This Question Paper is copyrighted property of AIR1CA Career Institute.

Sharing and Circulating it without

permission is punishable offence.

CA FINAL (Jan 2026)

GROUP II – PAPER 5
INDIRECT TAX LAWS
(Series 1)
Time Allowed: - 3 Hours Maximum Marks: 100

This question paper comprises two parts, Part I and Part II.
Part I comprises MCQ & Part II comprises questions which require descriptive answers.

PART – I (MCQs)
All MCQs are compulsory

Question no. 1-15 carry 2 marks each

Case Study 1
Zoom Air is an airline company operating domestic as well as international flights. The head office of
Zoom Air is in Mumbai and the company has also obtained registration under GST in each of the States
from where the flight operations are being conducted.
During the month of January, following transactions were undertaken by it:
(i) Zoom Air sold air tickets worth ₹ 5,00,000 during the month from its head office and the breakup
of air fare is as follows:
Basic fare excluding GST – ₹ 4,00,000
Passenger Service Fee (PSF) and User Development Fee (UDF) [inclusive of GST] – ₹ 1,00,000
PSF and UDF are remitted by Zoom Air to the airport authority. Further, the amount of PSF and
UDF is separately disclosed in the invoice issued to customers by Zoom Air along with applicable
GST. The airport authority pays an amount of 5% of PSF and UDF (inclusive of GST amount)
collected as collection charges to Zoom Air on which GST is applicable. There is no levy of PSF and
UDF on the tickets booked by Zoom Air for its own crew or other employees.
(ii) Zoom Air (Head Office) has collaborated with Supertrip India, an online travel portal, providing
services to the customers by way of booking air tickets through its electronic commerce platform
and registered under GST in the State of Maharashtra. During the month, Supertrip India booked
tickets for ₹ 2,00,000 (base fare excluding GST, PSF and UDF) for the customers of Zoom Air. The
amount was remitted by Supertrip India to Zoom Air after adjusting the amount of tax collected
at source under section 52. In addition to the aforesaid amount, Supertrip India charged
commission from Zoom Air at the rate of 5% of the base fare of air tickets booked.
(iii) Zoom Air (Head Office) charged 100% cancellation fee from the customers for bookings made in
prior months. The amount of cancellation fee charged was ₹ 1,00,000 inclusive of GST. Instead of
actually collecting the cancellation fee from the customers, such amount was adjusted against the
booking amount and GST discharged at the time of initial bookings. However, the PSF and UDF

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 1
 amounting to ₹ 10,000 (inclusive of GST) charged from the customers against such bookings
were refunded.
(iv) Zoom Air (Head Office) provided gifts in the form of air tickets to 10 of its employees based at its
head office for an amount equivalent to ₹ 60,000 each. No amount was recovered from the
employees for such air tickets.
(v) Zoom Air has a corporate tie-up with Welcome Hotel, located in Rajasthan, for stay of its crew
members. For January, the hotel issued an invoice of ₹ 5,00,000 in the name of Zoom Air, Head
office, Mumbai.
(vi) Doodle Inc. owns online space for advertisement on internet. Doodle Inc. has agreed to sell such
online advertising space to Haryana office of Zoom Air for an amount of ₹ 8,00,000 per month.
Haryana office of Zoom Air sells such advertising space to its customers in India on its own.
(vii) Haryana office of Zoom Air has provided services by way of sale of online advertisement space to
Amazing Pvt. Ltd. (a company registered in the State of Haryana) for promotion of Amazing Pvt.
Ltd.’s products. The amount charged for such service by Haryana office of Zoom Air is ₹ 5,00,000.
(viii) All the amounts given above are exclusive of GST unless otherwise provided. The opening balance
of Electronic Credit Ledger of Zoom Air and Supertrip India for the relevant tax period is nil.
Subject to the information given above, assume that all the other conditions necessary for
availing ITC have been fulfilled. Assume that there is no other outward or inward supply
transaction apart from aforesaid transactions, in the month of January.
(ix) GST is applicable on all inward and outward supplies unless otherwise specified @ 18%. (Ignore
CGST, SGST and IGST bifurcation for the sake of simplicity.)
(x) In case of cancellation of tickets, the airport authority and Zoom Air had an agreement that PSF
and UDF related adjustment shall be finalized at the end of financial year, i.e., during the month of
March. Further, separate GST invoice shall be issued to carry out such adjustment in books of
accounts.
Based on the facts of the case scenario given above, choose the most appropriate answer to Q. Nos. 1 to
5 below:
You are required to answer the following:
1. The gross GST liability of Mumbai Head Office of Zoom Air for the month of January is:
(a) 1,08,000
(b) 72,000
(c) 1,80,000
(d) 2,16,900
2. Determine all kinds of credits available to Mumbai Head Office of Zoom Air for setting off
against its GST liability for the month of January is:
(a) 2,800
(b) 93,800
(c) 3,800
(d) 96,800
3. Assuming that the customers, in point (i) of the case scenario above, are registered
customers and all other conditions for availment of input tax credit are complied with, the
amount of input tax credit available to such customers would be:
(a) 90,000

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 2
 (b) 72,000
(c) 87,254
(d) 76,272
4. Choose the most appropriate answer in relation to the transaction between Haryana office
of Zoom Air and Amazing Pvt. Ltd.:
(a) The service is in the nature of online information and database access or retrieval services
and Amazing Pvt. Ltd. is liable to pay IGST of ₹ 90,000.
(b) The sale of advertisement space is deemed sale of services as per Schedule II of CGST Act,
2017 and liable to CGST of ₹ 45,000 and SGST of ₹ 45,000.
(c) Zoom Air is required to pay IGST of ₹ 90,000 and Amazing Pvt. Ltd. is required to collect
tax at source on consideration paid to Zoom Air.
(d) Zoom Air is required to pay CGST of ₹ 45,000 and SGST of ₹ 45,000 and full credit shall be
allowed to Amazing Pvt. Ltd.
5. Supertrip India purchases 1,000 air tickets in bulk for an amount of ₹ 1,000 per ticket
from Zoom Air and made these tickets available for sale at its electronic portal to the
customers on its own account. Supertrip India was able to sell only 800 air tickets for
which the total amount collected from customers was ₹ 15,00,000. As per the agreement,
the remaining 200 air tickets purchased by Supertrip India from Zoom Air lapsed, and
amount was forfeited by Zoom Air. Choose the most appropriate statement.
(a) Supertrip India shall be liable to pay net GST of ₹ 90,000 and collect TCS of ₹ 10,000.
(b) Supertrip India is acting as an agent of Zoom Air and shall be liable to pay net GST of ₹
1,26,000 and no GST will be payable by Zoom Air separately.
(c) Supertrip India shall be liable to pay net GST of ₹ 90,000 and Zoom Air shall be liable to
pay GST of ₹ 1,80,000.
(d) Supertrip India shall be liable to pay net GST of ₹ 1,57,500 and Zoom Air shall be liable to
pay GST of ₹ 1,80,000.
6. Please select the correct statement specifically in relation to sale of online advertisement
space service provided by Doodle Inc. to Haryana office of Zoom Air:
(a) Doodle Inc is providing online information and database access or retrieval service and is
thus, required to register in India under GST and discharge GST on forward charge basis.
(b) Doodle Inc is providing online information and database access or retrieval service
electronically and place of supply in such case is the location of supplier which is outside
taxable territory in present scenario. Therefore, no GST is payable on such services.
(c) Doodle Inc. is providing online information and database access or retrieval service and tax
on the same is to be paid by Haryana office of Zoom Air on reverse charge basis.
(d) Doodle Inc. is providing online information and database access or retrieval service and tax
on same is to be paid by Haryana office of Zoom Air in capacity of an agent of Doodle Inc.

Case Study 2
Varun Associates is a supplier registered under GST in Delhi. It is engaged in manufacture of Product A
and Product B. Product A is a taxable product whereas Product B is an exempt product. It is also
engaged in manufacture of Product C, a taxable product, which is exported by it to other countries
without payment of tax under Letter of Undertaking. Its aggregate turnover during the preceding
financial year was ₹ 4.2 crore

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 3
It has furnished below information regarding purchase of machineries for his manufacturing business:
Date of purchase Machinery Amount (₹)
(exclusive of
taxes)
1st April, 2021 Machinery X 10,00,000 Exclusively used for manufacturing Product A
1st October, 2022 Machinery Y 15,00,000 Exclusively used for manufacturing Product B
1st May, 2023 Machinery Z 20,00,000 Exclusively used for zero-rated supply of
Product C
From 1st April, 2024, Varun Associates started using Machinery Y for manufacturing Product A as well.
All the purchases and sales are inter-State and rate of IGST applicable on all purchases and sales is 18%.
Subject to the information given above, assume that all the other conditions necessary for availing ITC
have been fulfilled and Varun Associates has not claimed depreciation on the GST paid on the purchase
of the machinery.
Based on the facts of the case scenario given above, choose the most appropriate answer to Q. Nos. 7 to
12 below:
You are required to answer the following:
7. Determine the amount of input tax which has been credited to electronic credit ledger
during the financial year 2021-22.
(a) ₹ 1,80,000
(b) ₹ 3,60,000
(c) ₹ 8,10,000
(d) ₹ 5,40,000
8. Determine the amount of GST, paid on purchase of a machinery, which has not been
credited to electronic credit ledger during the financial years 2021-22, 2022-23 and 2023-
24.
(a) ₹ 6,30,000
(b) ₹ 3,60,000
(c) ₹ 8,00,000
(d) ₹ 2,70,000
9. Amount of ineligible ITC in respect of Machinery Y, i.e. ‘Tie’, as per rule 43 of the CGST
Rules, 2017, to be added to the output tax liability is
(a) ₹ 4,81,000
(b) ₹ 1,89,000
(c) ₹ 81,000
(d) ₹ 72,000
10. What is the time-period up to which common credit needs to be computed for Machinery
Y?
(a) 31st March, 2029
(b) 30th September, 2027
(c) 31st March, 2031
(d) 30th September, 2031
11. The amount of common credit in respect of Machinery Y is
MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)
AIR1CA Career Institute (ACI)
Page 4
 (a) ₹ 2,02,500
(b) ₹ 2,70,000
(c) ₹ 6,30,000
(d) ₹ 4,90,500
12. Assuming that Varun Associates has an SEZ unit also located in Uttar Pradesh apart from
the regular Domestic Tariff Area (DTA) unit located in Delhi (both having same PAN).
Assume additional turnover of it’s SEZ unit is ₹ 2 crore in the preceding financial year in
addition to the aggregate turnover of DTA unit of Delhi of ₹ 4.2 crore of the preceding
financial year. Which of the following statements is correct in respect of e-invoicing
requirements?
(a) E-invoicing is not applicable to both SEZ and DTA units.
(b) E-invoicing is applicable to both SEZ and DTA units.
(c) E-invoicing is applicable to SEZ unit and DTA unit is exempt from e -invoicing.
(d) E-invoicing is applicable to DTA unit and SEZ unit is exempt from e -invoicing.

Independent MCQs

You are required to answer the following:

13. In respect of a consignment supplied on 20th August, provisional assessment was resorted
to by a person who files return on monthly basis. The assessment was finalized on 20th
November and the taxpayer became liable to pay differential IGST of ` 10,000. The
taxpayer paid this amount on 20th December. The number of days for which the taxpayer
is liable to pay interest are
(a) 122 Days
(b) 92 Days
(c) 91 Days
(d) 30 Days
14. XYZ Ltd. sent certain goods abroad for repairs. XYZ Ltd. has been advised by their
consultants that they will have to pay customs duty (i.e. basic customs duty, IGST & GST
compensation cess) only on fair cost of repairs, cost of materials used in repairs (whether
such costs are actually incurred or not), freight and insurance charges, both ways, on re-
import of exported goods provided they fulfill condition:
(a) The re-importation is done within 3 years from date of export or, if time is extended,
within 5 years.
(b) The re-importation is done within 5 years from date of export or, if time is extended,
within 7 years.
(c) The re-importation is done within 1 years from date of export or, if time is extended,
within 2 years.
(d) None of the above condition is applicable
15. Under the customs law, electric shaving machine is classifiable under following:
8510: Shavers and hair clippers with self-contained electric motors
8509: Electro-mechanical domestic appliances with self-contained electric motor
As per rules of classification, electric shaving machine should be classifiable under:
MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)
AIR1CA Career Institute (ACI)
Page 5
(a) 8510
(b) 8509
(c) More information is needed
(d) Can be classified under both

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 6
 PART – II (Descriptive Questions)
This part comprises 6 questions. Question No. 1 is compulsory. Attempt any
4 questions out of the remaining 5 questions.

Question 1 (14 Marks)

Skylark Pvt. Ltd., Noida (Uttar Pradesh) is engaged in various kinds of commercial activities. It
manufactures taxable goods as also provides certain services. The company has branch office in New
Delhi. The Head office at Noida and the branch office in New Delhi are registered under GST. The
branch office at New Delhi is eligible for full input tax credit.
The company has reported a total turnover of ₹ 256 crore (exclusive of GST) for the month of August
20XX. The following information is provided by the company in relation to such turnover:
(i) The turnover includes ₹ 45 crore from sale of securities which were purchased for ₹ 30 crore in
the month of January last year.
(ii) The company supplied goods worth ₹ 50 crore to ABC Ltd. in UK under a letter of undertaking
(LUT). The total export proceeds are received in the month of August 20XX itself; ₹ 30 crore in
foreign currency and balance ₹ 20 crore in Indian rupees.
(iii) The company provided consulting services to Sherpa & Sons in Nepal for ₹ 30 crore under a LUT.
The entire consideration is received in Indian rupees in the month of August 20XX itself, with the
permission of RBI.
(iv) The turnover includes supply of goods worth ₹ 10 crore to Shanghai Jianguo Trading Company
Ltd., a company based in China. As per the sale contract, the goods were to be assembled at
Shanghai Jianguo Trading Company Ltd.’s office in Gurugram, Haryana. The payment of the goods
is received in convertible foreign exchange in the month of August 20XX itself.
(v) Goods worth ₹ 20 crore are supplied under a LUT to DEF Pvt. Ltd. located in a SEZ in the State of
Uttar Pradesh.
(vi) Goods worth ₹ 40 lakh were being procured from a vendor in Japan. While the goods were in
transit, the company secured an order for the said goods for ₹ 50 lakh from a buyer in Thailand.
Thus, the goods were directly sent to Thailand without entering India.
(vii) The company owns three immovable properties in Noida. The first building is let out for running
a printing press at ₹ 10 lakh per month. The second building is let out for residential purpose to
an unregistered person at ₹ 5 lakh per month. The third building is let out to a Cold Storage
operator at ₹ 5 lakh per month. The cold storage operator sub-lets the building as a warehouse to
store potatoes.
(viii) The remaining turnover comprised of taxable goods sold within the State and outside the State in
the ratio of 3:2.
Total turnover of ₹ 256 crore includes the turnover referred to in points (i) to (vii) above. In addition to
above –
(i) the company transferred its stock (taxable goods) from Noida to Delhi branch without any
consideration; the value declared in the invoice is ₹ 4.5 crore (exclusive of GST). The cost of
production of such goods is ₹ 10 crore. Such stock is sold to independent buyers at ₹ 15 crore
(exclusive of GST).
(ii) Company had sent goods worth ₹ 12 crore (exclusive of GST) to M/s Sharma Traders in Haryana
on approval basis on 15th January, 20XX, 15th February 20XX & 15th March 20XX (₹ 4 crore each
month). Goods sent during all the three months are approved in month of September 20XX.

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 7
Compute the GST liability [CGST & SGST or IGST, as the case may be] of Skylark Pvt. Ltd., Noida for the
month of August 20XX. Make suitable assumptions wherever required.
Assume the rates of taxes to be as under:

CGST SGST IGST

Goods 6% 6% 12%
Services 9% 9% 18%

Question 2A (5 Marks)
Determine whether GST is payable in respect of each of the following independent services provided by
the registered persons:
(1) DPS school procured papers for printing the question papers for conducting exams.
(2) Bus fees collected from students by Rosemary College providing education as part of a
curriculum for obtaining a qualification recognised by Indian law - ₹ 2,500 per month.
(3) Security services provided by M/s. Clean Well to Himavarsha Montessori school, a play school, for
security at annual function conducted at a banquet hall in neighborhood - ₹ 25,000 per month.
(4) Air ambulance services to transport critically ill patients from distant locations to Swasthya
Nursing Home.
(5) Mr. Ashok rented his residential flat to his friend Dr. Kishore, who is not registered under GST for
use as his medical clinic at a monthly rent of 15000.

Question 2B (5 Marks)
B & D Company, a partnership firm, in Dehradun, Uttarakhand is a wholesaler of a taxable product ‘P’
and product ‘Q’ exempt by way of a notification. The firm supplies products only in the Uttarakhand. All
the procurements (both goods and services) of the firm are from suppliers registered under regular
scheme in the State of Uttarakhand. The firm pays tax under composition scheme.
B & D Company has furnished the following details with respect to its turnover (exclusive of taxes)

Particulars Turnover for the quarter ended 30th Turnover for the quarter ended 30th
June (₹) September (₹)
‘P’ 60,00,000 50,00,000
‘Q’ 13,65,000 21,00,000
The extract of the only bill book maintained by the firm showed the following details-
Bill No. Date Value of products (exclusive of taxes)
‘P’ (₹) ‘Q’ (₹) Total (₹)
1106 1st July 1,50,000 3,000 1,53,000
1107 2nd July 1,36,000 2,250 1,38,250
Bill No. Date Value of products (exclusive of taxes)
‘P’ (₹) ‘Q’ (₹) Total (₹)
2208 1st October 67,000 39,250 1,06,250
2309 3rd October 5,58,750 33,750 5,92,500

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 8
Further, B & D Company paid freight of ₹ 1,40,000 to Goods Transport Agency during the period April
to October and 1,60,000 to Arun Proprietors for providing security personal for safety of stock lying in
godowns for period April to July. Assume equal amount of freight and security charges is paid each
month on the 10th day of each month. Also, assume that GTA has not opted to pay tax under forward
charge.
All the above amounts are exclusive of taxes, wherever applicable.
Compute the GST liability (ignoring ITC provisions) of B & D Company for the period April to October
under composition scheme under sub-sections (1) and (2) of section 10 if any showing calculations for
each quarter separately.
Note: Make suitable assumptions wherever required. Rate of CGST and SGST is 18% (except on service
of transportation of goods by GTA is 2.5% each).

Question 2C (4 Marks)
Product 'Vertigo' was imported by Mr. Mrinal Sen by air from Singapore to Hyderabad. The details of
the import transaction are as under:
Particulars Euro
Price of 'Vertigo' at Singapore exporter's factory 7,500
Freight from factory of the exporter to load airport (Singapore airport) 300
Loading and handling charges at the local airport 200
Air freight from said airport to Hyderabad airport 1,350
Insurance charges 1,400
Purchase commission 200

Even though the bill of entry was presented on 20-9-2018, the aircraft, having been diverted to another
foreign airport due to technical reasons, landed at the Hyderabad airport only on 21-9-2018.
The other details furnished by the importer are as under:
Particulars 20.09.2018 21.09.2018
Rate of basic customs duty 10% 12%
Exchange rate notified by CBEC per € ₹ 80 ₹ 79
Exchange rate prescribed by RBI per € ₹ 79.50 ₹ 80.50
Integrated tax leviable under Section 3(7) of the Customs Tariff Act, 1975 6% 12%
Based on the above date, you are required to calculate the following:
(i) Assessable value of the product for the purpose of levying customs duty.
(ii) Customs duty and tax payable.

Question 3A (5 Marks)
Mr. Happy has a huge residential property located at a prime location in Mumbai, Maharashtra. He has
let out the 1st and 2nd floor to Mr. Peace for commercial purposes in April. Mr. Peace surrenders his
tenancy rights to Mr. Serene for a tenancy premium of 10,00,000 on 1st June. Mr. Serene has also paid
the applicable stamp duty and registration charges on transfer of tenancy rights. Moreover, Mr. Serene
has agreed to pay a monthly rent of 1,00,000 to Mr. Happy (registered under GST) from June.
Determine the taxability of the transaction(s) involved in the given case, for the month of June.

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 9
Question 3B (5 Marks)
Determine place of supply along with reasons in the following cases:
(i) Mr. X, an architect (Kolkata), provides interior decorator services to Mr. Y of New York (USA) in
relation to his immovable property located in New Delhi.
(ii) ABC Ltd. of Patna imported certain goods from XYZ Inc. of USA. The goods were imported
through vessel and delivery of goods was taken at Kolkata, whereafter the movement terminates
and the goods are stored.
(iii) Mr. Jigar, an unregistered person based in New Delhi hires a yacht from a company based in
London, UK for 29 days.
(iv) Mr. X, a registered person in Ranchi, Jharkhand, buys shares from a broker in Patna on NSE,
Mumbai. Determine the place of supply of brokerage service.
(v) Mr. Sahukaar (New Delhi) boards the New Delhi-Kota train at New Delhi. Mr. Sahukaar sells the
goods taken on board by him (at New Delhi), in the train, at Jaipur during the journey.

Question 3C (4 Marks)
Mr. Noddy [Minor] and a citizen of Australia, is on a solo trip to India for 1 month to meet his Indian
friend residing in Mumbai. He carries with him following articles as part of baggage:
Particulars Value in ₹
Used personal effects 80,000
Other articles carried on in person 1,00,000
65 cartridges of fire arms @ ₹ 1,000 per cartridge 65,000
150 gms of tobacco @ ₹ 10 per gram 1,500
Mobile phone 50,000
Travel Souvenir 40,000
One Laptop 75,000
50 cigars of ₹ 100 each 5,000
Used personal effects of his infant child 10,000
With reference to the Baggage rules 2016, indicate the taxability and taxable value in respect of each
item in the table under baggage rules or otherwise. Also calculate customs duty payable on baggage
rounded off to nearest rupee in accordance with law. Ignore agriculture infrastructure and
development cess.

Question 4A (5 Marks)
The following particulars are furnished by Delight Exporters, Karnataka, which is duly registered under
the GST law. The entity has also filed bond/LUT in order to export goods without payment of any taxes.
You are required to calculate the refund amount in respect of input tax credit on inputs and input
services relating to goods exported in the relevant tax period.
S.N. Particulars Value of supply in ₹
1. Turnover - excluding supply of services, but includes domestic exempt 54,00,000
supplies of ₹ 8,00,000. and inward supplies of ₹ 2,00,000
2. Zero-rated supply of goods under bond/LUT 6,00,000

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 10
 3. Export services under bond/LUT 48,00,000
4. Non-zero-rated supply of services 10,00,000
5. Payments received towards zero-rated supply, which includes ₹ 48,00,000
12,00,000 against which services are yet to be supplied.
6. Advance received in the past, against which zero-rated supplies of 14,00,000
services have been made in the current tax period
7. ITC on inputs and input services during the tax period 9,60,000
Further export of goods ‘X’ is also made during the period for ₹ 10,00,000 [In addition to above
information]. Goods “X” is liable for export duty @10%.

Question 4B (5 Marks)
ABC & Associates LLP (ABC), a firm of Chartered Accountants, was empanelled with the Commissioner
of GST for appointment as Special Auditor under section 66. X Ltd., a registered person under GST, was
selected by the Office of the Commissioner for special audit under section 66 for a financial year on
account of irregularities noticed during scrutiny of returns. ABC was nominated by the Office of the
Commissioner for special audit of X Ltd. Assume that the following events unfolded in relation to the
appointment and audit procedure:
1. The appointment of special auditor was based on the undertaking furnished by the firm that the
partners of the firm or any of their relatives are not directly or indirectly related to the auditee.
However, while submitting the declaration in relation to such appointment, if ABC fails to
disclose the fact that spouse of one of the partners of ABC is working under full time employment
as a Head of Tax Department of the auditee i.e. X Ltd., what will be its implications?
2. Material discrepancies in the valuation of stock transfer to related parties by the auditee were
noticed by ABC. If ABC fails to disclose these material discrepancies in the audit report submitted
to the Office of Commissioner, what will be its implications?
3. The input tax credit claim by X Ltd. i.e. the auditee, under Form GST ITC- 01, was certified by one
of the associate firms of ABC in favour of X Ltd. Such certificate was based on incorrect facts and
against the eligibility criteria for input tax credit as per section 18. However, if ABC fails to
exercise the due diligence and the certificate is taken on record by ABC as an audit procedure and
is relied upon at the time of finalization of audit report and submission of findings, what will be
its implications?
4. ABC receives a consideration of ₹ 5 lakh from X Ltd. in the name of special audit conducted, what
will be its implications?

Question 4C (4 Marks)
Supreme Car Decors imported car music systems and GPS devices from Germany. The importer
submits the following issues for your consideration:
(i) 7 music systems were pilfered before unloading and before the proper officer has made an
order for clearance for home consumption.
(ii) 10 GPS devices were pilfered after unloading and before the proper officer has made an order
for clearance for home consumption.
(iii) 30 music systems were damaged after unloading and examination for assessment by the
customs authorities but before actual home clearance.
Supreme Car seeks your expert advice with reason regarding impact on customs duty on said goods.

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 11
Question 5A (5 Marks)
State the prosecution, arrest and bail implications, if any, in respect of the following independent cases
pertaining to Jan 2024:
(i) ‘Ashuram’ fraudulently avails input tax credit of ₹ 200 lakh without any invoice or bill.
However, he is yet to utilize the same.
(ii) ‘Bahubali’ fraudulently avails the refund of tax of ₹ 550 lakh. The said tax has been recovered
from the buyer also.
(iii) ‘Chintamani’ knowingly supplies false information sought by the CGST Officer. The amount of
tax involved is ₹ 250 lakh.
(iv) ‘Deendayal’ collects ₹ 650 lakh as tax in January from its clients but has deposited only ₹ 50 lakh
with the Central Government till date.
Note: Assume that in all above cases, offence, if any, has been committed for the first time.

Question 5B (5 Marks)
Anant & Co. self-assessed its tax liability as ₹ 90,000 (CGST) for the month of April, but failed to make
the payment.
Subsequently the Department initiated penal proceedings against Anant & Co. for recovery of penalty
under section 73 for failure to pay GST and issued show cause notice on 10th August which was
received by Anant & Co. on 14th August.
Anant & Co. deposited the tax along with interest on 25th August and informed the department on the
same day. Department is contending that he is liable to pay a penalty of ₹ 45,000 (i.e. 50% of ₹ 90000).
Examine the correctness of the stand taken by the Department with reference to the provisions of the
CGST Act. Explain the relevant provisions in brief.

Question 5C (4 Marks)
KIP Chemical, Ahmedabad, Gujarat supplies goods to ACCP, Bharuch, situated in Dahez SEZ (Gujarat).
Examine with reference to decided case law, whether such supply is chargeable to export duty under
the provisions of Customs Act, 1962. [No Need to mention the Case Law]

Question 6A (6 Marks)
In an appeal filed with the High Court by Prateek Ltd., on the question whether activity undertaken by
Prateek Ltd. amounts to supply, the appeal was decided in favour of Prateek Ltd. The amount of tax,
interest and penalty involved were IGST of ₹ 1.2 crore, interest of ₹ 60 lakh and penalty of ₹ 50 lakh.
However, Department does not agree with order passed by High Court and contends that said activity
amounts to supply under GST. The Department wants to file an appeal before the Supreme Court
relating to the dispute pertaining to demand of tax, interest and penalty. You are required to examine
whether appeal can be filed by Department in given case. Will your answer change, in case matter is
related to valuation of services instead of determining whether said activity amounts to supply?

Question 6B (4 Marks)
Who is the competent authority to issue Search Warrant under the CGST Act, 2017? What details
should be contained in a Search Warrant?

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 12
 or
Explain in what cases, assessment order passed by proper officer may be withdrawn under CGST Act,
2017?

Question 6C (4 Marks)
Mention the Circumstances where benefits of RoDTEP scheme is not available.

MOCK TEST SERIES – By CA Atul & Ajay Agarwal (AIR-1)

AIR1CA Career Institute (ACI)
Page 13