Question 1

Prithviraj Pvt. Ltd., a registered supplier, is engaged in manufacturing heavy steel fabrication machine. The details pertaining to pricing of each such machine are as follows:
(i) Price of the machine (exclusive of taxes and discounts): ₹5,50,000
(ii) Part fitted in the machine at the premises of the recipient: ₹20,000 [Amount paid by recipient directly to the supplier; however, it was Prithviraj Pvt. Ltd.'s liability to pay the said amount.]
(iii) Installation and testing charges at the premises of the recipient: ₹25,000
(iv) Subsidy received from Shri Ram Trust: ₹50,000 [Subsidy is directly linked to the price of the machine]

Items in points (ii) to (iv) have been excluded while arriving at the price in point (i). The contract includes installation and testing of machine at the recipie…

Accepted Answer

**Computation of Net GST Payable by Prithviraj Pvt. Ltd. for July**

**Step 1 – Value of Supply per Machine (Section 15 of the CGST Act, 2017)**

The value of supply is determined under Section 15(1) as the transaction value. Adjustments are made as follows:

- **Base price:** ₹5,50,000
- **Part fitted at recipient's premises – ₹20,000 INCLUDED:** Under Section 15(2)(b), any amount that the supplier is liable to pay but which has been incurred by the recipient is includible in the value of supply.
- **Installation and testing charges – ₹25,000 INCLUDED:** Under Section 15(2)(c), incidental expenses including any amount charged for anything done at the time of or before delivery of goods are part of the value. Since installation is contractually part of the supply, it is includible.
- **Subsidy from Shri Ram Trust – ₹50,000 INCLUDED:** Under Section 15(2)(e), subsidies directly linked to the price are includible in value **except** subsidies given by Central/State Government. Since Shri Ram Trust is a private/non-government entity, this subsidy is added to the value.

**Value per machine = ₹5,50,000 + ₹20,000 + ₹25,000 + ₹50,000 = ₹6,45,000**

**Value for 10 machines = ₹6,45,000 × 10 = ₹64,50,000**

Output CGST @ 9% = ₹5,80,500; Output SGST @ 9% = ₹5,80,500

**Step 2 – Input Tax Credit (ITC) Eligibility (Section 16 & Section 17(5) of CGST Act, 2017)**

**(1) Raw material – ₹10,00,000 (to be received in September): ITC = NIL.** One of the mandatory conditions under Section 16(2…

Question 2

State with reasons, whether GST is payable in the following independent cases:

Accepted Answer

**Part (i): Services to recognised sports body as selector of national team**

GST is NOT payable.

Services provided to a **recognised sports body** by way of coaching, conducting sports events, selection of players, and related services are **exempt from GST** under the CGST Act, 2017. Since the sports body is explicitly stated as 'recognised' in the question, it satisfies the conditions for exemption. The services relating to selection of the national team fall squarely within the ambit of exempted services provided to recognised sports bodies. Consequently, no GST is chargeable on such services.

**Part (ii): Services provided by metered cab through electronic commerce operator**

GST IS payable at **5%**.

Services provided by way of **transportation of passengers** are subject to GST at the rate of 5% as specified in Schedule II of the CGST Act, 2017. The provision of metered cab transportation through an electronic commerce operator (ECO) does not exempt the service from GST. While the ECO is responsible for GST compliance and collection, this does not alter the taxability of the underlying transportation service. Whether provided directly or through an ECO platform, metered cab services remain taxable at 5%. The digital platform is merely the medium of service delivery and does not change the tax treatment of the service.

Question 3

Swaminathan started the business of supplying shoes in the State of Kerala from 1st April. He makes only intra-State supplies. His turnover for April–June quarter was ₹20 lakh and for July–September quarter was ₹100 lakh. Further, one-fourth of his total turnover in each of the quarters was exempt from GST. Being eligible for composition scheme, Swaminathan got himself registered under the composition scheme with effect from 1st July. Compute the tax payable by Swaminathan under composition scheme assuming that he is a manufacturer. Will your answer be different if Swaminathan is a trader?

Accepted Answer

**Applicable Period under Composition Scheme:** Swaminathan opted for the composition scheme with effect from 1st July. Therefore, the April–June quarter (₹20 lakh turnover) falls outside the composition scheme and is not considered for this computation. Tax under the composition scheme is computed only for the **July–September quarter** (₹100 lakh turnover).

**Exempt and Taxable Turnover — July–September Quarter:**
Total turnover = ₹100 lakh. One-fourth is exempt from GST = ₹25 lakh. Therefore, **taxable turnover = ₹75 lakh**.

**Rates under Composition Scheme [Section 10 of the CGST Act, 2017 read with Rule 7 of the CGST Rules, 2017]:**
(i) **Manufacturer** — Tax is levied @ 1% (0.5% CGST + 0.5% SGST) on the **turnover in the State**, which includes both taxable and exempt supplies.
(ii) **Trader** — Tax is levied @ 1% (0.5% CGST + 0.5% SGST) on the **taxable turnover in the State**, which excludes exempt supplies.

**Tax Payable if Swaminathan is a Manufacturer:**
Tax = 1% × ₹100 lakh = **₹1,00,000** (₹50,000 CGST + ₹50,000 SGST)

**Will the answer differ if Swaminathan is a Trader?**
Yes. For a trader, tax under composition scheme is payable only on taxable turnover (exempt supplies are excluded from the tax base).
Tax = 1% × ₹75 lakh = **₹75,000** (₹37,500 CGST + ₹37,500 SGST)

**Conclusion:** The tax liability for a manufacturer (₹1,00,000) is higher than that of a trader (₹75,000) because the tax base for a manufacturer includes exempt supplies, while for a trader it …

Question 4

Examine whether the supplier of goods is liable to get registered in the following independent cases:

Accepted Answer

The liability to obtain GST registration is governed by **Section 22 of the Central Goods and Services Tax (CGST) Act, 2017**, read with the relevant notifications. A supplier becomes liable when his **aggregate turnover** in a financial year exceeds the prescribed threshold. Importantly, **aggregate turnover is computed on an all-India PAN basis**, aggregating supplies across all states.

For **exclusive suppliers of goods**, the threshold is **₹40 lakh** for normal states and **₹20 lakh** for most special category states. Certain north-eastern special category states — namely **Manipur, Mizoram, Nagaland, and Tripura** — have opted for a still lower threshold of **₹10 lakh**.

**(i) Aryabhatt — Assam and Manipur:**

Aryabhatt operates showrooms in two states. His **aggregate turnover = ₹12 lakh (Assam) + ₹11 lakh (Manipur) = ₹23 lakh** (computed on all-India basis as per the definition under Section 2(6) of the CGST Act). Since he has a business establishment in each state, he requires a **separate registration in each state** under Section 22.

- **Assam** is a special category state with a threshold of **₹20 lakh** for goods. His aggregate turnover of ₹23 lakh **exceeds ₹20 lakh** → **Liable to register in Assam**.
- **Manipur** is a special category state that has opted for the **₹10 lakh threshold**. His aggregate turnover of ₹23 lakh **exceeds ₹10 lakh** → **Liable to register in Manipur**.

**Conclusion:** Aryabhatt is liable to obtain GST registration in **both Assam…

Question 5

Manmohan Textiles has to send cloth for dyeing to its job-worker. It wishes to know whether it needs to issue a tax invoice at the time of sending the goods to job-worker. You are required to advise it with reference to the provisions of the CGST Act.

Accepted Answer

Manmohan Textiles is **not required** to issue a tax invoice at the time of sending cloth to the job-worker. Instead, it must issue a **delivery challan**.

**Reason for Non-Issuance of Tax Invoice:**

Under Section 2(47) of the CGST Act, 2017, a **supply** is defined as a transaction in goods or services involving transfer of ownership or possession in exchange for consideration. When goods are sent to a job-worker for processing (dyeing), no transfer of property in the goods occurs at this stage. The goods remain the property of Manmohan Textiles and are sent merely for processing. Consequently, no supply takes place, and therefore no tax invoice is required. Section 143(1) of the CGST Act mandates issuance of tax invoice only when a supply is made.

**Delivery Challan Requirement:**

Rule 55 of the CGST Rules, 2017 specifically prescribes that when a principal sends goods to a job-worker, a **delivery challan** (and not a tax invoice) must be issued. The delivery challan should contain prescribed details such as the description and value of goods, GST registration numbers of both principal and job-worker, and date of dispatch. The delivery challan is issued in duplicate—one copy accompanies the goods and the other is retained by the principal.

**Definition of Job Work:**

As per Section 2(63) of the CGST Act, 2017, job work is any treatment or process undertaken by one person on goods belonging to another. The dyeing of cloth fits squarely within this definition. Job work…

Question 6

Enumerate the conditions necessary for availing ITC under GST law.

Accepted Answer

**Conditions Necessary for Availing Input Tax Credit (ITC) under GST Law**

Section 16 of the Central Goods and Services Tax Act, 2017 lays down the conditions that a registered person must fulfill to avail Input Tax Credit (ITC).

**1. Possession of a Valid Tax Invoice or Prescribed Document [Section 16(2)(a)]**
The registered person must possess a tax invoice or debit note issued by a registered supplier, or such other tax-paying document as may be prescribed (e.g., bill of entry for imports). The document must contain all particulars as required under Section 31 of the CGST Act, 2017.

**2. Receipt of Goods or Services [Section 16(2)(b)]**
The registered person must have actually received the goods or services or both. ITC on goods sent directly to a third party on the direction of the registered person (bill-to ship-to arrangement) is deemed to be received by the registered person who has caused the supply. In case of goods received in lots or instalments, ITC is available only upon receipt of the last lot or instalment.

**3. Tax Charged has been Paid to the Government [Section 16(2)(c)]**
The tax charged in respect of such supply must have been actually paid to the Government, either in cash or through utilisation of ITC. If the supplier has not remitted the tax to the Government, the recipient's ITC is liable to be reversed.

**4. Filing of Return [Section 16(2)(d)]**
The registered person must have furnished the return under Section 39 of the CGST Act, 2017 (i.e., GST…

Question 7

Elaborate the provisions relating to annual return contained under section 44 of the CGST Act, 2017.

Accepted Answer

**Provisions Relating to Annual Return under Section 44 of the CGST Act, 2017**

**Obligation to File Annual Return:**
Every **registered person** shall furnish an annual return for every financial year **electronically** in **Form GSTR-9**, on or before the **31st December** following the end of each financial year. The return must be filed through the common portal.

**Persons NOT Required to File Annual Return:**
The following categories of registered persons are exempt from filing GSTR-9:
- **Input Service Distributors (ISD)**
- Persons paying tax under **Section 51** (Tax Deducted at Source)
- Persons paying tax under **Section 52** (Tax Collected at Source)
- **Casual Taxable Persons**
- **Non-resident Taxable Persons**

Additionally, the **Commissioner** may, on the recommendations of the **GST Council**, by notification, **exempt any class of registered persons** from filing the annual return, subject to such conditions and restrictions as may be specified therein.

**Self-Certified Reconciliation Statement (GSTR-9C):**
A registered person whose **aggregate turnover during a financial year exceeds ₹5 crore** shall also furnish a **self-certified reconciliation statement** reconciling the value of supplies declared in the annual return (GSTR-9) with the figures as per the **audited annual financial statement** for every financial year in **Form GSTR-9C**.

It is important to note that prior to the **Finance Act, 2021**, the reconciliation statement (GSTR-9C) was requir…

Question 8

Determine the nature of supply and the applicable rate of GST for the packages supplied by Purvi to Bindusar Public School.

Accepted Answer

**Answer: (B)**

The supply of gift packages consisting of fountain pen, calculator and tape dispenser to Bindusar Public School constitutes a **mixed supply** under Section 2(74) of the Central Goods and Services Tax Act, 2017. A mixed supply means two or more individual supplies made in conjunction with each other by a taxable person for a single price, where such supply does not constitute a composite supply.

A **composite supply** under Section 2(30) requires a principal supply to which all other supplies are naturally bundled and supplied in conjunction in the ordinary course of business. In this case, a fountain pen, calculator, and tape dispenser are independent goods with no natural bundling — none is ancillary to the other, and they are not naturally supplied together in the ordinary course of business. They are simply packaged together as a gift package at a single price.

Since this is a **mixed supply**, as per Section 8(b) of the CGST Act 2017, it shall be treated as supply of that particular supply which attracts the **highest rate of tax**. Among the three items — fountain pen (5%), calculator (12%), and tape dispenser (18%) — the highest rate is **18%**. Therefore, the entire package is taxable at **18% GST**.

Question 9

Out of all the payments received by Purvi in the month of October, value of exempt supply amounts to _____.

Accepted Answer

**Answer: (B) ₹70,000**

From the payments received by Purvi in October, the exempt supply status of each is determined as follows:

**Western music concert (₹1,60,000) — Taxable:** Under Notification No. 12/2017-Central Tax (Rate), the exemption for musical performances is restricted to **folk or classical art forms** of music. A *western* music concert does not qualify as a folk or classical art form; hence, the performance fees of ₹1,60,000 are **taxable** under GST.

**Renting of space for Textile Emporium (₹50,000) — Taxable:** Renting of immovable property for **commercial purposes** is a taxable supply under the CGST Act, 2017. The exemption under Notification No. 12/2017-CT(Rate) is available only for renting of residential dwelling for use as *residence*. Since the space is rented for a Textile Emporium (commercial use), ₹50,000 is **taxable**.

**Supply of farm labour (₹70,000) — Exempt:** As per Entry 54 of Notification No. 12/2017-Central Tax (Rate), services by way of **supply of farm labour** are exempt from GST. Therefore, ₹70,000 is an **exempt supply**.

Accordingly, the **value of exempt supply = ₹70,000**.

Question 10

The value of supply of machinery supplied by Purvi is ________.

Accepted Answer

**Answer: (B) ₹47,500**

The value of supply is determined under **Section 15 of the CGST Act, 2017**.

**Inclusion of TCS under Income Tax Act:** As per **Section 15(2)(a) of the CGST Act, 2017**, the value of supply shall include any taxes, duties, cesses, fees and charges levied under any law other than GST laws, if charged separately by the supplier. TCS of ₹2,500 collected under the Income Tax Act, 1961 is a tax levied under another law — hence it is **includible** in the value of supply.

**Exclusion of Subsidy:** As per **Section 15(2)(e) of the CGST Act, 2017**, only subsidies **directly linked to the price** of supply (other than Central/State Government subsidies) are includible. The subsidy of ₹50,000 from Green Foundation Pvt. Ltd. is linked to **energy saved during the month**, not directly to the price of the machinery. Since it is **not linked to the price**, it is **excluded** from the value of supply.

**Value of supply of machinery = ₹45,000 + ₹2,500 = ₹47,500**

Question 11

Medhavi Industries, engaged in manufacturing of taxable goods, purchased cars for official use of its employees. Amount of GST paid on purchase of the cars amounted to ₹2,80,000. It also availed outdoor catering services for a marketing event organised for its prospective customers. Amount of GST paid on said services was ₹18,000. Compute the total amount of ITC that can be claimed by Medhavi Industries.

Accepted Answer

**Answer: (D)**

Medhavi Industries cannot claim any ITC on either purchase. **Cars for employee use** are covered under Section 17(5)(h) of the CGST Act, 2017, which specifically denies ITC on motor vehicles for use of employees. While the cars are purchased for 'official use,' they are being provided for employee transportation, which falls squarely within the blocked category. The GST paid of ₹2,80,000 is therefore not eligible for ITC.

**Outdoor catering services** are explicitly listed as ineligible items under Section 17(5) of the CGST Act, 2017. ITC on outdoor catering is blocked regardless of the purpose (whether for prospective customer events, employee events, or marketing activities). The GST paid of ₹18,000 cannot be claimed as ITC.

Therefore, **total ITC claimable = ₹0 (Nil)**. Both items are covered under standard ITC-blocking provisions in GST law.

Particulars	CGST (₹)	SGST (₹)	Total (₹)
Output tax on 10 machines	5,80,500	5,80,500	11,61,000
Less: ITC available	(85,500)	(85,500)	(1,71,000)
Net GST payable in cash	4,95,000	4,95,000	9,90,000

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