TYBMS SEM 6 Financial: Indirect Tax (Q.P. April 2019 with Solution)

 Paper / Subject Code: 86017/Finance: Indirect Taxes

TYBMS SEM 6

Financial: Indirect Tax

(Q.P. April 2019 with Solution)

Duration: 2½ hours

Marks-75

Note: 1) All questions are compulsory.

2) Working Notes should form part of your answer.

3) Figures to the right indicate full marks.

Q.1. (A) Select the most appropriate alternatives from those given below and rewrite the statements. (Any 8)    (08)

1. Chairperson of the GST council is ________.

a) Union minister of state in charge of revenue

b) Union Finance Minister

c) One elected person amongst the state finance minister

d) Minister incharge of finance and taxation

2. Mr. A of Gujarat supplies goods to Mr. X of Delhi, this will classify as ______

a) Intra state supply

b) Inter state supply

c) Export supply

d) Deemed supply

3. For banking and financial services, place of supply is ________ 

a) Location of recipient in records of supplier 

b) Location of supplier

c) Location of head office

d) Either (a) and if (a) is not available then (b)

4. Every electronic commerce operator required to collect tax at source has to furnish a statement in form

a) GSTR-1

b) GSTR-5

c) GSTR-7

d) GSTR-8

5. Aggregate Turnover includes _______

a) Taxable supplies

b) Inter-state supplies

c) Export of goods and services

d) All the above.

6. A non resident person having ________ may take registration as a casual taxable person.

a) TAN 

b) Adhar Number

c) PAN

d) Both (a) and (b)

7. The first 2 digits of GSTIN represent _______

a) Entity Code

b) Country Code

c) State Code

d) Checksum character

8. _______ is the time of supply of vouchers in respect of services when the supply with respect to the voucher is identifiable

a) Date of issue of voucher

b) Date of redemption of voucher 

c) Earlier of (a) and (b)

d) (a) and (b) whichever is later

9. Place of supply for services by way of admission to events are _______

a) Place where event is actually held

b) Location of recipient

c) Location of supplier

d) None of the above.

10. Place of supply when goods are imported into India is

a) Location of importer 

b) Location outside India

c) Location of supplier

d) None of the above

B) Match the following (Any 7/10)

Column “A”		Column “B”
1.	Petroleum products	a	Non- Resident taxable person
2	GSTR 5	b	Person supplying goods wholly exempt from tax
3	Reverse Charge basis	c	Input tax credit
4	Goods exported from India	d.	UTGST
5	Not liable for registration	e.	Recipient is liable to pay GST
6	Compulsory registration	f.	SGST
7	Non banking financial institution	g.	Location outside India
8	Electronic credit ledger	h.	GST yet to be notified
9	Chandigarh	i.	E-commerce operator
10	Pondicherry	j.	45 days from the date of supply of service.

Solution: 

Column “A”		Column “B”
1.	Petroleum products	f	SGST
2	GSTR 5	a	Non- Resident taxable person
3	Reverse Charge basis	e	Recipient is liable to pay GST
4	Goods exported from India	g.	Location outside India
5	Not liable for registration	b	Person supplying goods wholly exempt from tax
6	Compulsory registration	c.	Input tax credit
7	Non banking financial institution	h.	GST yet to be notified
8	Electronic credit ledger	f	E-commerce operator
9	Chandigarh	i.	45 days from the date of supply of service.
10	Pondicherry	f.	UTGST 45 days from the date of supply of service.

Q.2 (A). Find the place of supply of goods from the following transactions and give (08) explanation to the answer.

a) Mr. A of Nasik, Maharashtra sells 20 refrigerators to Mr. C of Ahmadabad, Gujarat for delivery at Mr. C's place of business in Ahmadabad.

b) Ekdanta Ltd (Mumbai Maharashtra) gives a contract to Sunshine Ltd (Ranchi, Jharkhand) to assemble a power plant in its Kutch, Gujarat.

c) Mr. Ashwin of Pune places order on Mr. Amod of Mumbai for delivery of certain goods. Mr. Ashwin directs Mr Amod to deliver goods to Mr. Rahul in Indore.

d) Mr. Z purchases coffee and snacks on board at Airjet Mumbai to Delhi flight when the aircraft flying over Gujarat. The food items were loaded into aircraft at Mumbai.

a) Mr. A (Nasik, Maharashtra) sells 20 refrigerators to Mr. C (Ahmadabad, Gujarat) for delivery at Mr. C's place of business in Ahmadabad.

• Place of Supply: Ahmadabad, Gujarat
• Reason: The movement of goods terminates for delivery at Mr. C's place of business in Ahmadabad. This is an interstate supply, so Integrated GST (IGST) will be applicable.

b) Ekdanta Ltd (Mumbai Maharashtra) gives a contract to Sunshine Ltd (Ranchi, Jharkhand) to assemble a power plant in its Kutch, Gujarat.

• Place of Supply: Kutch, Gujarat
• Reason: Though there's movement of goods (components), the supply is essentially the installation of a power plant at the specific location (Kutch). Since assembly and installation are deemed as supply under GST, the place of supply is where the installation occurs (Kutch, Gujarat). This will also be an interstate supply attracting IGST.

c) Mr. Ashwin of Pune places order on Mr. Amod of Mumbai for delivery of certain goods. Mr. Ashwin directs Mr. Amod to deliver goods to Mr. Rahul in Indore.

• Place of Supply: Indore, Madhya Pradesh
• Reason: Even though Mr. Amod dispatches goods from Mumbai, the movement terminates for delivery to the recipient (Mr. Rahul) in Indore. This is considered an inter-state supply and will attract IGST.

d) Mr. Z purchases coffee and snacks on board at Airjet Mumbai to Delhi flight when the aircraft flying over Gujarat.

• Place of Supply: Mumbai, Maharashtra
• Reason: In the case of supplies made on board an aircraft, ship, or train during their journey, the place of supply is the location where the goods are brought on board (Mumbai in this case). This will be considered an intra-state supply within Maharashtra and attract CGST and SGST.

Q.2 (B) Find the time of supply of goods from the following transactions and give explanation to the answer.        (07)

1. Determine the time of supply in the following cases where supply involves movement of goods.

Date of Removal	Date of Invoice	Date of Receipt of payment
01/10/2018	2/10/2018	15/11/2018
5/10/2018	2/10/2018	25/11/2018

2. Determine the time of supply from the following, if there is continuous supply of goods.

Date of Invoice	Date of Removal	Statement of accounts	Date of Receipt of payment
01/12/2018	15/11/2018	5/12/2018	2/12/2018
21/01/2018	18/01/2018	5/01/2018	10/02/2018

Solution: 

Time of Supply involves the movement of goods

Rules:

Time of supply of goods is the Earlier of the following:

a) Time of Removal

b) The date of invoice 

Date of Removal	Date of Invoice	Date of Receipt of payment	Time of Supply
01/10/2018	2/10/2018	15/11/2018	01/10/2018
5/10/2018	2/10/2018	25/11/2018	02/10/2018

2) In case of continuous supply of goods, the time of supply will be Earlier of the following:

a) Date of Invoice

b) Date of Statement of Accounts

c) Date of Payment

Rules:

Date of Invoice	Date of Removal	Statement of accounts	Date of Receipt of payment	Time of supply
01/12/2018	15/11/2018	5/12/2018	2/12/2018	01/12/2018
21/01/2018	18/01/2018	5/01/2018	10/02/2018	5/01/2018

Q.2 (P) M/s Radha traders supplied certain goods worth Rs. 5. 25,000(inclusive of GST) and Equipment worth Rs.8, 50,000 (excluding GST) to Geeta works, Compute the value of supply and also GST payable. (08)

Particulars	Goods	Equipment
Commission charges	10000	15000
Packing charges	7000	2000
Freight	7000	8200
Inspection Charges	570	1350
Designing charges	2270	1350

• M/s Radha traders gave a discount of Rs.20,000 on equipments.
• Taxes other than GST charged separately hy M/s Radha traders Rs.12,000 on goods and Rs 21,000 on Equipments
• GST rate applicable on Goods is 5% and Equipments 12%.

Solution: 

Computation of Value of Supply

Particulars	Goods	Equipment
Value of Goods + Commission Charges + Packing Changes + Freight + Inspection Charges + Designing charges + Taxes other than GST - Discount	500000 10000 7000 7000 570 2270 12000 -	850000 15000 2000 8200 1350 1350 21000 (20000)
Value of Supply + CGST = 2.5 % / 6% + SGST = 2.5 % / 6%	538840 13471 13471	878900 52734 52734
Value of Supply	565782	984368

Working Note on Goods:

= 525000 x 100 /105    = 500000

Q.2 (Q) Find the time of supply of services from the following transactions and give explanation to the answer.                         (07)

1. Determine time of supply of services (normal Case)

Sr. No	Date of provision of service	Date of Invoice	Date of payment
1	16/09/2018	5/10/2018	6/10/2018
2	12/10/2018	10/11/2018	12/11/2018

2. Determine time of supply of services (RCM Case)

Sr. No	Date of Invoice	Date of provision of service	Date of entry of Payment in books of accounts	Date of debit in Bank account
1	16/11/2018	26/11/2018	16/01/2019	11/01/2019
2	04/02/2019	03/02/2019	03/04/2019	02/04/2019

Solution: 

Time of Supply involves the movement of goods

Rules:

Time of supply of goods is the Earlier of the following:

a) Time of provision of service

b) The date of invoice 

Sr. No	Date of provision of service	Date of Invoice	Date of payment	TOS
1	16/09/2018	5/10/2018	6/10/2018	16/09/2018
2	12/10/2018	10/11/2018	12/11/2018	10/11/2018

Time of Supply in case of Reserve Charges Basis

The time of Supply of Service shall be the earlier of the following dates

a)      The Date of entry of Payment in books of accounts of the recipient

b)     The Date on which the payment is the debited in Bank account

c)      The date immediately following 60 Days from the date of issue of invoice

Sr. No	Date of Invoice (A)	Date of provision of service (B)	Date of entry of Payment in books of accounts (C)	Date of debit in Bank account (D)	Date immediately after 60 days from Date of invoice	Time of Supply Earlier of (b/c/d)
1	16/11/2018	26/11/2018	16/01/2019	11/01/2019	15/01/2019	11/01/2019
2	04/02/2019	03/02/2019	03/04/2019	02/04/2019	5/4/2019	02/04/2019

Q.3 From the following information for November, 2018 calculate the value of taxable and not taxable services assuming that goods and service tax is not included in amounts. (15)

Sr. No.	Particulars	Rs.
1	Rent received from Factory building	600000
2	Rent received from Agricultural plot	90000
3	House is let out to individual for residential purpoве	700000
4	Interest earned on loan	500000
5	Sale and purchase of forward contract	1000000
6	Coaching to students for IIM exams	800000
7	Development and design of software	100000
8	Express Parcel post services	200000
9	Collection of electricity Bill	100000
10	Implementation of software	500000

OR

Q.3 Mr. Pratik is a new dealer. From the following information find out on which day he will be liable to register under GST, give reason for your answer. (15)

Date	Taxable purchases	Tax free purchases	Tax Sale	Tax free Sale
02/04/18	100000	15,000	100000	40,000
04/04/18	-	-	500000	20,000
11/04/18	200000	-	300000	100000
20/04/18	-	-	100000	400000
25/04/18	400000	6000000	200000	80,000
02/05/18	-	-	500000	150000
11/05/18	5,000	20000	100,000	300000

Q.4 Ms. Dipti registered in state of Uttar Pradesh provides following details for the month of October. Calculate her net tax liability for the month of October. Closing balance in electronic credit ledger as on 30th September is IGST Rs.2, 00,000, CGST Rs.90,000 and SGST Rs.50,000. (15)

Sold goods @ 28% GST to Jagruti in Uttar Pradesh.	1000000
Sold goods @ 18% GST to Rushikesh in Punjab	9,70,000
Provided Services @ 5% GST to Akshay in Karnataka	4,25,000
Provided Services @ 12% GST to Akash in west Bengal.	8,75,000
Inward supplies @ 5% GST from Uttar Pradesh	7,80,000
Inward supplies @ 18% GST from Telangana	50,000
Inward supplies @ 12% GST from Karnataka	85,000
Inward supplies @ 28% GST from Uttar Pradesh	6,70,000

Q.4 A. Calculate aggregate turnover of Mrs. Sneha based on the following information

a) Taxable supplies Rs.4, 48,000 (including GST @ 12%)

b) Exempt Supplies Rs. 85,000,

c)Export of goods Rs.2, 30,000.

d) Inward supplies on which tax is payable under Reverse charge Rs 50,000

e) Inter-state supplies Rs.5,90,000.

f) Intra state supply of goods with Nil rate Rs.8,50,000

Q.4 B Kunal who is a manufacturer in Thane provides the following information. Explain whether Kunal is eligible to opt for composition scheme in financial year.    (07)

a) Intra state supplies Rs. 12,50,000 

b) Intra state supplies GST at nil rate Rs.30,50,000

c) Intra state supplies which are wholly exempt Rs. 34, 60,000. 

d) Value of inward supplies on which tax is payable under RCM Rs.5, 40,000.

Q.5 A. Explain GST and features of GST                 (08)

Ans: 

Understanding GST: India's Goods and Services Tax

The Goods and Services Tax (GST) is a major indirect tax reform implemented in India in 2017. It replaced a complex web of multiple indirect taxes levied by the central and state governments, such as excise duty, VAT (Value Added Tax), service tax, and others. Here's a breakdown of GST and its key features:

What is GST?

• A single, unified tax levied on the supply of goods and services throughout India.
• A multi-stage, destination-based tax levied at each point of sale (except for final consumers).
• Aims to create a common market by eliminating cascading taxes (tax on tax) and promoting seamless flow of goods and services across the country.

Features of GST:

• One Nation, One Tax: Replaces multiple indirect taxes with a single tax structure, simplifying tax compliance for businesses.
• Dual GST System: Comprises of Central GST (CGST) levied by the central government and State GST (SGST) levied by the state government on intra-state supplies (within the same state). For inter-state supplies (between states), Integrated GST (IGST) is levied, collected by the central government and then distributed to the originating and consuming states.
• Input Tax Credit (ITC): Businesses can claim credit for GST paid on purchases (inputs) when used for making taxable supplies (outputs), reducing the overall tax burden.
• Threshold Exemption: Smaller businesses with an annual turnover below a specified limit (currently Rs 40 lakh for most states) are exempt from GST registration.
• Composition Scheme: A simplified compliance scheme for small businesses with a lower tax rate but limited ITC benefits.
• Online Compliance: Focuses on online registration, filing of returns, and payments, promoting transparency and ease of doing business.
• Anti-Profiteering Measures: Measures to ensure businesses pass on the benefit of reduced tax rates to consumers, preventing profiteering.

Benefits of GST:

• Increased transparency and efficiency in tax administration.
• Reduced tax burden for businesses due to elimination of cascading taxes.
• Boosted economic growth due to a larger tax base and seamless movement of goods and services.
• Improved competitiveness of Indian businesses in the global market.

Q.5 B. Explain composite supply and Mixed supply with example.    (07)

Ans: 

Composite Supply vs. Mixed Supply under GST

In the world of GST (Goods and Services Tax), understanding the difference between composite and mixed supplies is crucial for determining the applicable tax rate. Here's a breakdown of both concepts with examples:

Composite Supply:

• A supply involving two or more goods or services that are naturally bundled and cannot be realistically separated. The buyer essentially purchases a combined package, and the value of the individual elements is not separately identifiable.
• Key Characteristics:
  • One element (principal supply) is the main purpose of the purchase.
  • Other elements (supporting supplies) are essential for the enjoyment of the principal supply.
  • They are always supplied together and cannot be independently chosen.
• Taxation: The entire supply is taxed at the rate applicable to the principal supply.
• Example:
  • A hotel stay (principal supply) includes room service, housekeeping, and access to amenities (supporting supplies). These cannot be purchased separately. The entire package is taxed at the GST rate applicable to hotel accommodation.

Mixed Supply:

• A supply involving two or more goods or services that are distinct and can be independently supplied. The buyer has the option to purchase them individually.
• Key Characteristics:
  • Each element has a separate identity and value.
  • They are not intrinsically linked and can be provided separately.
• Taxation: Each element is taxed at the GST rate applicable to that specific item.
• Example:
  • A grocery store sells a basket containing a variety of snacks and drinks (mixed supply). The basket itself is not essential. Customers can choose to buy individual items. Each item (snacks, drinks) will be taxed at its respective GST rate.

Here's a table summarizing the key differences:

Feature	Composite Supply	Mixed Supply
Nature of Supply	Naturally bundled goods/services	Distinct goods/services
Separability	Cannot be realistically separated	Can be independently supplied
Tax Rate	Taxed at the rate of principal supply	Each item taxed at its individual GST rate

Q.5 Short Notes (Any 3):            (15)

1. Inter and Intra state supply

Ans: 

In the context of Goods and Services Tax (GST) in India, understanding the difference between inter-state and intra-state supply is crucial for businesses. Here's a breakdown:

Intra-state Supply:

• Occurs when the supplier and the recipient of goods or services are located in the same state or union territory.
• Applies to both goods and services.
• Tax levied: Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). These are collected and deposited with the central and state governments, respectively.
• Example: A clothing store in Mumbai sells a t-shirt to a customer in Mumbai.

Inter-state Supply:

• Occurs when the supplier and the recipient of goods or services are located in different states or union territories.
• Applies to both goods and services.
• Tax levied: Integrated Goods and Services Tax (IGST). This tax is collected by the central government and then distributed to the originating and consuming states.
• Example: A furniture manufacturer in Delhi sells a sofa set to a customer in Bangalore.

• Determining the place of supply (where the supply is considered to take place) is crucial for classifying a transaction as intra-state or inter-state. Generally, the place of supply for goods is the destination where they are delivered, and for services, it's the location where the service is provided.
• The type of supply (intra-state or inter-state) determines the applicable GST rate and the GST compliance procedures that businesses need to follow.

Here's a table summarizing the key differences:

Feature	Intra-state Supply	Inter-state Supply
Location of Supplier	Same state as recipient	Different state from recipient
Location of Recipient	Same state as supplier	Different state from supplier
Tax Levied	CGST + SGST	IGST
Tax Collected By	Central Government (CGST) + State Government (SGST)	Central Government
Tax Distributed To	Central Government (CGST) + State Government (SGST)	Split between originating and consuming states

2. Supply with consideration

Ans: In the context of GST (Goods and Services Tax), a "supply with consideration" refers to a transaction where there's an exchange of value for the goods or services provided. This exchange can be in two main forms:

1. Monetary Consideration: This is the most common type of consideration, where the recipient pays money for the goods or services received. This money can be paid directly to the supplier, or it can be paid by a third party on behalf of the recipient.

2. Barter: This involves exchanging goods or services for other goods or services of (ideally) comparable value. The concept of "money's worth" still applies, even though no physical cash is involved.

Here's what's NOT considered "consideration" under GST:

• Gifts: If you freely give away goods or services without expecting anything in return (monetary or otherwise), it's not a supply with consideration. However, there might be exceptions for free samples used for promotional purposes.
• Subsidies: Government subsidies provided to businesses or individuals are not considered consideration for GST purposes.

Why is "consideration" important?

• It's a key element for determining whether a transaction is considered a "supply" under GST. Transactions without consideration generally fall outside the scope of GST.
• The presence of consideration helps distinguish between taxable and non-taxable activities.
• It affects the calculation of GST liability. The value of the consideration forms the basis for calculating the taxable value on which GST is levied.

Examples of supply with consideration:

• A bakery selling bread to a customer for cash.
• A plumber charging for repairing a leaky faucet.
• A company hiring a consultant and paying them a fee for their services.
• Two businesses exchanging goods or services of equal value.

3. Definition of Goods and Services under GST

Ans: 

Goods and Services under GST

The Goods and Services Tax (GST) in India applies to both the supply of goods and services. Here's a breakdown of their definitions:

Goods:

• Defined as every kind of movable property other than money and securities.
• Includes:
  • Tangible items like furniture, electronics, clothes, etc.
  • Actionable claims (enforceable rights)
  • Growing crops, grass, and things attached to land if agreed to be severed before supply.

Services:

• Defined as anything other than goods, money, and securities.
• Includes:
  • Professional services (accounting, legal, consulting)
  • Transportation and communication services
  • Hotel accommodation, restaurant services, and entertainment
  • Activities related to the use of money or its conversion (banking, financial services)

• The distinction between goods and services is crucial for determining the applicable GST rate and procedures.
• The supply concept is central to GST. GST applies on every "supply," which includes sale, barter, exchange, lease, license, etc. of goods or services.

4. Time of supply of goods in case of Voucher.

Ans: 

Time of Supply for Goods with Vouchers

The time of supply for goods purchased using vouchers depends on the type of voucher:

1. Single-purpose Voucher:

• Identifies the specific good(s) to be supplied at the time of issuance.
• Time of Supply: Date of issuing the voucher.

2. Multi-purpose Voucher:

• Allows purchase of various goods within a defined value or category.
• Time of Supply: Date of redeeming the voucher for the specific good(s)

• GST implications like tax rate and filing deadlines depend on the time of supply.
• These are general guidelines, and specific rules or exceptions might apply in certain cases. It's advisable to consult a tax professional for detailed advice.

5. Casual Taxable Person.

Ans: 

Casual Taxable Person (CTP)

A Casual Taxable Person (CTP) is someone who occasionally supplies taxable goods or services in a state/territory where they don't have a permanent business presence. Here's a quick summary:

• Who is a CTP?

  • A person who occasionally sells taxable goods or services (acting as a principal or agent) in a state/territory different from their main business location.
  • Example: A consultant from Bangalore providing services in Hyderabad (where they have no office).

• Registration Requirement

  • CTPs (except for specific handicraft suppliers) need to register for GST before making the supply.
  • There's no minimum threshold for registration unlike regular businesses.

• Tax Payment

  • CTPs need to deposit an estimated GST amount in advance for the period of registration.

• Returns

  • CTPs have to file monthly GST returns.