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8. In respect of proposed activities for the month of May
following activities are not permitted for Suja & Co.?
(A) Only (i)

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FINAL EXAMINATION: MAY 2026

(B) (i) and (ii)
(C) (ii) and (iii)
(D) (i), (ii) and (iii) (2 Marks)
9. The firm will be liable to pay tax of ` _______ each under CGST and SGST
under reverse charge mechanism for the month of July 2025:
(A) Nil
(B) 2,700
(C) 4,500
(D) 7,200 (2 Marks)
10. Amount of ITC eligible to be claimed by the firm on switching from
composition to regular scheme is:
(A) ` 30,000
(B) ` 90,000
(C) ` 1,40,000
(D) ` 6,00,000 (2 Marks)
11. In respect of transaction between the firm and Green Dot couriers, the place
of supply will be _______.
(A) Dubai
(B) Jodhpur
(C) Kanpur
(D) Jaipur (2 Marks)
12. In respect of retired partner, he will be liable for tax, interest and penalty of
the firm due up to the date of:
(A) 30.09.2025
(B) 10.10.2025
(C) 30.10.2025
(D) 28.10.2025 (2 Marks)

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13. On 15th October 2025, Jai Laxmi Exim Limited was served with a demand
order by the Revisional Authority (RA) of GST for demand of tax (IGST)
` 1400 crore, interest of ` 100 crore and penalty of ` 120 crore. Company
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admitted tax of ` 200 crore, interest of ` 20 crore and penalty of ` 10 crore.
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No appeal filed with regard to this matter earlier against Appealed Authority
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(AA) and company wants to file appeal directly to GST Appellate Tribunal.

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Total amount (as tax+ interest and penalty, if any) to be deposited by the
appellant before filing appeal to GST Appellate Tribunal is `:
(A) Nil
(B) 270 crore
(C) 369 crore
(D) 350 crore (2 Marks)
14. Mrs. Sinha, an Indian resident, returns to India from New Zealand, after
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staying there for 13 months with her daughter Miss Niva, aged one and half
year old. They brought with them following items:

s em Sinha
la Amount (`)
Particulars Mrs. Miss Niva

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Amount
(` )
Used Personal effects ` 50,000 ` 25,000
Jewellery 31 grams of ` 98,000 20 grams of ` 50,000
One Laptop each Amounting to Amounting to ` 35,000
` 35,000
Other Articles (Not ` 40,000 ` 25,000

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covered in annexure I)

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Compute the net value of baggage liable to concessional customs duty

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according to the provisions of the Baggage Rules, 2016.

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(A) Mrs. Sinha ` Nil, Miss Niva ` 60,000
Miss Niva ` 1,00,000 a
ag (B) Mrs. Sinha ` Nil,
(C) Mrs. Sinha ` 88,000, Miss Niva ` 1,10,000
(D) Mrs. Sinha ` Nil, Miss Niva ` 1,10,000 (2 Marks)

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FINAL EXAMINATION: MAY 2026

15. U & Vee Ltd having registered office in Mumbai imported a new industrial
chemical from Germany on 25th September 2025. The proper officer of
customs could not determine the correct customs duty without a lab report,
so the goods were assessed provisionally on 1st October 2025. The proper
officer informed the company in writing on 10th October 2025 for furnishing
of the said lab report.
What is the maximum extended deadline (including all possible extensions
by any authority) date for submitting the required report (information) under
the regulation 4 of the Customs (Finalization of Provisional Assessment)
Regulations, 2025 by U & Vee Ltd?
(A) 10th December 2025
(B) 10th February 2026
(C) 1st December 2026
(D) 10th December 2026 (2 Marks)
Answer Key
MCQ No. Correct Option
1. (B)
2. (C)
3. (B)
4. (D)
5. D
6. (C) OR (D)
7. (A)
8. (C)
9. (A)
10. (C)
11. (B)
12. (A)
13. (B)
14. (D)
15. (C)

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PART – II: Descriptive Questions

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(i) Question paper comprises of 6 questions. Answer Question No. 1 which is

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compulsory and any 4 questions out of the remaining 5 questions.

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(ii) Working notes should form part of the answer.
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as samended by the Finance Act, 2025 including significant notifications and gl
(iii) All questions

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lcirculars and other legislative amendments made, which have becomea
a effective upto 31.10.2025 and (ii) Customs law as amended by the Finance
Act, 2025 and significant notifications and circulars and other legislative
amendments made, which have become effective upto 31.10.2025.

Question 1
Zaveri Automobiles Pvt Ltd (referred as ZAPL) is a registered person in Rajkot
(Gujarat). It has authorized dealership of VTZ Motors Ltd. registered in Gwalior

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(Madhya Pradesh), an original equipment manufacturer. ZAPL is dealing in cars

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under all segments of Sedan, SUV, Hatchback etc. Different variants like petrol,

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diesel and electric are available for all segments and it is also dealing in buying
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and selling in second-hand cars and financing cars too.
gregarding outward and inward activities during
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ZAPL provides following details
the month of October 2025:
Sr. Particulars Amount
No. (in `)
Outward transactions:
(i) Sale proceeds received from sale of cars with option of one
year of extended warranty during the month of October
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2025:

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Type of car Quantity Rate per car

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(in `)

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las Petrol cars Hatchback upto 10
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6,50,000
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inside the

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1200 cc (Inter-State) table.
a Electric cars (Intra-State) 8 8,50,000
Diesel SUV cars above 1500 5 11,00,000
cc (Intra-State)

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FINAL EXAMINATION: MAY 2026

Extended warranty is taken only by purchasers of electric
car amounting to ` 50,000 per car at the time of purchase.
(This ` 50,000 is not included in above car rates.)
(ii) Received ` 12,00,000 from Maharshi Automobiles registered As given
in Udaipur (Rajasthan) for sale of used demo cars being inside the
diesel car below 1500 cc, these cars are originally purchased table.
as used cars from registered person on 01/04/2025 and
ZAPL used these cars only for display in the showroom and
for test drive for prospective customers, other details are as
below:
Originally purchased for: ` 11,70,000
Minor refurbishment expenses made in relation to this by
ZAPL ` 50,000 to registered suppliers during the month of
October 2025.
(iii) ZAPL issued taxable debit note to VTZ Motors Ltd. for repair 2,20,000
services in addition to replacement of parts to customers
without any consideration as part of the warranty on behalf
of the VTZ Motors Ltd.
(iv) Sale of electric car on 15.10.2025, which was repossessed 5,00,000
from defaulter of loan Mr. Shikhar, an unregistered person,
who purchased the car on 01.01.2024 for ` 7,00,000.
(v) ZAPL replaced the goods and parts on 15th October 2025 to -
the customer without any consideration under warranty on
behalf of the VTZ Motors Ltd., out of the supply already
received from VTZ Motors Ltd. during the month of August
2025.
VTZ Motors Ltd. issued taxable credit note on 25th October,
2025 of ` 2,50,000 in respect of goods and parts so replaced.
Inward transactions:
(i) Cars being petrol variant above 1200 cc purchased from 50,00,000
VTZ Motors Ltd. for` 10,00,000 each.
Out of these cars, 2 cars were used exclusively for
transportation of staff and remaining cars were used
exclusively for trial run and to demonstrate features of
vehicle to prospective buyers.

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(ii) VTZ Motors Ltd. supplied 5 electric cars on ex-works 60,00,000
contract basis to ZAPL, billed and handed over on behalf of

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ZAPL to transporter at VTZ Motor's factory gate on

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29th October 2025. The cars reached the location of ZAPL

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on 2nd November 2025.
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Additional
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a guarantee provided without consideration by Mr. Mahesh Kumar,a
(a) lPersonal
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a director of ZAPL, to the ASR Bank Ltd for sanctioning of cash credit facility of
` 12 crore to ZAPL.
(b) During the month, ZAPL gave shares of its holding company Graymord Co.
Inc, located in New Zealand, to employees as Restricted Stock Units (RSU) on
meeting performance standards as per the terms of the employment. Cost of
these shares is ` 45,00,000 which ZAPL paid to holding company against the
issue of shares. Holding company also charged commission of ` 12,00,000 on

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this transaction.

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(c) Extended warranty amounting to ` 3,00,000 has been taken by the few

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customers in the month of October 2025 for petrol cars of 1400 cc which were
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purchased by them in the previous month.
(d) In respect of above points g
a at Sr. No (ii) and (iv) of outward transactions, no
ITC has been claimed on cars purchased and also no depreciation has been
claimed.
(e) All conditions necessary for availing Input Tax Credit (ITC) has been complied
with except mentioned otherwise.
(f) All the figures given are exclusive of GST.
(g) Place of supply to be taken as intra-State supply, wherever a detail for

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determination of same is not provided with.

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(h) Assume the applicable GST rates (for new as well as for old items) as follows

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and ignore the effect of any notification/clarification of reduction or

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restriction of GST rates:
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gla Cars Engine capacity GST ratesa
a Petrol Upto 1200 cc 9% CGST, 9% SGST and 18%
Diesel Upto 1500 cc IGST

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FINAL EXAMINATION: MAY 2026

Petrol Above 1200 cc 20% CGST, 20% SGST and 40%
Diesel Above 1500 cc IGST

Electric cars - 2.5% CGST, 2.5% SGST and 5%
IGST
Extended warranty - 9% CGST, 9% SGST and 18%
service IGST

(i) Assume that all other inward and outward supplies are taxable at 9% CGST,
9% SGST and 18% IGST.
(j) All motor vehicles mentioned here are for transportation of persons having
approved seating capacity of not more than 13 persons (including the driver).
(k) There is no opening balance of any ITC but ZAPL wants to pay minimum
amount of CGST as far as possible as per norms.
Compute the net minimum GST liability to be paid in cash by ZAPL for the month
of October 2025.
Note: Computation of tax to be calculated separately for each transaction and
treatment to each transaction should be accompanied by the relevant legal
provisions of the GST law, except for the provision of the place of supply.
(14 Marks)
Answer
Computation of minimum net GST liability payable in cash for the
month of October 2025
S. Particulars Value CGST SGST IGST (`)
No. (`) (`) (`)
GST payable under forward charge
(i) Supply of Petrol cars 65,00,000 - - 11,70,000
(upto 1200cc) [65,00,000
x 18%]
Supply of electric 72,00,000 1,80,000 1,80,000 -
cars [68,00,000 + [72,00,000 x [72,00,000
[Since extended 4,00,000] 2.5%] x 2.5%]
warranty was taken

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at the time of
purchase of electric
car, it is a composite
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supply with supply
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of electric car being
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principal supply;
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car (2.5%
CGST/SGST) will be
applicable.]
Supply of Diesel SUV 55,00,000 11,00,000 11,00,000 -
cars (above 1500cc) [55,00,000 [55,00,000
x 20%] x 20%]
(ii) Sale of used demo 30,000 - - 5,400
car [30,000
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[Tax is payable on x 18%]
the margin 1.
.
Margin 2 = Sale Price -
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Purchase Price
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[12,00,000 -11,70,000
= 30,000]. a
Further, it is an inter-
State supply.]
(iii) Debit note for repair 2,20,000 - - 39,600
services provided to [2,20,000
VTZ Motors Ltd. x 18%]

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[Taxable, being

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repair services

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provided to VTZ

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Motors Ltd. It is an
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1
Since ITC has not been availed and depreciation has not been claimed under the
Income-Tax Act,1961.
2
Refurbishment expenses shall not be considered while determining the margin.

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FINAL EXAMINATION: MAY 2026

(iv) Sale of repossessed 80,000 2,000 2,000 -
electric car [80,000 [80,000
[Value of supply = x 2.5%] x 2.5%]
Sale price -
(Purchase price
reduced by 5% per
quarter or part
thereof) i.e. 5,00,000
– 4,20,000 (7,00,000
× 5% × 8 quarters) 3.]
(v) Extended warranty 3,00,000 27,000 27,000 -
on petrol cars [3,00,000 [3,00,000
[Since extended x 9%] x 9%]
warranty was taken
after purchase of
car/was not taken at
the time of purchase
of car, it is a separate
supply of services,
taxable at the
applicable rate for
extended
warranty 4.]
Total output tax 13,09,000 13,09,000 12,15,000
Less: ITC available for set
off [Refer working
note below.]
IGST credit is being - (12,15,000)
first utilized for
payment of IGST
liability and then for (4,56,000)

3
Place of supply has been taken as Intra-State supply, since details for determination of
place of supply are not provided with.
4
Place of supply has been taken as Intra-State supply, since details for determination of
place of supply are not provided with.

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INDIRECT TAX LAWS

payment of CGST
liability.

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CGST and SGST (4,500) (4,500) -

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credit is being

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utilized for payment

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of CGST and SGST
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l Net tax payable
liability respectively.
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a GST payable under reverse charge 8,48,500 13,04,500 Nil

Add: Commission - - 2,16,000
charged by [12,00,000
Graymord Co. x 18%]
[Tax on import of
services is payable

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under reverse
charge. Since it is
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not an output tax, it
has to be paid in
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cash and not by
utilizing ITC.] a
Minimum net GST 8,48,500 13,04,500 2,16,000
payable in cash
Working note - Computation of eligible ITC available for set off

Particulars Amount CGST (`) SGST (`) IGST (`)
(`)

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Purchase of Petrol Cars 30,00,000 - - 12,00,000

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above 1200cc
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[30,00,000

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promote sales, they are

las considered as being used for
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further supply of such motor
a vehicles and thus, ITC on 3
cars used for demo is
allowed. ITC on 2 motor

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FINAL EXAMINATION: MAY 2026

vehicles used for
transportation of staff is
blocked. Further, it is an
inter-State supply.]
Purchase of 5 Electric Cars 60,00,000 - - 3,00,000
[ITC is admissible on the cars [60,00,000
purchased for further x 5%]
supply . In an ex-factory
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transaction, cars are deemed
to be received when handed
over to transporter at
supplier’s factory gate;
hence, ITC can be claimed in
October. Further, it is an
inter-State supply.]
Personal guarantee by - - - -
director
[No tax is payable since open
market value of personal
guarantee provided without
consideration by the director
being a related person is nil 6.
Thus, no ITC is available.]
Commission charged by 12,00,000 - - 2,16,000
Graymord Co. [12,00,000
[RSUs issued by an overseas x 18%]
holding company to
employees of an Indian
subsidiary as part of

5
Since it has been mentioned in the question that ZAPL is car dealer, it has been assumed
that electric cars have been purchased for further supply only.
6
Open market value is nil since the RBI Guidelines mandates that no consideration by
way of commission, brokerage fees or any other form, can be paid to the director by the
company, directly or indirectly, in lieu of providing personal guarantee to bank for the
company.

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employment, reimbursed on
cost-to-cost basis, are not a
supply as these are
m
m
transactions in securities,
c. o
.co
and thus, are not liable to
s em
em
GST. However, commission
l a
a s
charged by the holding
l ag
ag
company is liable to GST
being consideration for
facilitating transaction in
securities. Further, it is an
inter-State supply.]
Minor refurbishment 50,000 4,500 4,500 -
expenses [50,000 [50,000 x
[ITC in respect services used x 9%] 9%]
in used in the course or
m
furtherance of business is
. co
em
available 7.]
Less: Credit note issued by
la s
2,50,000 - - (45,000)
VTZ Motors Ltd.
[ITC is to be reversed.] a g [2,50,000 x
18%]
Total ITC available 4,500 4,500 16,71,000

Question 2
(a) FUN TOURS Limited, registered as a regular dealer under GST in the State of
Punjab, provides the following information related to the month of October
2025:
m
m c. o
Sr. Particulars Amount

c. o em7,00,000
No. (in `)

em
(i)
lato
Provided services as a tour operator to entire New s
las a g
Zealand Cricket Team of a club, which was on visit

ag
7
Place of supply has been taken as Intra-State supply, since details for determination of
place of supply are not provided with.

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FINAL EXAMINATION: MAY 2026

India to Play T20 club cricket series. The said tour was
organized wholly in Nepal and Bhutan for 4 days.
(ii) Snacks and magazines supplied on board the omni bus 50,000
from Chandigarh (Punjab) to Delhi; Such goods were
taken on board in Panipat, Haryana State.
(iii) Paid fine as per law to Uttar Pradesh State Government 10,000
for over speeding of its bus in expressway.
(iv) Provided intra-State transportation of passengers by 1,60,000
omni bus through an e-commerce operator website.
(v) Sponsored a 'Summer Tour Fair' organized by Green 2,00,000
City Lions Club of Punjab, an NGO, during the month.

Additional information:
(1) All the amounts given above are exclusive of tax, wherever applicable.
(2) Assume the rate of tax for CGST/SGST/IGST as 9%, 9% and 18%
respectively for both inward and outward supplies.
(3) Place of supply to be taken as intra-State supply, wherever a detail for
determination of same is not provided with.
From the details given above, you are required to determine gross tax liability
of FUN TOURS Limited for the above given month before the set off of the
Input Tax Credit (ITC), if any.
Correct reason for treatment of each time should form part of your answer
separately. (5 Marks)
(b) Parikh Industries Ltd., registered under GST in Ahmedabad, Gujarat, is
engaged in manufacturing of electric bicycles. On 1st October 2025, the
company bought 100 VIP tickets for ` 5,000 each for an upcoming final
cricket match to be played on 30th October, 2025.
The company distributes these tickets complimentary as under:

Sr. Particulars
No.
(i) 20 tickets to top 5 clients (not related) as a goodwill gesture.
(ii) 2 tickets each to 15 dealers (not related) as part of a scheme where
dealers were promised to 2 complimentary tickets of the final

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cricket match if they achieved 50% more than their actual half
yearly target.

m
c. o
(iii) 15 tickets to Mr. Surendra, marketing executive as performance

m
co
reward.

. em
m s
(iv) 20 tickets to Mr. Patel, accounts executive as part of ‘Family Sports

s e l a
15 tickets to 15 employees as performance reward. No other ag
Day’ benefit defined in the employment letter.

l a
ag
(v)
complimentary benefits given to these employees till date.

Compute the value of the taxable supply under the GST law in each of the
above case separately along with correct legal provisions for the same in
brief. (5 Marks)
(c) XYZee Ltd. imports a machine from USA. The invoice value of the machine
was 30,000 USD plus 1% loading charges at the load airport.

m
Following additional amounts were paid by XYZee Ltd.:
Sr. Particulars
. co Amount
No.
s em
(i)
l a
Charges paid to the exporter for the right to
g
5,000 USD

a
reproduce in India, the imported machine
manufactured in USA.
(i) Erection and assembling charges paid for ` 1,50,000
assembling at Indian airport to a company
incorporated at USA.

Additional information:
(i) Materials and components (not included / deducted at above) supplied
m
c. o
by buyer to the exporter in USA at reduced rate at 3,000 USD. The actual
m
c. o
cost of the said material was 4,000 USD.

e m in the
em s
(ii) The cost of air freight and insurance charges are also not included
invoice value since the same are not ascertainable. a
l
las (iii) Exchange rate to be considered as 1 USD for ` 80.ag
ag From the above information determine the assessable value of imported
machine (rounded off to the nearest rupee) under the Customs Act, 1962 with
appropriate working notes in brief. (4 Marks)

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FINAL EXAMINATION: MAY 2026

Answer
(a) Computation of gross tax liability of Fun Tours Ltd. for the month of
October 2025

Particulars Value CGST SGST IGST
(`) (`) (`) (`)
GST payable under forward charge
Services as a tour operator 7,00,000 Nil Nil -
[Tour operator services to a
foreign tourist in relation to a
tour conducted wholly outside
India are exempt or not
taxable.]
Snacks and magazines 50,000 - - 9,000
supplied on board [50,000
[Taxable. It is inter-State x 18%]
supply since place of supply is
Haryana being location at
which such goods were taken
on board and supplier is in
Punjab.]
Fine paid to UP State 10,000 Nil Nil -
Government
[Fine imposed for violation of
laws is not consideration for
any supply received and are
thus not leviable to GST.]
Intra-State transportation of 1,60,000 14,400 14,400 -
passengers by omni bus [1,60,000 [1,60,000
through an e-commerce x 9%] x 9%]
operator
[Even though transportation
of passengers services by an
omnibus provided through an
ECO are notified services, tax

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is not payable by ECO, instead
it is payable by supplier itself
because supplier is a
m
company.]
o m c. o
c
. a Summer Tour Fair 2,00,000 18,000 18,000
GST payable under reverse charge
em
m
e sponsorship services l a s
s
Sponsored

l a
[Since [2,00,000 [2,00,000
ag
ag are provided by a person other
than a body corporate
x 9%] x 9%]

(NGO 8)to a body corporate,
tax is payable under reverse
charge. It is intra-State supply
since both place of supply
(being location of recipient)
and location of supplier are in

m
c. o 32,400
Punjab.]

emsupply
Gross tax liability 32,400 9,000

la s
(b) Computation of value of taxable

Particulars
a g Value
(`)
20 tickets to top 5 clients Nil
[Not a supply since tickets are given without consideration to
unrelated persons and it is not covered under Schedule I.]
2 tickets each to 15 dealers Nil
[Not a supply since transaction is being undertaken without

om
consideration and is not covered under Schedule I.]

m c. 75,000
c. o
15 tickets to Mr. Surendra, marketing executive as
m
se
performance reward

s em g la
gla a
a 8
It has been assumed that NGO is not a body corporate. If it is assumed that NGO is a
body corporate, tax will be payable under forward charge and thus, no tax will be payable
by FUN TOURS Limited, but by the supplier-NGO.

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FINAL EXAMINATION: MAY 2026

[Tickets given without consideration to employee exceeding
` 50,000 in a financial year are deemed as supply under
Schedule I.]
20 tickets to Mr. Patel, accounts executive Nil
[Services provided by an employee to employer in course of
his employment are neither supply of goods nor as supply of
services.
15 tickets to 15 employees as performance reward Nil
[Not a supply since tickets given without consideration to
employee upto ` 50,000 in a financial year are not deemed as
supply.]
Value of taxable supply 75,000
(c) Computation of assessable value of imported machine

Particulars Amount ($)
FOB price of machine 30,000
Add: Materials and components supplied by the buyer
[Includible in assessable value.] 4,000
FOB 34,000
Add: Air freight [Notes – 1 &4]
[20% of Customs FOB = 20% [30,000+4000+300] 6,860
Add: Insurance
[1.125% of Customs FOB =1.125% (30,000+4000+300)] 382.50
CIF value 41,182.5
Rate of exchange ` 80
Assessable value 32,99,670
Notes:
(1) Loading charges are not separately added since they are already included
in the freight computed at 20% of Customs FOB. However, to arrive at
freight charges & insurance, it needs to be considered.
(2) Charges for right to reproduce machine in India are not includible in
assessable value.

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(3) Erection and assembling charges paid for assembling, being charges
incurred post import, are not includible.

m
c. o
(4) In the case of goods imported by air, the cost of transport, loading,

m
unloading and handling charges associated with the delivery of the

.co
imported goods to the place of importation shall not exceed 20% of the
s em
m
e
FOB value of the goods. [Fifth proviso to rule 10(2) of the Customs
l a
l a s
Valuation (Determination of Value of Imported Goods) Rules, 2007.
a g
a(a)g Determine the time of supply for the purpose of the payment of tax in each
Question 3

of the following independent transactions with explaining relevant provisions
under the CGST Act, 2017 in brief:
(i) Cuteex Pvt. Ltd. is registered in the State of Karnataka under GST. It has
taken a residential house for its Managing Director (MD) on rent from
Mr. Rathi, also registered under GST in Karnataka. The invoice for rent
for the month of August 2025 was issued on 31st July 2025 by Mr. Rathi.
m
co
The due date for payment was 7th August 2025, but since the MD was on
.
em
a business trip, payment was made online by IMPS system on

s
15th October 2025 but recorded in advance in the books of the accounts

l a
of the company on the 14th October 2025. The amount was credited in
g
a
Mr. Rathi's bank account on 15thOctober, 2025.
(ii) Ziva Telecom Ltd. is a telecom operator providing mobile network
(2 Marks)

services in India by securing the right to use spectrum from the
Government of India as per the spectrum allocation model. As per the
contract, the company has to make periodic payments over a period of
12 months in 12 installments to the Government. The due date for
payment was
20th October 2025 and payment was made by the company on

o m
19th October 2025 since it was a Sunday on 20th October 2025.
m c
. of the
c. o m
Also discuss in brief the provision related to due date of issue

m
invoice in the above case.
s e (3 Marks)
s e a questions
(b) Examine the following independent cases and answer thelrelevant
g
gla with regards to provision of the GST law: a
a (i) Blue Bank Ltd. had lent a term loan to SKY Powers for setting up a solar
plant on an agreed repayment schedule. Due to crunch in working

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FINAL EXAMINATION: MAY 2026

capital, SKY Powers missed a few installments and the bank charged
penal charges for breach of repayment contract.
Whether these penal charges collected by the bank are liable for GST?
(2 Marks)
(ii) 'Highway', an e-commerce operator (ECO), provides various services in
its online platform. In one of the services, it is liable to pay tax as notified
under section 9(5) of the CGST Act, 2017. Its tax consultant advised that
it can discharge its liability under section 9(5) by utilizing its available
Input Tax Credit (ITC) but it needs to reverse proportionate ITC in respect
of said turnover reported.
You are approached to evaluate the correctness of the advice of the tax
consultant. (3 Marks)
(c) Charkha Spinning Mills Ltd imported polyester fibre from Turkey on 10th July,
2025. The said goods entered in the territorial waters of India on 25th July,
2025 and were stored in a bonded warehouse on the same day. The goods
were wholly exempt from levy of customs duty vide a notification issued by
the Central Government under section 25(1) of the Customs Act, 1962.
The said goods were removed from the bonded warehouse on 25th September
2025, on which date the exemption notification had been rescinded and the
exemption granted thereunder was withdrawn and the goods were leviable
to 25% duty.
The Customs Department demanded duty of 25% as per the new notification.
The company argued that since the goods entered the territorial waters on
25th July 2025 on which date the goods were exempted from levy of customs
duty, no duty is leviable when the goods were removed from the warehouse.
Whether the company is correct in its stand?
Discuss with the help of the decided case law if any, along with relevant legal
provisions under the Customs law in brief.
Note: Citation of the case law is not required. (4 Marks)
Answer
(a) (i) Tax on renting of residential dwelling services is payable under reverse
charge since they are being provided to a registered person (Cuteex
Pvt. Ltd.)

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Time of supply is earliest of:
(i) Date of recording payment in books of recipient-14th October
m
c. o
2025

o m m
c
(ii) Date of debit from bank account of recipient -15th October 2025
(iii) .Date immediately following 60 days from issue of invoice (61 day e
em from issue of invoice) - 30 September 2025 l a s st

s
la Accordingly, time of supply is 30 September 2025. a g
th

g
a (ii) Spectrum allocation services are ‘continuous supply of services’ since
th

they are:
• provided continuously
• under a contract for over 3 months
• with periodic payments.

m
Since the due date of payment is clearly ascertainable from contract,

c. o
the invoice must be issued on or before due date of payment, i.e., on

emby Government is payable under reverse
or before 20th October 2025.

la s
Tax on said services provided
charge.
Thus, time of supply
g
a is as and when the payments are due or made,
whichever is earlier, 19thOctober 2025.
(b) (i) Liquidated damages are not a consideration for tolerating an
act/situation and are thus not a supply. They are amount for preventing
breach of contract and thus, are not subject to GST.
Accordingly, no GST is payable on the penal charges collected by bank.

m
co
(ii) The advise of consultant of Highway is not correct since:

m .
c. o m
• ECO has to pay the full tax liability under section 9(5) only in cash

se
i.e. only through electronic cash ledger.

s em • ECO is not required to reverse the ITC on hisla
g
la
inputs and input

g
services used for making such supplies. a
a (c) Supreme Court, in a landmark judgment, held that in case of warehoused
goods, import gets completed only when goods cross customs barriers and
not when goods land in India or enter territorial waters.

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FINAL EXAMINATION: MAY 2026

In case of warehoused goods, import takes place only when the goods are
cleared from the warehouse. Duty is leviable once the import gets
completed.
Further, section 15 of the Customs Act provides that relevant date for
determining rate of duty is date on which a bill of entry for home
consumption in respect of such goods is presented.
In view of the above, since the goods are leviable to 25% duty on the date
of removing the goods from the warehouse 9, applicable rate on such goods
is 25% and thus, the stand taken by the company is not correct.
Question 4
(a) Go Global Inc., a firm registered under GST, submits the following
information pertaining to the month of September 2025:
(i) Export of fruit jam: 1,000 bottles
(ii) Domestic inter-State sale of fruit jam: 2,500 bottles
(iii) Eligible Input Tax Credit (ITC) of IGST for the given month for inputs,
input service and capital goods amount to ` 1,50,000, ` 2,50,000 and
` 3,00,000 respectively.
(iv) Rate of fruit jam for domestic supply was priced at ` 120 per bottle.
(v) For export, the same product was priced at ` 200 per bottle.
(vi) In domestic market, the product is taxed at 18% under IGST.
The firm had duly filed LUT for making export without payment of tax in
accordance with the provisions of the IGST Act, 2017. FOB value declared in
the shipping bill and value as per tax invoice was one and the same.
Determine the eligible refund amount that can be claimed by Go Global Inc.
for the given month under the GST law.
Note: Assume all the conditions for refund have been complied with.
(5 Marks)
(b) Twinkle Toys Ltd., a manufacturer of toys and registered under GST in the
State of Gujarat, handed over boxes of toys along with duly filled in Part A of
the e-way bill on 22nd October 2025 at 15:30 hrs to M/s Zoom Roadways

9
It has been most logically assumed that ex-bond bill of entry has been filed on date of
removal of goods from warehouse.

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(transporter) for transportation by road. The goods were to be delivered to
M/s Happy Toys, a registered dealer in the State of Rajasthan located at a
distance of 610 km from the warehouse of Twinkle Toys Ltd. The transporter
m
m
entered XYXY as the vehicle number of the normal truck in which the goods
c. o
.co
were to be transported in Part-B of the e-way bill on 24th October 2025 at
s em
e m
10.30 hrs. However, the goods could not be transported due to a sudden strike
l a
l a s
of transporters till midnight of 26th October 2025.
The transporter decided to transport the said goods as soon as the strikea
g
ag ended on midnight of 26 October 2025 along with the e-way bill already
th

generated earlier with XYXY as the vehicle number but in another truck
whose number was ABCD.
Discuss the followings in brief with relevant provisions of the CGST Act. 2017:
(i) Can the transporter transport the goods in truck number ABCD instead
of XYXY or does he need to generate another e-way bill?

m
(ii) Transporter think that the time for cancellation of e-way bill has already

c o
Note: XYXY and ABCD are just given. for the purpose of reference only and
expired so new e-way bill required.

s em
gl a
may not be the actual truck number. (5 Marks)
Alternative
a
(b) Manyur Enterprises, a registered person in Nagpur, Maharashtra, sent goods
for job work purpose to Kechime Enterprise located in Imphal, Manipur, not
registered under GST. Aggregate turnover of Manyur Enterprise in the
preceding financial year was ` 7.50 crore.
You are required to answer the below stated questions as per the provisions
of GST law:

m
co
(i) What will be the due date of submitting intimation in Form GST

m .
c. o
ITC-04?
m
em se
(ii) Who is required to generate e- way bill?

s g la
la
(iii) Whether Kechime Enterprise required to take registration under CGST

g a
Act, 2017, if their aggregate turnover during the current year is ` 9 lakh?
a (5 Marks)
(c) Keeyan Limited imported machine spares from Italy. Both provisional and
final assessment took place for such import, details of which are as follows:

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FINAL EXAMINATION: MAY 2026

Date of provisional assessment: 31.07.2025
Date of final re-assessment: 30.09.2025
Duty demanded based on final re-assessment: ` 4,00,000
Date of payment of duty demanded: 10.10.2025
You are required to briefly state the relevant provision of the Customs Act,
1962 and calculate the interest payable (nearest to one rupee), if any, by
Keeyan Limited on the final re-assessment. (4 Marks)
Answer
(a)
(Turnover of zero-rated supply of
goods + Turnover of zero-rated
Refund amount = supply of services) × Net ITC
Adjusted Total Turnover
where,
(A) Turnover of zero-rated supply of goods is lower of:
(i) Value of zero-rated supply of goods = ` 2,00,000 [1,000 × ` 200]
or
(ii) 1.5 times the value of like goods domestically supplied
= ` 1,80,000 [(1,000 × ` 120) ×1.5]
i.e. ` 1,80,000.
(B) Adjusted Total Turnover = Turnover of zero-rated supply of goods +
Turnover in State
= ` 1,80,000 + 3,00,000 [2,500 × ` 120]
= ` 4,80,000
(C) Net ITC on inputs and input services = ` 4,00,000
1,80,000
Refund Amount = × 4,00,000
4,80,000

= ` 1,50,000
(b) (i) The transporter can transport the goods in truck number ABCD by
updating the vehicle number in Part-B of the e-way bill, within the

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validity period.
E-way bill validity is:
m
m c. o
• 1 day for the first 200 km of distance and 1 additional day for every

c o 200 km or part thereof,
m
• .counted from the time of first entry in Part-B (Vehicle details) s e
m a
l a se• with each day ending at midnight of the following day. a g l
ag midnight
Since in given case, distance is 610 km, e-way bill remains valid till
of 28 October 2025, and thus, the vehicle number can be
th

updated and goods can be transported accordingly.
Another e-way bill is not required.
(ii) Although time for cancellation of e-way bill, i.e. 24 hours of generation,
has expired, new e-way bill is not required as existing e-way bill is still
valid; only vehicle details need to be updated.

o m
c
(b) Alternative
(i) Since the aggregate turnover of.Manyur Enterprises during preceding
m ITC-04 is required to be filed on half
F.Y. exceeds ` 5 crore, FormeGST
s
la & 25 April.
g
yearly basis by 25 October th th

a
(ii) Principal - Manyur Enterprises is required to generate e-way bill.
(iii) Since the job worker – Kechime Enterprises – supplies inter-State job
work services from a Special Category State – Manipur, it is required to
obtain registration only when its aggregate turnover exceeds ` 10 lakh.
Since its aggregate turnover is ` 9 lakh, it is not required to obtain
registration.

m
(c) An importer is liable to pay interest at the rate of 15% p.a. on any amount

m c. o
payable consequent to the re-assessment order from the first day of the

c. o em interest:
month in which the duty is provisionally assessed till the date of payment.

em la s
Therefore, in the given case, Keeyan Ltd. is liable to pay following

las = ` 4,00,000 × 15% × 102/365
a g
ag = ` 16,767 (rounded off)
Question 5

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FINAL EXAMINATION: MAY 2026

(a) Mr. Rajaram issued a tax invoice to Mr. Balram without any actual supply of
goods or services involving total Input Tax Credit (ITC) of ` 60 lakh on
5th October 2025. Mr. Balram avails ITC on the basis of the said tax invoice.
Mr. Balram further issues tax invoice to Mr. Lilaram with total ITC amounting
to ` 70 lakh without actual supply of goods or services on the same day. All
the three persons are registered under GST in the same State.
The Department conducts an inquiry and proves that no service/goods ever
moved between any of the persons.
On the basis of the above given facts, answer the following with reference to
GST law:
(i) Determine the amount of penalty to be paid by Mr. Balram, if any.
(ii) Whether any other action can be taken against Mr. Balram under any of
the provisions of the GST law?
(iii) Calculate the minimum and maximum compounding amount as per the
provisions of section 138 of the CGST Act, 2017, payable by Mr. Rajaram,
if any.
Note: Calculations must be done separately for CGST and SGST or IGST as
the case may be. (5 Marks)
(b) Shivam Tools Limited filed an appeal before the First Appellate Authority (AA)
against order of the proper officer under section 74A of the CGST Act, 2017.
The Authorized Representative (AR) of the company, who appeared in appeal
proceedings, provides the following updates on the said appeal,
(i) AR forgot to submit the bank statements to prove the stand of the
appellant. These bank statements hold complete evidence in favour of
the appellant.
(ii) AA called for certificate from the supplier of the appellant as per
notification issued by the CBIC in respect of payment of tax by the
supplier.
Since the supplier was admitted in hospital for two weeks, the AR could not
produce the said evidence.
AA dismissed the present appeal and the appellant decided to appeal before
the GST Appellate Tribunal.

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You are approached to advise the appellant as to the admissibility of the
above evidences before the Tribunal, which could not be filed before the AA,
by briefly explaining the relevant provisions /circumstances in brief.
m
m c. o
c. o
(c) List any two exporters and any two capital goods eligible for the Export

e m
s
Promotion Capital Goods Scheme (EPCG) under the Foreign Trade Policy.
Answer em a
s
a Since Balram has availed ITC on the basis of tax invoice issued bya g l
(a) l(i)
g
a Rajaram, without actual receipt of goods and/or services, said ITC is
ineligible and thus, Balram is liable to a penalty, viz., higher of:
(i) ` 10,000
or
(ii) Amount equivalent to the ITC availed of / passed on irregularly
` 60 lakh (CGST & SGST)

m
i.e. ` 30 lakh each under CGST and SGST

. co
Further, since Balram has issued tax invoice without actual supply of

em
goods and/or services, he is liable to a penalty, viz., higher of:
(i) ` 10,000
l a s
(i)
or
a g
Amount equivalent to the tax evaded
` 70 lakh (CGST & SGST)
i.e. ` 35 lakh each under CGST and SGST
(ii) Other action to be taken against Balram is as follows:
Since Balram issued invoice without supply of goods and/or services
and availed ITC in violation of the provisions of the GST law, his GST

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c. o
registration is liable to be cancelled.

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(iii) Prosecution cannot be initiated against Rajaram since the tax involved in
m
eprosecution
s
issuing invoices without actual supply does not exceed ` 1crore.

s em As compounding of offences is allowed only where
l a
g case.
is

gla a
invokable, compounding is not applicable in Rajaram’s

a Nevertheless, a person accused of issuing invoices without actual
supply is not eligible for compounding of that offence.

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FINAL EXAMINATION: MAY 2026

(b) The appellant shall not be allowed to produce before Appellate Tribunal
any evidence other than the evidence produced by him during the course
of proceedings before Adjudicating Authority or Appellate Authority,
except under the following specified circumstances:
(a) where the adjudicating authority or, as the case may be, the AA has
refused to admit evidence which ought to have been admitted; or
(b) where the appellant was prevented by sufficient cause from producing
the evidence which he was called upon to produce by the adjudicating
authority or, as the case may be, the AA; or
(c) where the appellant was prevented by sufficient cause from producing
before the adjudicating authority or, as the case may be, the AA any
evidence which is relevant to any ground of appeal; or
(d) where the adjudicating authority or, as the case may be, the AA has
made the order appealed against without giving sufficient opportunity
to the appellant to adduce evidence relevant to any ground of appeal.
In view of the above, the appellant cannot produce before the Appellate
Tribunal the additional evidence of the Bank Statement.
However, it can produce the additional evidence of Certificate from supplier
provided Appellate Tribunal records in writing the reasons for its admission.
(c) Exporters eligible for EPCG scheme:
(i) Manufacturer exporters with or without supporting manufacturer(s),
(ii) Merchant exporters tied to supporting manufacturer(s), and
(iii) Service providers including service providers designated as Common
Service Provider (CSP) subject to prescribed conditions.
Capital goods eligible for EPCG scheme:
(i) Capital Goods including capital goods in CKD/SKD condition
(ii) Computer systems and software which are a part of the Capital Goods
being imported
(iii) Spares, moulds, dies, jigs, fixtures, tools & refractories [any three]
(iv) Catalysts for initial charge plus one subsequent charge

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INDIRECT TAX LAWS

Question 6
(a) How is the amount realized from the sale of goods or conveyance, movable
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c. o
or immovable property be appropriated for the recovery of dues from a

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c. o
defaulter or for recovery of penalty under section 129(3) of the CGST Act,

e m
s
2017?

e mwith reference to section 79(1)(d) of the CGST Act, 2017 and rules of la
s (6 Marks) g
Answer

g l a
the CGST Rules, 2017.
a
a assessment and the time period by which the proper officer has to pass the
(b) Mention the reasons for which taxable person can go for provisional

provisional assessment order and final assessment order as per the provision
of section 60 of the CGST Act 2017. (4 Marks)
(c) While calculating export performance for grant of One Star Export House
Status category, certain units / exports are granted double weightage.
List those categories of units / exports with reference to the Foreign Trade

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Policy. (4 Marks)

em
Answer

a s
(a) The amounts so realised from the
l
sale of goods or conveyance, movable or

g
immovable property, for the recovery of dues from a defaulter or for
a under section 129(3) shall:
recovery of penalty payable
(a) first, be appropriated against the administrative cost of the recovery
process;
(b) next, be appropriated against the amount to be recovered or to the
payment of the penalty payable under section 129(3), as the case may
be;

m
(c) next, be appropriated against any other amount due from the defaulter

m
under GST law; and
c o
(d) the balance, if any, shall be credited to the electronic cash .ledger of
c. o s emin case the
em a said person is
the owner of the goods or conveyance as the case may be,
person is registered under the GST law, and wherelthe
las g
not required to be registered under the GST law,athe said amount shall
ag be credited to the bank account of the person concerned;
(e) where it is not possible to pay the balance of sale proceeds, as above,
to the person concerned within a period of 6 months from the date of

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FINAL EXAMINATION: MAY 2026

sale of such goods or conveyance or such further period as the proper
officer may allow, such balance of sale proceeds shall be deposited
with the Consumer Welfare Fund.
(b) Taxable person can go for provisional assessment for following reasons:
(i) he is unable to determine the value of goods or services or both
(ii) he is unable to determine the rate of tax applicable thereto.
The proper officer has to pass the provisional assessment order within 90
days from the date of receipt of request for provisional assessment.
The proper officer has to pass the final assessment order within 6 months
(extendible on sufficient cause being shown and for reasons to be recorded
in writing) from the date of the communication of the provisional
assessment order.
(c) While calculating export performance for grant of One Star Export House
Category, following units/exports are granted double weightage:
• Exports by IEC holders under Micro and Small Enterprises,
• Manufacturing units having ISO/BIS certification,
• Units located in Northeastern States including Sikkim and Union
Territories of Jammu, Kashmir and Ladakh
• Export of fruits and vegetables

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