CA Final November 2024 Suggested Answers Paper 5 Indirect Tax Laws

FOR CA FINAL EXAM PREPARATION

CA Final 2024
Suggested Answers ·
Paper 5 Indirect Tax
Laws
EXAM YEAR TYPE SUBJECT

CA Final 2024 Suggested Answers Paper 5 Indirect Tax Laws
DATE

November 2024

Notes · Sample Papers · Previous Year Papers · Mock Tests

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PAPER – 5: INDIRECT TAX LAWS
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.c PART – I MCQs
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emimported a s
s of all duties of customs. The said machine was exported (sent back) gl
1. Chirag a machine from China at ` 100 lakh in May, 2023 on

ltoa the supplier for repairs in August, 2023 and re-imported without any re-a
payment
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a manufacturing or reprocessing in March, 2024 after repairs as per the terms
of warranty. The repairs were carried out free of cost but 50% of the cost of
material was to be borne by Chirag. Following details are available in
relation to the repairs:

Fair cost of repair (excluding cost of material) ` 4,00,000
Cost of material used in repairs ` 5,00,000

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Actual insurance and freight paid towards send back to ` 1,00,000
supplier
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s emtoward re-importation ` 1,20,000
Actual insurance and freight paid
a of customs duty for such repairs under
Value for the purpose of llevy
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a Act, 1962:
section 20 of the Customs
A. ` 11,20,000
B. ` 8,70,000/-
C. ` 7,50,000/-
D. ` 7,70,000/- (2 Marks)

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2. Keshav of Bengaluru imported 2000 pieces of certain dutiable goods from

m China during the month of April, 2024. The Central Government has imposed
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Gazette under section 9A of the Customs Tariff Act 1975. Details regarding

las import are as below:
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ag Particular Amount per piece
Normal Value (Comparable price in China) $ 120
Export Price $ 60

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FINAL EXAMINATION: NOVEMBER 2024

Landed Value of dumped item $75
Fair Selling price (Non injurious price) $ 105

Rate of exchange relevant for conversion is ` 80 per $
Maximum Amount of anti- dumping to be payable by Keshav on 2,000 pieces
of dutiable goods is:
A. ` 48,00,000/-
B. ` 96,00,000/-
C. ` 72,00,000/-
D. ` 24,00,000/- (2 Marks)
3. Madhav Associates has taken GST registration on 1st January 2023 but failed
to furnish GST returns. Owing to this, the proper officer cancelled its
registration on 31st July 2023 and order of cancellation of registration was
served to Madhav Associates on the same date.
Up to which date an application for revoke the cancellation of registration
can be filed assuming no extension in time-limit has been granted?
A. 30th August 2023
B. 31st August 2023
C. 29th October 2023
D. 30th October 2023 (2 Marks)
Case Scenario: I
Data Limited commenced business of trading of goods in the State of Assam on
1st April, 2023. Aggregate turnover of the company crossed ` 20 lakh on 31st May,
2023 and ` 40 lakh on 15th July, 2023. The company made the application for
registration under GST law on 25th July, 2023 and the registration certificate was
granted on 30th July, 2023. The company has opted to file return on monthly
basis under regular scheme. The company was exclusively engaged in supply of
taxable goods only.
The company had following input tax credit lying in the books related to input
and input service on different dates:

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Particulars Amount in (`)
30th May, 14th July, 24th July, 29th July,
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2023 2023 2023 2023

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Input held in stock 10,000 15,000 20,000 40,000

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Input services 4,000 6,000 12,000 14,000
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g lapremises. Details regarding the installation of solar panel were as follow: a
During the month of January 2024, the company has installed solar panel at the

a
office

Particulars Amount
List Price of the solar panel ` 5,50,000
Additional information not adjusted or given effect in the
list price
(a) Trade discount recorded in invoice @ 3% on list price.

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(b) Local taxes paid ` 15,000.

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(c) Cost of packing, outward freight, loading-unloading and

em linked to the price
installation charges ` 12,000 as a condition of sale.
(d) State Government subsidy s
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directly
` 70,000.
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a received ` 2,00,000 as advance payment on
Apart from the above, Data Limited
2nd January, 2024 from Mr. Prem, a customer, with respect to the taxable supply
of goods of ` 10,00,000. The company removed the goods on 9th January, 2024
and issued the invoice on 10th January, 2024. Goods were received by Mr. Prem
on 11th January, 2024 and Mr. Prem had made the balance payment of
` 8,00,000 on 20th January, 2024 through NEFT.
In addition to the above, due to oversight, the company failed to disclose a self-
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assessed outward supply of ` 2,00,000 while filing the GSTR-3B for the month of
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August, 2023. Balance of input tax credit for the month of August, 2023 in the

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electronic credit ledger was of ` 10,000/- each under CGST and SGST which

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remains till date of deposit of tax. Company filed the return for the month of
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gla August, 2023 on the due date of return on 20th September, 2023. The company
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a disclosed this supply in the return (GSTR 3B) for the month of January, 2024 and
paid the net tax (after set off of ITC of ` 10,000 each CGST and SGST) with interest
in the GSTR 3B filed on 18th February, 2024.

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FINAL EXAMINATION: NOVEMBER 2024

The proper officer issued show cause notice on 25th February, 2024 demanding
the penalty for late deposit of tax on escaped supply relating the month of August,
2023.
Note: All amounts given above are exclusive of taxes, wherever applicable. All
supplies are intra-State and chargeable to GST @ 9% each under CGST and SGST.
From the information given above, choose the most appropriate answer for the
following Q Nos. 4 to 9 with reference to GST law:
4. Amount of opening input tax credit available for availment and utilization
on registration:
A. ` 15,000
B. ` 21,000
C. ` 54,000
D. ` 40,000 (2 Marks)
5. In relation to the transaction with Mr. Prem, time of supply of goods for
purpose of payment of tax will be:
A. For ` 2,00,000 - 02.01.2024 and for ` 8,00,000-09.01.2024
B. 09.01.2024 for both ` 2,00,000 and ` 8,00,000
C. 10.01.2024 for ` 2,00,000 and ` 8,00,000
D. For ` 2,00,000 - 02.01.2024 and for ` 8,00,000-10.01.2024 (2 Marks)
6. Amount of total penalty which could be leviable under section 73 of the CGST
Act, 2017 with respect to the payment of tax on delayed disclosure of outward
supply (total for both CGST and SGST)
A. ` 20,000
B. ` 3,600
C. ` 10,000
D. Nil (2 Marks)
7. What is the effective date of registration of the company?
A. 15th July, 2023

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B. 25th July, 2023
C. 31st May, 2023
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D. 30th July, 2023 (2 Marks)
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What is value of inward supply of Solar Panel under section 15 the CGST Act,
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e` 5,45,500
2017?
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A.

a B. ` 5,60,500
C. ` 4,90,500
D. ` 4,75,500 (2 Marks)
9. Amount of total interest (CGST+SGST) to be paid (nearest to rupees one)
under section 50 of the CGST Act, 2017 with respect to delayed disclosure of
outward supply :

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(Assume 365 days in the year)
A. ` 1,192 (` 596 each under CGST .and SGST)
s emand SGST)
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B. ` 1,184 (` 592 each under CGST
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a under CGST and SGST)
C. ` 2,680 (` 1,340 each
D. ` 2,664 (` 1,332 each under CGST and SGST) (2 Marks)
Case Scenario:- II
Pukhraj Gupta is a registered supplier of goods and services under GST in the
State of Karnataka. He provided the following details of outward transactions
belong to the financial year 2023-2024:

Particulars
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Amount (`)
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Taxable supply 1,40,00,000

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Exempted Supply
la se 3,50,000
las Interest received on Unsecured loan (not included in above)
a g 2,00,000

ag Transfer goods to the residence of his brother, a well- Free of cost but
known professional. the open market
value is ` 40,000

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FINAL EXAMINATION: NOVEMBER 2024

During the month of April, 2024, Pukhraj Gupta provided the following outward
supplies:

Particulars Amount (`)
Taxable supply of goods 4,00,000
Insurance agent service to Samta Insurance Company 30,000
registered under GST
Interest received for late payment from various customers 10,000
Recovery agent service to Vipul Limited, a trader of goods 40,000
Security and housekeeping service provided to Bachpan School 50,000
(upto higher secondary), an unregistered person under GST, at
its Annual Day function held at Vallabh Convention centre
being outside the school campus.

Particulars Amount (`)
Renting of motor vehicle designed to carry passenger 80,000
provided to M Sea Limited wherein cost of fuel in included
(applicable rate of tax CGST @ 2.50% and SGST 2.50%)
Received with reference to a contract of ` 5,00,000 for 1,50,000
taxable supplies awarded by a public sector undertaking
(PSU) registered u/s 51 of the CGST Act, 2017 in the State
of Tamil Nadu, taxable supplies was made in the State of
Karnataka as per instruction of the PSU.

Further, on 20th April, 2024, he hired Perfect Wedding Planner of Japan to plan
and organize his son's wedding under a composite contract of all events of
marriage.
Pre-wedding program was organized at Mumbai while the marriage and
reception held at Paris (France)
In addition to the above, proper officer has issued an order under the CGST Act,
2017 dated 10th April, 2024 and raised a demand of ` 33 lakh (Tax - ` 20 lakh,
Interest - ` 3 lakh and penalty ` 10 lakh) in respect of an intra-State transaction.
The above amounts are related to the CGST only.

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Pukhraj Gupta admitted the tax demand of ` 5 lakh and interest demand of ` 2
lakh and disputed the remaining tax and interest demand and entire penalty

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demanded.

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Pukhraj Gupta wants to file an appeal before the Appellant Authority.
All amounts .given above are exclusive of taxes, wherever applicable. s e
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Fromathe information given above, choose the most appropriate answer for the g
l Q. Nos. 10 to 15 with reference to GST law: a
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following
10. What is the taxable value of supply for the month of April, 2024 in the hands
of Pukhraj Gupta?
A. ` 6,50,000
B. ` 6,10,000
C. ` 6 00,000
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D. ` 5,60,000
c. o (2 Marks)

e m under section 51 by the PSU:
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11. Amount of TDS require to be deducted

A. CGST ` 750 and SGST `l750a
B. IGST ` 3,000 ag
C. CGST ` 1,500 and SGST ` 1,500

D. No TDS required to be deducted under section 51 of the CGST Act, 2017.
(2 Marks)
12. What is the maximum amount of pre-deposit (of CGST only) to be made for

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filing the appeal before the Appellant Authority under the GST law?

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A. ` 8.50 lakh

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B. ` 10 lakh
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C. ` 9.60 lakh
a D. ` 12.20 lakh (2 Marks)

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FINAL EXAMINATION: NOVEMBER 2024

13. What is the aggregate turnover of the financial year 2023-2024 under
section 2(6) of the CGST ACT 2017?

A. ` 1,45,90,000
B. ` 1,45,50,000
C. ` 1,43,50,000.
D. ` 1,43,90,000 (2 Marks)
14. What is the place of supply in respect of transaction with Perfect Wedding
organization Planner?
A. Mumbai for both the event
B. Karnataka for both the event
C. For Pre-wedding- Mumbai and for marriage and reception- Paris
D. Japan for both the event (2 Marks)
15. Which of following outward supplies provided by Mr. Pukhraj Gupta are NOT
subject to payment of tax under reverse charge mechanism (RCM)?
(i) Insurance agent service
(ii) Recovery agent service
(iii) Security and housekeeping service

(iv) Renting of motor vehicle
Choose the most appropriate answer.
A. Only (ii), (iii) and (iv)

B. Only (ii) and (iii)
C. Only (ii) and (iv)
D. Only (iii) (2 Marks)

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Answer Key

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1. A

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2. A

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3. C
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a5.g B
4. A

6. A

7. A

8. B

9. C
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10. A
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s em
a
11. B

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12. A
a
13. B

14. A

15. B

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a

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FINAL EXAMINATION: NOVEMBER 2024

PART – II Descriptive Questions
(i) Question paper comprises of 6 questions. Answer Question No. 1 which is
compulsory and any 4 questions out of the remaining 5 questions.
(ii) Working notes should form part of the answer.
(iii) All questions should be answered on the basis of the position of (i) GST law
as amended by the Finance Act, 2023 including significant notifications and
circulars and other legislative amendments made upto 30.04.2024 and (ii)
Customs law as amended by the Finance Act, 2023 and significant
notifications and circulars and other legislative amendments made upto
30.04.2024.
Question 1
Sachha and Sudh Limited is a registered supplier of taxable goods and services at
Raipur in the state of Chhattisgarh under regular scheme. Head office of the
company is at Raipur whereas its branch office situated at Ludhiana, Punjab. It
furnished the following information for various activities or transaction made
during the month of April, 2024:
S. No. Particulars Amount
(` )
OUTWARD TRANSACTIONS
(i) Supplied goods to Matadeen and Sons in the State of 8,00,000
Rajasthan on the instruction of Dhananjai Associates, a
registered person under GST in the State of Chhattisgarh.
The contract for such supply was for the delivery of goods
at buyer's premises and included a fixed transportation
cost of ` 20,000 irrespective of the actual freight paid. It
is indicated separately in the invoice issued in this respect
of supply of goods.
(ii) Amount received for sale of the loading tempo, used for 1,80,000
transportation of goods, to Mr. Suresh. Loading tempo
was purchased at ` 4,80,000 and its depreciated value at
the time of sale was ` 2,40,000. No GST credit was taken.
Delivery of the loading tempo was given at registered
office of the company.

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(iii) Provided intra-State supply of sponsorship service to 50,000
Vidhi Agency, a proprietary concern of Raipur.

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(iv) Received as fine from Vipul, a registered person, for 50,000
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delayed supply of goods. Such payment was made as a
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compensation for margin loss caused due to price

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reduction between due date and actual date of supply.

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l INWARD TRANSACTIONS
There was no express contract in this respect.
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a (i) Intra-State purchase of goods from various registered 7,00,000
persons.
(Out of this` 7,00,000, goods of ` 1,00,000 was received
on 1st May, 2024 due to riots in the area but all the
invoices were received by 30th April, 2024.)
(ii) Rent paid to Indian Railway for office premises situated 40,000
in the State of Chhattisgarh.
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(iii)
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Representational service from Mr. Vikas Gupta, an 1,00,000

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advocate of Delhi and unregistered person under GST,

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towards dealing the GST appeal matters with the
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Commissioner (Appeal)
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Additional information: The company paid ` 15,000 towards actual freight to
Mr. Shailendra of Chhattisgarh, a truck owner and unregistered person in respect
of supply of goods to Matadeen & Sons in the State of Rajasthan. Mr. Shailendra
had not issued the consignment note.
th
(i) On 15 April, 2024, the company acquired 1% additional share holding in
one of its subsidiary company for a consideration of ` 10,00,000

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(ii) The company made inter-State purchase of goods of ` 1,00,000 to be used
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for discharge of corporate social responsibility (CSR) referred to in

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section 135 of the Companies Act, 2013.

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Notes:

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a
Assume rates of CGST, SGST and IGST are 9%, 9% and 18%
outward supply of goods and services except transportation service which is
chargeable at 2.5%, 2.5% and 5% CGST, SGST and IGST respectively.
Both inward and outward supplies given above are exclusive of taxes.

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FINAL EXAMINATION: NOVEMBER 2024

All the conditions necessary for availing the ITC have been fulfilled.
There was no opening balance of any input tax credit.
Compute the minimum net GST payable in cash by Sachha and Sudh Limited for
the month of April, 2024 by considering that company wants to pay minimum
amount of SGST as far as possible legally.
Working notes and correct provision of law for each point should form the part
of your answer along with applicable provisions of place of supply under GST law.
(14 Marks)
Answer
Computation of minimum net GST payable in cash by Sachha and
Sudh Limited to be paid in cash for the month of April, 2024

S. Particulars Amount CGST (`) SGST IGST
No. (`) (`) (`)
Output tax payable under forward charge
(i) Supplied goods to 8,00,000 1 72,000 72,000
Matadeen and Sons [8,00,000 [8,00,000
[Since the contract is for x 9%] x 9%]
delivery of goods at
buyer’s premises and
includes transportation
cost, it becomes a
composite supply; the
principal supply being
the supply of goods.
Thus, GST rate
applicable on goods
will be charged on the
entire value of supply of
` 8,00,000 (contract
price actually paid by
buyer).

1
It has been logically assumed that the transportation cost of ` 20,000 is included in the
total contract value of ` 8,00,000.

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Further, since goods are
delivered on Bill to Ship
to Model to Matadeen
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and Sons on the
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direction of a third
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person – Dhananjai
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l a s Associates, said third
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person is deemed to
have received the
goods and the place of
supply is the principal
place of business of
such person, i.e.
Chhattisgarh. Thus, it is
an intra-State supply.]

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(ii) Sale of used loading Nil
tempo to Suresh
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[Since ITC has not been
taken on the tempo and
l a s
depreciation has been
claimed on it under the a g
Income-Tax Act, 1961 2,
value of supply is
consideration received
less depreciated value
on the date of supply of
tempo. However, since
value of supply is
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negative [` 1,80,000 –
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` 2,40,000], it is to be

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ignored.]

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2
It has been assumed that depreciation has been claimed under the Income-Tax Act, 1961
and depreciation given in question is depreciation claimed as per the Income-tax Act, 1961.

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FINAL EXAMINATION: NOVEMBER 2024

(iii) Intra-State supply of 50,000 4,500 4,500
sponsorship service [50,000 x [50,000 x
[Tax is payable under 9%] 9%]
forward charge since
recipient of said
services is a proprietary
concern. Tax is not
payable under reverse
charge since recipient
of said services is a not
a partnership firm or
body corporate.]
(iv) Fine for delayed supply -
of goods
[There was no express
contract. Fine received
from Vipul, being
liquidated damages is
merely a payment to
compensate the loss
caused due to delayed
supply of goods and is
not a consideration for
supply.]
Total output tax 76,500 76,500
Less: ITC available for - (18,000)
set off [Refer note - IGST
below.] (57,600)- (57,600)
[IGST credit is utilized CGST -SGST
for payment of SGST
only in order to
minimize the SGST
liability. CGST and
SGST credit are utilized
for payment of CGST

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INDIRECT TAX LAWS

and SGST liability
respectively.]

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Net output tax payable 18,900 900

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in cash

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GST payable in cash under reverse charge

s e Tax on services l a
la received from the ag
Add: 18,000

ag advocate – Vikas Gupta
- is payable under
reverse charge by the
recipient of service.
Minimum net GST 18,900 900 18,000
payable

Working note - Computation of eligible ITC available for set off
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S. Particulars
c. o CGST (`) SGST (`)
Amount IGST

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No. (`) (`)
(i)
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Intra-State purchase of 6,00,000 54,000 54,000

ag [7,00,000- [6,00,000
goods [6,00,000
[ITC on goods ` 1,00,000 × 9%] × 9%]
not received in April 1,00,000]
cannot be availed.]
(ii) Freight paid to truck 15,000 - -
owner
[No ITC is available since
GST on service of
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transportation of goods
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by road received from a

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person other than a

s
GTA is exempt.]
g a
l3,600
gla (iii) Rent paid to Indian 40,000 3,600 a
a Railway
[It is an intra-State
[40,000 ×
9%]
[40,000 ×
9%]
supply since the place

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FINAL EXAMINATION: NOVEMBER 2024

of supply is location of
immovable property,
i.e. Chhattisgarh and
supplier – Indian
Railways is in
Chhattisgarh Tax is
payable under forward
charge. Further, ITC on
services used in course
or furtherance of
business is allowed.]
(iv) Representational 1,00,000 18,000
services received from [1,00,000
Vikas Gupta × 18%]
[Services received by a
business entity 3 from
advocates are not
exempt. It is an inter-
State supply since the
supplier is in Delhi and
place of supply is
location of recipient, i.e.
Chhattisgarh. Further,
ITC on services used in
course or furtherance of
business is available.]
(v) Additional share -
holding acquired in
subsidiary
[It is neither supply of
goods nor supply of
services, which is
covered under

3
It has been assumed that the aggregate turnover of Sachha and Sudh Limited exceeded
such amount in the preceding FY as makes it eligible for exemption from registration under
the CGST Act, 2017.

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Schedule III. ITC cannot
be claimed since no GST
is payable on the same.]
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(vi) Inter-State purchase of -

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goods to be used for

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corporate social
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l [ITC on goods to be
responsibility
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a used for discharge of
corporate social
responsibility is blocked
under section 17(5)]
Total ITC available 57,600 57,600 18,000

Question 2

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(a) Mr. Ayush is a registered supplier in Ahmedabad (Gujarat) under GST law. He

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provides the following information pertaining to various outward supplies
made by him during the month of March, 2024:
s em
S. Particulars
g l a Amount
No. a (`)
(i) Vijay Vayapar Chamber of Commerce organized a
business summit. Nuba Pvt. Ltd., manufacturer of
readymade garments, sponsored the summit and
paid sponsorship fee of ` 1,80,000 to Vijay Vayapar
40,000
Chamber of Commerce. Mr. Ayush, an independent
director of Nuba Private Ltd., provided the services to

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the company in relation to this and Nuba Private Ltd.

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paid ` 40,000 to him as remuneration.
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c. o (ii) Supply of railway equipments by way of
s em1,20,000

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transportation by a vessel from one place in India to

las another.
a g
ag (iii) Services by way of storage/warehousing of processed
tea used for beverage as green tea.
70,000

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FINAL EXAMINATION: NOVEMBER 2024

(iv) Health care services by his clinical establishment of
providing rooms having room charges ` 3,100 per
day to a person receiving health care services. 3,00,000
(v) Services of a guest house, for lodging purposes,
having value of supply of a unit of accommodation ` 72,000
800 per day

All above amounts are exclusive of GST. All the supplies are intra-State
supply and assume the rate of taxes are IGST @ 18% and CGST & SGST
@ 9% each.
From the above information, compute the GST liability of each item
seperately, on which tax to be paid by Mr. Ayush for the month of March,
2024.
Correct provision of law should form the part of your answer. (5 Marks)
(b) M/s Ronak Ltd. having a registered head office in Maharashtra, provides a
service to its branch office in Kerala in the month of April, 2024 by way of
carrying out administrative work with the use of service of the employees
working in the head office. However, the head office has not included the
salary cost of employees involved in providing the said services while issuing
tax invoice to its branch office.
You are required to decide the following:
What will be the value of service and also discuss whether the salary cost of
head office employees involved in providing the said services has to be
mandatorily included in the computation of value of service provided by
head office to branch office (when full ITC is available to the concerned
branch office)?
What will be the value of service if head office has not issue invoice to the
branch office?
Also discuss in brief the relevant provisions of GST law. (5 Marks)
(c) Sneha International Ltd., Bombay imported a drill machine from USA (by air).
Machinery reached Delhi airport from where it was transshipped to Mumbai
airport. Contracted CIF price of machine was US $ 20,000 which was to be
delivered in February 2024. But on request of Sneha International Ltd.,

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supplier agreed to deliver the machine in January 2024 for which US $ 2000
was charged over and above the contracted CIF price.

m
c. o
Other information is given below:-
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S.
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Particulars Amount
s em
m
e Air freight
No.
l a
a s
l (ii) Insurance charges paid
(i) $ 5000
ag
g
a (iii) Inspection charges of drill machine paid by the $1200
$500
supplier (The same was neither mentioned in the
terms of contract nor required for making the goods
ready for shipment).
(iv) Transport charges from Delhi airport to Mumbai ` 50000
Airport

m
co
You are required to determine the assessable value of imported machine

.
(rounded off to nearest one rupee) under the Customs Act, 1962 from the
particulars given above.
s em
Notes:-
g l a
a
(a) Rate of exchange to be taken as ` 83 for one $
(b) Brief reasoning for treatment of each item should form part of your
answer. (4 Marks)
Answer
(a) Computation of GST liability of Mr. Ayush

Particulars CGST SGST

o m
c
@ 9% (`) @ 9% (`)
m . --
c. o (i) Service provided to Nuba Pvt. Ltd. --

s em
em gla
[Tax on services provided in the capacity

las of an independent director is payable by
a
ag the recipient – Nuba Pvt. Ltd. under

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FINAL EXAMINATION: NOVEMBER 2024

reverse charge mechanism and not by
Mr. Ayush. 4]
(ii) Supply of transportation of railway 10,800 10,800
equipment by vessel
[Taxable, since it is not specifically
exempt. Transportation of specified
goods by vessel from one place in India to
another are exempt. However, railway
equipment is not a specified good.
Exemption earlier available to
transportation of railway equipment by
vessel from one place in India to another
was withdrawn.]
(iii) Storage/warehousing of processed tea 6,300 6,300
[Taxable, since storage/warehousing of
only agricultural produce is exempt but
processed tea is not an agricultural
produce.]
(iv) Health care services of providing rooms - -
by his clinical establishment
[Exempt, since room charges do not
exceed ` 5,000 per day.]
(v) Services of a guest house for lodging 6,480 6,480
purposes
[Taxable, since exemption with respect to
services provided by guest house for
lodging purposes with value of supply up
to ` 1,000 per day, was withdrawn.]

4
It has been assumed that services provided by Mr. Ayush are in the capacity of director of
that company. However, where such services are assumed to be provided by Mr. Ayush in
his personal capacity, tax on the same will be paid by Mr. Ayush under forward charge.

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(b) (i) The value of supply of services by Head Office (HO) to its Branch Office
(BO) [HO and BO being the distinct persons], shall be the open market
value (OMV) of such supply.
m
m c. o
co
Further, where the recipient - BO - is eligible for full input tax credit

. em
s
(ITC), the value declared in the invoice by HO shall be deemed to be
m
eMoreover, the cost of any particular component of said services g l a
s
OMV of such services.

g a
l including the salary cost of the HO employees involved in providinga
a the said services is not required to be mandatorily included in the value
of the services in the invoice.
(ii) If HO has not issued a tax invoice to the BO and the recipient - BO - is
eligible for full ITC, the value of service by HO to BO may be deemed
to be declared as Nil and may be deemed as OMV of such services.
(c) Computation of assessable value

o m
. c
Particulars Amount (`)
CIF value (re-negotiated price)
e m 18,26,000

l
[Since the contract price was
a s re-negotiated owing to

price actually paid or a
g
early delivery of the machine, transaction value, being
payable for the goods, will be re-
negotiated price, i.e. [$ 22,000 (20,000 + $ 2,000) x ` 83]
Less: Air freight [$ 5,000 x ` 83] 4,15,000
Less: Insurance [$ 12,000 x ` 83] 99,600
FOB value (in rupees) 13,11,400
Add: Inspection charges Nil

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co
[Not includible in value since only the payments actually

m .
c. o
made as a condition of sale of imported goods by buyer
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se
to seller are includible and inspection charges are not

em la
required for making the goods ready for shipment.]

las FOB value as per Customs
a g 13,11,400

ag Add: Air Freight (20% of ` 13,11,400) 2,62,280
[Air freight cannot exceed 20% of FOB value.]

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FINAL EXAMINATION: NOVEMBER 2024

Add: Insurance 99,600
[Actual insurance charges paid are includible.]
Transport charges from Delhi airport to Mumbai airport Nil
[Cost of transport charges associated with
transshipment of imported goods to another customs
station in India are not includible.]
Assessable value (in `) 16,73,280

Question 3
(a) Vijay Pvt. Ltd. of Chennai, Tamil Nadu, exclusively manufactures and sells
product 'V2Z' which is exempt from GST vide notifications with certain
taxable supplies. The company sells product 'V2Z' only within Tamil Nadu
and it is registered under GST under regular scheme. Further, all the inward
supplies of the company are taxable under forward charge. The company
expects the sales to grow in the current year. Owing to the growing demand
for the product, the company decided to increase its production capacity and
purchased additional machinery exclusively used for manufacturing 'V2Z' on
1st August, 2023. The purchase price of such machinery was ` 45 lakh
(exclusive of GST@ 18%).
However, with effect from 1st December, 2023, exemption available on 'V2Z'
was withdrawn by the Central Government and GST @ 12% was imposed
thereon. Can Vijay Pvt. Ltd take input tax credit on additional machinery
purchased exclusively for manufacturing 'V2Z'? If yes, then when and how
much credit can be availed?
Advice Vijay Pvt. Ltd. on the above issues with reference to the provisions of
GST law.
Correct provisions of law should form the part of your answer. (5 Marks)
(b) Decide with reason whether following independent transactions amount to
supply or not as per the provision, rules, circulars and notification issued
under the GST law:
(i) Satyam has lent securities to Kala Enterprises for a consideration of
` 10,000 towards lending of securities under the Securities Lending
Scheme, 1997 through an approved intermediary. Ignore the transaction
between Satyam and intermediary.

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(ii) Patta Limited made supply of goods to its agent, Romi, without
consideration. Romi issued invoice for the further supply of goods to the
customers in his own name. Romi also disclosed the name of principal
m
m
in the invoice issued.
c. o
.co
(iii) Dilasa Limited recruited Miss Chhaya as senior relationship manager. At
s em
m e l a
s
the time of joining as senior relationship manager, the company paid

l a a g
` 3,00,000 towards "Not joining'' Milan Limited, a stiff competitor of

a(c)g Rustam imported a sports car from Japan. He paid the applicable customs
Dilasa Limited. (5 Marks)

duty and an order for home consumption was issued. At the time of actual
clearance for home consumption, he found that the sports car was destroyed
due to a fire occurred at the customs station. The loss of sports car is forever
and beyond recovery.
Rustam seeks your advice on how to deal with the situation under the

m
provisions of the Customs Act, 1962.

. co
Whether your answer would differ if Rustam warehoused the sports car due

em
to delay in legal formalities after complying with the relevant provisions of

l a s
the Customs Act, 1962 and the fire occurred there after the payment of duty

a g
but before actual clearance therefrom? (4 Marks)
Answer
(a) Where an exempt supply of goods by a registered person becomes a
taxable supply, such person shall be entitled to take ITC, inter alia, in
respect of capital goods exclusively used for such exempt supply on the
day immediately preceding the date from which such supply becomes
taxable i.e. Nov 30, 2023.

m
ITC on capital goods can be claimed after reducing the tax paid on such

m c. o
capital goods by 5% per quarter of a year or part thereof from the date of

c. o the invoice.
em
Thus, Vijay Pvt. Ltd. can take following amount of ITCs on additional
s em g la by making an
la electronic declaration in prescribed form specifyingathe details of capital
machinery purchased exclusively for manufacturing “V2Z”

ag goods on the day immediately preceding the date from which such supply
becomes taxable within 30 days of becoming eligible to avail ITC:
= (` 45 lakh × 18%) - (` 45 lakh × 18% × 5% × 2 quarters)
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FINAL EXAMINATION: NOVEMBER 2024

= ` 8,10,000 – ` 81,000
= ` 7,29,000
(b) (i) Lending of securities under the Securities Lending Scheme is not a
transaction in securities as it does not involve disposal of securities. It
is not excluded from the definition of services and amounts to supply.
Consequently, lending of securities for consideration to Kala Enterprise
amounts to supply.
(ii) Since the invoice for further supply of goods is being issued by the
agent – Romi. in his own name, the provision of goods from the
principal – Patta Limited. - to the agent – Romi - would fall within the
purview of Schedule I of the CGST Act, 2017 and would amount to
supply even though made without consideration.
Further, supply of goods by Romi to the customer for consideration
amounts to supply.
(iii) Since any amount paid by employer to employee for not joining a
competing business is paid for providing the service of forbearance to
act to refrain cannot be considered for providing services in the course
of employment, amount received by Miss Chhaya from Dilasa Limited
amounts to supply under the GST law.
(c) Where it is shown to the satisfaction of Assistant or Deputy Commissioner
that any imported goods have been destroyed, otherwise than as a result
of pilferage at any time before clearance for home consumption, the duty
shall be remitted on such goods.
In the given case, since loss of sports car is forever and beyond recovery
due to fire, Rustam can claim remission of customs duty upon proving the
loss to the satisfaction of the Assistant Commissioner or Deputy
Commissioner.
Further, since duty has already been paid in the given case, he can claim
refund after getting the remission orders.
Further, Rustam can claim remission or refund of duty even if he
warehoused the sports car and fire occurred there after the payment of
duty but before actual clearance therefrom.

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Question 4
(a) M/S MN Ltd has a balance of ` 30,000 as CGST and ` 30,000 SGST in the
m
c. o
electronic credit ledger in the beginning of April 2024. During the month of

o m
April, 2024, M/S MN Ltd has following liabilities:-
m
.c s e
e m
Particulars
a
CGST SGST (`)

s l
a ag
(` )

g l Payable on outward supplies
GST 10,000 10,000
a GST payable as a consequence of proceeding 5,000 5,000
instituted under the provision of GST law
GST payable on reverse charge supplies 6,000 6,000
Interest for default in late filing of GSTR-3B 500 500
Penalty 500 500
TOTAL 22,000 22,000

o m
. c
There is no input tax credit for the month of April 2024.

e m
M/S MN Ltd is of the view that since opening balance in the electronic credit

a s
gl tax for the above month.
ledger is sufficient to discharge the whole liability for the month of April 2024,

a
it is not required to deposit any
Explain with reasons whether the contention of M/S MN Ltd is correct in view
of the applicable provisions of the CGST Act, 2017.
If not, what would be the amount payable in cash for the month of April,
2024?
Also discuss in brief, the relevant provision of GST law. (5 Marks)
(b) Sunita Industries, registered in the State of Gujarat, receives machinery for
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co
repair in its workshop located in Surat, Gujarat on 4th April, 2024 from
m .
c. o
Titen Ltd., an automobile manufacturing company based in China. Titen Ltd.
m
se
is not registered in India. The repair work was carried out by Sunita Industries

s em la
for which it was paid in convertible foreign exchange. The aggregate turnover
g
la a
of Sunita Industries was ` 450 crore in the preceding financial year 2023-

ag 2024 but for the financial year 2022-2023 the turnover was ` 562 crore.
While raising the invoice for the said consideration, the accountant of Sunita
Industries approaches you as to whether the Dynamic Quick Response (QR)
code is mandatorily required on said invoice?
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FINAL EXAMINATION: NOVEMBER 2024

You are required Lo advise him on the same by explaining the relevant
provisions of GST law with reference to Dynamic Quick Response code along
with applicable provisional of place of supply. (5 Marks)
(c) Mr. Sahil, an importer, had made provisional payment of customs duty of
` 2,00,000 under section 18 of the Customs Act, 1962 on 17th July, 2023,
along with a security of ` 1,00,000 towards provisional release of goods. Final
assessment was completed on 15th October, 2023 with a duty assessed as
` 50,000. The refund order of ` 50,000 and the order of release of security of
` 1,00,000 was issued on the same day (15th October, 2023).
Mr. Sahil had filed a refund application on 20th October, 2023 alongwith
necessary documents. On perusal of the refund application, proper officer
had found some deficiencies which were communicated to Mr. Sahil.
Mr. Sahil had submitted the required additional documents and proper officer
had issued an acknowledgement on 5th November, 2023. Refund was paid to
him on 25th March, 2024.
You are required to compute interest receivable by Mr. Sahil under section
27A of the Customs Act, 1962 on amount of duty and on amount of security
if any.
Calculation should be nearest to one rupee and assume 366 days in the year.
(4 Marks)
Answer
(a) The electronic credit ledger can be used for making payment of only output
tax which is the tax chargeable on taxable outward supply, but excludes tax
payable on reverse charge mechanism. It cannot be used for making
payment of any interest, penalty, fees or any other amount payable under
the GST law.
Accordingly, electronic credit ledger can be used for any payment towards
output tax, whether self-assessed in the return or payable as a consequence
of any proceeding instituted under the GST law.
Thus, in view of the above-mentioned provisions, the contention of MN Ltd.
is not correct.

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Computation of amount payable in cash is as under: -

Particulars CGST (`) SGST
m
c. o
(`)

o m m
.c e
GST payable on outward supplies 10,000 10,000

m
e under GST law
GST payable as consequence of proceeding 5,000 5,000
l a s
a s
instituted
l Total ag
g
a Less: ITC in Electronic Credit ledger
15,000 15,000
(15,000) (15,000)
Balance Nil Nil
Add: GST payable on reverse charge supplies 6,000 6,000
Add: Interest for default in late filing of GSTR-3B 500 500
Add: Penalty 500 500
Total amount payable in cash 7,000 7,000
m
(b) ALTERNATIVE-I
c. o
s em is exported without being put
Where it is assumed that the machinery
to any use in India:
g la
a services supplied in respect of goods which are
The place of supply of the
temporarily imported into India for repairs and are exported after such
repairs without being put to any use in India where supplier is in India and
recipient is located outside India, is the location of the recipient of services,
location outside India i.e. China.
Thus, place of supply of repair services provided to Titen Ltd. in the given
case is China.

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Further, said repair services shall qualify as “export of services” since:
m .
c. o • supplier is in India,
se
m
s em •
l a
both recipient and place of supply are outside India,
g
gla • the payment for service is received in convertible a
foreign exchange, and
a • supplier and recipient are not merely establishments of a distinct person.

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FINAL EXAMINATION: NOVEMBER 2024

All B2C invoices issued by a registered person whose aggregate turnover
in any preceding financial year from 2017-18 onwards exceeds ` 500 crores
will have a Dynamic QR code.
However, no Dynamic QR code is required in case of exports.
In the given case, although the aggregate turnover of Sunita Industries
exceeds ` 500 crore in preceding FY 2022-23, it is still not mandatorily
required to have a Dynamic QR code requirement on the invoice for said
services as Dynamic QR code requirement is not applicable to exports.
ALTERNATIVE-II
Where it is assumed that the machinery is exported after being put to
use in India:

The place of supply of the services supplied which are required to be made
physically available by the recipient to the supplier for repairs and are
exported after such repairs if put to any use in India where supplier is in
India and recipient is located outside India, is the location where goods are
situated at the time of supply of services.
Thus, place of supply of repair services provided to Titen Ltd. in the given
case is Gujarat.
All B2C invoices issued by a registered person whose aggregate turnover
in any preceding financial year from 2017-18 onwards exceeds ` 500 crores
will have a Dynamic QR code.
However, in cases, where an invoice is issued to recipient outside India, for
supply of services, for which place of supply is in India and the payment is
received by supplier, in convertible FOREX, such invoice may be issued
without having a Dynamic QR Code.
In the given case, although the aggregate turnover of Sunita Industries
exceeds ` 500 crore in preceding FY 2022-23, it is still not mandatorily
required to have a Dynamic QR code requirement on the invoice for said
services.

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(c) In case of provisional assessment of duty, if any amount refundable upon
finalization of assessment to the importer is not refunded within 3 months
from the date of final assessment of duty, interest @ 6% per annum shall be
m
m
paid on such unrefunded amount till the date of refund of such amount.
c. o
.co
No interest is payable on security deposits for provisional release of goods,
s em
e m l a
s
etc.

l a ag
ag
Thus, in the given case, the amount of interest receivable by Mr. Sahil is as
under:-
16th January, 2024 to 25th March, 2024 (Both inclusive)
Period of delay = 70 days
Thus, interest = ` 50,000×6% × 70/366
= ` 574 (rounded off)

m
Note: Please read ‘section 27A in the question as section 18.

Question 5
c. o
e m taxable person under GST in the State
s the overseas package tours for the month
(a) Swastik Tours and Travel is registered

l a
of Punjab. Its gross receipts from
of February 2024 amounted
ag topersons.
were received from registered
` 50 crore. Out of this ` 50 crore, ` 10 crore
While filing GSTR-1 for the month-of
February 2024, it tampered the amount of invoices issued to unregistered
persons and reported only ` 20 crore on account of B to C transactions (i. e,
transaction with unregistered persons), thus, understating the tax liability by
` 3.60 crore (i.e. 18% of 20 crore). Moreover, while filing GSTR-3B for the
same month, it availed ITC of ` 0.40 crore on account of fake invoices
received without receipt of goods/services.

m
c. o
GST Department initiated prosecution proceedings against Swastik Tours and
m
c. o em with the
Travel for the above offence.

em s
a being amount
Swastik Tours and Travel deposited the amount of tax due along
l
las g
interest and penalty and ` 1 crore as compounding amount
equivalent to 25% of tax evaded and requested a
g
the commissioner for
a compounding of offence. Other conditions required for compounding the
amount were duly complied with.

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FINAL EXAMINATION: NOVEMBER 2024

Even then commissioner rejected the request of Swastik Tours and Travel on
the plea that compounding amount deposited by Swastik Tours and Travel is
less than the minimum amount to be deposited for compounding of offence.
You are required to examine the case and comment upon the rejection of
request of Swastik Tours and Travel as per the provisions of section 138 of
the CGST Act, 2017 read with relevant rule of the CGST Rules, 2017.
Also discuss the relevant legal provision in brief. (5 Marks)
(b) Miss Meena is aggrieved by the order passed by the Assistant Commissioner
and wants to file an appeal with Commissioner (Appeals). Her accountant,
who looked after her GST related matters including filing of GST returns
/other compliances online, is on leave for one month. So, she decides to file
the appeal manually.
The order against which appeal is to be filed is available on the GST portal.
There was no such notification issued by the commissioner that appeal can
be filed manually.
With reference to the provisions of GST law, you are required to ascertain:-
(i) Whether Miss Meena can file an appeal to the commissioner (Appeals)
in this case?
(ii) Whether decision taken by Miss Meena to manually file an appeal is
valid?
Also explain the relevant legal provisions in support of your answer.
(5 Marks)
(c) Mr. Charanjit, an importer, filed a claim for refund of custom duty paid under
protest which was assessed on the value of imported machinery.
The assessment order on the basis of which duty was payable by
Mr. Charanjit had neither been reviewed nor modified in any appeal. The
department rejected the claim for refund filed by Mr. Charanjit.
Discuss with the help of the decided case law, if any, whether the action of
Department rejecting the claim is correct in law? Give reason for support of
your answer.

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What other options are available to Mr. Charanjit?
Note: Name of the case law is not mandatory to be part of your answer.
m
m (4 Marks)
c. o
Answer
.co s e m
m
e l a
l a s
(a) In the given case, Swastik Tours and Travel has committed the following
a g
g offences:
a • Availing of ITC using the fake invoices received without receipt of
goods/services
• Falsification or substitution of financial records with an intention to evade
payment of tax due or evasion of tax
Here, the amount of tax evaded/ITC wrongly availed is Rs. 4 crore (` 3.60
crore + ` 0.4 crore), i.e. it exceeds ` 2 crore but does not exceed ` 5 crore.
m
. co
Further, where the offence committed by the person falls under more than

em
one category, the compounding amount shall be the amount determined

l a s
for the offence for which higher compounding amount has been
prescribed.
a g
Thus, the compounding amount will be as follows:
• For the offence of availing of ITC using the fake invoices received without
receipt of goods/services, compounding amount is 40% of the amount of
ITC wrongly availed.
• For the offence of falsification or substitution of financial records with an
intention to evade payment of tax due or evasion of tax, compounding

o m
c
amount is 40% [higher of 25% or 40%] of the amount of tax evaded].
m . amount
c. o em
Thus, Swastik Tours and Travel should have deposited the following
s
s em la
of tax evaded/ITC wrongly availed as the compounding amount:
g
gla = 40% of ` 4 crore
a
a = ` 1.60 crore

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FINAL EXAMINATION: NOVEMBER 2024

Since Swastik Tours and Travel has deposited lesser compounding amount
than required, the rejection of its request for compounding by the
Commissioner is justified.
(b) (i) An appeal may be filed to the Commissioner (Appeals) against an
adjudicating order if such an order is passed by the Additional or Joint
Commissioner.
However, where the order is passed by the Assistant Commissioner, the
appeal is to be filed to any officer not below the rank of Joint
Commissioner (Appeals).
Thus, in the given case, appeal cannot be filed to the Commissioner
(Appeals), but to any officer not below the rank of Joint Commissioner
(Appeals).
(ii) An appeal to the Appellate Authority may be filed manually only if-
(i) the Commissioner has so notified, or
(ii) the decision or order to be appealed against is not available on the
common portal.
Therefore, in light of the facts of the given case, the appeal cannot be
filed manually.
(c) The action of the Department of rejecting the refund claim is correct.
The facts of the given case are similar to a Supreme Court judgment 5
wherein the Court held that unless an assessment order has been reviewed
and/or modified in an appeal, that assessment order stands, and the duty
is payable only as per that assessment order.
A refund claim is not an appeal proceeding.
Further, the officer considering the refund claim, cannot not review the
assessment order.

5
Priya Blue Industries Limited v. Commissioner of Customs 2004 (172) ELT 145 (SC)

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INDIRECT TAX LAWS

Thus, refund claims based on challenge to an order of assessment are liable
to be rejected.

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Mr. Charanjit has alternative option of:
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filing appeal against the assessment order with which he is aggrieved.
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g 6
aQuestion
(a) Describe the provision of payment of tax and other amount in installment
under section 80 of the CGST Act, 2017.
Also discuss, under what circumstances such payment facility shall not be
allowed. (6 Marks)
(b) Discuss in brief the precautions to be observed while issuing summons under
the GST law.
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OR. c
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Under the GST law who can orderefor carrying out inspection and under what
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circumstances? (4 Marks)
a Foreign Trade Policy. Which categories of
(c) Define Status Holder under
exporter firms are eligible for recognition as a Status Holder and what are
the criteria towards recognition as Status Holder?
Also state what would be the minimum threshold limit of export performance
of Status holders for various categories of Star Export House. (4 Marks)
Answer

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(a) On an application filed by a taxable person, the Commissioner may, for

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reasons to be recorded in writing, allow payment of tax and other amounts
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interest and subject to prescribed conditions and limitations.

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If there is default in payment of any one instalment on due date, then the

ag whole outstanding balance shall become due and payable immediately.
The facility of payment in instalments shall not be allowed where –

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FINAL EXAMINATION: NOVEMBER 2024

(a) the taxable person has already defaulted on the payment of any
amount under the GST law, for which the recovery process is on.
(b) the taxable person has not been allowed to make payment in
instalments in the preceding financial year.
(c) the amount for which instalment facility is sought is less than ` 25,000.
(d) the amount payable is self-assessed tax.
(b) The following precautions should generally be observed when summoning
a person: -
(i) A summon should not be issued for appearance where it is not justified.
The power to summon can be exercised only when there is an inquiry
being undertaken and the attendance of the person is considered
necessary.
(ii) Repeated summons should be avoided. As far as practicable, the
statement of the accused/ witness should be recorded in minimum
number of appearances.
(iii) The time of appearance given in the summons should be respected.
No person should be made to wait for long hours before his statement
is recorded unless decided as a matter of strategy.
(iv) Statements should preferably be recorded during office hours;
however, an exception could be made regarding the time and place of
recording statement having regard to the facts in the case.
(b) Alternative Answer
Inspection can be carried out upon a written authorization given by an
officer of the rank of Joint Commissioner or above.
A Joint Commissioner or an officer higher in rank can give such
authorization only if he has reasons to believe that the person concerned
has done one of the following to evade tax:
i. suppressed any transaction of supply;
ii. suppressed stock of goods in hand;
iii. claimed excess input tax credit;

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INDIRECT TAX LAWS

iv. contravened any provision of the CGST Act to evade tax;
v. a transporter or an owner/operator of a warehouse/godown/any other
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place has kept goods which have escaped payment of tax or has kept

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his accounts or goods in a manner that is likely to cause evasion of tax.
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em Authority. Status Holders are exporter firms recognized on the gla
(c) Status Holder is an exporter recognized for export performance by a

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a of their export performance as business leaders who have excelled ina
Regional
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a international trade and have successfully contributed to country’s foreign
trade.
All exporters of goods, services and technology having an import-export
code (IEC) number, on the date of application, shall be eligible for
recognition as a status holder based on export performance.
An applicant may be categorized as status holder on achieving the
threshold export performance in the current and preceding three financial
years as indicated below:
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c. Export
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Status category Performance (Threshold

l a s in USD Million)
One Star Export House
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Three Star Export House 50
Four Star Export House 200
Five Star Export House 800

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