CA Final November 2023 Suggested Answers Paper 8 Indirect Tax Laws (Old Scheme)

FOR CA FINAL EXAM PREPARATION

CA Final 2023
Suggested Answers ·
Paper 8 Indirect Tax
Laws (Old Scheme)
EXAM YEAR TYPE

CA Final 2023 Suggested Answers
SUBJECT DATE

Paper 8 Indirect Tax Laws (Old Scheme) November 2023

Notes · Sample Papers · Previous Year Papers · Mock Tests

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PAPER – 8: INDIRECT TAX LAWS

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

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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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e m notifications/circulars issued and by the amendments made by the Finance la
(iii) All questions should be answered on the basis of the position of (i) GST law as amended
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l a s 2022 which have become effective, till 30.04.2023 and (ii) Customs law as amended g
by significant
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Act,

a amendments made upto 30.04.2023.
by the Finance Act, 2022 and significant notifications/circulars and other legislative

Question 1
Poorva Impex Ltd., a registered entity under GST in the State of Maharashtra, is engaged in
making various supplies. It provides the following information for the month of April, 2023:
S. Particulars Amount (`)
No.

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OUTWARD SUPPLY:
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(i) Sold a future derivative contract at NSE (National Stock Exchange) 20,00,000

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which was due in the month of April. Said contract had no delivery

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option.
(ii) Supplied 50 LED TVs at Hyderabad to the State Government of 8,00,000
Telangana.
50 Stands mandatorily required to mount the TV on wall were also 72,000
supplied along with LED TV.
(iii) Provided intra-State service as a Direct Selling Agent (D.S.A.) to 5,00,000
Uday Small Finance Bank Limited for their retail loan products
(iv) Passenger transportation service provided to general public by 1,20,000
company owned ferries between two islands in the State of

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Maharashtra. Purpose was to facilitate daily commutation of local

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people.

c. o (v) Supplied
of the said goods were ` 3,00,000. The said agent is supplying goods e
goods to its agent in the State of Bihar. Open market value
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INWARD SUPPLY:
(i) Availed HR training services for all its employees from "BE HUMBAL", 4,00,000
an HR Firm registered under GST in Maharashtra. Training was held
at a resort in the State of Himachal Pradesh.

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66 FINAL EXAMINATION: NOVEMBER, 2023

(ii) Purchased processing machines from David & Co., registered under 1,00,000
GST, in the State of Gujarat. Machines were bought in "as is where
is condition" at Gujarat to produce taxable items.
(iii) Purchased 5 two-wheelers with engine capacity of 25 cc for usage of 2,00,000
its employees both within and outside factory producing taxable
products. Supply was made at Mumbai by a GST registered dealer at
Tamil Nadu.
The company provided the following additional information:
(i) Company wishes to choose the most beneficial option in respect of supply to agent and
branch transfer.
(ii) Company transferred certain taxable items to its Kerala branch for distributing as free
samples on the occasion of inauguration of said branch which is yet to be registered. Value
declared in the invoice for transfer was ` 2.50 lakh whereas open market value of the same
was ` 3.00 lakh. Kerala branch has yet not sold such kind of goods to any of the customer.
(iii) Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively for both inward and
outward supply of goods and services, except TV stand for which the rates are 14%, 14%
and 28% respectively.
(iv) All the amounts given above are exclusive of taxes, wherever applicable.
(v) Except specially written, all the inward supplies were used for taxable as well as exempted
outward supplies.
(vi) No inward supply is used for non-business purpose.
(vii) There was no opening balance of any ITC.
From the information given above, you are required to compute the eligible Input Tax Credit
(ITC) available and minimum net GST liability payable in cash (CGST, SGST or IGST, as the
case may be) for the month of April, 2023 for the Poorva Impex Ltd., Maharashtra.
Reason for the treatment of each item needs to be given. (14 Marks)
Answer
Computation of minimum net GST payable in cash for the month of April, 2023
S. Particulars Amount CGST SGST IGST
No. (`) (`) (`) (`)
(i) Futures derivatives contract 20,00,000 - - -
[Futures derivative contracts
with no delivery option qualify
as securities. They are neither
goods nor services in terms of
Schedule III of the CGST Act,

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PAPER – 8: INDIRECT TAX LAWS 67

2017. Thus, given transaction is
not a supply.]

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(ii) Supply of 50 LED TVs 8,72,000 1,56,960

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[It is an inter-State supply since [8,00,000 [8,72,000

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place of supply here is the + 72,000] × 18%]

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location where the movement of

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goods terminates, viz.

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Further, supply of LED TVs with
stands is a composite supply,
chargeable to tax at the rate
applicable to the principal
supply (viz. supply of LED TVs)
i.e.,18%.]
(iii) Intra-State supply as Direct 5,00,000 45,000 45,000
Selling Agent (DSA) [5,00,000 [5,00,000
[Taxable under forward charge. × 9%] × 9%]

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Reverse Charge Mechanism is

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not applicable since services

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are provided by a body

s 1,20,000
corporate and not by an
individual DSA.]

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(iv) Passenger transportation
service
[Passenger transportation
service provided by public
transport, other than
predominantly for tourism
purpose, in a vessel between
places located in India is
exempt.]

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(v) Supply of goods to an agent 2,88,000 51,840

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[Value of inter-State supply of [2,88,000

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goods to agent shall be:

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× 18%]

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(i) Open Market Value

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(3,00,000)

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or

ag (ii) 90% of the price of goods
of like kind and quality
charged by recipient to

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68 FINAL EXAMINATION: NOVEMBER, 2023

unrelated customer
(3,20,000 × 90%),
at the option of owner.
Since the company wishes to
choose most beneficial option,
least of the two values has been
taken.]
(vi) Inter-State transfer of taxable 3,00,000 54,000
items to Kerala branch [3,00,000
[Since recipient is not eligible for × 18%]
full ITC and goods are not
intended for further supply as
such by the recipient, value of
supply of goods to branch shall
be open market value.]
Total output tax 45,000 45,000 2,62,800
Less: ITC available for set off 33,600 33,600 36,000
[Refer note below]
Minimum net GST payable in 11,400 11,400 2,26,800
cash (rounded off)
Note - Computation of eligible ITC available for set off
S. Particulars Amount CGST SGST IGST
No. (`) (`) (`) (`)
HR training availed 4,00,000 36,000 36,000
[It is intra-State supply as place [4,00,000 [4,00,000
of supply of training services × 9%] × 9%]
provided to registered person is
location of recipient, i.e.
Maharashtra. Further, ITC of
services used in course or
furtherance of business is
available.]
Machine purchased 1,00,000 - - -
[It is intra-State supply since
place of supply in case of goods
not involving movement of
goods is location of goods at the
time of delivery to recipient, viz.
Gujarat.

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PAPER – 8: INDIRECT TAX LAWS 69

However, ITC of the same will
not be available as CGST/SGST

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of one State cannot be utilized

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for discharging of CGST/SGST

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liability of another State.]

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Two wheelers purchased 2,00,000 36,000

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[It is inter-State supply since [2,00,000

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place of supply is Mumbai. ITC × 18%]
is not blocked as it is eligible on
two-wheelers with engine
capacity of upto 25cc.]
Computation of eligible ITC available for set-off
Common credit 36,000 36,000
[ITC availed on HR training is
common credit.]
Less: ITC attributable to exempt 2,400 2,400

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supplies [Common credit x

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(Exempt turnover/ Total

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turnover)] to be reversed
[36,000 × 1,40,000/21,00,000]

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Total Exempt Turnover =
Exempt ferry service (120,000) ag
+ value of security (20,000)
= 1,40,000
Value of exempt supply includes
transactions in securities and
value of transactions in
securities is 1% of sale value of
security =1% of 20,00,000

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= 20,000

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Eligible ITC out of common 33,600 33,600

se 36,000
credit

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Add: ITC on two-wheelers used

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exclusively in relation to taxable
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products
Eligible ITC available for set 33,600 33,600 36,000
off

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70 FINAL EXAMINATION: NOVEMBER, 2023

Question 2
(a) Mr. Dev is registered as a regular tax-payer under GST in Mumbai, Maharashtra since July
2017. His turnover for the previous year 2022-23 was ` 2 crore. He provides the following
information pertaining to various outward supplies made by him during the month of
April, 2023:
Sr. Particulars Amount
No. Charged (`)
(i) Services by way of storage/warehousing of raw vegetable 4,00,000
fibre such as cotton flex, jute etc.
(ii) Supply of online mathematics journal to 'Model CBSE' school 2,00,000
for its secondary and higher secondary students.
(iii) Made a composite supply of goods and services to 1,40,000
M/s. Maharashtra State Development Corporation, a
Government Entity, by way of activity in relation to function
entrusted to a Panchayat under article 243G of the
constitution. Value of supply of goods constituted 23% of
value of said composite supply.
(iv) Sitting fees received for attending a committee meeting as 1,00,000
an independent director from M/s. ABC Ltd.
(v) Insurance commission received as an insurance agent from 1,25,000
XYZ Insurance Company Ltd., registered under GST.
(vi) Services provided to the State Government of Maharashtra 1,50,000
for conducting fitness training program for its employees.
71% of the total expenditure incurred for the program was
borne by the State Government.
(vii) Honorarium received by Mr. Dev to appear as a guest anchor 25,000
on a TV channel.
(viii) Amount received for services provided to a recognized 6,00,000
sports body as a commentator.
From the above information, compute the total GST liability of Mr. Dev (on which tax to be
paid by Mr. Dev) for the month of April, 2023.
All the supplies are intra-State supplies and the rate of taxes are CGST and SGST @ 9%
each. All the figures given are exclusive of GST, wherever applicable.
Reason for the treatment of each item needs to be given. (9 Marks)
(b) Milly Ltd. imported a machinery from USA. The machine reaches Delhi Airport first and
then from there, it is transshipped to Dehradun Airport.

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PAPER – 8: INDIRECT TAX LAWS 71

From the following details furnished, compute the assessable value (up to nearest rupee)
for the purpose of customs duty payment:

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S. Particulars Amount

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No.

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(i) Price of the machine US $ 15,000
(ii) m Air freight
s e License fee relating to imported goods payable 15% of price of machine gla
US $ 4,000

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(iii)
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a (iv) Drawing charges paid to an architect in India ` 25,000
(v) Commission (not buying commission) paid by US $ 250
the buyer to agent of exporter in USA
Other details for computing the assessable value are as under:
(i) Insurance charges paid in India-Not ascertainable.
(ii) Material supplied in USA by the buyer free of cost valued at ` 75,000.

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(iii) Importer paid transshipment charges from Delhi Airport to Dehradun Airport
` 1,00,000.
m. charges for delay in transport of the
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(iv) Importer paid ` 20,000 towards demurrage
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gl is ` 70 per US$.
machine from Delhi airport.

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(v) Exchange rate to be considered
Note: Price of the machine (US $ 15,000) given at serial number (i) of table above is
excluding of any of the amounts given thereafter.
Working notes should form part of your answer. (5 Marks)
Answer
(a) Computation of total GST payable by Mr. Dev
Particulars Amount CGST SGST
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c. o36,000
(`) @ 9% (`) @ 9% (`)

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(i) Storage/warehousing of raw vegetable 4,00,000 36,000

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fibres

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[Services by way of storage/ warehousing

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of raw vegetable fibre is not exempt.]
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ag

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72 FINAL EXAMINATION: NOVEMBER, 2023

(ii) Supply of online journal to school 2,00,000 18,000 18,000
[Not exempt, since such services are
exempt only when they are provided to an
educational institution providing
education as a part of a curriculum for
obtaining a recognised qualification.
Thus, exemption from GST is not
available when such services are
provided to a secondary and higher
secondary school.]
(iii) Composite supply of goods and services 1,40,000 12,600 12,600
to State Development Corporation
[Not exempt since exemption in respect
of composite supply of goods and
services by way of any activity in relation
to any function entrusted to a Panchayat
under article 243G of the Constitution is
not available when such supply is made
to a Government entity.]
(iv) Sitting fees for attending meeting as an - - -
independent director
[Services provided by an independent
director to company are not in
course/relation of employment are thus
outside the scope of Schedule III of
CGST Act, 2017. So, they qualify as
supply. Further, tax on such services is
payable by company under reverse
charge.]
(v) Insurance Commission received as an - - -
insurance agent
[Tax on services provided by insurance
agent to insurance company is payable
by such company under reverse charge.]
(vi) Services provided to State Government 1,50,000 13,500 13,500
for fitness training program
[Not exempt, since services provided to
the State Government under any training
programme are exempt only when 75% or
more of the total expenditure for the same
is borne by the State Government.]

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PAPER – 8: INDIRECT TAX LAWS 73

(vii) Honorarium received to appear as guest 25,000 2,250 2,250
anchor

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[Liable to GST, since it is not specifically

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exempt and is not declared as ‘neither a

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supply of goods nor a supply of service’

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under Schedule III of the CGST Act,

s e Services provided to a recognized sports 6,00,000 l a
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2017.]

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l body as a commentator
(viii) 54,000 54,000

a [Services by an individual as a
commentator to a recognized sports body
are not exempt.]
Total GST payable by Mr. Dev 1,36,350 1,36,350
(b) Computation of assessable value
Particulars Amount ($)

om
Price of the machine 15,000
Add: License fee
. c 2,250

em
[Licence fee relating to imported goods is includible since it is payable
by the buyer as a condition of sale.]
l a s
Add: Drawing charges
ag
[Not includible since undertaken in India.]
-

Add: Commission paid by buyer to agent of exporter 250
[Includible since it is not buying commission]
Total 17,500
Amount (`)
Value in Indian currency 12,25,000
[$ 17,500 x ` 70]

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m c.
Add: Material supplied by the buyer free of cost 75,000

c. o em13,00,000
[Includible in the assessable value]

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FOB value
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la 2,60,000
las Add: Air Freight
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g
[Restricted to 20% of FOB value since goods are imported by air.]
a Add: Demurrage charges
[Only ship demurrage charges on chartered vessels are includible in
-

the cost of transport of the imported goods.]

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74 FINAL EXAMINATION: NOVEMBER, 2023

Add: Insurance Charges 14,625
[1.125% of FOB value since insurance charges are not ascertainable]
Add: Transshipment charges from Delhi Airport to Dehradun Airport -
[Since these charges are incurred within India, they are not includible
in the assessable value]
Assessable value 15,74,625
Question 3
(a) Anuja checked-in at the 'Welcome Tourist Lodge' in Madurai on 15th July, 2022. The room
rent for the same was ` 900 per day for a single room. She checked-out on 17 th of July,
2022 and payment in respect to the same was received by the lodge via cheque at the time
of checking-out and entered in the books on the same date. The lodge decided to issue
her the invoice on the same date when the amount would get credited in its bank account.
The lodging of hotel rooms which was exempted upto ` 1,000 earlier became chargeable
to tax from 18 th July, 2022.
Under the GST law, determine the time of supply and taxability of the service of lodging in
the hands of 'Welcome Tourist Lodge' if the cheque gets credited into the bank account of
'Welcome Tourist Lodge' on 20 th of July, 2022. (5 Marks)
Note: Assume that all the days covered in the above case are working days.
(b) (i) Rhea is a person registered under GST in Mysore, Karnataka. She transports certain
goods by air to Mrs. Iyer who resides in Florida, USA. The air cargo operator by
which goods are transported is registered in Bengaluru, Karnataka.
Determine the place of supply of such transport/courier service under GST law with
supporting notes related to legal provisions. (2 Marks)
(ii) 'Mischievous Muppets' - a Kindergarten school in Pune, Maharashtra, has given the
contract of catering service to a Pune based agency viz. 'Toddlers Catering Agency',
registered under GST.
Whether the said catering service provided by 'Toddlers Catering Agency' in the
school is taxable under GST law?
Answer with supporting notes related to legal provisions. (2 Marks)
(c) 'Mezo Blanca', a firm registered in India, imported certain items of machine equipment from
China. These items were bestowed with subsidy by the Chinese Government for production
as well as export to other countries. Considering the impact of subsidized articles being
imported into India, Indian Government imposed countervailing duty under section 9 of the
Customs Tariff Act, 1975 on the import of said items. Mezo Blanca managed to import the
same product by altering the name of the product. But proper officer imposed
countervailing duty on the said import.

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PAPER – 8: INDIRECT TAX LAWS 75

Mezo Blanca seeks your advice on the correctness of the action of the Proper Officer and
also want to know the different ways of circumvention which are prohibited. (5 Marks)

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Answer

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(a) In the given case,

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Date of receipt of payment is:-

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(a) Date of entry of payment in books of account [17th July 2022] or

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a whichever is earlier, viz., 17 July 2022.
(b) Date of credit of payment in bank account [20th July 2022]
th

Date of issue of invoice is 20th July 2022 (since lodge decided to issue invoice on date of
credit of payment in its bank account.)
Since in the given case of change in rate of tax (on 18 th July, 2022):
• services have been supplied and payment has been received, before such change in
rate

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• but invoice is issued after the change in rate,

emof ` 1,000 was exempted at the time of supply,
time of supply is date of receipt of payment, viz. 17th July, 2022.

a s
Since the service of lodging upto a value
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no GST is payable in the given case.

a by way of transportation of goods, including by courier,
(b) (i) The place of supply of services
to a place outside India is the place of destination of such goods.
Hence, in the given case, place of supply of such services would be Florida, USA.
(ii) Catering services provided to an educational institution providing services by way of
pre-school education and education up to higher secondary school are exempt from
GST.
Thus, in the given case, catering service provided by “Toddlers Catering Agency” to

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“Mischievous Muppets” - a Kindergarten school is exempt from GST.

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(c) Where the Central Government, on such inquiry as it considers necessary, is of the opinion

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that circumvention of countervailing duty has taken place by any of the following ways, it

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may extend the countervailing duty to such other article also from such date, as the Central

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Government may, by notification in the Official Gazette, specify:

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(i) a
by altering the description or name or composition of the article on which such duty
a has been imposed
(ii) by import of such article in an unassembled or disassembled form
(iii) by changing the country of its origin or export or

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76 FINAL EXAMINATION: NOVEMBER, 2023

(iv) in any other manner, whereby the countervailing duty so imposed is rendered
ineffective.
In accordance with the above provisions, the action of the proper officer is correct 1.
Question 4
(a) Mr. Broker wrongly availed ` 1,25,000 as input tax credit (CGST + SGST) at the time of
furnishing return under section 39 of the CGST Act, 2017 for the month of October 2022.
This ITC was not utilized against the output tax liability for the month of October 2022.
Mr. Broker utilised ITC of ` 75,000 from the above wrongly availed ITC of ` 1,25,000
against output tax liability for the month of November 2022.
Mr. Broker paid the amount of ITC wrongly utilised of ` 75,000 on 10th March, 2023 and
reversed the unutilized amount of ` 50,000 on 20th March 2023. Calculate the total interest
payable (CGST + SGST) rounded off to nearest rupee under GST law if Mr. Broker files:
(i) Form GSTR-3B for the month of October on 18 th November 2022, and
(ii) Form GSTR-3B for the month of November on 25 th December 2022.
Note: Assume there is no extension of due date of filing of Form GSTR-3B and no other
transactions were undertaken during the year 2022-23. (5 Marks)
(b) M/s Cute and Co., a registered person under GST, filed an appeal with respect to denial
of Input Tax Credit (ITC) related to the financial year 2017-18. This appeal was disposed
of in favour of M/s Cute and Co. on 30-09-2022. Annual return for the financial year
2017-18 was filed by it on 31-03-2020. Due date for the said return was 07-02-2020.
Cute and Co. seeks your advice with reason regarding the time-line upto which they are
supposed to retain the books of accounts and other records as per the provisions of the
CGST Act, 2017. (4 Marks)
(c) M/s. Lotus Auto Weaves imported 10 automated looms from Germany for a price of US $
70,000. The price was settled and machines were shipped on 20 th March, 2023.
Meanwhile, the importer made further negotiations with the exporter for reduction of price
of looms based on the leads given by them so far and also in future. Due to this negotiation,
the exporter further reduced the price of 10 automated looms to US $ 60,000 and confirmed
the same by email dated 30th March, 2023. However, consignment arrived in India on
29th March, 2023. Proper officer of customs ignored the revised price confirmed by email
and assessed the value based on original price of US $ 70,000. This was contested by the
importer as unfair action by the Department. Importer seeks your advice on the
correctness of action of the proper officer. Give reason in support of your answer.
(5 Marks)

1 It is most logically assumed that the Central Government has extended the countervailing duty by
notification in the Official Gazette to the product imported (by altering name) by Mezo Blanca.

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PAPER – 8: INDIRECT TAX LAWS 77

Answer
(a) Where ITC has been wrongly availed and utilised, the registered person shall pay interest

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on the same

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• for the period starting from the date of utilisation of such wrongly availed ITC

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a
• till the date of reversal of ITC or payment of tax in respect of such amount

s e@ 18% per annum. l
a wrongly availed ITC of ` 50,000 has been reversed without utilizing the same,ag
•
lSince
ag interest is not payable on the same.
Interest is payable on wrongly availed and utilised ITC of ` 75,000.
Date of utilisation of said ITC will be:
(a) Due date of furnishing return for November, 2022 [20 th December, 2022] or
(b) Actual date of filing of the return for November [25 th December, 2022]
whichever is earlier.

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Thus, date of utilisation of said ITC will be 20th December, 2022.

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Interest (CGST + SGST) will be payable for 80 days [21 st December 2022 to 10 th March,

s
2023 (both days inclusive)] as follows:
` 75,000 × 80/365 × 18%
l a
g off)
a
= ` 2,959 [CGST+SGST] (rounded
(b) M/s Cute & Co. who is a party to an appeal is required to retain the books of accounts and
other records:
(i) for a period of 1 year after final disposal of such appeal (i.e. 30.09.2023),
or
(ii) for 72 months from the due date of furnishing of annual return for the financial year
2017-18 (07.02.2026),

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whichever is later.

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c. o (c) Astransaction
Thus, M/s Cute & Co. needs to maintain books of accounts till 07.02.2026.
per section 14 of the Customs Act, 1962, the value of the importedmgoods is the
m s egoods at the time
s e l a
value, which means the price actually paid or payable for the
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la Further, the Supreme Court in case of Garden Silk Mills v. UOIa
and place of importation.

ag 1999 (113) E.L.T. 358 has
held that importation gets complete only when the goods become part of mass of goods
within the country.

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78 FINAL EXAMINATION: NOVEMBER, 2023

Since in the instant case, the price of the goods was reduced after the goods arrived in
India, the price would be considered to be revised after the importation took place.
Hence, the goods should be valued as per the original price of US $ 70,000, which was the
price payable at the time of importation.
The action taken by the proper officer is valid.
Question 5
(a) M/s. Root & Co. filed a refund application under section 54 of the CGST Act, 2017 in
respect of export made by them. While declaring the export turnover, their accountant
included the exempt turnover also as part of export turnover and claimed excess refund.
Amount of refund excess claimed was ` 18,000 each under CGST and SGST.
Determine the total amount of penalty (CGST + SGST) leviable under GST law in respect
of such erroneous refund if:
(i) such excess refund claim was proved to be inadvertent and not wilful/fraud.
(ii) such excess refund was on account of wilful misstatement/ fraud. (5 Marks)
(b) M/s. Square & Co. received a notice under section 74(1) of the CGST Act, 2017 demanding
tax, interest and penalty on the allegation of suppression of facts for the financial year
2018-19. Notice was issued on 24-11-2022. Square & Co. filed an appeal denying any
suppression and on which Appellate Authority concluded that the notice is not sustainable
under section 74(1), for the reason that the charges have not been established by the
Department. Proper officer deemed the said notice to have been issued under
section 73(1) and re-determined the demand.
Square & Co. is of the opinion that the action of proper officer is not in line with GST law.
Square & Co. filed its annual return for the financial year 2018-19 on 30-11-2019. Assume
the due date of such return as 31-12-2019.
Square & Co. seeks your advice with reason on the following issues:
(i) Whether the proper officer can proceed to re-determine the demand under
section 73(1), in respect of notice issued under section 74(1)?
(ii) If yes, whether the fresh demand is valid?
(iii) If the above notice issued under section 74(1) is assumed to have been issued on
24-09-2022, what would be your answer for the validity of demand? (4 Marks)
(c) You are required to calculate the amount of interest receivable/payable (rounded off to
nearest rupee) in the following independent cases along with brief explanation for the same
with reference to the provisions of the Customs Act, 1962 and rules made thereunder:
(i) Mr. Lolo filed a claim for payment of duty drawback amounting to ` 1,80,000 on
25th September 2022. However, amount was received on 30 th December 2022.
(3 Marks)

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PAPER – 8: INDIRECT TAX LAWS 79

(ii) Mr. Golo was erroneously refunded a sum of ` 45,000 in excess of actual drawback
on 15th April 2022. Department issued demand notice for recovery of excess amount

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on 25 th July 2022. Thereafter, Mr. Golo returned excess erroneous refund amount on

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27th Aug 2022. (2 Marks)

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(a) Amount of. penalty (each under CGST and SGST) in respect of the erroneous refund e
Answer

emby M/s Root & Co.: l a s
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l(i)a Where the excess refund claim was proved to be inadvertent and nota
claimed
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a wilful/fraud
Penalty payable will be higher of the following:
(a) 10% of tax due, i.e. ` 1,800 (18,000 x 10%)
(b) ` 10,000
Penalty will be ` 10,000 each under CGST and SGST
(ii) Where the excess refund claim was on account of wilful misstatement/fraud

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Penalty payable will be higher of the following:

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(a) Tax due, i.e. ` 18,000

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(b) ` 10,000

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Penalty will be ` 18,000 each under CGST and SGST
a
(b) (i) Since the appellate authority
sustainable for reason that the charges of fraud etc. have not been established by
Department against M/s Square & Co., the proper officer can re-determine the
demand, deeming as if the notice was issued under section 73(1) of the CGST Act,
2017.
(ii) Fresh demand will not be valid since show cause notice under section 74(1) of the
CGST Act, 2017 was issued on 24.11.2022, i.e. beyond 2 years and 9 months from
the due date of furnishing of annual return for financial year 2018-19, i.e. 30.09.2022.

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(iii) If show cause notice under section 74(1) of the CGST Act, 2017was issued on
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24.09.2022, i.e. within 2 years and 9 months from the due date of furnishing of annual

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return for financial year 2018-19, demand would be valid.

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a drawback [26 October,
of filing such claim, interest @ 6% per annum is payable from the

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2022 to 30 December, 2022 (both days inclusive)] that is 66 days as follows:
th

= ` 1,80,000 x 66/365 x 6/100
= ` 1,953 (rounded off)

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80 FINAL EXAMINATION: NOVEMBER, 2023

(ii) Interest is payable by Mr. Golo on erroneous refund of duty drawback @ 15% per
annum for the period beginning from the date of payment of such drawback to the
claimant, till the date of recovery of such drawback [16 th April, 2022 to
27th August, 2022 (both days inclusive)]. i.e. 134 days.
= ` 45,000 x 134/365 x 15/100
= ` 2,478 (rounded off)
Question 6
(a) List the instances when TDS is not liable to be deducted under the GST law. (4 Marks)
OR
(a) With reference to provision of section 93(1) of the CGST Act, 2017, discuss the liability to
pay tax, interest or penalty on death of a person so liable. (4 Marks)
(b) Write short note on "Summary Assessment" under section 64 of the CGST Act, 2017.
(5 Marks)
(c) List the rights of the owner of the warehoused goods with reference to the section 64 of
the Customs Act, 1962. (5 Marks)
Answer
(a) Tax is not liable to be deducted at source under GST law when:
(i) Location of the supplier and the place of supply are in a State/ Union territory which
is different from the State/ Union territory of registration of the recipient.
(ii) Goods and/or services are supplied from a public sector undertaking (PSU) to another
PSU, whether or not a distinct person
(iii) Supply of goods and/or services takes place between one person to another person
specified in clauses (a), (b), (c) and (d) of section 51(1) of the CGST Act, 2017, i.e.
(a) Department/establishment of Central/State Government
(b) Local authority
(c) Governmental agencies
(d) Notified persons or category of persons
(iv) Total value of taxable supply ≤ ` 2.5 lakh under a contract
Alternative Answer to Q. 6(a)
Where a person, liable to pay tax, interest or penalty under the CGST Act, 2017 dies,
then—
(1) if a business carried on by the person is continued after his death by his l egal
representative or any other person, such legal representative or other person, shall

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PAPER – 8: INDIRECT TAX LAWS 81

be liable to pay tax, interest or penalty due from such person under the CGST Act,
2017; and

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(2) if the business carried on by the person is discontinued, whether before or after his

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death, his legal representative shall be liable to pay, out of the estate of the deceased,

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to the extent to which the estate is capable of meeting the charge, the tax, interest or

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penalty due from such person under CGST Act, 2017, whether such tax, interest or

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penalty has been determined before his death but has remained unpaid or is

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determined after his death.
successor shall be liable to pay any tax, interest or any penalty due from the
transferor in cases of transfer of business due to death of sole proprietor.
(b) Summary assessments may be initiated to protect the interest of revenue with the previous
permission of Additional/Joint Commissioner when:
(i) the proper officer has evidence that a taxable person has incurred a tax liability, and
(ii) the proper officer has sufficient grounds to believe that delay in passing an
assessment order may adversely affect the interest of revenue.

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In case Additional/Joint Commissioner considers such order to be erroneous, either on his
own motion or on an application made by the taxable person within 30 days of receipt of

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order, he may withdraw such order.

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liability pertains to supply of goods,athe person in charge of such goods shall be deemed
Where the taxable person to whom the

to be the taxable person liable g to lbe assessed and liable to pay tax and any other amount
due. a
(c) The owner has every access to the goods.
The owner of any warehoused goods may, after warehousing the same,—
(a) inspect the goods;
(b) ensure that the goods do not deteriorate or get damaged during storage in the
warehouse;

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(c) sort the goods; or

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(d) show the goods for sale.

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