CA INTER CS EXECUTIVE CMA INTER

PRACTICE
MANUAL GOODS AND
SERVICES TAX
(FOR MAY/JUNE/SEP/DEC 25 & JAN 26)

All questions of ICAI, ICSI,

ICWAI Module
Last 5 years RTPs & MTPs
Past Year QUESTIONS

CA Vivek Gaba
(FCA, CCTP, B.COM)
PREFACE

PREFACE
The book adopts a fresh and new approach to understand and gain in-depth knowledge of the provision of
taxation relating to Income tax Act in an illustrative manner for the students of CA Inter, CS Executive, CMA
Inter and other taxation students. The law stated in the book is as per the Finance Act 2024 and the problems
are solved keeping in mind the amended provision of the act. The objective of the book is to present the law
in simple and easy language so as to make topics student friendly by illustrating provision in graphical and
tabular manner.

The book has been written keeping in view the new syllabus as notified by the ICSI and ICWAI.

KEY FEATURES OF THE BOOK

a) Suitable for detailed discussion and in depth understanding of the topic: The book covers entire syllabus
at a place along with suitable illustration for concepts for better understanding.

b) Includes most important solved problems: The book contains practical question that will help students
in the application of law.

c) All concepts in simple and easy language: All the provisions have been explained in easy language and
also in graphical and tabular manner to make study easy and simple.

I would like to thank GOD for his constant courage, blessing and everything that has been provided by
Almighty to each one of us. I would also like to thank you MY Family and ALL My Teacher's for their constant
support, faith, blessing, encouragement and guidance.

I would like to Special thank my Parents & My Wife for their constant love, support, encouragement, blessing
and for being a big source of inspiration.

I would like to acknowledge the efforts put in by My Friends who have always motivated and inspired me to
do my best and give my maximum in each and every situation.
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PREFACE

Revised Edition

Amended by Finance ACT, 2024

Book Dedicated to -
MY Parents
&
ALL My Students

Source - ICAI, ICSI, ICWAI Module, PYQs , RTPs and MTPs.

"Your Taxation Paper is MY Responsibility "

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 INDEX

INDEX

INTRODUCTION TO GST 1.1 – 1.6

CHARGE OF GST 2.1 – 2.3

SUPPLY UNDER GST 3.1 – 3.17

COMPOSITION SCHEME 4.1 – 4.7

TIME OF SUPPLY 5.1 -5.13

VALUE OF SUPPLY 6.1 -6.9

INPUT TAX CREDIT 7.1 – 7. 47

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 INDEX

EXEMPTIONS UNDER GST 8.1 – 8.39

PLACE OF SUPPLY 9.1 – 9.13

REGISTRATION 10.1 – 10.22

TAX INVOICE, DEBIT NOTE, CREDIT NOTE 11.1 – 11.17

ACCOUNTS & RECORDS 12.1 -12.4

PAYMENT OF TAX 13.1 -13.8

TDS & TCS UNDER GST 14.1 – 14.5

RETURNS UNDER GST 15.1 – 15.5

GST Master Questions 16.1 – 8.25

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INTRODUCTION TO GST 1

CHAPTER - 1 INTRODUCTION TO GST

ILLUSTRATION 1
List some of the benefits that GST may accrue to the economy.

Ans.

GST may accrue following benefits to the economy:

(a) Creation of Unified National Market: GST aims to make India a common market with common tax
rates and procedures and remove the economic barriers, thereby paving the way for an integrated
economy at the national level.

(b) Boost To 'Make In India' Initiative: GST may give a major boost to the 'Make in India' initiative of the
Government of India by making goods and services produced in India competitive in the national as
well as international market. This would make India a manufacturing hub.

(c) Boost To Investments, Exports And Employment: Under the GST regime, the principle of exporting
only the cost of goods or services and not taxes is being followed. This may boost Indian exports
thereby improving the balance of payments position. Exporters are being facilitated by grant of
provisional refund of 90% of their claims within 7 days of issue of acknowledgement of their
application, thereby resulting in the easing of position with respect to cash flows.

Further, the subsuming of major Central and State taxes in GST, complete and comprehensive set-off of
input tax on goods and services and phasing out of Central Sales Tax (CST) may reduce the cost of
locally manufactured goods and services. Resultantly, the competitiveness of Indian goods and services
in the international market may increase to give boost to investments and Indian exports. With a boost
in exports and manufacturing activity, more employment would be generated and GDP would increase.

ILLUSTRATION 2
Explain with the help of examples, how a particular transaction of goods and services is taxed
simultaneously under Central GST (CGST) and State GST (SGST) ?

Ans.

The Central GST and the State GST is levied simultaneously on every intra-state supply of goods or
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INTRODUCTION TO GST 1

services or both made by registered persons except the exempted goods and services as well as goods
and services which are outside the purview of GST. Further, both are levied on the same price or
transaction value. The same can be better understood with the help of following examples:

ILLUSTRATION 3
Û Suppose that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of steel in
Uttar Pradesh supplies steel bars and rods to a construction company which is also located within
the same State for, say ₹ 100, the dealer would charge CGST of ₹ 10 and SGST of ₹ 10 in addition to
the basic price of the goods. The CGST component will go into a Central Government account while
the SGST portion into the account of the concerned State Government (viz. U.P.).

Û It is important to note that he might not actually pay ₹ 20(₹10 + ₹10)in cash as he would be entitled
to set-off this liability against the CGST or SGST paid on his eligible purchases (inputs, input
services and capital goods) assuming that all his purchases are intra-state. However, for paying
CGST, he would be allowed to use only the credit of CGST paid on his purchases while for SGST he
can utilize the credit of SGST alone. CGST credit cannot be used for payment of SGST and vice versa.

ILLUSTRATION 4
Û Suppose, again the rate of CGST is 10% and that of SGST is 10%. When an advertising company
located in Mumbai supplies advertising services to a company manufacturing soap also located
within the State of Maharashtra for, let us say ₹ 100, the ad company would charge CGST of ₹ 10 as
well as SGST of ₹ 10 at the basic value of the service. The CGST component will go into a Central
Government account while the SGST portion into the account of the Maharashtra Government.

Û He might not actually pay ₹ 20 (₹10+₹10) in cash as it would be entitled to set-off this liability against
the CGST or SGST paid on his eligible purchases (say, of inputs such as stationery, office equipment,
services of an artist etc.) assuming that all his purchases are intra-state. However, for paying CGST,
he would be allowed to use only the credit of CGST paid on its purchase while for SGST, he can utilise
the credit of SGST alone. CGST credit cannot be used for payment of SGST and vice versa.

ILLUSTRATION 5
Why was the need to amend the Constitution of India before introducing the GST?

Ans.

Earlier, the fiscal powers between the centre and the States were clearly demarcated in the constitution
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INTRODUCTION TO GST 1

wit::- almost no overlap between the respective domains. The Centre had the powers to levy tax on the
manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc) while the
States had the powers to levy tax on the sale of goods. In the case of inter-state sales, the Centre had
the power to levy the Central sales Tax but the tax was collected and retained entirely by the States. As
for services, it was the Centre alone that was empowered to levy service tax.

• Introduction of the GST necessitated the amendments in the Constitution so as to simultaneously

empower the Centre and the States to levy and collect this tax. The Constitution of India was
amended by the Constitution (101st Amendment) Act, 2016 for this purpose. Article 246A of the
constitution introduced thereby empowered the centre and the States to simultaneously levy and
collect the GST.

ILLUSTRATION 6
GST is a destination-based tax on consumption of goods or services or both. Discuss the validity of the
statement.

Ans.

The given statement is valid. GST is a destination-based tax on consumption of goods or services or
both. GST is known as destination-based tax since the tax would accrue to the taxing authority which
has jurisdiction over the place of consumption which is also termed as place of supply.

• For example, if A in Delhi produces the goods and sells the goods to B in Haryana. In this case, the
tax would accrue to the State of Haryana and not to the State of Delhi. On the other hand, under pre-
GST regime, origin-based taxation was prevailing in such cases.

• Under origin-based taxation, the tax used to accrue to the State from where the transaction
originated. In the given case, under origin-based taxation, the central sales tax would have been
levied by Centre and collected by the State of Delhi and not by the State of Haryana.

ILLUSTRATION 7
Discuss the leviability of GST or otherwise on the following:

a) Alcoholic liquor for human consumption

b) Petroleum crude, diesel, petrol, Aviation Turbine Fuel (ATF) and natural gas
c) Tobacco
d) Opium, Indian hemp and other narcotic drugs and narcotics
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INTRODUCTION TO GST 1

Ans.

a) Alcoholic liquor for human consumption is outside the realm of GST. The manufacture/production
of alcoholic liquor continues to be subjected to State excise duty and inter-State/intra-State sale
of the same is subject to CST/NAT respectively.

b) As regards petroleum crude, diesel, petrol, ATF and natural gas are concerned, they are not
presently leviable to GST. GST will be levied on these products from a date to be notified on the
recommendations of the GST Council. Till such date, central excise duty continues to be levied on
manufacture/production of petroleum crude, diesel, petrol, ATF and natural gas and inter-
State/intra-State sale of the same is subject to CST/ VAT respectively.

c) Tobacco is within the purview of GST, ie GST is leviable on tobacco. However, Union Government has
also retained the power to levy excise duties on tobacco and tobacco products manufactured in
India. Resultantly, tobacco is subject to GST as well as central excise duty.

d) Opium, Indian hemp and other narcotic drugs and narcotics are within the purview of GST, ie GST is
leviable on them. However, State Governments have also retained the power to levy excise duties
on such products manufactured in India. Resultantly, Opium, Indian hemp and other narcotic drugs
and narcotics are subject to GST as well as State excise duties.

ILLUSTRATION 8
Under Goods and Services Tax (GST), only value addition is taxed and burden of tax is to be borne by the
final consumer. Examine the validity of the statement.

Ans.

The statement is correct. Goods and Services Tax is a destination-based tax on consumption of goods
and services. It is levied at all stages right from manufacture up to final consumption with credit of taxes
paid at previous stages available as set-off. Resultantly, only value addition is taxed and burden of tax
is to be borne by the final consumer.

ILLUSTRATION 9
Which are the commodities which have been kept outside the purview of GST? Examine the status of
taxation of such commodities after introduction of GST.
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INTRODUCTION TO GST 1

Ans.

Article 366 (12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016 defines
the Goods and Services tax (GST) as a tax on supply of goods or services or both, except supply of
alcoholic liquor for human consumption. Therefore, alcohol for human consumption is kept out of GST
by way of definition of GST in the constitution. Five petroleum products viz. petroleum crude, motor spirit
(petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out of the
purview of GST; GST Council shall decide the date from which they shall be included in GST. The erstwhile
taxation system (CST/VAT & central excise) still continues in respect of the said commodities.

ILLUSTRATION 10
A dual GST has been implemented in India. Elaborate.

Ans.

A dual GST has been implemented in India with the Centre and States simultaneously levying it on a
common tax base. The GST levied by the Centre on intra-State supply of goods and/or services is called
the Central GST (CGST) and that levied by the States/Union Territory is called the State GST (SGST) /
Union Territory GST (UTGST). Similarly, Integrated GST (IGST) is levied and administered by Centre on
every inter-State supply of goods and/or services.

• India is a federal country where both the Centre and the States have been assigned the powers to
levy and collect taxes through appropriate legislation. Both the levels of Government have distinct
responsibilities to perform according to the division of powers prescribed in the Constitution for
which they need to raise resources. A dual GST, therefore, keeps with the constitutional requirement
of fiscal federalism.

ILLUSTRATION 11
Discuss Article 269A pertaining to levy and collection of GST on inter-State supply.

Ans.

Article 269A of the Constitution stipulates that Goods and Services Tax on supplies in the course of
inter-State trade or commerce shall be levied and collected by the Government of India and such tax
shall be apportioned between the Union and the States in the manner as may be provided by Parliament
by law on the recommendations of the Goods and Services Tax Council.
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INTRODUCTION TO GST 1

• Here, supply of goods, or of services, or both in the course of import into the territory of India shall
be deemed to be supply of goods, or of services, or both in the course of inter-state trade or
commerce.
• The amount so apportioned to a State shall not form part of the Consolidated Fund of India. Where
an amount collected as
• IGST has been used for payment of SGST or vice versa, such amount shall not form part of the
Consolidated Fund of India/State respectively. This is to facilitate transfer of funds between the
Centre and the States.
• Parliament is empowered to formulate the principles for determining the place of supply, and when
a supply of goods, or of services, or both takes place in the course of inter-state trade or commerce.

ILLUSTRATION 12
Discuss Article 246A which grants the power to make laws with respect to Goods and Services Tax.

Ans.

Article 246A stipulates that Parliament, and, the Legislature of every State, have power to make laws
with respect to goods and services tax imposed by the Union or by such State.

• Parliament has exclusive power to make laws with respect to goods and services tax where the
supply of goods, or of services, or both takes place in the course of inter-state trade or commerce.

• However, in respect to petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel, the aforesaid provisions shall apply from the date to be notified
by the Government on the recommendations by the GST Council.

ILLUSTRATION 13
No act or proceedings of the Goods and Services Tax Council shall be invalid merely by certain reasons.
What are they?

Answer I

No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of:

(a) any vacancy in, or any defect in, the constitution of the council; or

(b) any defect in the appointment of a person as a Member of the Council; or

(c) any procedural irregularity of the Council not affecting the merits of the case.
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CHARGE OF GST 2

CHAPTER - 2 CHARGE OF GST

ILLUSTRATION 1
State the person liable to pay GST in the following independent cases provided recipient is located in
the taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to a registered
business entity.

Ans.

a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business
entity located in the taxable territory is payable under reverse charge, in the given case, GST is
payable by the recipient - business entity.

b) GST on sponsorship services provided by any person to any body corporate or partnership firm
located in the taxable territory is payable under reverse charge. Since in the given case, services
have been provided to an individual, reverse charge provisions will not be attracted. GST is payable
under forward charge by the supplier - company.

c) GST on services supplied by Central Government, State Government, Union Territory or local
authority by way of renting of immovable property to a person registered under CGST Act, 2017 is
payable under reverse charge. Therefore, in the given case, GST is payable under reverse charge
by the recipient - registered business entity.

ILLUSTRATION 2
Vivek Goyal, an independent director of A22 Pvt Ltd, appointed in accordance with the provisions of
the Companies Act, 2013, has received sitting fee amounting to ₹। lakh from A22 Pvt Ltd for attending
the board meetings. Who is the person liable to pay tax in this case?
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CHARGE OF GST 2

Ans.

GST on supply of services by director of a company to the said company located in the taxable
territory is payable on reverse charge basis. Therefore, in the given case, person liable to pay GST is
the recipient of services, ie A22 Put Ltd.

ILLUSTRATION 3
Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP. Determine the
person liable to pay tax in this case.

Ans.

In case of services provided by any person by way of sponsorship to any body-corporate or

partnership firm, GST is liable to be paid under reverse charge by such body-corporate or partnership
firm located in the taxable territory. Further, for reverse charge purposes, Limited Liability Partnership
formed and registered under the provisions of the Limited Liability Partnership Act, 2008 is also
considered as a partnership firm. Therefore, in the given case, WE-WIN Cricket Academy is liable to
pay GST under reverse charge.

ILLUSTRATION 4
Legal fees is received by Sushrut, an advocate, from M/s Tatva Trading Company having turnover of
₹50 lakhs in the preceding FY. Who is the person liable to pay tax in this case?

Ans.

GST on legal services supplied by an advocate to any business entity located in the taxable territory
is payable on reverse charge basis. Therefore, in the given case, person liable to pay GST is M/s Tatva
Trading Company.

ILLUSTRATION 5
State the person liable to pay GST in the following independent cases provided recipient is located in
the taxable territory:
(a) Services supplied by an insurance agent to an insurance company.
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CHARGE OF GST 2

(b) Services supplied by a recovery agent to a car dealer.

(c) Security services (ie, services provided by way of supply of security personnel) provided by a
partnership firm to a registered person paying tax under regular scheme.

Ans.

a) GST on services supplied by an insurance agent to any person carrying on insurance business
located in the taxable territory is payable under reverse charge. Therefore, in the given case, GST
is payable under reverse charge by the recipient - insurance company.

b) GST on services supplied by a recovery agent to a banking company or a financial institution or

a NBFC located in the taxable territory is payable under reverse charge. However, since in the
given case, services are being supplied by a recovery agent to a car dealer, GST is payable under
forward charge by the service provider - recovery agent.

c) GST on security services. (ie, services provided by way of supply of security personnel) provided
by a non-corporate entity to a registered person, located in the taxable territory is payable under
reverse charge. Therefore, in the given case, GST is payable under reverse charge by the recipient
- registered person receiving the services.
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SUPPLY UNDER GST 3

CHAPTER - 3 SUPPLY UNDER GST

ILLUSTRATION 1
Meghraj & Co wishes to commence the business of supplying ready-made garments within Punjab and
in the neighbouring States of Delhi and Haryana. Kindly state as to what is the taxable event under
GST and leviability of CGST, SGST/UTGST and IGST on the same?

Ans.

Taxable event under GST is supply of goods or services or both. CGST and SGST/UTGST will be levied
on intra-state supplies. IGST will be levied on inter-state supplies.

ILLUSTRATION 2
Damodar Private Ltd, registered in Delhi, has transferred some goods to its branch, registered in West
Bengal, so that the goods can be sold from the branch. The goods have been transferred without any
consideration. The company believes that the transaction undertaken by it does not qualify as supply
as no consideration is involved. Ascertain whether the transfer of goods by Damodar Private Ltd to its
branch office qualifies as supply.

Ans.

As per Schedule I of the CGST Act, supply of goods or services or both between related persons or
between distinct persons as specified in section 25, when made in the course or furtherance of
business, is deemed as supply even if made without consideration. In the given case, since Damodar
Put Ltd and its branch located in another State are distinct persons, supply of goods between them
qualifies as supply.

ILLUSTRATION 3
Prithvi Associates is engaged in supply of taxable goods. It enquires from its tax advisor as to whether
any activity can be treated as supply even if made without consideration in accordance with the
provisions of the CGST Act. Enumerate such activities, if any.
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SUPPLY UNDER GST 3

Ans.

Section 7 stipulates that the supply should be for a consideration and should be in the course or
furtherance of business. However, Schedule I of the CGST Act enumerates the cases where an activity
is treated as supply, even if the same is without consideration. These are as follows:

• Permanent transfer or disposal of business assets where input tax credit has been availed on such
assets.

• Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, when made in the course or furtherance of business. However, gifts not
exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall
not be treated as supply of goods or services or both.

• Supply of goods by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or by an agent to his principal where the agent undertakes to receive such
goods on behalf of the principal.

• Import of services by a person from a related person or from any of his other establishments
outside India, in the course or furtherance of business.

ILLUSTRATION 4
Composite supply is treated as supply of that particular goods or services which attracts the highest
rate of tax. Examine the validity of the statement.

Ans.

The statement is not correct. Composite supply is treated as supply of the principal supply. It is the
mixed supply that is treated as supply of that particular goods or services which attracts the highest
rate of tax.

ILLUSTRATION 5
Transfer of title and/or possession is necessary for a transaction to constitute supply of goods.
Examine.

Ans.

Title as well as possession both have to be transferred for a transaction to be considered as a supply
of goods. In case title is not transferred, the transaction would be treated as supply of service in terms
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SUPPLY UNDER GST 3

of schedule II of the CGST Act. In some cases, possession may be transferred immediately, but title
may be transferred at a future date like in case of sale on approval basis or hire purchase arrangement.
Such transactions will also be termed as supply of goods.

ILLUSTRATION 6
Examine whether the following activities would amount to supply u/s 7 read with Schedule I of the
CGST Act:

a) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these establishments
are registered in respective States. Finished goods are sent from factory in Delhi to the Mumbai
depot without consideration so that the same can be sold.

b) Raman is an architect in Chiennai. His brother who is settled in London is a well-known lawyer.
Raman has taken legal advice from him free of cost with regard to his family dispute.

c) Would your answer be different if in the above case, Raman has taken advice in respect of his
business unit in Chennai?

Ans.

(a) Schedule I of CGST Act, inter alia, stipulates that supply of goods or services or both between
related persons or between distinct persons as specified in Section 25, is supply even without
consideration provided it is made in the course or furtherance of business. Further, a person who
has obtained more than one registration, whether in one State/Union territory or more than one
State/Union territory shall, in respect of each such registration, be treated as distinct persons. In
view of the same, factory and depot of sulekha Manufacturers are distinct persons. Therefore,
supply of goods from Delhi factory of Sulekha Manufacturers to Mumbai Depot without
consideration, but in course/furtherance of business, is supply 4/57 read with schedule 1 of the
CGST Act.

(b) Schedule I of CGST Act, inter alia, stipulates that import of services by a taxable person from a
related person located outside India, without consideration is treated as supply if it is provided in
the course or furtherance of business. Section 15 provides that persons shall be deemed to be
"related persons" if they are members of the same family. Further, as per Section 2(49) of the CGST
Act, 2017, family means:
• the spouse and children of the person; and
• the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.
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SUPPLY UNDER GST 3

In the given case, Raman has received free of cost legal services from his brother. However, as per
the above definition, Raman and his brother cannot be considered to be related as Raman's brother
is a well-known lawyer and is not wholly/mainly dependent on Raman. Further, Raman has taken
legal advice from him in personal matter and not in course or furtherance of business.
Consequently, services provided by Raman's brother to him would not be treated as supply u/s 7
read with Schedule I of the CGST Act.

(c) In the above case, if Raman has taken advice with regard to his business unit, services provided by
Raman's brother to him would still not be treated as supply u/s 7 of the CGST Act read with
Schedule I as although the same are provided in course or furtherance of business, such services
have not been received from a related person.

ILLUSTRATION 7
State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule II of the CGST Act:

a) Renting of immovable property.

b) Goods forming part of business assets are transferred or disposed of by/under directions of
person carrying on the business.

c) Transfer of right in goods without transfer of title in goods.

d) Transfer of title in goods under an agreement which stipulates that property shall pass at a future
date.

Ans.

a) Supply of services
b) Supply of goods
c) Supply of services
d) Supply of goods

ILLUSTRATION 8
Determine whether the following supplies would be treated as supply of goods or supply of services
as per Schedule II of the CGST Act:

a) Temporary transfer or permitting use or enjoyment of any intellectual property right.

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SUPPLY UNDER GST 3

b) Supply of goods by an unincorporated association or body of persons to a member thereof for

cash, deferred payment or other valuable consideration.

c) Any treatment or process which is applied to another person's goods.

d) Transfer of title in goods.

Ans.

(a) supply of services

(b) supply of goods
(c) Supply of services
(d) supply of goods

ILLUSTRATION 9
The goods supplied on hire purchase basis will be treated as supply of services. Examine the validity
of the statement.

Ans.

The statement is not correct. Supply of goods on hire purchase shall be treated as supply of goods as
there is transfer of title, albeit at a future date.

ILLUSTRATION 10
Examine whether the activity of import of service in the following independent cases would amount to
supply u/s 7 of the CGST Act, 2017:

a) Ms Shriniti Kaushik received interior decoration services for her residence located at Bandra,
Mumbai from Mr Racheal of Sydney (Australia). The amount paid for the said service is 5,000
Australian Dollar.

b) Ms Shriniti Kaushik received interior decoration services for her residence located at Bandra,
Mumbai from her brother, Mr Varun residing in Sydwey (Australia) [wholly dependent on Ms Shriniti].
Further, Ms Shriniti did not pay any consideration for the said service.

c) Will your answer change if in the above case, if Ms Shriniti has taken interior decoration services
with regard to her business premises and not her residence?
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SUPPLY UNDER GST 3

Note: Any specific exemption by way of notification needs to be ignored.

Ans.

a) Supply, u/s 7 of the CGST Act, 2017, inter alia, includes import of services for a consideration even
if it is not in the course or furtherance of business. Thus, although the import of service for
consideration by Ms Shriniti Kaushik is not in course or furtherance of business (as the interior
decoration services have been availed in respect of residence), it would amount to supply.

b) Schedule I of CGST Act, inter alia, stipulates that import of services by a taxable person from a
related person located outside India, without consideration is treated as supply if it is provided in
the course or furtherance of business. section 15 provides that persons shall be deemed to be
"related persons" if they are members of the same family. Further, as per section 2(49) of the CGST
Act, 2017, family means:
• the spouse and children of the person; and
• the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.

In the given case, Ms Shriniti Kaushik has received interior decoration services from her brother. In
view of the above definition, Ms Shriniti and her brother shall be considered to be related as Miss
Shriniti's brother is wholly dependent on her. However, Ms Shrinti has taken interior decoration
services for her residence and not in course or furtherance of business. Consequently, services
provided by Ms Shrinti's brother to her would not be treated as supply u/s7 read with schedule I of
the CGST Act.

c) In the above case, if MS Shriniti has taken interior decoration services with regard to her business
premises, services provided by MS Shriniti's brother to her would be treated as supply u/s7 of the
CGST Act read with Schedule I of the CGST Act, 2017.

ILLUSTRATION 11
Determine whether the following supplies amount to composite supplies:

a) A hotel provides 4 days -3 nights package wherein the facility of breakfast and dinner is provided
along with the room accommodation.

b) A toothpaste company has offered the scheme of free soap along with the toothpaste.
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Ans.

Under composite supply, two or more taxable supplies of goods or services or both, or any
combination thereof, are naturally bundled and supplied in conjunction with each other, in the ordinary
course of business, one of which is a principal supply.

a) Since supply of breakfast and dinner with the accommodation in the hotel are naturally bundled,
the said supplies would qualify as 'composite supply'.

b) Since supply of soap along with the toothpaste are not naturally bundled, said supplies do not
qualify as 'composite supply'.

ILLUSTRATION 12
Dumdum Electronics has sold the following electronic items to Akbar Retail Store.

• Refrigerator (500 litres) taxable @ 18%

• Stabilizer for refrigerator taxable @ 12%
• LED television (42 inches) taxable @ 12%
• Split air conditioner (2 Tons) taxable @ 28%
• Stabilizer for air conditioner taxable @ 12%

Dumdum Electronics has issued a single invoice, indicating price of each of the above items separately
in the same. Akbar Retail store has given a single cheque of ₹1,00,000/-for all the items as a composite
discounted price. State the type of supply and the tax rate applicable in this case.

Ans.

In the given case, the items supplied by Dumdum Electronics are not naturally bundled in the ordinary
course of business. Therefore, such supply is not a composite supply. Further, although Akbar Retail
Store has paid a composite discounted price for these goods, Dumdum Electronics has not charged a
single price for the said supply. Therefore, said supply is also not a mixed supply. Supply of these
goods is, therefore, supply of individual items which are taxable at the respective rates applicable to
them.

ILLUSTRATION 13
Manikaran, a registered supplier of Delhi, has supplied 20,000 packages at ₹ 30 each to Mukhija Gift
Shop in Punjab. Each package consists of 2 chocolates, 2 fruit juice bottles and a packet of toy
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balloons. Determine the rate(s) of GST applicable in the given case assuming the rates of GST to be as
under:

• Chocolates - 18%
• Fruit juice bottles - 12%
• Toy balloons - 5%

Ans.

As per Section 2(74) of the CGST Act, 2017, mixed supply means two or more individual supplies of
goods or services, or any combination thereof, made in conjunction with each other by a taxable
person for a single price where such supply does not constitute a composite supply.

supply of a package containing chocolates, fruit juice bottles and a packet of toy balloons is a mixed
supply as each of these items can be supplied separately and is not dependent on any other. Further,
as per section 8 of the CGST Act, 2017, the mixed supply is treated as a supply of that particular supply
which attracts the highest rate of tax. Thus, in the given case, supply of packages is treated as supply
of chocolates since chocolate attracts the highest rate of tax. The rate of GST applicable on the
package of ₹6,00,000 (20,000 × ₹30) shall be 18%.

ILLUSTRATION 14
Gagan Engineering Pvt Ltd, registered in Haryana, is engaged in providing maintenance and repair
services for heavy steel machinery. For carrying out the repair work, Gagan Engineering Pvt Ltd sends
its container trucks equipped with items like repair equipments, consumables, tools, parts etc from
Haryana workshop to its own repairing centres (registered under GST law) located in other States
across India where the clients' machinery are being brought and are being repaired. Discuss the
leviability of GST on the inter-state movement of trucks from the workshop of Gagan Engineering Pvt
Ltd in Haryana to its own repairing centres located in other States across India.

Ans.

As per Section 25, a person who has obtained more than one registration, whether in one State or
Union territory or more than one State or Union territory shall, in respect of each such registration, be
treated as 'distinct persons'.

Schedule I to the CGST Act specifies situations where activities are to be treated as supply even if
made without consideration.
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Supply of goods and/or services between 'distinct persons' as specified in Section 25, when made in
the course or furtherance of business is one such activity included in Schedule I.

However, in view of the GST Council's recommendation, it has been clarified that the inter-state
movement of various modes of conveyance between 'distinct persons' as specified in Section 25, not
involving further supply of such conveyance, including trucks carrying goods or passengers or both
or for repairs and maintenance, may be treated 'neither as a supply of goods nor supply of service'
and therefore, will not be leviable to IGST.

Thus, in the given case, inter-state movement of trucks from the workshop of Gagan Engineering Put
Ltd located in Haryana to its repair centres located in other States is 'neither a supply of goods nor
supply of service'.

ILLUSTRATION 15
PTL Put Ltd is a retail store of merchandise located in 25 States/UTs in the country. For the purpose
of clearance of stock of merchandise and to attract consumers, PTL Pvt Ltd launched scheme of "Buy
One Get One Free" for the same type of merchandise, for instance, one shirt to be given free with
purchase of one shirt. Determine how the taxability of the goods supplied under "Buy one Get One
Free" scheme is determined.

Ans.

As per Section 7(1)(a) of CGST Act, the goods or services which are supplied free of cost (without any
consideration) are not treated as "supply" except in case of activities mentioned in Schedule I of the
CGST Act. Under "Buy One Get One Free" scheme, it may appear at first glance that in case of offers
like "Buy One, Get One Free", one item is being "supplied free of cost" without any consideration.
However, it is not an individual supply of free goods, but a case of two or more individual supplies where
a single price is being charged for the entire supply. It can at best be treated as supplying two goods
for the price of one. Taxability of such supply will be dependent upon as to whether the supply is a
composite supply or a mixed supply and the rate of tax shall be determined accordingly.

ILLUSTRATION 16
Sarvanna & Sons wishes to start supplying liquor in the State of Tamil Nadu. Therefore, it applies for
license for selling liquor to the Tamil Nadu Government for it has charged specified fee from it. Examine
whether the grant of alcoholic liquor license by the Tamil Nadu Government to Sarvanna & Sons
qualifies as supply.
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Ans.

Services by way of grant of alcoholic liquor license by the State Governments have been notified to
be treated neither as a supply of goods nor as a supply of service. Such licence is granted against
consideration in the form of licence fee or application fee or by whatever name it is called. This special
dispensation is applicable only to supply of service by way of grant of liquor licenses by the State
Governments as an agreement between the Centre and States and is not applicable/has no
precedence value in relation to grant of other licenses and privileges for a fee in other situations,
where GST is payable. Thus, in the given case, the grant of alcoholic liquor license by the Tamil Nadu
Government to Sarvanna & Sons is neither a supply of goods nor a supply of service.

ILLUSTRATION 17
M/s Chand is a manufacturer of Paper products having factory at Pune, Maharashtra. M/s Kela and M/s
Bela of Mumbai, Maharashtra are appointed as agents to sell the products on behalf of M/s Chand with
the condition that both of them guarantee the realization of payment from buyers.

Both M/s Kela and M/s Bela provide short-term borrowing facilities to buyers for timely payment of
dues against supplies made to them and for this they charge interest from the ultimate buyer. While
M/s Kela raises invoices in the name of M/s Chand and M/s Bela raises invoices in its own name.

In light of provisions contained in Para 3 of Schedule I of CGST Act, kindly explain treatment of interest
charged by M/s Kela and M/s Bela in above mentioned cases.

Answer

• M/s Kela and M/s Bela are Del-Credere Agents (DCA) of M/s Chand as they guarantee the payment
to the supplier. A DCA falls under the ambit of 'agent' under Para 3 of Schedule I of the CGST Act,
2017 if the invoice for supply of goods is issued by the DCA in its own name. However, if the invoice
for supply of goods is issued by the supplier to the customer, either himself or through DCA, the
DCA is not an 'agent' in terms of Para 3 of Schedule I. Thus, while M/s Bela is an agent of M/s Chand
in terms of Para 3 of Schedule I, M/s Kela is not.

• Where the DCA is not an agent under Para 3 of Schedule I, the temporary short-term loan being
provided by DCA to the buyer is a supply of service by the DCA to the recipient on principal-to-
principal basis and is an independent supply. Said supply is specifically exempt from tax. Thus,
interest charged by M/s Kela is an independent supply and is exempt from tax.

• Where the DCA is an agent under Para 3 of Schedule I, the temporary short-term credit being
provided by DCA to the buyer no longer retains its character of an independent supply and is
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subsumed in the supply of the goods by the DCA to the recipient. The value of the interest charged
for such credit is included in the value of supply of goods by DCA to the recipient. Thus, interest
charged by M/s Bela will be included in the value of goods supplied by it.

ILLUSTRATION 18
Explain the concept of composite supply and mixed supply. A trader launches a package sales for
marriage containing double bed, refrigerator, washing machine, wooden wardrobe at a single rate. He
is issuing an invoice showing value of each goods separately, whether this is case of mixed supply or
composite supply. Explain.

Answer

• Composite supply comprises of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with each other in
the ordinary course of business, one of which is a principal supply.

• Mixed supply means two or more individual supplies of goods or services, or any combination
thereof, made in conjunction with each other by a taxable person for a single price where such
supply does not constitute a composite supply.

• Items such as double bed, refrigerator, washing machine and wooden wardrobe are not naturally
bundled and also the invoice for the supply shows separate values for each item, ie the package is
not supplied for a single price. Therefore, supply of such items as a package will neither constitute
a composite supply nor a mixed supply. Thus, the various items of the package will be treated as
being supplied individually and they would be taxed at their respective rates.

ILLUSTRATION 19
Examine whether the following activities would amount to "supply" under GST law?

i. Glory Ltd is engaged in manufacturing and selling of cosmetic products. Seva Trust, a
charitable organisation approached Glory Ltd to provide financial assistance for its charitable
activities. Glory Ltd donated a sum of ₹ 2 lakh to Seva Trust with a condition that Seva Trust will
place a hoarding at the entrance of the trust premises displaying picture of products sold by
Glory Ltd.

ii. Mr Swamy of Chennai is working as a manager with ABC Bank. He consulted M/s Jacobs and
company of London and took its advice for buying a residential house in Mumbai and paid them
consultancy fee of 200 UK Pound for this import of service.
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Answer

i. An activity qualifies as supply under GST only if it is for a consideration and is in

course/furtherance of business. Donations received by the charitable organizations are
treated as consideration only when there's an obligation on part of the recipient of the
donation to do anything. Since in the given case, the display of products sold by the donor -
Glory.Ltd - in charitable organization's premises aims at advertising/promotion of its business,
it is supply for consideration in course/furtherance of business and thus, qualifies as supply
under GST law.

ii. Supply includes importation of services, for a consideration whether or not in the
course/furtherance of business. Thus, in the given case, the import of services by Mr Swamy
amounts to supply although it is not in course/furtherance of business.

ILLUSTRATION 20
Mr Jayesh, a registered supplier of Mumbai, received the following amounts in respect of the various
activities undertaken by him during the month of October 2023.

S.No. Particulars Amount (₹)

(i) Commission received as a recovery agent from a Non-Banking Finance 80,000
Company (NBFC)

(ii) Actionable claim received from normal business debtors 10,50,000

(iii) Amount received from ABC Ltd for performance of classical dance in one 1,74,500
program
(iv) Business assets (old computers) given to a friend free of cost, the No amount
market value of all the computers was ₹ 51,000. No ITC has been availed Charged
on such computers when used for business.
(v) Consideration received for one month rent from a registered individual 15,200
person for renting of residential dwelling for use as residence. Tenant to
use the property for stay of employees.
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Details of Input Services:

S.No. Particulars Amount (₹)

(i) Paid to an unregistered Goods Transport Agency for various 15,100

consignments of transportation of goods by road. (Each individual
consignment in a single carriage was of less than ₹ 1,450)

Notes:

1. All the amounts stated above in both the tables are exclusive of GST, wherever applicable.

2. Aggregate turnover of Mr Jayesh in previous year was ₹42,00,000.

You are required to compute gross value of supplies, on which GST to be paid by Mr Jayesh for the
month of October 2023.

Answer

Computation of Gross Value of Supplies On which GST Needs To Be Paid By Mr Jayesh:

S.No. Particulars Amount (₹)

Outward Leg:
(i) Commission received as a recovery agent from a Non-Banking Finance
NBFC To Pay GST
Company (NBFC) {services provided by a recovery agent to a NBFC are
Under RCM
taxable under reverse charge mechanism as per section 9(3) of CGST
Act}
(ii) Actionable claim received from normal business debtors Not A Supply
{Actionable claims other than lottery, betting and gambling are
covered under schedule III of CGST Act, meaning that they shall neither
qualify as supply of goods nor as supply of services?

(iii) Amount received from ABC Ltd for performance of classical dance in
one program {services provided by a performing artist in classical art 1,74,500
forms of dance, music or theatre are exempt if the amount charged
doesn't exceed ₹ 1,50,000 per event. Exemption is not available in the
present case since the amount charged for one performance exceeds
₹ 1,50,000}

(iv) Business assets (old computers) given to a friend free of cost. No ITC
has been availed on such computers when used for business. Not A Supply
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{Disposal of business assets without consideration shall be regarded

as supply only where ITC has availed on such assets. The present
transaction wouldn't qualify as supply since no ITC has been availed on
business assets}

(v) Consideration received for one month rent from a registered individual Tenant To Pay
person for renting of residential dwelling for use as residence. GST Under RCM
{Services provided by way of renting of residential dwelling for use as
residence to a registered tenant are taxable under reverse charge
mechanism as per section 9(3) of CGST Act}

Input Leg:
(i) Services received from an unregistered GTA for various consignments
of transportation of goods by road. Each individual consignment in a 15,100
single carriage was of less than ₹ 1,450. {Exemption not available Mr Jayesh To Pay
because services are provided by GTA to a registered recipient and not Tax Under RCM
to an unregistered recipient. Further since GTA hasn't obtained any
registration, it implies that the transaction is taxable under reverse
charge. Tax needs to be paid by the registered recipient under RCM.}

Gross Value of Supplies On Which Tax Is To Be Paid By Mr Jayesh: ₹ 1,74,500 FCM; ₹ 15,100 RCM

ILLUSTRATION 21
Charm Limited, registered under GST in the State of Jharkhand, manufactures cosmetic products and
appointed Mr Handsome of Mumbai, who is registered under GST in the State of Maharashtra, as their
Del-credere agent (DCA) to sell their products. Being a DCA, he agrees to raise invoices in his own name
and also guarantees for the realization of payments from customers to Charm Limited. In order to
realize the payments from customers on time, he extends short term transaction based loans to them
and charges interest for the same. Mr Handsome provides you the following details of transactions
carried out during March 2023:

Particulars Amount in (₹)

Outward Supply:

(i) Goods sold by Mr Handsome in his DCA capacity (intra-state 2,80,000

transaction)
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(ii) interest earned from the above customers for short term credit 20,000
facility provided for timely payment of dues. (intra-state
transaction)

(iii) Commission bill raised on Charm Limited (inter-state transaction) in 30,000

respect of DCA services provided.
Inward Supply:

(iv) Inter-State supply of goods received from Charm Limited. Being a Nil
DCA, no consideration was paid. Value under section 15 - ₹ 2,00,000
(v) Received training in marketing and distribution from Charm Limited Nil
as per DCA agreement, free of cost. Company charges ₹75,000 for
such training when it provides the same to others.

Applicable rate of tax on both inward and outward supplies is 9% each for CGST and SGST and 18% for
IGST. Amounts given above are exclusive of taxes wherever applicable. Subject to the information given
above, necessary conditions are complied with for availment of input tax credit. You are required to
calculate the gross GST liability and eligible input tax credit for the month of March 2023 of Mr
Handsome. Brief notes should form part of your answer for treatment of items in S. No. (i) to (v).

Answer
Computation of Gross GST Liability of Mr Handsome For The Month of March 2023:
Particulars CGST (₹) SGST (₹) IGST (₹)

Goods sold by Mr Handsome in his DCA 27,000 27,000 -

capacity (₹2,80,000) [3L × 9%] [3L × 9%]

Add: Interest earned for short term credit

facility provided to above customers (₹20,000)
[Since the invoice for goods sold is issued by
the DCA (ie, Mr Handsome) in his own name, he
would fall under the ambit of an agent under
schedule I of the CGST Act. Where DCA is an
agent under schedule 1 of the CGST ACt,
interest is included in the value of supply of the
goods sold as short term credit facility
provided by DCA to the buyer is subsumed in
the supply of the goods by the DCA to the
buyer.]
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Commission charged for DCA services [Being - - 5,400

taxable supply of services] [30,000 × 18%]

Gross GST Liability 27,000 27,000 5,400

Computation of Eligible ITC For The Month of March 2023:

Particulars CGST (₹) SGST (₹) IGST (₹)

Inward supply of goods from Charm - - 36,000

Limited free of cost [2,00,000 × 18%]

Training in marketing and distribution - - -

received from Charm Limited free of
cost [since no consideration is
charged for the services provided, said
services do not qualify as supply. As no
GST is paid on the same, ITC is not
available]

Total ITC Available Nil Nil 36,000

ILLUSTRATION 22
Examine whether the following activities would amount to "supply" under GST law?

i. Mr Sonu from Chandigarh purchased a water cooler from Malhotra Bros of Hoshiarpur for ₹
25,000 to donate it to a temple situated in Hoshiarpur. Mr Sonu directed Malhotra Bros to
engrave the words on the water cooler - "Donated by Mr Sonu from Chandigarh" and dispatch
the water cooler directly to the temple.

ii. Wesco Ltd, a registered person in Ahmedabad (Gujarat) having head office located in Singapore,
received management consultancy services free of cost from its head office.

Answer

i. An activity qualifies as supply under GST only if it is carried out for a consideration and is in
course or furtherance of business. In the existing case, water cooler has been donated to a
temple with no reference or mention of any business activity of the donor which otherwise
would have got advertised. In case of donations, no GST is leviable where all the three
conditions are satisfied - namely the gift or donation is made to a charitable organization, the
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payment has the character of gift or donation and the purpose is philanthropic (ie, it leads to
no commercial gain) and not advertisement. Since all the conditions are satisfied in the present
case, the transaction wouldn't qualify as supply and thus GST shall not be leviable.

ii. As per section 7 (I) (c) of CGST Act read along with Schedule I of CGST Act, import of services
by a person from a related person or from any of his establishments located outside India in
the course or furtherance of business shall be treated as supply irrespective of the presence
of consideration. Therefore, in the present case, management consultancy services received
by Wesco Ltd (a registered person in Ahmedabad, Gujarat) free of cost from its head office
located in Singapore shall be deemed as supply.

ILLUSTRATION 23
Examine the existence of "consideration" for donation received by charitable institutions from
individual donors, without quid pro quo an important feature as defined in section 2(31) of the CGST
Act, 2017.

Answer

• Donations received by the charitable institutions from individual donors are treated as
consideration only if there exists, quid pro quo, ie there is an obligation on part of recipient of the
donation or gift to do anything.

• When the name of the donor is displayed in recipient institution premises, in such a manner, which
can be said to be an expression of gratitude and public recognition of donor's act of philanthropy
and is not aimed at giving publicity to the donor in such a manner that it would be an advertising
or promotion of his business, then it can be said that there is no supply of service for a
consideration (in the form of donation). There is no obligation (quid pro quo) on the part of recipient
of the donation or gift to do anything (supply a service). Therefore, there is no GST liability on such
consideration.

ILLUSTRATION 24
Describe the provisions related to import of services by a registered person as prescribed in sections
7 (1) (b), 7 (I) (c) and Schedule 1 of CGST Act 2017.

Answer

Refer the relevant legal portion given in the book

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CHAPTER - 4 COMPOSITION SCHEME

ILLUSTRATION 1
Sultan & Sons, a partnership firm, in Nagpur, Maharashtra is a wholesaler of a taxable product ' P ' and
product 'Q' exempt by way of a notification, in the State of Maharashtra. Its aggregate turnover in the
preceding financial year is ₹ 130 lakhs. The firm wishes to opt for composition scheme under sub-
sections (1) & (2) of Section 10 of the CGST Act. However, its accountant is of the view that a person
engaged in making supply of exempt goods is not eligible for the said scheme. Discuss.
Note: Assume that Sultan & Sons is not engaged in manufacture of goods as notified u/s 10 (2) (e).

Ans.

The view taken by the accountant of sultan & Sons is not valid in law. A registered person with an
aggregate turnover in a preceding financial year up to ₹ 1.5 crore is eligible for composition levy, u/s
10 (1) & 10(2), in Maharashtra. Further, such person must not be engaged in making any supply of goods
which are not leviable to tax under this Act and must not be engaged in making any inter-state outward
supplies of goods, for being eligible to pay tax under said scheme.

In the given case, the aggregate turnover of sultan & Sons does not exceed ₹1.5 crore. Further, it is
engaged in making only intra-state supply of goods and Product P supplied by it is taxable and Product
Q supplied by it is leviable to tax though exempted by way of notification. Therefore, it is eligible for
composition levy 4/510 (1) & 10 (2) in the current year.

ILLUSTRATION 2
A person availing composition scheme, under sub-sections (1) & (2) of Section 10 of the CGST Act, in
Haryana during a financial year crosses the turnover of ₹ 1.5 crore in the month of December. Will he
be allowed to pay tax under composition scheme for the remainder of the year, ie till 31st March?
Please advise.

Ans.

No. The option to pay tax under composition scheme lapses from the day on which the aggregate
turnover of the person availing composition scheme for goods during the financial year exceeds the
specified limit (₹1.5 crore). Once he crosses the threshold, he is required to file an intimation for
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withdrawal from the scheme in prescribed form within 7 days of the occurrence of such event.

Every person who has furnished such an intimation, may electronically furnish at the common portal,
a statement in prescribed form containing details of the stock of inputs and inputs contained in semi-
finished or finished goods held in stock by him on the date on which the option is withdrawn, within a
period of 30 days from the date from which the option is withdrawn.

ILLUSTRATION 3
Determine whether the suppliers in the following cases are eligible for composition levy, u/s 10 (1) &
10(2) of the CGST Act, 2017, provided their turnover in the preceding year does not exceed ₹1.5 crore:

(a) Mohan Enterprises is engaged in trading of pan masala in Rajasthan and is registered in the same
State.

(b) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in
neighbouring States.

Ans.

(a) A supplier engaged in the manufacture of goods as notified u/s10(2)(e), during the preceding FY
is not eligible for composition scheme u/s 10 (1) and 10(2). Ice cream and other edible ice, whether
or not containing cocoa, pan masala, tobacco and manufactured tobacco substitutes and
aerated waters are notified under this category. However, in the given case, since Mohan
Enterprises is engaged in trading of pan masala (and not in manufacture of pan masala) and his
turnover does not exceed ₹1.5 crore, he is eligible for composition scheme subject to fulfilment
of specified conditions.

(b) Since supplier of inter-state outward supplies of goods is not eligible for composition levy,
sugam Manufacturers is not eligible for composition levy.

ILLUSTRATION 4
Subramanian Enterprises has two registered places of business in Delhi. Its aggregate turnover for
the preceding year for both the places of business was ₹120 lakhs. It wishes to pay tax under
composition levy, u/s 10 (1) & 10 (2) of the CGST Act, 2017, for one of the places of business in the
current year while under normal levy for other. You are required to advice Subramanian Enterprises
whether he can do so?
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Ans.

A registered person with an aggregate turnover in a preceding financial year up to ₹1.5 crore is eligible
for composition levy, u/s10 (1) & 10(2), in Delhi. Since the aggregate turnover of Subramanian
Enterprises does not exceed ₹ 1.5 crore, it is eligible for composition levy in the current year. However,
all registered persons having the same Permanent Account Number (PAN) have to opt for composition
scheme. If one such registered person opts for normal scheme, others become ineligible for
composition scheme. Thus, Subramanian Enterprises either have to opt for composition levy for both
the places of business or under normal levy for both the places of business.

ILLUSTRATION 5
Mr Ajay has a registered repair centre where electronic goods are repaired/serviced. His repair centre
is located in State of Rajasthan and he is not engaged in making any inter-state supply of services.
His aggregate turnover in the preceding financial year (FY) is ₹ 45 lakhs.

With reference to the provisions of the CGST Act, 2017, examine whether Mr Ajay can opt for the
composition scheme u/s10 (1) & 10 (2) of the CGST Act, 2017 in the current financial year? Or whether
he is eligible to avail the beneft of composition scheme u/s 10(2 A) ?

Considering the option of payment of tax available to Mr Ajay, compute the amount of tax payable by
him assuming that his aggregate turnover in the current financial year is ₹35lakhs.

Will your answer be different if Mr Ajay procures few items required for providing repair services from
neighboring State of Madhya Pradesh?

Ans.

• Section 10(1) provides that a registered person, whose aggregate turnover in the preceding
financial year did not exceed ₹ 1.5 crore (₹75 lakhs in Special Category States except Assam,
Himachal Pradesh and 7&K), may opt to pay, in lieu of the tax payable by him, an amount calculated
at the specified rates. However, as per proviso to Section 10(1), person who opts to pay tax under
composition scheme may supply services other than restaurant services, of value not exceeding
10% of the turnover in a State or Union Territory in the preceding financial year or ₹5 lakhs,
whichever is higher. In the given case, since Mr Ajay is an exclusive supplier of services other than
restaurant services (ie, repair services), he is not eligible for composition scheme u/s 10 (1) & 10
(2).

• However, section 10(2A) provides an option to a registered person (subject to certain conditions)
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whose aggregate turnover in the preceding financial year is upto ₹ 50 lakhs and who is not eligible
to-pay tax under composition scheme u/s 10(1) & 10(2), to pay tax @ 6% of the turnover of supplies
of goods and services in the State or Union Territory. Thus, in view of the above-mentioned
provisions, Mr Ajay is eligible to avail the composition scheme u/s 10(2A) as his aggregate turnover
in the preceding FY does not exceed ₹ 50 lakhs and he is not eligible to opt for the composition
scheme u/s 10 (1) & 10(2). Amount of tox payable by him as per the composition scheme u/s10 (2
A) is ₹ 2,10,000 (6% of ₹ 35 lakhs).

• A registered person cannot opt for composition scheme u/s10(2 A), if, inter alia, he is engaged in
making any inter-state outward supplies. However, there is no restriction on inter-state
procurement of goods. Hence, answer will remain the same even if Mr Ajay procures few items
from neighbouring State of Madhya Pradesh.

ILLUSTRATION 6
M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in the State
of Karnataka. Their aggregate turnover in the preceding financial year by way of supply of appliances
was ₹ 120 L. The firm also expects to provide repair and maintenance service of such appliances from
the current financial year. With reference to the provisions of the CGST Act, 2017, examine:

(i) Whether the firm can opt for the composition scheme, u/s10(1) and 10(2) of the CGST Act, 2017,
for the current financial year, as the turnover may include supply of both goods and services?

(ii) If yes, up to what amount, the services can be supplied?

Ans.

(i) The registered persons, whose aggregate turnover in the preceding financial year did not exceed
₹1.5 crore, may opt to pay tax under composition levy, u/s 10(1) and 10(2). The scheme can be
availed by an intra-state supplier of goods and supplier of restaurant service. However, the
composition scheme permits supply of marginal services (other than restaurant services) for a
specified value along with the supply of goods and restaurant service, as the case may be. Thus,
M/s united Electronics can opt for composition scheme for the current financial year as its
aggregate turnover is less than ₹1.5 crore in the preceding financial year and it is not engaged in
inter-state outward supplies.

(ii) The registered person opting for composition scheme, 4/510(1) and 10(2), can also supply
services (other than restaurant services) for a value upto 10% of the turnover in the preceding
year or ₹ 5 lakhs, whichever is higher, in the current financial year. Thus, M/s United Electronics
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can supply repair and maintenance services up to a value of ₹ 12 lakhs [10% of ₹120L or ₹s lakhs,
whichever is higher] in the current financial year.

ILLUSTRATION 7
Mr Zafar of Assam, provides the following information for FY 2022-23 (ie, the preceding financial year).
You are required to find out the aggregate turnover for the purpose of eligibility of composition levy
scheme and determine whether he is eligible for composition levy scheme or not, for FY 2023-24.

S.No. Particulars Amount

(₹ in lakhs)

(i) Value of taxable outward supplies (Out of ₹ 50 lakhs, ₹ 10 lakhs was 50.00
in course of inter-state transactions)
(ii) Value of exempt supplies (Out of ₹ 70 lakhs, ₹ 30 lakhs was received 70.00
as interest on loans & advances)
(iii) Value of inward supplies on which he is liable to pay tax under reverse 5.00
charge
(iv) Value of exports 5.00

All the amounts are exclusive of GST.

Answer
Computation of Aggregate Turnover of Mr Zafar of Assam For FY 2023-24:

S.No. Particulars Amount

(₹ in lakhs)
(i) Value of taxable outward supplies (Out of ₹ 50 lakhs, ₹ 10 lakhs was in 50.00
course of inter-state transactions) {value of all taxable supplies including
inter-state supplies are includible in aggregate turnover}
(ii) Value of exempt supplies (Out of ₹ 70 lakhs, ₹ 30 lakhs was received as 40.00
interest on loans & advances) ¿Value of exempt supplies is includible in
aggregate turnover. However, value of supply of exempt services by way
of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount is not includible in aggregate
turnover for deternining eligibility for composition scheme?
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(iii) Value of inward supplies on which he is liable to pay tax under reverse -
charge
{Excludible from aggregate turnover}

(iv) Value of exports {Includible in aggregate turnover} 5.00

Aggregate Turnover For Determining Eligibility For Composition Scheme 95.00

A registered person of Assam is eligible to opt for composition levy if his aggregate turnover does not
exceed ₹ 1.5 crove in the preceding financial year provided he is not engaged in inter-state outward
supplies of goods. Therefore, in the given case, assuming that he is not engaged in making any inter-
state outward supply of goods in FY 2023-24, Mr 2afar is eligible to opt for composition levy for FY
2023-24 since his aggregate turnover does not exceed ₹1.5 crore in FY 2022-23.

ILLUSTRATION 8
M/sT is a registered dealer of Andhra Pradesh trading in different types of machinery and its related
different types of services. Their aggregate turnover for the preceding financial year (ie, FY 2022-23)
from sale of machinery was ₹ 1.32 Cr. It was the first year of business, so they had not started for
providing service related to machinery. From FY 2023-24, they are planning to provide repair and
maintenance service of ₹ 6.25 Lakh for which they have to purchase some raw material of ₹ 5 Lakh
from the other state (till date they are purchasing within state only).

From the information given above, examine whether M/S T can opt for composition scheme u/s 10 (1)
and 10 (2) or 10 (2A) of the CGST Act for FY 2023-24?

Answer

• A registered supplier of goods whose aggregate turnover in the preceding financial year does not
exceed ₹ 1.5 crore (₹75 lakhs in case of Specified Special Category States) may opt for
composition scheme prescribed u/s 10(1) & 10(2) of CGST Act, 2017 provided the value of services
in the current financial year doesn't exceed 10% of turnover of preceeding financial year or ₹ 5
lakhs, whichever is higher.

• In the present case, the turnover of M/s T during the preceding FY (ie, FY 2022-23) is ₹1.32 crore,
ie within ₹1.5 crore. Therefore, M/sT (engaged in supply of repair and maintenance services along
with machines) can opt for composition scheme prescribed u/s10 (1) & 10 (2) of CGST Act, 2017 if
the turnover of services in the current FY (ie, FY 2023-24) doesn't exceed ₹ 13,20,000.
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• Since the turnover of services during FY 2023-24 is ₹ 6,25,000 (ie, within the permissible limit of
₹ 13,20,000), M/s T can opt for composition scheme prescribed u/s 10(1) & 10(2) of CGST Act, 2017.

• A composition supplier is not permitted to make inter-state supply of goods and/or services on
his outward leg, however he is free to make inter-state procurement of goods and/or services on
his inward leg. Therefore, inter-state procurement of raw material of ₹ 5 lakhs will not have any
impact on the eligibility for composition scheme in the present case.
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CHAPTER - 5 TIME OF SUPPLY

ILLUSTRATION 1
Explain the significance of time of supply under GST law.

Ans.

GST is payable on supply of goods or services. Time of supply indicates the point in time when the
liability to pay tax arises. However, it is important to note that though the liability to pay tax arises at
the time of supply, the same can be paid to the Government by the due date prescribed with reference
to the said 'time of supply'. The CGST Act provides separate provisions for time of supply for goods and
services vide Sections 12 and 13.

ILLUSTRATION 2
GST is payable on advance received for supply of goods and services taxable under forward charge. Do
you agree with the statement? Support your answer with legal provisions.

Ans.

The statement is not correct. While GST is payable on advance received for supply of services taxable
under forward charge, the same is not payable in case of advance received for supply of goods taxable
under forward charge. As per section 13, the time of supply of services taxable under forward charge
needs to be determined as follows:

• If the invoice is issued within 30 days from the date of supply of service, the time of supply is date
of issue of invoice or date of receipt of payment, whichever is earlier.
• If the invoice is not issued within 30 days from the date of supply of service, the time of supply is
date of provision of service or date of receipt of payment, whichever is earlier.

Thus, in case of services, if the supplier receives any payment before the provision of service or before
the issuance of invoice for such service, the time of supply gets fixed at that point in time and the liability
to pay tax on such payment arises. However, the tax can be paid by the due date prescribed with
reference to such time of supply.
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As regards time of supply of goods taxable under forward charge is concerned, Notification No 66/2017-
CT dated 15 th November 2017 provides that a registered person (excluding composition supplier) should
pay GST on the outward supply of goods at the time of supply as specified in Section 12(2) (a) {ie, the
date of issue of invoice or the last date on which invoice ought to have been issued in terms of section
31). Therefore, in case of goods, tax is not payable on receipt of advance payment.

ILLUSTRATION 3
Determine the time of supply in the following cases assuming that GST is payable under reverse charge:

S.No. Date of Receipt Date of Payment by Recipient of Date of Issue of Time of

of Goods Goods invoice by Supply
Supplier of Goods
(i) July 1 August 10 June 29
(ii) July 1 June 25 June 29
(iii) July 1 Part payment made on June 30 and June 29
balance amount paid on July 20
(iv) July S Payment is entered in the books of June 1
accounts on June 28 and debited in
recipient's bank accounts on June
30
(v) July 1 Payment is entered in the books of June 29
accounts on June 30 and debited in
recipient's bank accounts on June
26
(vi) August 1 August 10 June 29

ILLUSTRATION 4
Determine the time of supply in the following cases assuming that GST is payable under reverse charge:

S.No. Date of Payment by Recipient of Services Date of Issue of Time of

Invoice by Supplier Supply
of Services
(i) August 10 June 29

(ii) August 10 June 1

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(iii) Part payment made on June 30 and balance amount June 29

paid on September 1

(iv) Payment is entered in the books of accounts on June June 1

28 and debited in recipient's bank accounts on June
30

(v) Payment is entered in the books of accounts on June June 29

30 and debited in recipient's bank accounts on June
26

ILLUSTRATION 5
Kabira Industries Ltd engaged the services of a transporter for road transport of a consignment on 17th
June and made advance payment for the transport on the same date, ie 17th June. However, the
consignment could not be sent immediately on account of a strike in the factory, and instead was sent
on 20th July. Invoice was received from the transporter on 22nd July. What is the time of supply of the
transporter's service?

Ans.

As per section 13(3), time of supply of service taxable under reverse charge is the earlier of the following
two dates:

• Date of payment;
• 61st day from the date of issue of invoice.

In this case, the date of payment precedes 61st day from the date of issue of invoice by the supplier of
service. Hence, the date of payment, ie 17th June, will be treated as the time of supply of service.

ILLUSTRATION 6
Raju Put Ltd receives the order and advance payment on Sth January for carrying out an architectural
design job. It delivers the designs on 23rd April. By oversight, no invoice is issued at that time, and it is
issued much later, after the expiry of prescribed period for issue of invoice. When is the time of supply
of service?
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Ans.

Since the invoice has not been issued within the prescribed time period, time of supply of service will be
the earlier of the following two dates in terms of Section 13(2):

• Date of provision of service;

• Date of receipt of payment.

The payment was received on 5th January and the service was provided on 23rd April. Therefore, the
date of payment, ie 5th January is the time of supply of the service in this case.

ILLUSTRATION 7
Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2nd August but no
invoice was raised and the transaction (dispatch of cartons) were not entered in the accounts. There
was no evidence of receipt of payment. What is the time of supply of 150 cartons for the purpose of
payment of tax?

Ans.

As per Notification No 66/2017-CT dated 15th November 2017, a registered person (excluding
composition supplier) has to pay GST on the outward supply of goods at the time of supply as specified
in Section 12 (2) (a) {ie, date of issue of invoice or the last date on which invoice ought to have been
issued in terms of section 31}. In this case since the invoice has not been issued, the time of supply for
the purpose of payment of tax will be the last date on which the invoice is required to be issued.

The invoice for supply of goods must be issued on or before the dispatch of goods, ie on 2nd August.
Therefore, the time of supply for the purpose of payment of tax for the goods will be 2nd August, the
date when the invoice should have been issued.

ILLUSTRATION 8
An order is placed on Ram & Co on 18th August for supply of a consignment of customized shoes. Ram
& Co gets the consignment ready and informs the customer and issues the invoice on 2 nd December.
The customer collects the consignment from the premises of Ram & Co on 7th December and
electronically transfers the payment on the same date, which is entered in the accounts on the next
day, 8th December. What is the time of supply of the shoes for the purpose of payment of tax?
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Ans.

As per Notification No 66/2017-CT dated 15th November 2017, a registered person (excluding
composition supplier) has to pay GST on the outward supply of goods at the time of supply as specified
in Section 12(2) (a) {ie, date of issue of invoice or the last date on which invoice ought to have been issued
in terms of section 313. In this case, the invoice is issued before the removal of the goods and is thus,
within the time limit prescribed u/s31(1).

Therefore, the time of supply for the purpose of payment of tax is the date of issue of invoice, which is
2nd December.

ILLUSTRATION 9
Meal coupons are sold to a company on 9th August for being distributed to the employees of the said
company. The coupons are valid for six months and can be used against purchase of food items. The
employees use them in various stores for purchases of various edible items on different dates
throughout the six months. What is the date of supply of the coupons?

Ans.

As the coupons can be used for a variety of food items, which are taxed at different rates, the supply
cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of the
coupons is the date of their redemption in terms of Section 12(4).

ILLUSTRATION 10
A firm of advocates issues invoice for services to ABC Ltd on 17th Feb. The payment is contested by ABC
Ltd on the ground that on account of negligence of the firm, the company's case was dismissed by the
Court for non-appearance, which necessitated further appearance for which the firm is billing the
company. The dispute drags on and finally payment is made on 3rd November. Identify the time of supply
of the legal services.

Ans.

Tax on services supply by a firm of advocates by way of legal services to any business entity is payable
under reverse charge by such firm of advocates. As per section 13(3), the time of supply of services that
are taxable under reverse charge is earliest of the following two dates:

• Date of payment (3rd November); or

• 61st day from the date of issue of invoice (19 th April).
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The date of payment comes subsequent to the 61st day from the issue of invoice by the supplier of
service. Therefore, the 61st day from the date of supplier's invoice has to be taken as the time of supply.
This fixes 19th April as the time of supply.

ILLUSTRATION 11
Modern Security Co provides service of testing of electronic devices. In one case, it tested a batch of
devices on 4th and 5th September but could not raise invoice till 19th November because of some
dispute about the condition of the devices on return. The payment was made in December. What is the
method to fix the time of supply of the service?

Ans.

Section 13 provides that if the invoice is not issued within 30 days from the date of supply of service,
the time of supply of service is the date of provision of service or the date of receipt of payment,
whichever is earlier.

In this case, the service is provided on 5th September but not invoiced within the prescribed time limit.
Therefore, 5th September, the date of provision of service, being earlier than the date of payment, will
be the time of supply.

ILLUSTRATION 12
M/s XYZ & CO, a firm of Chartered Accountants, issued invoice for services rendered to Mr A on 7th
September. Determine the time of supply in the following independent cases:

(i) The provision of service was completed on 1!" August and payment was received on 28th
September.

(ii) The provision of service was completed on 14th August and payment was received on 28th
September.

(iii) Mr A made the payment on 3rd August. However, provision of service was remaining to be
completed at that time.

(iv) Mr A made the payment on 15th September. However, provision of service was remaining to be
completed at that time.

Ans.
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Section 13 provides that if the invoice is issued within 30 days from the date of supply of service, the
time of supply of service is the date of issue of invoice or the date of receipt of payment, whichever is
earlier. However, if the invoice is not issued within 30 days from the date of supply of service, the time
of supply of service is the date of provision of service or the date of receipt of payment, whichever is
earlier.

In accordance with the aforesaid provisions, the time of supply in the four independent cases will be:

(i) 1st August since the invoice is not issued within 30 days of supply of service.
(ii) 7th September since the invoice is issued within 30 days of supply of service and the payment is
received after the issuance of invoice.

(iii) 3rd August {ie, Earlier of date of invoice (7th September) or date of receipt of payment (3rd
August)}

(iv) 7th September {ie, Earlier of date of invoice (7th September) or date of receipt of payment (15th
September)}

ILLUSTRATION 13
M/s Pranav Associates, a partnership firm, provided recovery agent services to Newtron Credits Ltd, a
non-banking financial company and a registered supplier, on 15th January. Invoice for the same was
issued on 7th February and the payment was made on 18th April by Newtron Credits Ltd. Bank account
of the company was debited on 20th April. Determine the following:

(i) Person liable to pay GST

(ii) Time of supply of service

Ans.

(i) Tax on services supplied by a recovery agent to, inter alia, a non-banking financial company
(NBFC) is payable under reverse charge by such non-banking financial company. Therefore, in the
given case, person liable to pay GST is the NBFC - Newton Credits Ltd.

(ii) As per Section 13(3), the time of supply of service on which GST is payable under reverse charge
is earlier of the following:
• Date of payment as entered in the books of account of the recipient (18 th April);
• Date on which the payment is debited in his bank account (20 April); or
• Date immediately following 60 days since issue of invoice by the supplier (9th April).
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Thus, time of supply of service is 9th April.

ILLUSTRATION 14
Mr X supplied goods for ₹50,000 to its customer Miss Diyana on 1!# January on the condition that
payment for the same will be made within a week. However, Miss Digana made payment for the said
goods on 2nd February and thus, paid interest amounting to ₹ 2,000. What is the time of supply with
regard to addition in the value by way of interest in lieu of delayed payment of consideration?

Ans.

As per Section 12(6), the time of supply with regard to an addition in value on account of interest, late
fee or penalty or delayed payment of consideration is the date on which the supplier received such
additional consideration. Thus, time of supply in respect of interest would be the date on which the
supplier has received such additional consideration, ie 2nd February.

ILLUSTRATION 15
M/s Mansh & Vansh Trading Company, a registered supplier, is liable to pay GST under forward charge. It
has furnished the following information:

• Goods were supplied on 3rd October

• Invoice was issued on 5th October
• Payment received on 9th October

Determine the time of supply of goods for the purpose of payment of tax.

Ans.

As per Notification No 66/2017-CT dated 15th November 2017, a registered person (excluding
composition supplier) has to pay GST on the outward supply of goods at the time of supply as specified
in Section 12(2) (a) {ie, date of issue of invoice or the last date on which invoice ought to have been issued
in terms of section 31}. Further, a registered person is required to issue a tax invoice before or at the
time of removal of goods for supply to the recipient.

Thus, in the given case, the invoice for supply of goods should have been issued on or before the removal
of goods, ie on 3 rd October. However, since the invoice has not been issued within the prescribed time,
the time of supply for the purpose of payment of tax will be the last date on which the invoice is required
to be issued, ie 3rd October.
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ILLUSTRATION 16
(TOS of Goods - Supply Involves Movement of Goods)

Determine the time of supply in each of the following independent cases as per the provisions of section
12 of CGST Act in case supply involves movement of goods.

S.No. Date of Removal Date of Invoice Date When Goods Made Date of Receipt of
Available To Recipient Payment
1. 01 − 10 − 2023 02 − 10 − 2023 03 − 10 − 2023 15 − 11 − 2023
2. 03 − 10 − 2023 01 − 10 − 2023 04 − 10 − 2023 25 − 11 − 2023
3. 04 − 11 − 2023 04 − 11 − 2023 06 − 11 − 2023 01 − 10 − 2023

ILLUSTRATION 17
(TOS Of Goods - Supply Involves Movement of Goods)

Determine the time of supply in each of the following independent cases as per the provisions of Section
12 of Section 12 of CGST Act in case supply involves movement of goods.

S.No. Invoice Date Invoice Due Date Payment Entry In Supplier's Credit In Bank
Books Account

1. 10 − 11 − 2023 20 − 11 − 2023 28 − 11 − 2023 30 − 11 − 2023

2. 30 − 11 − 2023 18 − 11 − 2023 10 − 11 − 2023 28 − 11 − 2023

ILLUSTRATION 18
(TOS Of Goods - Supply Does Not Involve Movement of Goods)

Determine the time of supply in each of the following independent cases as per the provisions of section
12 of CGST Act in case supply doesn't involve movement of goods.

S.No. Date of Invoice Date When Goods Made Available To Date of Receipt of
Recipient Payment
1. 02 − 10 − 2023 03 − 10 − 2023 15 − 11 − 2023
2. 04 − 10 − 2023 01 − 10 − 2023 25 − 11 − 2023

3. 04 − 11 − 2023 06 − 11 − 2023 01 − 10 − 2023

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ILLUSTRATION 19
(TOS of Goods - Continuous Supply of Goods)

Determine the time of supply in each of following independent cases in accordance with provisions of
Section 12 of CGST Act in case supply of goods amounts to continuous supply of goods.

S.No. Invoice Date Removal of Goods Statement of Receipt of Payment

Accounts
1. 01 − 12 − 2023 15 − 11 − 2023 05 − 12 − 2023 02 − 12 − 2023
25 − 11 − 2023
2. 21 − 01 − 2024 18 − 01 − 2024 05 − 01 − 2024 10 − 02 − 2024
31 − 01 − 2024
3. 08 − 02 − 2024 14 − 01 − 2024 05 − 02 − 2024 01 − 02 − 2024
23 − 01 − 2024

ILLUSTRATION 20
(TOS Of Goods - Reverse Charge Basis)

Determine the time of supply in each of the following independent cases in accordance with provisions
of Section 12 of CGST Act in case recipient of goods is liable to pay tax under reverse charge mechanism.

S.No. Date of Invoice Date of Receipt of Date of Payment Date When Payment
Goods In Books Debited In Bank Account
1. 01 − 10 − 2023 05 − 10 − 2023 10 − 10 − 2023 12 − 10 − 2023
2. 01 − 10 − 2023 15 − 10 − 2023 10 − 10 − 2023 12 − 10 − 2023

3. 01 − 10 − 2023 15 − 10 − 2023 12 − 10 − 2023 10 − 10 − 2023

4. 01 − 10 − 2023 15 − 11 − 2023 18 − 11 − 2023 20 − 11 − 2023

ILLUSTRATION 21
(TOS of Goods - Reverse Charge Basis)

From the following information, determine the time of supply if supply of goods is taxed under reverse
charge basis:
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S.No. Date of Invoice Removal of Receipt of Date of Entry In Date of Debit In

Issued Goods Goods Books of Bank Account of
By Supplier Accounts of Recipient
Recipient
1. 31 − 12 − 2023 31 − 12 − 2023 20 − 01 − 2024 30 − 01 − 2024 01 − 02 − 2024

2. 31 − 12 − 2023 31 − 12 − 2023 20 − 01 − 2024 05 − 01 − 2024 06 − 01 − 2024

3. 31 − 12 − 2023 28 − 02 − 2024 05 − 03 − 2024 NA NA

ILLUSTRATION 22
(TOS of Services)

Determine the time of supply in each of the following independent cases in accordance with Section 13
of CGST Act:

S.No. Date of Actual Date of invoice Date of Payment

Provision of Service
1. 10 − 11 − 2023 30 − 11 − 2023 15 − 12 − 2023

2. 10 − 11 − 2023 30 − 11 − 2023 15 − 11 − 2023

3. 10 − 11 − 2023 30 − 11 − 2023 15 − 11 − 2023 (Part) and 10-12-2023
(remaining)
4. 10 − 11 − 2023 30 − 11 − 2023 06 − 11 − 2023 (Part) and 09-11-2023
(remaining)
5. 10 − 11 − 2023 30 − 11 − 2023 06 − 11 − 2023 (Part) and 16-11-2023
(remaining)
6. 10 − 11 − 2023 12 − 12 − 2023 30 − 04 − 2024

7. 10 − 11 − 2023 12 − 12 − 2023 05 − 11 − 2023 (Part) and 25-12-2023

(remaining)
8. 10 − 11 − 2023 22 − 12 − 2023 12 − 12 − 2023

ILLUSTRATION 23
(TOS of services)

Determine the time of supply in each of the following independent cases in accordance with Section 13
of CGST Act:
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S.No. Date of Date of Invoice Payment Entry In credit in Bank Remarks

Completion of Supplier's Books Account
service
1. 20-10-2023 21-10-2023 26-10-2023 30-10-2023

2. 20-10-2023 30-10-2023 24-10-2023 22-10-2023

3. 16-11-2023 26-12-2023 28-01-2024 29-01-2024

4. 01 − 12 − 2023 30 − 10 − 2023 30 − 10 − 2023 30 − 10 − 2023 ₹5L is received
30 − 10 − 2023 06 − 12 − 2023 08 − 12 − 2023 as advance on
30-10-2023
and balance
amount of
₹6,80,000 is
received on
06 − 12 − 2023

ILLUSTRATION 3
(TOS of Services - Continuous supply of Services)

From the following information, determine the time of supply of services. The supply is a continuous
supply of service where contract provides for monthly payment upto 15th of the succeeding month.

S.No. Entry of Provision of Date of Invoice Due Date of Payment Receipt of Payment
Services In Books As Per Contract

1. 30 − 11 − 2023 07 − 12 − 2023 15 − 12 − 2023 20 − 12 − 2023

2. 31 − 12 − 2023 22 − 01 − 2024 15 − 01 − 2024 20 − 01 − 2024

3. 31 − 01 − 2024 15 − 02 − 2024 15 − 02 − 2024 11 − 02 − 2024

ILLUSTRATION 3
Know & Grow Publishers, a registered dealer in India, paid an advance of ₹ 50,000 to Mr Ganatra, an
author, for the copyright covered u/s 13 (1) (a) of the Copyright Act, 1957 of his original literary work on
5-9-2023. It made the balance payment of ₹ 1,50,000 on 12-12-2023. You are required to determine the
time of supply, if Mr Ganatra raised the invoice on:

(i) 6-10-2023; or
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(ii) 17-12-2023.

Answer

GST On supply of services by an author by way of transfer or permitting the use or enjoyment of a
copyright covered u/s 13(1) (a) of the Copyright Act, 1957 relating to original literary works to a publisher
is payable under reverse charge by such publisher, i.e. Know & Grow Publishers.

The time of supply of service, on which GST is payable under reverse charge, is earlier of the following
two dates:

• Date of payment; or
• 61$" day from the date of issue of invoice by the supplier.

(i) If the invoice is issued on 06.10.2023, time of supply shall be as under:

• For the payment of ₹ 50,000 − 05.09.2023 {earlier of date of payment and 61st day from the
date of issue of invoice}

• For the payment of ₹ 1,50,000 - 06.12.2023 {earlier of date of payment and 61st day from the
date of issue of invoice}

(ii) If the invoice is issued on 17.12.2023, time of supply shall be as under:

• For the payment of ₹50,000 − 05.09.2023 {earlier of date of payment and 61 st day from the
date of issue of invoice}

• For the payment of ₹ 1,50,000 − 12.12.2023 {earlier of date of payment and 61 st day from
the date of issue of invoice}
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CHAPTER - 6 VALUE OF SUPPLY

ILLUSTRATION 1
Are post-supply discounts eligible for deduction from the value of supplies in all situations? Explain.

Ans.

Post-supply discounts are not eligible for deduction from the value of supplies in all situations. Such
discounts are allowed as a deduction from the value of supply only in the situations where the
following conditions are satisfied:

• The discount is in terms of an agreement that existed at the time of supply and can be worked out
invoice-wise; and

• Proportionate input tax credit is reversed by the recipient {The buyer would have availed ITC of
GST payable on the gross value specified in the invoice. Thus, when a credit note is issued to him
by the supplier for the discount, the buyer will reverse the proportionate credit, consequent to
which the supplier's output tax liability will be reduced by the same amount}

If any of the above conditions are not satisfied, post-supply discount is not allowed as a deduction
from the value of supply and consequently, GST liability of the supplier does not get reduced.

ILLUSTRATION 2
'Consideration under GST law includes both monetary and non-monetary considerations.' Discuss the
correctness or otherwise of the statement with reference to the definition of term 'consideration'
provided under the CGST Act.

Ans.

The statement is correct. As per the definition of the term 'consideration' provided under the CGST
Act, consideration under the GST law includes both payment in money or otherwise made by the
recipient or any other person and also takes within its sweep the monetary value of any act or
forbearance for the supply by the recipient or any other person. Further, it includes within its ambit
any deposit which is applied as a consideration for the supply but excludes the subsidies provided by
the State or Central Government.
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The term money has also been defined under the CGST Act. It not only includes cash (Indian as well as
foreign currency) but also cheque, promissory note, bill of exchange, letter of credit, draft, pay order,
traveller's cheque, money order, postal/electronic remittance or any such similar instrument
recognized by RBI. Non-monetary consideration essentially means consideration in kind.

ILLUSTRATION 3
Sharp Minds institute provides coaching for engineering entrance examinations. Fee charged by the
Institute from a student is ₹10,000 per month. The Institute is known for its commitment to provide
education to underprivileged children. It trains 10 students every year for entrance examinations free
of cost.

The Institute has received ₹3,00,000 as coaching fees during a month. Nav Jeevan, an NGO working in
the area of education for underprivileged children, has given a subsidy of ₹ 10,000 (in lumpsum) during
the month to the institute as it is serving the cause of underprivileged children.

Determine the value of supply of education services made by sharp Minds institute during the month.

Ans.

As per Section 15(2)(e), the value of a supply includes subsidies directly linked to the price, excluding
subsidies provided by the State Governments and the Central Government.

In the given case, though the subsidy is given by a non-Government body, the same is not includible
in the value as it is given in lumpsum and not directly linked to the price of the supply being valued.
Therefore, the value of supply made by sharp Minds during the month is ₹ 3,00,000.

ILLUSTRATION 4
Furniture-Wala is a chain of retail showrooms selling both modern and classic furniture. In order to
build strong customer association, the showroom provides free delivery of the furniture at the
premises of the customers if the distance between the showroom and the customer's premises is upto
20 kms. Where the distance is more than 20 kms, the showroom charges a concessional freight of ₹10
for every additional km.

Ms Leena Kapoor purchases a double bed, a dressing table and a centre table for ₹2,00,000 from
Furniture-Wala. Ms Leena gets free delivery of the furniture as her residence is located at a distance
of 18 kms from the showroom. The showroom incurs an expenditure of ₹1,000 'for delivering the
furniture at Ms Leena's residence.
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Determine the value of taxable supply made by Furniture-Wala. Will your answer change if residence
of Ms Leena is 50 kms away from the showroom?

Ans.

In the given case, the showroom is not charging any amount towards freight from Ms Leena but
incurring the same out of its own pocket. Therefore, the same should not be added to the value. Thus,
the value of supply will be ₹ 2,00,000,

However, the answer will change in the second case when the showroom will charge ₹ 300 for freight
[(50kms - 20 kms) x ₹10] from Ms Leena. In this case, the supply will be a composite supply (principle
supply being supply of furniture) and value thereof will be ₹ 2,00,300.

ILLUSTRATION 5
AKJ Foods Pvt Ltd gets an order for supply of processed food from a customer. The customer wants
the consignment tested for gluten and specified chemical residues. AKJ Foods Pvt Ltd does the testing
before the supply and charges a testing fee for the same from the customer. AKJ Foods Pvt Ltd argues
that such testing fess should not form part of the consideration for the sale as it is a separate activity.
Is the company's argument correct in the light of section 15?

Ans.

Section 15 (2) mandates addition of certain elements in the value of supply. Section 15(2) (c) specifies
that amount charged for anything done by the supplier in respect of the supply at the time of or before
delivery of goods or supply of services shall be included in the value of supply.

Since AKJ Foods Put Ltd does the testing before the delivery of goods, the charges therefor will be
included in the value of the consignment. Therefore, AKJ Foods Pvt Ltd's argument is not correct. The
testing fee should be added to the price to arrive at value of the consignment.

ILLUSTRATION 6
A philanthropic association makes a substantial donation each year to a reputed private management
institution to subsidize the education of low-income group students who have gained admission there.
The fee for these individuals is reduced thereby coming to ₹3lakhs a year compared to ₹5lakhs a year
for other students. What would be the value of the service of coaching and instruction provided by the
institution to the low-income group students?
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Ans.

As per Section 15(2)(e), the value of a supply includes subsidies directly linked to the price, excluding
State Government and Central Government subsidies. In this case, the subsidy is not received from
Government but from a philanthropic association. Therefore, the subsidy is to be added back to the
price to arrive at the value, which comes to ₹ 5 lakhs a year.

ILLUSTRATION 7
Mezda Banners, an advertising firm, gives its customers an interest-free credit period of 30 days for
payment. Its customer paid for the supply 32 days after the supply of service. Mezda Banners waived
the interest payable for delay of two days. The Department wants to add interest for two days to the
value of supply. Should notional interest be added to the value?

Ans.

This is a supply that is valued as per transaction value u/s15(1) as the price is the sole consideration
for the supply and the supply is made to unrelated person. The value of a supply includes certain
elements like interest which are actually payable. ance waived, the interest is not payable and is
therefore, not to be added to the value.

ILLUSTRATION 8
Crunch Bakery Products Ltd sells biscuits and cakes through its dealers, to whom it charges the list
price minus standard discount and pays GST accordingly. When goods remain unsold with the dealers,
it offered additional discounts on the stock as an incentive to push the sales. Can this additional
discount be reduced from the price at which the goods were sold, and corresponding tax adjustments
made?

Ans.

The discounts were not known or agreed for at the time of supply of goods to the dealers. Therefore,
in terms of Section 15 (3), such discounts cannot be reduced from the price on which tax had been
paid.

ILLUSTRATION 9
Red Pepper Ltd, Delhi, a registered supplier, is manufacturing taxable goods. It provides the following
details of taxable inter-state supply made by it during the month of March:
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S.No. Particulars Amount (Rs)

(i) List price of taxable goods supplied inter-state (exclusive of taxes) 15,00,000
(ii) Subsidy received from the Central Government for supply of taxable goods 2,10,000
to Government School
(exclusively related to supply of goods included at S. No. 1)
(iii) subsidy received from an NGO for supply of taxable goods to an old age 50,000
home (exclusively related to supply of goods included at S. No. 1)
(iv) Tax levied by Municipal Authority 20,000
(v) Packing charges 15,000

(vi) Late fee paid by the recipient of supply for delayed payment of 6,000
consideration (Recipient has agreed to pay ₹ 6,000 in lump sum and no
additional amount is payable by him)

The list price of the goods is net of the two subsidies received. However, the other charges/taxes/fee
are charged to the customers over and above the list price. Calculate the total value of taxable supplies
made by Red Pepper Ltd during the month of March. Rate of IGST is 18%.

Ans.
Computation of Total Value of Taxable Supplies Made By Red Pepper Ltd During The Month of March:

Particulars Amount (Rs)

List price of the goods 15,00,000
Subsidy amounting to ₹2,10,000 received from the Central Government Nil
{Since the subsidy is received from the Government, the same is not includible
in the value in terms of section 15(2)(e)}
Subsidy received from NGO 50,000
{Since the subsidy is received from a non-Government body and directly linked
to the supply, the same is includible in the value in terms of Section 15(2)(e)}
Tax levied by the Municipal Authority 20,000
{Includible in the value as per Section 15(2)(a)}
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Packing charges 15,000

{Being incidental expenses, the same are includible in the value as per section
15(2)(c)}
Late fees paid by recipient of supply for delayed payment 5,085
{Includible in the value as per Section 15(2)(d) - As the amount of interest
received is a lump sum amount, the same has to be taken as inclusive of GST} (
₹6,000 × 100/118)
Total Value of Taxable supplies 15,90,085

ILLUSTRATION 10
M/s Flow Pro, a registered supplier, sold a machine to BP Ltd. It provides the following information in
this regard:

S.No. Particulars Amount (Rs)

(i) Price of the machine (excluding taxes and other charges mentioned at S.No. 25,000
(ii) and (iii))

(ii) Third party inspection charges (Such charges were payable by M/s Flow Pro 5,000
but the same have been directly paid by BP Ltd to the inspection agency;
these charges were not recorded in the invoice issued by M/s Flo Pro)
(iii) Freight charges for delivery of the machine 2,000
(M/s Flow Pro has agreed to deliver the goods at BP Ltd's premises)
(iv) Subsidy received from the State Government on sale of machine under Skill 5,000
Development Programme
(Subsidy is directly linked to the price)
(v) Discount of 2% is offered to BP Ltd on the price mentioned at S.No. (i) above
& recorded in the invoice

Note: Price of the machine is net of the subsidy received.

Determine the value of taxable supply made by M/s Flow Pro to BP Ltd.

Ans.
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Computation of Value of Taxable Supply Made By M/S Flo Pro To BP Ltd:

Particulars Amount (Rs)

Price of the machine {Since the subsidy is received from the State Government, 25,000
the same is not includible in the value of supply in terms of Section 15(2)(e)}

Third party inspection charges {Any amount that the supplier is liable to pay in 5,000
relation to the supply but has been incurred by the recipient and not included in
the price actually paid or payable for the goods, is includible in the value of supply
in terms of Section 15(2)(b)}

Freight charges for delivery of the machine value {Since arranging freight is the 2,000
liability of supplier, it is a case of composite supply and thus, freight charges are
added in the value of principal supply?
Total 32,000
Less: Discount @ 2% on ₹ 25,000 being price charged to BP Ltd {Discount given (500)
before or at the time of supply if duly recorded in the invoice is deductible from
the value of supply as per section 15(3)}

Value of Taxable Supply 31,500

ILLUSTRATION 11
Shri Krishna Pvt Ltd, a registered supplier, furnishes the following information relating to goods sold
by it to Shri Balram Pvt Ltd:

S.No. Particulars Amount (Rs)

(i) Price of the goods (excluding taxes and other charges mentioned at S.No. 1,00,000
(iii), (v) and (vi))
(iii) Municipal tax 2,000
(iii) Inspection charges 15,000

(iv) Subsidy received from Shri Ram Trust (Subsidy is directly linked to the 50,000
goods supplied)
(v) Late fees for delayed payment inclusive of GST (Shri Balram Pvt Ltd paid 1,000
the late fees. However, these charges were ultimately waived by Shri
Krishna Pvt Ltd and the amount was refunded to Shri Balram Put Ltd
during the same month)
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(vi) Weighment charges (Such charges were paid by Shri Balram Pvt Ltd to 2,000
Radhe Pvt Ltd on behalf of Shri Krishna Pvt Ltd)

Note: Price of the goods is net of the subsidy received.

Determine the value of taxable supply made by Shri Krishna Pvt Ltd to Shri Balram Pvt Ltd.

Ans.
Computation of Value of Taxable Supply Made By Shri Krishna Pvt Ltd To Shri Balram Put Ltd:

Particulars Amount (RS)

Price of the goods 1,00,000

Municipal tax {Includible in the value as per Section 15(2)(a)} 2,000
Inspection charges {Any amount charged for anything done by the supplier 15,000
in respect of the supply of goods at the time of/before delivery of goods is
includible in the value as per section 15(2)(c)}

subsidy received from Shri Ram Trust {Since the subsidy is received from a 50,000
non-government body and directly linked to the supply, the same is
includible in the value in terms of section 15(2)(e)}

Late fees for delayed payment {Not includible since the same is waived off} N/L
Weighment charges paid to Radhe Put Ltd on behalf of Shri Krishna Put Ltd 2,000
{Any amount that the supplier is liable to pay in relation to supply but has
been incurred by the recipient and not included in the price actually paid or
payable for the goods, is includible in the value of supply as per Section
15(2)}
Value of Taxable Supply 1,69,000

ILLUSTRATION 12
Koli Ltd, a registered supplier, has supplied machinery to Ghisa Ltd (a supplier registered in the same
State). It provides following particulars regarding the same:

S.No. Particulars Amount (Rs)

(i) Price of machinery (exclusive of taxes and discounts) 5,50,000

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(ii) Part fitted in the machinery at the premises of Ghisa Ltd (Amount has 20,000
been paid by Ghisa Ltd directly to the supplier. However, it was Koli Ltd's
liability to pay the said amount. The said amount has not been recorded
in the invoice issued by Koli Ltd)

(iii) Installation and testing charges for machinery, not included in price 25,000

(iv) Discount @ 2% on price of the machinery mentioned at S.No. (i) above

(recorded in the invoice)
(v) Koli Ltd provides additional discount @ 1% at year end, based on
additional purchase of other machinery for which adjustment is made
at the end of the financial year without any change in individual
transactions.

Ans.

Computation of Value of Taxable Supply Made By Koli Ltd To Ghisa Ltd:

Particulars Amount (Rs)
Price of machinery (exclusive of taxes and discounts) 5,50,000

Amount paid by Ghisa Ltd directly to the supplier for the part fitted in the 20,000
machinery {Any amount that the supplier is liable to pay in relation to a supply
but which has been incurred by the recipient of the supply and not included in the
price actually paid or payable for the goods is includible in the value of supply in
terms of section 15(2)(b)}

Installation and testing charges {Any amount charged for anything done by the 25,000
supplier in respect of the supply of goods at the time of/before delivery of goods
is includible in the value of supply in terms of Section 15 (2) (c)}
Less: Discount @ 2% on the price of machinery (₹ 5,50,000 × 2%) {Since discount (11,000)
is given at the time of supply of machinery and recorded in the invoice, the same
is deductible from the value of the supply in terms of Section 15(3)}
Less: Additional 1% discount at year end {Though the additional discount is Nil
established before/at the time of supply, it is not deductible from the value of
supply in terms of section 15 (3) as the same is not linked to any specific
transaction and is adjusted by the parties at the end of the financial year}
Value of Taxable supply 5,84,000
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CHAPTER - 7 INPUT TAX CREDIT

ILLUSTRATION 1
What is input tax?

Ans.

Input tax means the Central Tax (CGST), State Tax (SGST), integrated Tax (IGST) or Union Territory Tax
(UTGST) charged on supply of goods/services or both made to a registered person. It also includes tax
paid on reverse charge basis and IGST charged on import of goods. It does not include tax paid under
composition levy.

ILLUSTRATION 2
What are the conditions necessary for availing ITC?

Ans.

Following six conditions are to be satisfied by the registered taxable person for obtaining ITC:

(a) He is in possession of tax invoice or debit note or such other tax paying documents as may be
prescribed;
(b) He has received the goods or services or both;
(c) The details of the invoice or debit note referred to in Condition I should have been furnished by
the supplier in the statement of outward supplies (Form GSTR-1 or IFF) and such details should
have been communicated to the registered recipient in Form GSTR-2B;

(d) The details of input tax credit in respect of the said supply communicated to such registered
person u/s 38 has not been restricted.

(e) The supplier has actually paid the tax charged in respect of the supply to the Government; and
(f) He has furnished the return u/s 39.
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ILLUSTRATION 3
Can a person take ITC without payment of consideration for the supply along with tax?

Ans.

Yes, the recipient can take ITC. However, he is required to pay the consideration along with tax within
180 days from the date of issue of invoice. This condition is not applicable where tax is payable on
reverse charge basis.

ILLUSTRATION 4
What is the time limit for taking ITC and reasons therefor?

Ans.

The time limit for taking ITC is 30th November of the succeeding financial year or date of filing of
annual return, whichever is earlier

ILLUSTRATION 5
What is the ITC entitlement of a newly registered person?

Ans.

A person applying for registration can take input tax credit of inputs held in stock and inputs contained
in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of
registration.

If the person was liable to take registration and he has applied for registration within 30 days from the
date on which he became liable to registration, then ITC of inputs held in stock and inputs contained
in semi-finished or finished goods held in stock on the day immediately preceding the date on which
he became liable to pay tax can be taken.

In case of voluntary registration, ITC of such goods held in stock on the day immediately preceding
the date of registration can be taken.

ILLUSTRATION 6
What is the implication of supply of capital goods by a registered person who had taken ITC on such
capital goods?
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Ans.

In case of supply of capital goods or plant and machinery on which ITC has been taken, the registered
person shall pay an amount equal to the ITC taken on the said capital goods or plant and machinery
reduced by 5% per quarter or part thereof from the date of invaice or the tax on the transaction value
of such capital goods, whichever is higher.

However, in case of refractory bricks, moulds and dies, jigs and fixtures when these are supplied as
scrap, the person can pay tax on the transaction value.

ILLUSTRATION 7
A registered person transfers its business to another person. Is such registered person allowed to
transfer the unutilized ITC lying in its electronic credit ledger to such transferred business? Discuss.

Ans.

As per Section 18(3), in case of sale, merger, demerger, amalgamation, transfer or change in ownership
of business etc, the ITC that remains unutilized in the electronic credit ledger of the registered person
can be transferred to the new entity, provided there is a specific provision for transfer of liabilities in
such change of constitution.

The registered person should furnish the details of change in constitution on the common portal and
submit a certificate from practicing Chartered Account/Cost Accountant certifying that the change
in constitution has been done with a specific provision for transfer of liabilities. Upon acceptance of
such details by the transferee on the common portal, the unutilized ITC gets credited to his electronic
credit ledger. The transferee should record the inputs and capital goods so transferred in his books of
account.

ILLUSTRATION 8
Swastik Put Ltd is a manufacturer of taxable goods. It purchased a machinery for ₹8,00,000 on which
IGST of ₹14,400 is paid. The company has claimed depreciation under the Income Tax Act, 1961 on the
full value of the machine, ie including the IGST component of ₹14,400 availed by it as ITC. Examine if
the stand taken by the company is correct in law.

Ans.

As per section 16(3), if the person taking the ITC on capital goods and plant and machinery has claimed
depreciation on the tax component of the cost of the said items under the Income Tax Act 1961, the
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ITC on the said tax component shall not be allowed. Since in the given case, Swastik Pvt Ltd has claimed
depreciation on the tax component of the cost of the machine, it cannot claim ITC of IGST of ₹ 14,400
paid by it on the machine. It can either claim depreciation on the tax component or avail ITC of such
tax but cannot avail both the benefits simultaneously.

ILLUSTRATION 9
Sigma consultants, an LLP of finance professionals, provides financial consultancy services. It made
an advance payment of ₹1,18,000 (inclusive of 1G5 @ @ 18%) in the month of October to Azuro
Computer Services for developing a software. The software would be used by the LLP to enhance the
precision of the financial advice given by it to various clients. The balance payment is to be made after
the successful test run of the software in the month of December. Sigma Consultants has availed ITC
of IGST of ₹18,000 in the month of October.

Do you think Sigma Consultants can avail such ITC? Examine the scenario with reference to the
relevant legal provisions.

Ans.

As per Section 16 (2) (b), tax paid on supply of goods and/or services can be availed as ITC only if such
goods and/or services are received by the registered person. In the given case, Sigma consultants has
paid IGST of ₹18,000, in the month of October, on advance for IT services intended to be used in the
course or furtherance of business. However, it cannot avail ITC of such tax in the month of October as
the services in relation to which the advance payment has been made have not been received in that
month.

ILLUSTRATION 10
A taxable person is in the business of information technology. He buys a car (maximum seating
capacity - 5 persons) for use of his Executive Directors. Can he avail the ITC in respect of GST paid on
purchase of such car?

Ans.

No. ITC on motor vehicles for transportation of persons with seating capacity of up to 13 persons
(including driver), can be availed only if the taxable person is in the business of transport of
passengers or is providing the services of imparting training on driving such motor vehicles or is in the
business of supply of such motor vehicles.
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ILLUSTRATION 11
A technical testing agency tests and certifies each batch of machine tools before dispatch by BMT
Ltd. Some of these tools are dispatched to a unit in a SEZ without payment of GST as these supplies
are not taxable. The finance personnel of BMT Ltd want to know whether they need to carry out
reversal of ITC on the testing agency's services to the extent attributable to the SEZ supplies. Give
your comments.

Ans.

ITC is disallowed only to the extent it pertains to supplies used for non-business purposes or supplies
other than taxable and zero-rated supplies. Supplies to SEZ units are zero rated supplies in terms of
section 16 (1) of the IGST Act. Thus, full ITC is allowed on inward supplies of BMT Ltd used for effecting
supplies to the unit in the SEZ.

ILLUSTRATION 12
'AB', a registered person, was paying tax under composition scheme up to 30th July. However, wef
311st July, ' AB ' becomes liable to pay tax under regular scheme. is ' AB ' eligible for any ITC?

Ans.

'AB' is eligible for ITC on inputs held in stock and inputs contained in semi-finished or finished goods
held in stock and capital goods as on 30th July. ITC on capital goods will be reduced by 5% per quarter
or part thereof from the date of invoice.

ILLUSTRATION 13
Babla Enterprises is exclusively engaged in making exempt supply of goods and is thus, not registered
under GST. On 1st October, the exemption available on its goods gets withdrawn. On that day, the
turnover of Babla Enterprises was ₹ 50 lakhs. Examine the eligibility of Babla Enterprises for availing
ITC, if any.

Ans.

Since the exemption available on goods being supplied by Babla Enterprises gets withdrawn, it
becomes liable to registration as its turnover has crossed the threshold limit on the day when the
exemption is withdrawn.
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Assuming that Babla Enterprises applies for registration within 30 days of 1st October and it obtains
such registration, it will be entitled to take credit of input tax in respect of inputs held in stock and
inputs contained in semi-finished or finished goods held in stock on the day immediately preceding
the date from which it becomes liable to pay tax, ie 30 th september.

ILLUSTRATION 14
Mamta Trade Links trades in exempt goods and provides taxable services. It is registered under GST.
On 1st October, the exemption available on its goods gets withdrawn. Analyze the scenario and
determine the eligibility of Mamta Trade Links for availing ITC, if any, on inputs and/or capital goods
used in the supply of exempt goods.

Ans.

If the exempt supply made by a registered person becomes a taxable supply, provisions of section 18
become applicable. In the given case, since Mamta Trade Links is a registered person, Section 18 will
be applicable.

As per Section 18, Mamta Trade Links will be entitled to take credit of input tax in respect of inputs
held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such
exempt supply and on capital goods exclusively used for such exempt supply on the day immediately
preceding the date from which such supply becomes taxable, ie 30th September. ITC on capital goods
will be reduced by 5% per quarter or part thereof from the date of invoice.

ILLUSTRATION 15
Comfortable (P) Ltd is registered under GST in the State of Odisha. It carries on business of
manufacture of iron and steel products. It has received IT engineering services from High-Fi Infotech
(P) Ltd for ₹ 11,00,000 (excluding GST @ 18%) on 28th October. Invoice for service rendered was issued
on 5th November. Comfortable (P) Ltd made part payment of ₹4,20,000 on 30th November. Being
unhappy with service provided by High-Fi Infotech (P) Ltd, it did not make the balance payment.
Deficiency in service rendered was made good by High-Fi Infotech (P) Ltd by 15th April of next year.
Comfortable (P) Ltd made the balance payment on 6th July of next year.

Examine the availability of ITC with Comfortable (P) Ltd in respect of IT engineering services received
by it from High-Fi Infotech (P) Ltd.
SIR
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Ans.

Every registered person is entitled to take credit of input tax charged on any supply of goods and/or
services which are used or intended to be used in the course or furtherance of his business if, inter
alia, he is in possession of a tax invoice issued by a supplier and he has received the goods and/or
services.

The registered person must pay to the supplier, the value of the goods and/or services along with the
tax within 180 days from the date of issue of invoice. In the event of failure to do so, the corresponding
credits availed by the registered person would be added to his output tax liability, with interest.
However, once the recipient makes the payment of value of goods and/or services along with tax, he
will be entitled to avail the credit again without any time limit. In case part-payment has been made,
proportionate credit would be allowed.

In the given case, High-Fi Infotech (P) Ltd provides the service in the month of October and Comfortable
(P) Ltd receives the invoice in the month of November. Therefore, in view of the above provisions and
assuming all other conditions required for availing ITC having been fulfilled, ITC of ₹1,98,000
(₹11,00,000 × 18%) will be availed by Comfortable (P) Ltd in the month of November when it receives
the invoice issued by High-Fi Infotech (P) Ltd.

However, proportionate ITC amounting to ₹1,33,932 {(₹12,98,000 - ₹4,20,000) × 18/118} will be added
to the output tax liability of Comfortable (P) Ltd as full payment has not been made within 180 days of
issuance of the invoice, ie by 4th May of next year. ITC of ₹1,33,932 can, however, be availed again by
Comfortable (P) Ltd in the month of July next year when it makes the balance payment.

ILLUSTRATION 16
M/s Diwan & Sons of New Delhi, has placed an order for 250 kg of plastic granules @ ₹ 50 per kg
(exclusive of GST) on M/s Karim & Bros of Noida, UP. M/s Karim & Bros has agreed to deliver the goods
at the warehouse of M/s Diwan & Sons at New Delhi.

While the order was getting packed at the factory of M/s Karim & Bros, M/s Diwan & Sons got an order
from Shubhkamna Sales of Hapur, UP for 250 kg of plastic granules @ ₹ 60 per kg (exclusive of GST).
In order to save on transportation cost, M/s Diwan & Sons asks M/s Karim & Bros to directly deliver the
plastic granules to Shubhkamna Sales at its godown located in Hapur. Accordingly, M/s Karim & Bros
has delivered the plastic granules at the godown of Shubhkamna Sales at Hapur.

Examine the availability of ITC with M/s Diwan & Sons & M/s Karim & Bros.

Note: All the parties are registered under GST and rate of GST is 18%.
SIR
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Ans.

One of the conditions for availing ITC is that the registered person taking the ITC must have received
the goods and/or services. However, goods delivered to a third person on the direction of the
registered person by way of transfer of documents of title or otherwise, either before or during the
movement, are deemed to have been received by such registered person. So, ITC is available to the
registered person, on whose order the goods are delivered to a third person even though the
registered person does not receive the goods.

In the given case, goods have been delivered by M/s Karim & Bros (supplier) to Shubhkamna sales
(third person) on the direction of M/s Diwan & Sons (registered person). Therefore, in view of the above
provisions, 1TC of ₹ 2,250 (₹50perkg × 250 kg × 18%) will be available to M/s Diwan & Sons (registered
person) on the purchase of 250 kg of plastic granules @ 50 per kg.

Further, in this case there is another supply between M/s Diwan & Sons (supplier) and Shubhkamna
Sales (recipient). Therefore, shubhkamna sales can avail ITC of ₹ 2,700 (₹60 per kg × 250 kg × 18%) on
the purchase of 250 kg of plastic granules@60perkg.

ILLUSTRATION 17
Harshgeet Put Ltd, a registered supplier, is engaged in the manufacture of taxable goods. The
company provides the following information pertaining to GST paid on the purchases made/input
services availed by it during the month of July:

S.No. Tax Liability Amount (₹)

(1) Raw Material (To be received in September) 2,50,000
(2) Membership of a club availed for employees working in the factory 1,45,000
(3) Inputs to be received in 5 lots, out of which 3rdalot was received 80,000
during the month
(4) Trucks used for transport of raw material 40,000

(5) Capital Goods (out of 3 items, invoice for 2 items is missing & GST paid 1,50,000
on those items is ₹80,000)

Determine the amount of tax credit available with Harshgeet Put Ltd for the month of July by giving
the necessary explanation for treatment of various items. All the conditions necessary for availing the
ITC have been fulfilled.
SIR
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Ans.

Computation of ITC Available With Harshgeet Pvt Ltd:

S.No. Tax Liability Amount (₹)

(1) Raw Material (To be received in September) Nil

{ITC can be availed only if the goods have been received. Since the goods
are received in September, ITC cannot be availed in July}
(2) Membership of a club availed for employees working in the factory Nil
{Blocked credit in terms of Section 17(5) of the CGST Act, 2017}
(3) Inputs to be received in S lots, out of which 3rd lot was received during the Nil
month
{In case of goods received in lots, ITC can be taken only upon receipt of
the last lot}

(4) Trucks used for transport of raw material {ITC of GST paid on motor 40,000
vehicles is allowed only when used, inter alia, for transportation of goods}
(5) Capital Goods (out of 3 items, invoice for 2 items is missing & GST paid on 70,000
those items is ₹ 80,000)
{ITC of GST paid on items for which invoice is missing is not available; so
ITC of ₹80,000 is not available}

Total ITC Available 1,10,000

ILLUSTRATION 18
Jamku Ltd, a registered person, is engaged in the business of spices. It provides the following details
for GST paid during October. Determine the amount of ITC available to Jamku Ltd for the month of
October with all related workings and explanations. All the conditions necessary for availing the ITC
have been fulfilled.

S.No. Particulars Amount (₹)

(i) Purchase of raw spices:
• Raw spices used for furtherance of spices 50,000
• Raw spices used for personal use of directors 20,000

(ii) Electric machinery purchased to be used in the manufacturing process 20,000

SIR
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(iii) Motor vehicle used for transportation of the employee 25,000

(iv) Payment made for material and to contractor for construction of staff 55,000
quarter

Ans.

Computation of ITC Available With Jamku Ltd:

S.No. Particulars Amount (₹)

(i) Purchase of raw spices used for furtherance of spices {Every registered 50,000
person is entitled to take credit of input tax charged on any supply of goods
to him which are used or intended to be used in the course or furtherance
of his business?
Purchase of raw spices used for personal use of directors {ITC is not
available on goods used for personal consumption}

(ii) Electric machinery purchased to be used in the manufacturing process 25,000

{Every registered person is entitled to take credit of input tax charged on
any supply of goods to him which are used or intended to be used in the
course or furtherance of his business?

(iii) Motor vehicle used for transportation of the employee {ITC on motor Nil
vehicles can be availed, inter alia, when they are used for making the taxable
supply of transportation of passengers. In the given case, since the supplier
is in the business of spices, it cannot avail credit on motor vehicles used for
transportation of the employee. Thus, ITC on motor vehicle used for
transportation of the employee is blocked credit} - Assumed that the
seating capacity of the vehicle including driver ⩽ 13 persons

(iv) Payment made for material and to contractor for construction of staff Nil
quarter {ITC is not available on goods or services or both received by a
taxable person for construction of an immovable property (other than plant
or machinery) on his own account including when such goods or services or
both are used in the course or furtherance of business?

Total Eligible ITC 75,000

SIR
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ILLUSTRATION 19
Dina Ltd, a registered supplier from Maharashtra, is engaged in the manufacturing of passenger auto.
The company provides the following details of purchases made/services availed by it during the month
of March. You are required to determine the eligible input tax credit available to M/s Dina Ltd for the
month of March, by giving brief explanations for treatment of various items. Subject to the information
given above, all the other conditions necessary for availing input tax credit have been fulfilled.

S.No. Particulars Amount (₹)

(i) Purchase of iron which is used as a raw material {Goods were received 2,50,000
in two instalments, first one in March and the second instalment was
received in April}

(iii) Purchase of accessories which were delivered directly to the dealers of 90,000
the company. Only invoice was received by Dina Ltd

(iii) Purchase of bus (seating capacity 15) for the transportation of 1,97,000
employees from their residence to company and back

(iv) Input tax credit on general insurance taken on a car used by executives 5,200
of the company for official purposes

(v) Payment made to M/s Tasty Caterers for providing daily breakfast & 54,700
lunch to the employees of the company, as a voluntary staff welfare
measure

Ans.

Computation of input Tax Credit (ITC) Available With Dina Ltd:

S.No. Particulars Amount (₹)

(i) Purchase of iron which is used as a raw material {Goods were received in Nil
two instalments, first one in March and the second instalment was
received in April}
{When inputs are received in instalments, ITC can be availed only on the
receipt of last instalment. Hence, since last instalment is received in April,
ITC cannot be availed in March?
SIR
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(ii) Purchase of accessories which were delivered directly to the dealers of 90,000
the company. Only invoice was received by Dina Ltd
{Goods delivered to another person on the direction of the registered
person by way of transfer of documents of title or otherwise, either before
or during the movement, are deemed to have been received by such
registered person. Thus, ITC is available to the registered person, on
whose order/ direction the goods are delivered to a third person}

(iii) Purchase of bus (seating capacity 15) for the transportation of employees 1,97,000
from their residence to company and back
{ITC on motor vehicles for transportation of persons with seating capacity
> 13 persons (including the driver) used for any purpose is allowed?

(iv) Input tax credit on general insurance taken on a car used by executives of Nil
the company for official purposes

{ITC an motor vehicles for transportation of persons with seating capacity

⩽ 13 persons (including the driver) is blocked except when the same are
used for (a) making further taxable supply. of such motor vehicles (b)
making taxable supply of transportation of passengers (c) making taxable
supply of imparting training on driving such motor vehicles. Further, ITC is
not allowed on services of general insurance relating to such ineligible
motor vehicles. Since, the car is not used for any of the eligible purposes,
ITC thereon is blocked and thus, ITC on general insurance taken on such
car is also blocked?

(v) Payment made to M/s Tasty Caterers for providing daily breakfast & lunch Nil
to the employees of the company, as a voluntary staff welfare measure
{ITC on outdoor catering is blocked except (a) in the case of sub-
contracting, ie when such service is used by the taxpayer who is in the
same line of business (b) when such service is provided by the employer
to its employees under a statutory obligation. Since the company is not
an outdoor caterer and it is providing such services to its employees as a
voluntary staff welfare measure, ITC on such outdoor catering services is
blocked?

Total ITC Available 2,87,000

SIR
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ILLUSTRATION 20
Paritosh & CO, a supplier of goods, pays GST under regular scheme. It has made the following outward
taxable supplies in a tax period:

S.No. Particulars Amount (₹)

(i) Intra-state taxable supply of goods 10,00,000

(ii) Inter-state taxable supply of goods 8,00,000

It has also furnished the following information in respect of purchases made by it in that tax period:

S.No. Particulars Amount (₹)

(i) Intra-state purchase of goods 3,00,000
(ii) inter-state purchase of goods 2,50,000

Paritosh & Co has following ITCS with it at the beginning of the tax period:
Nature ITC Amount (₹).

CGST 57,000
SGST 60,000
IGST 1,40,000

Compute the minimum GST, payable in cash, by Paritosh & CO for the tax period and the ITC to be
carried forward to the next month after taking note of the following points. Make suitable assumptions
as required.

• Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively.
• Both inward and outward supplies are exclusive of taxes wherever applicable.
• All the conditions necessary for availing the ITC have been fulfilled,

Ans.

Computation of Output GST Liability of Paritosh & Co:

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Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Intra-state taxable supply of goods 10,00,000 90,000 90,000 -
Inter-state taxable supply of goods 8,00,000 - - 1,44,000

Total 90,000 90,000 1,44,000

Computation of Input GST Credit Of Mr Himanshu:

Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Opening ITC (As Brought Forward) - 57,000 60,000 1,40,000

Intra-state purchase of goods from 3,00,000 27,000 27,000

registered dealer
{Assumed that inward supply of goods is
used/intended to be used in the
course/furtherance of his business}
linter-state purchase of goods from 2,50,000
registered dealer
{Assumed that inward supply of goods is
used/intended to be used in the
course/furtherance of his business?

Total 84,000 87,000 1,85,000

Computation of Net GST Payable In Cash:

Particulars CGST (₹) SGST (₹) IGST (₹)

Output GST Liability 90,000 90,000 1,44,000
Less: Utilization of ITC
• IGST (38,000) (3,000) (1,44,000)
• CGST (52,000) - (1,44,000)

• SGST - (87,000) -
Net GST Payable in Cash Nil Nil Nil

ITC Balance To Be C/F To Next Period 32,000 Nil Nil

SIR
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ILLUSTRATION 21
Mr Nimit, a supplier of goods, pays GST under regular scheme. He is not eligible for any threshold
exemption. He has made the following outward taxable supplies in the month of August 2023:

S.No. Particulars Amount (₹)

(i) Intra-state supplies of goods ₹6,00,000
(ii) Inter-state supplies of goods ₹2,00,000

He has also furnished the following information in respect of purchases made from registered dealers
during August 2023:

S.No. Particulars Amount (₹)

(i) Intra-state purchase of goods ₹4,00,000
(ii) inter-state purchase of goods ₹50,000

Balance of ITC available at the beginning of August 2023:

Nature ITC Amount (₹)

CGST ₹ 15,000

SGST ₹ 35,000

IGST ₹ 20,000

Compute the net GST payable by Mr Nimit for the month of August 2023 after taking note of the
following points:

• Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies.
• Both inward and outward supplies given above are exclusive of taxes, wherever applicable.
• All the conditions necessary for availing the ITC have been fulfilled.

Ans.

Computation of Output GST Liability of Mr Nimit {August 2023}:

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Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Intra-state taxable supply of goods 6,00,000 54,000 54,000 -
Inter-state taxable supply of goods 2,00,000 - - 36,000
Total 54,000 54,000 36,000

Computation of input GST Credit of Mr Ajay {August 2023}:

Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Opening ITC (AS Brought Forward) - 15,000 35,000 20,000

Intra-state purchase of taxable 4,00,000 36,000 36,000 -
goods
Inter-state purchase of goods 50,000 - - 9,000

Total 51,000 71,000 29,000

Computation of Net GST Payable in Cash {August 2023}:

Particulars CGST (₹) SGST (₹) IGST (₹)

Output GST Liability 54,000 54,000 36,000

Less: Utilization of ITC

• Set-off of IGST credit against IGST liability - (29,000)

• Set-off of CGST credit against CGST liability (51,000) (54,000) -

• Set-off of SGST credit firstly against SGST liability - (54,000) (7,000)
and then against IGST liability
Net GST Payable In Cash 3,000 Nil Nil

Note: Balance SGST credit of ₹ 10,000 shall be c/f to the future periods.

ILLUSTRATION 22
Mr Ajay, a registered supplier of goods, pays GST under regular scheme and provides the following
information for the month of August 2023:
SIR
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S.No. Particulars Amount (₹)

(i) Inter-state taxable supply of goods 10,00,000
(ii) Intra-state taxable supply of goods 2,00,000
(iii) Intra-state purchase of taxable goods 5,00,000

He has the following input tax credit at the beginning of August 2023:
Nature ITC Amount (₹)
CGST 20,000
SGST 30,000
IGST 25,000

Compute the net GST payable by Mr Ajay for the month of August 2023 after taking note of the
following points:

• Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively.
• Both inward and outward supplies are exclusive of taxes wherever applicable.
• All the conditions necessary for availing the ITC have been fulfilled.

Ans.

Computation of Output GST Liability of Mr Ajay {August 2023}:

Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Intra-state taxable supply of goods 2,00,000 18,000 18,000 -

Inter-state taxable supply of goods 10,00,000 - - 1,80,000

Total 18,000 18,000 1,80,000

Computation of Input GST Credit of Mr Ajay {August 2023}:

Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Opening ITC (As Brought Forward) - 20,000 30,000 25,000

Intra-state purchase of taxable goods 5,00,000 45,000 45,000 -

SIR
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Total 65,000 75,000 25,000

Computation of Net GST Payable in Cash {August 2023}:

Particulars CGST (₹) SGST (₹) IGST (₹)

Output GST Liability 18,000 18,000 1,80,000

Less: Utilization of ITC
• Set-off of IGST credit against IGST liability - - (25,000)

• Set-off of CGST credit firstly against CGST liability and (18,000) - (47,000)
then against IGST liability

• Set-off of SGST credit firstly against SGST liability and - (18,000) (57,000)
then against IGST liability

Net GST Payable in Cash Nil Nil 51,000

ILLUSTRATION 23
Insight Ltd is operating in West Bengal. The tax liability for the month of August 2023 is as follows:

S.No. Tax Liability Amount (₹)

(i) Output CGST Payable 24,000
(ii) Output SGST Payable 9,000

(iii) Output IGST Payable 3,000

(iv) Input CGST 7,000

(v) Input SGST 14,000

(vi) Input IGST 12,000

Calculate tax payable and carry forward for the month of August 2023.

Ans.

Computation of Net GST Payable In Cash {August 2023}:

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Particulars CGST (₹) SGST (₹) IGST (₹)

Output GST Liability 24,000 9000 3,000

Less: Utilization of ITC
- Set-off of IGST liability from IGST credit - - (3,000)

- Set-off of IGST credit against CGST liability (9,000) - -

- Set-off of CGST and SGST credit against CGST and SGST (7,000) (9,000) -
liability respectively

Net GST Payable in Cash 8,000 Nil Nil

Note: Unutilized SGST credit of ₹ 5,000 shall be c/f to next period.

ILLUSTRATION 24
From the following information, compute the net GST payable for the month of October 2023:

Output GST (₹) Opening ITC as per Credit Ledger (₹)

CGST 2,000 Nil
SGST 15,000 1,000
IGST 24,000 37,000

Ans.

Computation of Net GST Payable In Cash {October 2023}:

Particulars CGST (₹) SGST (₹) IGST (₹)

Output GST Liability 2,000 15,000 24,000

Less: Utilization of ITC

• Set-off of IGST liability from IGST credit (200) - (24,000)

• Set-off of IGST credit against CGST & SGST liability (2,000) (11,000) -

• Set-off of SGST credit against SGST liability - (1,000) -

Net GST Payable in Cash Nil 3,000 Nil

SIR
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ILLUSTRATION 25
From the following information furnished by ABCLtd, determine the amount of input tax credit
admissible in respect of various inputs purchased during the month of September 2023:

Particulars Amount (₹)

Goods purchased without invoice 25,000

Purchase of goods not to be Used for business purposes 18,000

Goods purchased from PQR Ltd (Full payment is made by ABC Ltd to PQR Ltd 1,20,000
against such supply but tax has not been deposited by PQR Ltd)
Purchase of goods from π Ltd (Invoice of TT Ltd is received in the month of 24,000
September 2023, but goods were received in the month of October 2023)
Goods purchased against valid invoice from FF Ltd. Tax has been deposited by FF 36,000
Ltd. ABC Ltd has made payment to FF Ltd for such purchases in October 2023.

Ans.
Computation of Admissible ITC:

Particulars Amount (₹)

Goods purchased without invoice Nil
{Input tax credit is not available in the absence of a supporting document}

Purchase of goods not to be used for business purposes

{Input tax credit is available only where the goods are used or intended to be
used in the course or furtherance of his business. Since ABC Ltd has purchased
the goods for non-business purposes, hence no credit will be admissible on such
purchases?

Goods purchased from PQR Ltd (Full payment is made by ABC Ltd to PQR Ltd Nil
against such supply but tax has not been deposited by PQR (td)
{A registered person is entitled to claim credit of input taxes in respect of supply
of goods only if the tax charged in respect of such supply has been actually
paid to the government. Since PQR Ltd has not deposited the tax to the credit
of government, no ITC can be claimed by ABC Ltd}
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Purchase of goods from πLtd (Invoice of π Ltd is received in the month of Nil
September 2023, but goods were received in the month of October 2023)
{In case of purchase of goods, input tax credit is admissible only when such
goods have been received. Since the goods are received in the month of October
2023, input tax credit cannot be taken in the month of September 2023}

Goods purchased against valid invoice from FF Ltd. Tax has been deposited by Nil
FF Ltd. ABC Ltd has made payment to FF Ltd for such purchases in October 2023.
{Input tax credit shall be admissible in the month of September 2023 even if
payment is made by ABC Ltd in the month of October 2023}

Eligible Input Tax Credit 36,000

ILLUSTRATION 26
S Ltd, a manufacturer in Jaipur, entered into a contract with a supplier for supply of Input ' X ' in the
month of October 2023. As per contract, it was agreed that 10,000 kgs of input ' X ' will be supplied for
₹7,28,000 (inclusive of CGST and SGST @ 6% each) in 4 lots. Invoice of ₹ 7,28,000 has been issued with
supply of first lot of input ' x '. Following further information has been provided regarding supply of
input ' X ' received in subsequent lots.

Input ' 𝐱 ' (in Lots) Quantity (Kgs) Date of Receipt of Supply
First Lot 2,500 19 − 10 − 2023

Second Lot 3,000 21 − 10 − 2023

Third Lot 1,500 12 − 11 − 2023

Fourth Lot 3,000 01 − 12 − 2023

Briefly explain whether S Ltd is eligible to take credit on proportionate basis.

Ans.

Section 16(2) of CGST Act provides that where the goods against an invoice are received in lots or
installments, credit can be taken only after the receipt of last lot. Therefore, SLtd is not eligible to claim
credit on proportionate basis. Since Input ' X ' has been received in lots, the credit of tax of ₹78,000
(₹7,28,000 × 12/112) can be taken only after the receipt of last lot (ie, credit can be taken on or after
01-12-2023).
SIR
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ILLUSTRATION 27
XYZ Ltd purchased goods valuing ₹ 6,00,000 (exclusive of CGST and SGST @ 9% each) under the cover
of an invoice dated 25-12-2023. The company made payment to the supplier on the same date. Since
there was a doubt regarding admissibility of tax credit on such inputs, the company did not take the
input tax credit at the time of receipt of input. The company obtained clarification from a legal
consultant who opined that the goods were eligible as inputs under Input Tax Credit Rules. The opinion
was received on 05-05-2024. The company now wants to avail input tax credit of the tax paid on such
inputs. Can it do so? The company has filed its annual return for FY 2023-24 on 12-08-2024.

Ans.

Section 16 (4) of CGST Act provides that a registered person shall not be entitled to take input tax
credit in respect of any invoice or debit note for supply of goods or services after:

(a) 30th November of succeeding financial year; or

(b) furnishing of the relevant annual return, whichever is earlier.

In this case the inputs were purchased by invoice dated 25-12-2023, hence the time by which input
tax credit in respect of such inputs can be taken shall be earlier of following dates:

(a) 30-11-2024: or
(b) 12-08-2024, being the date of furnishing of annual return for FY 2023-24.

Since XY2 Ltd can avail credit of input tax paid on inputs till 12-08-2024, therefore, it can avail credit
of CGST ₹54,000 and SGST of ₹ 54,000 on 05-05-2024.

ILLUSTRATION 28
A registered supplier of taxable goods supplied goods valued ₹1,12,000 (inclusive of CGST ₹6,000 and
SGST ₹6,000) to PQR Ltd under forward charge on 12-11-2022 for which tax invoice was also issued on
the same date. The inputs were received by PQR Ltd on 12-11-2022. PQR Ltd availed credit of ₹12,000
on 15-12-2022. But PQR Ltd did not make any payment towards such supply along with tax thereon to
the supplier. Is PQR Ltd eligible to avail input tax credit on such supply?

Discuss ITC implications if PQR Ltd makes payment of ₹ 78,400 to the supplier on 15-09-2023 and
balance payment of ₹33,600 on 06-10-2023.
SIR
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Ans.

• PQR Ltd can avail input tax credit on receipt of goods. But it is required to pay the consideration
along with tax within 180 days from the date of issue of invoice.

• Where a registered person has availed credit on any inward supply of goods or services without
making payment and such person fails to make payment to the supplier within 180 days from the
date of issue of invoice, he shall furnish the details of such supply and the amount of input tax
credit proportionate to such unpaid amount in his return of the month immediately following such
180 days.

• In this case, since PQR Ltd has not made any payment within 180 days from the date of invoice (ie
upto 11th May 2023), therefore amount equal to input tax credit availed by PQR Ltd shall be
considered as an output tax liability for the month of May 2023. Such details need to be furnished
in the returns which are to be filed for the month of May 2023.

• Interest shall be calculated @ 18% p.a for the period starting from date of availing credit till the
date when input tax credit added to the output tax liability is paid.

• If PQR Ltd makes payment of ₹78,400 to the supplier on 15-09-2023 and balance payment of
₹33,600 on 06-10-2023, PQR Ltd shall be entitled to avail input tax credit of ₹8,400 and ₹3,600 on
15-09-2023 and 06-10-2023 respectively.

ILLUSTRATION 29
XYZ Ltd, a manufacturer, which is engaged in supply of taxable goods has purchased 10,000 kgs of
inputs for ₹1,00,000 (exclusive of CGST @ 6% and SGST @ 6%) on which input tax credit has been
taken. Due to technical changes in manufacturing process, the said inputs became obsolete and their
value has been written off in the books of accounts. Explain treatment of input tax credit in the above
case.

Ans.

As per Section 17(5) of CGST Act, if the value of any goods is written-off in the books of accounts, then
no input tax credit shall be allowed in respect of the said input. Where input tax credit has been taken
in respect of the said goods, the same has to be paid back by the recipient. Since XYZ Ltd has availed
input tax credit in the given case, thus it has to pay ₹ 6,000 (₹1,00,000 @ 6%) towards CGST and
₹6,000 towards SGST liability.
SIR
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7.23 By – CA VIVEK GABA SIR

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ILLUSTRATION 30
XYZ Ltd is engaged in supply of works contract services for construction of immovable property. It
gives a part of the construction work to a sub-contractor. The sub-contractor charges GST in his
invoice to XYZ Ltd. You are required to advice XY ≥ Ltd if it can avail input tax credit of the GST charged
to it by the sub-contractor.

Ans.

As per Section 17(5) of CGST Act, input tax credit shall not be available in respect of works contract
services when supplied for construction of an immovable property. However, credit is allowed where it
is an input service for further supply of works contract service. In the given case, the services supplied
by the sub-contractor have been used by XYZ Ltd for supply of works contract service. Hence, XYZ Ltd
can avail input tax credit of the GST charged on the input service provided by the sub-contractor.

ILLUSTRATION 31
XY2 Ltd is engaged in supply of passenger transportation services. During September 2022, it has
purchased two motor vehicles for ₹36,00,000 plus GST @ 28%. You are required to advice XYZ Ltd if it
can avail input tax credit of the GST paid by it on motor vehicles.

Ans.

As per section I7(S) of CGST Act, input tax credit shall not be available in respect of motor vehicles and
conveyances. However, credit will be available when they are used for making taxable supplies of
transportation of passengers. Since XYZ Ltd is engaged in transportation of passengers, it will be
entitled to take credit of GST amounting to ₹ 10,08,000 (₹36L!!"#% ).

ILLUSTRATION 32
XYZ Ltd conducted its 50th Annual General meeting at its head office in New Delhi and availed services
of 'Delicious Caterers' on that occasion. Delicious Caterers charged ₹ 15,00,000 plus GST @ 18% for
the supply of outdoor catering services, You are required to advice XYZ Ltd if it can avail input tax
credit of GST paid on outdoor catering service.

Ans.

As per section 17(5) of CGST Act, input tax credit shall not be available in respect of supply of outdoor
catering services. Hence, XYZ Ltd is not entitled to avail input tax credit of GST paid on outdoor
SIR
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7.24 By – CA VIVEK GABA SIR

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catering services availed from Delicious Caterers.

ILLUSTRATION 33
X Ltd, a registered manufacturer engaged in taxable supply of goods, procured the following goods
during the month of october. The same has been capitalized in the books of accounts of × Ltd.
Determine the amount of input tax credit available by giving necessary explanations for treatment of
various items:

Inward Supplies GST (₹)

Electrical transformers used in the factory 2,16,000

Moulds and dies used in the factory 26,000
Pollution control equipment used in the factory 2,34,000
Capital goods purchased on which depreciation has been taken on full value 1,35,000
including input tax thereon

Capital goods used as parts purchased from supplier who paid tax of ₹ 10,000
composition tax has not been collected from X Ltd.

Ans.

Computation of input Tax Credit Available:

Inward Supplies GST (₹)

Electrical transformers used in the factory 2,16,000

{Credit available as the goods are being used in the course or furtherance of
business}
Moulds and dies used in the factory 26,000
{Credit available as the goods are being used in the course or furtherance of
business}
Pollution control equipment used in the factory 2,34,000
{credit available as the goods are being used in the course or furtherance of
business}
Capital goods purchased on which depreciation has been taken on full value Nil
including input tax thereon {ITC is not admissible where registered person has
SIR
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claimed depreciation on the tax component of the cost of capital goods u/s 32 of
Income Tax Act}

Capital goods used as parts purchased from supplier who paid tax under Nil
composition scheme and the composite tax has not been collected from X Ltd
{Tax paid under composition scheme by a supplier cannot be claimed as credit by
the recipient}

Total Input Tax Credit Available 4,76,000

ILLUSTRATION 34
Determine the amount of ITC available with Posco Ltd in respect of the following items procured by
them:

S.No. Inward supplies GST (₹)

(i) Input used for the manufacture of the final product 72,000

(ii) Food and beverages procured from Sweet Caterers for being used in 48,000
dealer's meet
(iii) Goods used for providing services during warranty period 12,000

(iv) Goods used for setting up telecommunication towers being immovable 90,000
property
(v) Inputs stolen from the factory store 13,200

Ans.

Computation of input Tax Credit Available:

inward Supplies GST (₹)

input used for the manufacture of the final product {Credit available as the goods 72,000
are being used in the course or furtherance of business}

Food and beverages procured from Sweet Caterers for being used in dealer's Not
meet {ITC is available in respect of food and beverages only where an inward Available
supply of such goods is used for making a similar outward taxable supply. Hence,
no ITC is available on food and beverages procured from sweet Caterers for being
used in dealer's meet}
SIR
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Goods used for providing services during warranty period {Credit available as the 12,000
goods are being used in the course or furtherance of business}

Goods used for setting up telecommunication towers being immovable property Not
{Goods used by a person for construction of an immovable property on his own Available
account shall be considered as ineligible inputs. Since telecommunication tower
is an immovable property, no ITC shall be allowed in respect of goods used for
setting it up}

inputs stolen from the factory store {Goods lost, stolen, destroyed, written-off or Not
disposed of by way of gift or free samples are considered as ineligible input and Available
credit of GST paid on such goods cannot be taken}
Total Input Tax Credit Available 84,000

ILLUSTRATION 35
Determine the amount of input tax credit admissible to PQR Ltd in respect of the following goods
procured by it:

S.No. Inward Supplies GST (₹)

1. Goods used in constructing an additional floor of office building 28,800

2. Packing materials used in a factory 6,000

3. Goods destroyed due to natural calamities 12,500
4. Goods used for repairing office building and cost of repairs is debited to 12,000
P&L A/C

5. Paper for photocopying machine used in administration office 950

6. Goods given as gifts: 25,000

7. Inputs used for tests or quality control check 15,600

Ans.

Computation of input Tax Credit Available:

SIR
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Inward Supplies GST (₹)

• Goods used in constructing an additional floor of office building {Goods used Nil
by a person for construction of an immovable property on his own account shall
be considered as ineligible inputs. Hence, ITC shall not be available in respect of
goods used in construction of an additional floor of office building?

• Packing materials used in a factory {credit available as the goods are being 6,000
used in the course or furtherance of business}

• Goods destroyed due to natural calamities {ITC shall not be available in respect Nil
of goods lost, stolen, destroyed, written-off or disposed of by way of gift or free
samples?
• Goods used for repairing the office building and cost of repairs is debited to 12,000
P&L A/C {Goods used for revenue repairs of an immovable property are
considered as an eligible input and credit shall be allowed on the same}
• Paper for photocopying machine used in administration office {Credit available 950
as the goods are being used in the course or furtherance of business}
• Goods given as gifts {ITC shall not be available in respect of goods lost, stolen, NI
destroyed, written-off or disposed of by way of gift or free samples}

• Inputs used for tests or quality control check {credit available as the goods are 15,600
being used in the course or furtherance of business?
Total input Tax Credit Available 34,550

ILLUSTRATION 36
Determine the amount of input tax credit admissible to P Ltd in respect of the following items procured
by them:

S.No. Inward Supplies GST (₹)

1. Goods supplied for captive consumption in a factory 9,800

2. Goods purchased for repairing the factory shed and same has been 18,000
capitalized in books
3. Cement used for making foundation and structural support to P&M 14,000

4. Inputs used in trial runs 14,560

5. Food and beverages purchased for the employees during office hours 8,400
SIR
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Ans.
Computation of input Tax Credit Available:

Inward Supplies GST (₹)

Goods supplied for captive consumption in a factory {Credit available as the goods 9,800
are being used in the course or furtherance of business}

Goods purchased for being used in repairing the factory shed and same has been Nil
capitalized {Goods used by a person for construction of an immovable property on
his own account shall be considered as ineligible inputs. Construction includes re-
construction, renovation, additions or alterations or repairs, to the extent of
capitalization, to the said immovable property. Since the cost of repairs is
capitalized in books, ITC on goods used shall not be allowed}
Cement used for making foundation and structural support to P&M 14,000
{ITC is admissible in respect of goods or services or both received by a taxable
person for construction of plant or machinery. Hence, tax paid on cement shall be
available for ITC}

inputs used in trial runs 14,560

{credit available as the goods are being used in the course or furtherance of
business}
Food and beverages purchased for the employees during office hours {ITC is Nil
available in respect of food and beverages only where an inward supply of such
goods is used for making a similar outward taxable supply. Hence, no ITC is available
on food & beverages for use of employees during office hours?

Total Input Tax Credit Available 38,360

ILLUSTRATION 37
Compute the input tax credit available with Ujjwal Motors Ltd, manufacturer of cars, in respect of the
following services availed by it in the month of October 2022:

S.No. Inward Supplies GST (₹)

(i) Accounting and auditing services 7,200

SIR
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(ii) Health insurance services for employees (Services are not provided 16,200
under government obligation)
(iii) Routine maintenance' of the cars manufactured by Ujiwal Motors Ltd 18,000

(iv) Repair services for office building (Cost of repairs is charged to P&L 14,400
A/C)
(v) Hotel accommodation and conveyance facility to employees on 3,360
vacation

(vi) Testing services availed for car engines 9,000

Ans.
Computation of input Tax Credit Available:

Inward Supplies GST (₹)

Accounting and auditing services 7,200

{credit available as the services are being used in the course or furtherance of
business}
Health insurance services for employees {services not provided under government Nil
obligation} {No input tax credit shall be available in respect of health insurance
services availed for employees since the Government has not notified the said
services as obligatory services to be provided to employees?

Routine maintenance of the cars manufactured by Ujiwal Motors Ltd 18,000

{credit available as the services are being used in the course or furtherance of
business}
Repair services for office building {cost of repairs is charged to P&L A/c} 14,400
{services used for revenue repairs of immovable property are considered as an
eligible input service and credit shall be allowed on the same}
Hotel accommodation and conveyance facility to employees on vacation Nil
{credit is not available for services extended to employees on vacation}
Testing services availed for car engines 9,000
{Credit available as the services are being used in the course or furtherance of
business}
Total input Tax Credit Available 48,600
SIR
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ILLUSTRATION 38
XY2 Ltd, engaged in supplying taxable goods, has availed the following services in September 2022.
Compute the input tax credit admissible on such input services.

S.No. Inward Supplies GST (₹)

1. Sales promotion services 16,200

2. Health care services availed from Physique Club for upkeep of health of 10,800
employees
3. XYZ Ltd hired cab on rent for employees {Government has issued a 4,500
notification for such service to be mandatorily provided to employees}
4. Market research services 10,080

5. Quality control services 18,000

6. Work contract services for construction of office building 45,000

Ans.

Computation of input Tax Credit Available:

Inward Supplies GST (₹)

Sales promotion services {Credit available as the services are being used in the 16,200
course or furtherance of business}

Health care services availed from Physique Club for upkeep of health of employees Nil
{Input tax credit is available in respect of food and beverages, outdoor beauty
treatment, health services, cosmetic and plastics surgery only where an inward
supply of such services is used by a registered person for making an outward
taxable supply of similar services. Thus, no input tax credit shall be admissible on
health care services provided to employees}
XYZ Ltd hired cab on rent for employees {Government has issued a notification for 4,500
such service to be mandatorily provided to employees?
{Since the government has notified cab services as obligatory services to be
provided to employees, hence credit of tax paid on such services shall be allowed}

Market research services 10,080

SIR
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{Credit available as the services are being used in the course or furtherance of
business}
Quality control services 18,000
{Credit available as the services are being used in the course or furtherance of
business}
Work contract services for construction of office building {Not considered as Nil
eligible input service}
Total Input Tax Credit Available 48,780

ILLUSTRATION 39
PQR Pvt Ltd, engaged in supplying taxable goods to its customers within the state, is not liable for
registration u/s 22 of CGST Act. From 15-02-2024 onwards, it started inter-state supply of taxable
goods. Hence, it applied for registration on 25-02-2024 and the same has been granted to it. Its CGST,
SGST and IGST liability for the month of February 2024 is ₹19,500, ₹ 19,500 and ₹ 40,500 respectively
and PQR Pvt Ltd has to make e-payment of tax on the due date, ie on 20-03-2024. PQR Pvt Ltd has
provided the following details of stock of input held on 14-02-2024 and tax paid thereon.

Particulars CGST (₹) SGST (₹)

Input received on 10-01-2024 lying in stock (Invoice dated 11-01-2024) 3,600 3,600

input received on 25-10-2023 lying in semi-finished stock (Invoice 7,500 7,500

dated 28-10-2023)
Inputs received on 15-01-2024 contained in finished goods (Invoice 9,600 9,600
dated 15-01-2024)

Briefly explain the tax payable by PQR Put Ltd in cash, if any. PQR Pvt Ltd has not opted for the
provisions of composition scheme as prescribed u/s 10 of CGST Act.

Ans.

• As per Section 18 of CGST Act, a person applying for registration within 30 days from the date on
which he becomes liable to registration shall be entitled to take credit of input tax in respect of
inputs held in stock, or contained in semi-finished or finished goods in stock on the date
SIR
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immediately preceding the date from which he becomes liable to registration (ie, 14th February
2024).

• However, a registered person shall not be entitled to take input tax credit in respect of any supply
of goods or services or both after the expiry of 1 year from the date of issue of invoice relating to
such supply.

• In view of the above provision, input tax credit available to PQR Pvt Ltd will be computed as follows:

Particulars CGST (₹) SGST (₹)

Input received on 10-01-2024 lying in stock as on 14-02-2024 (Invoice 3,600 3,600

dated 11-01-2024)
input received on 25-10-2023 lying in semi-finished stock as on 14-02- 7,500 7,500
2024 (Invoice dated 26-10-2023)

Inputs received on 15-01-2024 contained in finished goods as on 14-02- 9,600 9,600

2024 (Invoice dated 15-01-2024)
Total Eligible Input Tax Credit 20,700 20,700

• Computation of Tax Payable In Cash By PQR Put Ltd For February 2024:
Particulars CGST (₹) SGST (₹) IGST (₹)

Output Tax Liability for February 2024 19,500 19,500 40,500

Less: Eligible input tax credit available on inputs in
respect of:
• CGST (19,500) - (1,200)

• SGST - (19,500) (1,200)

Output Tax Payable in Cash Nil Nil 38,100

ILLUSTRATION 40
B Ltd is not required to register under CGST Act but it wishes to obtain voluntary registration. So, it
applied for voluntary registration on 18th September 2023 and registration has been granted to it on
25th September 2023. The CGST and SGST liability for the month of September 2023 is ₹ 21,000 each.
SIR
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B Ltd provides the following information of inputs held in stock on 24th September 2023. It is not
engaged in making inter-state outward taxable supplies.

Particulars Amount (₹)

Input procured on 02-09-2023 lying in stock:

- CGST @ 6% 4,500

- SGST @ 6% 4,500

Input received on 21-02-2023 contained in semi-finished goods held in

stock:
- CGST @ 6% 7,500

- SGST @ 6% 7,500
Inputs procured on 19-09-2022 contained in finished goods held in stock:
- IGST @ 18% (Invoice issued on same day) 36,000
Inputs procured on 13-09-2023 lying in stock:
- IGST @ 18% 9,000

Capital goods procured on 12-09-2023 lying in stock:

- CGST @ 6% 12,000
- SGST @ 6% 12,000

You are required to determine the amount of tax to be paid in cash by B Ltd for September 2023.

Ans.

• As per Section 18 of CGST Act, in case of a person obtaining voluntary registration, he shall be
entitled to take credit of input tax in respect of inputs held in stock, or contained in semi-finished
or finished goods in stock as on the date immediately preceding the date of grant of registration
(ie, 24th September 2023).

• A registered person shall not be entitled to take input tax credit in respect of any supply of goods
or services or both after the expiry of 1 year from the date of issue of tax invoice relating to such
supply.

• In view of the above provision, eligible input tax credit available to B Ltd will be computed as follows:
SIR
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Particulars CGST (₹) SGST (₹) IGST (₹)

Input procured on 02-09-2023 lying in stock 4,500 4,500 -

Input received on 21-02-2023 contained in semi-finished 7,500 7,500 -
goods
Inputs procured on 19-09-2022 contained in finished - - -
goods
(Invoice has been issued on 19-09-2022, hence one year
has elapsed on 18-09-2023. So, ITC in respect of such
purchases is not admissible after 18-09-2023)
Inputs procured on 13-09-2023 lying in stock - - 9,000

Capital goods procured on 12-09-2023 lying in stock - - -

(There is no provision u/s 18 which allows availment of ITC
on capital goods lying in stock by a person who obtains
voluntary registration)

Total Eligible Input Tax Credit 12,000 12,000 9,000

• Computation of Tax Payable In Cash By B Ltd For September 2023:

Particulars CGST (₹) SGST (₹)

Output Tax Liability for September 2023 21,000 21,000

Less: Set-off of Eligible Input Tax Credit Available On Inputs:

- CGST (12,000) (12,000)
• SGST

• IGST (9,000) -
CGST/SGST Payable In Cash Nil 9,000

ILLUSTRATION 41
ABC Traders, paying tax under composition scheme, crosses the applicable threshold and becomes
liable to pay tax under regular scheme on 01-04-2023. Can it avail input tax credit and if so, calculate
the amount of ITC available. The details of inputs lying in stock and capital good's in possession as on
31-03-2023 are given below:
SIR
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Particulars CGST (₹) SGST (₹)

• Inputs lying in stock (Invoice dated 12-03-2023) 3,600 3,600
• Input lying in semi-finished goods in stock (Invoice dated 12-12- 2,400 2,400
2022)
• Capital goods procured on 25-09-2022 (Invoice dated 25-09- 7,200 7,200
2022)

Ans.

• As per section 18 of CGST Act, where any registered person ceases to pay tax 4/510 of CGST Act,
he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained
in semi-finished or finished goods held in stock and on capital goods held on the day immediately
preceding the date from which he becomes liable-to pay tax.

• Further, credit can be claimed on such capital goods after reducing the tax paid on such capital
goods by 5% per quarter of a year or part thereof from the date of invoice. "Quarter" shall mean a
period comprising of three consecutive calendar months ending on the last day of March, June,
September and December of a year.

• Input Tax Credit Available To ABC Traders in Respect of Inputs:

Particulars CGST (₹) SGST (₹)

Inputs lying in stock 3,600 3,600
Inputs lying in semi-finished goods in stock 2,400 2,400

Total input Tax Credit Available 6,000 6,000

• Input Tax Credit Available To ABC Traders in Respect of Capital Goods:

- Date of invoice of capital goods 25 − 09 − 2022

• Date from which ABC Traders became liable to pay tax 01 − 04 − 2023
• No of quarters from the date of invoice to the day immediately 3
preceding the day on which ABC Traders became liable to pay tax
• CGST and SGST paid on capital goods procured on 25-09-2022 ₹14,400
Total Credit (CGST and SGST) Available On Capital Goods (₹14,400-15%) ₹12,240
SIR
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CGST - ₹6,120; SGST - ₹6,120

ILLUSTRATION 42
M/s XYZ, a registered dealer, is engaged in supplying exempted goods to its customers. On 17-06-2023,
the exemption notification was rescinded and goods were made liable to tax. M/s XYZ has to make e-
payment of tax on the due date ie, on 20-07-2023. Determine the eligible credit for the month of June
2023 if the following information is provided:

Particulars Value (Exclusive of CGST SGST @GST

CGST/SGST/GST) @ 6% @ 6% @ 12%
Value of inputs lying in stock as on 16- 1,00,000 - - 12,000
06-2023.
All inputs were procured after 01-03-
2023
Value of inputs contained in semi- 1,35,000 8,100 8,100 -
finished goods lying in stock as on 16-
06-2023 but only inputs worth ₹85,000
in semi-finished goods were procured
after 16-06-2022
Inputs received on 31-01-2023 lying in 1,55,000 9,300 9,300 -
finished goods in stock on 16-06-2023
Capital goods procured on 10-12-2022 8,00,000 - - 96,000
which are exclusively used in supplying
exempted goods

Ans.

• As per section 18 of CGST Act, where any exempt supplies made by a registered person become
taxable, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs
contained in semi-finished or finished goods held in stock and on capital goods held on the day
immediately preceding the date from which he becomes liable to pay tax.

• Further, credit can be claimed on such capital goods after reducing the tax paid on such capital
goods by 5% per quarter of a year or part thereof from the date of invoice. "Quarter" shall mean a
period comprising of three consecutive calendar months ending on the last day of March, June,
September and December of a year.
SIR
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• Input Tax Credit Available To M/s XYZ in Respect of inputs & Capital Goods:

Particulars CGST (₹) SGST (₹) IGST (₹) Total Eligible

Credit (₹)
ITC on the value of inputs lying in stock - - 12,000 12,000
{Since all inputs were acquired within 1
year prior to the effective date on which
the goods became taxable, entire ITC
would be allowed}

ITC on the value of inputs contained in 5,100 5,100 - 10,200

semi-finished goods {Out of the total
stock of ₹1,35,000, inputs amounting to
₹ 50,000 are older than 1 year from the
effective date on which the goods
became taxable. Therefore, ITC to this
extent stands disallowed.
ITC on inputs contained in stock of ₹
85,000 would be eligible. Eligible credit
each in respect of CGST and SGST =
₹85,000 ∗ 6% = ₹5,100}
ITC on value of inputs lying in stock of 9,300 9,300 - 18,600
finished goods {Since all inputs were
acquired within 1 year prior to the
effective date on which the goods
became taxable, entire ITC would be
allowed}
Credit (IGST) available on capital goods - - 81,600 81,600
(WN I)
Total Input Tax Credit Available 14,400 14,400 93,600 1,22,400

WN I - Credit Available In Respect of Capital Goods:

• Date of invoice of capital goods 10 − 12 − 2022

• Date from which the exempt goods became taxable 17-06-2023

• No of quarters or part thereof from the date of invoice to the day 3

immediately preceding the day on which goods became taxable
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• IGST paid on the capital goods used exclusively in relation to goods 96,000
exempted
IGST Available On Capital Goods (₹96,000 - 15%) 81,600

ILLUSTRATION 43
The goods manufactured by Royal Ltd have been exempted from GST with effect from 01-05-2023.
Earlier these goods were liable to CGST and SGST @ 6% respectively. The inputs used in manufacturing
these goods were also liable to CGST and SGST@6% respectively. Following information is available on
30-04-2023:

• inputs costing ₹1,12,000 (inclusive of CGST &SGST) are lying in stock.

• Inputs costing ₹ 80,640 (inclusive of CGST & SGST) are held in process.
• Finished goods valuing ₹ 5,60,000 are in stock, the input cost (inclusive of CGST and SGST) is 50%
of value.

• Input tax credit on capital goods lying in stock is ₹72,000. These goods were purchased on 1-8-
2022.

• Balance in electronic credit ledger is ₹1,52,000.

Discuss input tax credit implications in the hands of Royal Ltd.

What would your answer be if the balance in electronic credit ledger as on 30-04-2023 is ₹1,00,000?

Ans.

Amount payable by Royal Ltd has been calculated below:

Particulars Amt (₹)
• Tax on inputs lying in stock (₹1,12,000 × 12/112) 12,000

• Tax on inputs held in process (₹80,640 8,640

• Tax on inputs contained in finished goods lying in stock (₹5,60,000 * 50% * 30,000
12/112)
• Proportionate tax on capital goods taking total life as 5 years (₹72,000 * 51/60) 61,200
(Capital goods used for 9 months, thus remaining useful life shall be taken as 51
months)
Amount To Be Paid By Royal Ltd (CGST + SGST) 1,11,840
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The aforesaid amount can be paid by utilizing the balance in electronic credit ledger. The remaining
credit of ₹40,160 (₹1,52,000 - ₹1,11,840) in electronic credit ledger shall lapse.

If Balance In Electronic Credit Ledger Is ₹1,00,000: If the balance in electronic credit ledger as on 30-
04-2023 is ₹1,00,000, then Royal Ltd will have to pay an amount of ₹ 11,840 (₹1,11,840 − ₹1,00,000) in
cash.

ILLUSTRATION 44
PQR Ltd, a registered person supplying taxable goods in Jaipur, has opted to pay tax as per
composition scheme prescribed u/s 10 of CGST Act with effect from 28-02-2024. It provides the
following information relating to balance of input tax credit lying as on 27-02-2024:

• Inputs lying in stock as such valued at ₹1,68,000 (inclusive of CGST & SGST @ 12%)
• Inputs contained in finished goods where tax invoice is not available relating to such inputs but it
is known that market price of such inputs (inclusive of CGST & SGST @ 12%) on 28-02-2024 is
₹89,600.
• Input tax on capital goods purchased on 25-10-2023 is ₹72,000.
• Balance in electronic credit ledger is ₹1,10,000

Discuss input tax credit implications in the hands of PQR Ltd.

Ans.

Amount payable by PQR Ltd has been calculated below:

Particulars Amt (₹)

• Tax on inputs lying in stock (₹1,68,000 × 12/112) 18,000
• Tax on inputs contained in finished goods lying in stock (₹89,600 *12/112) (Where 9,600
tax invoices related to inputs lying in stock are not available, reversals have to made
on the basis of prevailing market price of goods on the date of opting for
composition scheme)
• Proportionate tax on capital goods taking total life as 5 years (₹72,000*55160) 66,000
(Capital goods used for 4 months & 2 days, thus remaining useful life shall be taken
as 55 months)
Amount To Be Paid By PQR Ltd (CGST + SGST) 93,600
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The aforesaid amount can be paid by utilizing the balance in electronic credit ledger. The remaining
credit of ₹ 16,400 (₹1,10,000 - ₹93,600) in electronic credit ledger shall lapse.

ILLUSTRATION 45
XYZ Ltd, a supplier of goods, has purchased capital goods under the cover of an invoice dated 01-10-
2022 for ₹4,13,000 (inclusive of CGST @ 9% and SGST @ 9%). After using the capital goods for business
use, the same were supplied for ₹2,85,000 on 26-04-2023. Explain input tax credit treatment in this
case.

Ans.

As per Section 18 of CGST Act, in case of supply of capital goods on which input tax credit has been
taken, the registered person is required to pay higher of the following two amounts:

• Input tax credit taken on the said capital goods reduced by an amount calculated @ 5% for every
quarter or part thereof from the date of issue of invoice of such goods; or

• Tax on transaction value of supply of such capital goods.

Computation of Amount of Tax Payable By XYZ Ltd:

• CGST and SGST paid on purchase of capital goods (₹4,13,000 * 18/118) 63,000
• Date of invoice of purchase of capital goods 01 − 10 − 2022
• Date of supply of capital goods after being used 26 − 04 − 2023
• No of quarters or part thereof from the date of issue of invoice for such 3
goods
• Proportionate Credit To Be Reversed (₹63,000 - 15%) 53,550
• Tax On Transaction Value of supply of such Capital Goods (₹2,85,000 * 51,300
18%)
Amount To Be Payable (Higher of Above Two Figures) 53,550

The aforesaid amount can be paid by utilizing the balance in electronic credit ledger. The remaining
credit of ₹ 16,400 (₹1,10,000 - ₹93,600) in electronic credit ledger shall lapse.

ILLUSTRATION 46
What would be your answer in Question 7 if the capital goods in question are refractory bricks which
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are removed as scrap at a transaction value of ₹ 25,000 on 09-03-2023?

Ans.

As per Section 18 of CGST Act, where refractory bricks, moulds and dies, jigs and fixtures are supplied
as scrap, there shall be no requirement for reversal of input tax credit. The taxable person may pay tax
on the transaction value of such goods determined u/s IS of CGST Act.

• In the given case, refractory bricks are cleared as scrap. The manufacturer shall pay on amount
equal to the tax leviable on transaction value {ie, CGST of ₹ 2,250(+) SGST of ₹ 2,250}.

ILLUSTRATION 47
R Ltd, a registered person engaged in supplying taxable goods, is being sold to X Ltd, with specific
provision for transfer of liability. The unutilized credit in respect of CGST and SGST is ₹ 48,000 and ₹
48,000 respectively. Now × Ltd wants to utilize such credit remaining unutilized. Discuss its eligibility.

Ans.

As per section 18 of CGST Act, where there is a change in the constitution of a registered person on
account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific
provision for transfer of liabilities, the said registered person shall be allowed to transfer the input tax
credit which remains unutilized in his electronic credit ledger to such sold, merged, demerged,
amalgamated, leased or transferred business in such manner as may be prescribed.

• Therefore, X Ltd is entitled to utilize the unutilized credit on input and capital goods lying in
accounts of R Ltd, provided R Ltd furnishes details of such transaction on sale of business
electronically on GST Common Portal with request to transfer unutilized tax credit to electronic
credit ledger of XLtd.

• A certificate of Chartered Accountant/Cost Accountant is to be furnished and the transfer details

have to be accepted by the transferee.

ILLUSTRATION 48
R Ltd, a registered manufacturer, demerged its entity into RX Cement Ltd and RY Steel Ltd. The total
value of assets of R Ltd is ₹ 25,00,000 and unvilized credit on account of CGST SGST and IGST
amounted to ₹60,000, ₹45,000 and ₹84,600 respectively. The value of assets of RX Cement Ltd and
RY Steel Ltd is ₹12,00,000 and ₹13,00,000 respectively obtained as per the scheme. Discuss the
eligibility of credit transferred to new units on account of demerger.
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Ans.

• As per section 18 of CGST Act, where there is a change in the constitution of a registered person
on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the
specific provision for transfer of liabilities, the said registered person shall be allowed to transfer
the input tax credit which remains unutilized in his electronic credit ledger to such sold, merged,
demerged, amalgamated, leased or transferred business in such manner as may be prescribed.

• In case of demerger, input tax credit shall be apportioned in the ratio of value of assets of new unit
as specified in demerger scheme, In the given case, credit transferred to both the new units would
be:

Particulars R Ltd (₹) RX Cement Ltd (₹) RY Steel Ltd (₹)

Value of assets 25,00,000 12,00,000 13,00,000

Unutilized credit to be apportioned in ratio

of value of assets
• CGST 60,000 28,800 31,200

• SGST 45,000 21,600 23,400

• IGST 84,600 40,608 43,992
Total Apportioned Credit 1,89,800 91,008 98,592

ILLUSTRATION 49
SRI Petrol Pump is a licensed petrol pump of M/s 10C corporation and engaged in the sale of petrol,
diesel and 'Mobil' engine oil. During the month of October 2023, total sales and purchases of M/S SRI
Petrol Pump are as follows:

Item Sale Value (₹) Purchase Value (₹)

Petrol 7,00,000 5,00,000
Diesel 15,00,000 16,00,000

Mobil 3,00,000 2,00,000

All the figures above are exclusive of GST and rate of GST is 9% CGST and 9% SGST on applicable items.

Other information:
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1. Every month M/s10 C Corporation charges license fees from SRI Petrol Pump for grant of license
and the same is charged based on total quantity of sale of all the products. During the month of
October 2023, the amount of license fees charged by 10 C corporation was ₹ 1,00,000 plus CGST &
SGST @ 9% each.

2. Administrative expenses incurred by SRI Petrol Pump was ₹ 50,000 on which CGST & SGST @ 6%
each were paid.

You are required to calculate the amount of taxable supply under GST, available input tax credit and
net liability of SRI Petrol Pump for the month of october 2023. Kindly provide appropriate reason
wherever necessary.

Answer
Computation of Value of Taxable Supply And Net GST Liability of SRI Petrol Pump {October 2023}:

Particulars Amount (₹)

Supply of petrol & diesel {Levy of GST on petrol and diesel has been deferred and Nil
thus, being not leviable to tax, the supply of the same is exempt supply?
Supply of Mobil 3,00,000

Value of Taxable Supply 3,00,000

Particulars CGST (₹) SGST (₹)
Total output tax liability (₹ 3,00,000 × 9%) 27,000 27,000
Less: Input Tax Credit (Refer Working Note below) (19,440) (19,440)
Net GST Liability Payable In Cash 7,560 7,560

Working Note - Computation of ITC Available With SRI Petrol Pump:

Supply Under GST Amount (₹) CGST (₹) SGST (₹)

Inward supply of petrol & diesel 21,00,000 -

{Being exempt supply, no GST is payable thereon and

hence, no ITC}
Inward supply of Mobil 2,00,000 18,000 18,000

License fees @ 9% 1,00,000 9,000 9,000

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Administrative expenses @ 6% 50,000 3,000 3,000

{Being used in the course or furtherance of business,
ITC is available}
Less: Ineligible ITC attributable to exempt supply {License fee and (10,560) (10,560)
administrative expenses are used for making both taxable supply of
Mobil and exempt supply of petrol and diesel, hence ITC attributable
to exempt supply will be reversed as under}
Ineligible ITC = {Common ITC × Exempt Supply}/Aggregate turnover
Common ITC = ₹ 9,000 + ₹3,000 = ₹12,000
Exempt Supply = ₹7L + ₹15L = ₹22L
Aggregate Turnover =₹ 7L + ₹15L + ₹3L = ₹25L
Ineligible ITC = (12,000 × 22 L)/25 L = ₹10,560
Eligible ITC 19,440 19,440

ILLUSTRATION 50
Briefly explain the provisions relating to reversal of ITC in case of non-payment of tax by the supplier
and re-availment thereof.

Answer

Every registered person (ie, recipient of goods/services) shall be entitled to avail the credit of eligible
input tax, as self-assessed, in his GSTR-3B and such amount shall be credited to his Electronic Credit
Ledger.

Reversal of ITC Availed in Case of Default in Furnishing GSTR-3B By supplier:

• A registered person can avail ITC in GSTR-3B for a tax period in respect of such invoice/debit note,
the details of which have been furnished by its supplier in the statement of outward supplies (in
Form GSTR-1/using IFF).

• However, if supplier does not furnish return in Form GSTR-3B for the tax period corresponding to
the said statement of outward supplies till 30th September following the end of FY in which the ITC
in respect of such invoice/debit note has been availed, the said amount of ITC shall be reversed by
the said recipient, while furnishing a return in Form GSTR-3B on or before 30 November following
the end of such FY during which such ITC has been availed.

• However, where the said amount of ITC is not so reversed by the recipient, such amount shall be
payable by the said recipient along with interest thereon u/s50.
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Re-Availment of Reversed ITC: Where the said supplier subsequently furnishes the return in GSTR-3B
for the said tax period and discharges his tax liability, the said recipient may re-avail the amount of
credit reversed by him earlier.

ILLUSTRATION 51
As per the CGST Act 2017, Vishnu Limited was not mandatorily required to get registered, however it
opted for voluntary registration and applied for registration on 12th February 2024. Registration
certificate has been granted by the Department on 24th February 2024. Vishnu Limited is not engaged
in making inter-state outward taxable supplies. The CGST and SGST liability for the month of February
2024 is ₹ 31,000 each. Vishnu Limited provides the following information of goods held in stock on
23rd February 2024:

S.No. Particulars Amount (₹)

(i) Capital goods procured on 5th February 2024 2,00,000
(Rate of CGST and SGST @ 6% each) being intra-state supply
(ii) Inputs contained in finished goods stock held were procured on 13 3,00,000
February 2023
(Rate of IGST @ 18%) being inter-state supply
(iii) Value of inputs received on 10th October 2023 contained in semi- 2,50,000
finished goods held in stock
(Rate of CGST and SGST @ 6% each) being intra-state supply
(iv) Inputs procured on 15th February 2024 lying in stock of semi-finished 1,50,000
goods
(Rate of CGST and SGST @ 7.5 % each) being intra-state supply
(v) Inputs procured on 8th February 2024 lying in stock of finished goods 60,000
(Rate of IGST @ 18%) being inter-state supply

You are required to determine the eligible ITC available and amount of net minimum GST to be paid in
cash by Vishnu Limited for the month of February 2024.

Answer

Person taking voluntary registration can avail ITC on inputs contained in semi-finished or finished
goods held in stock on the day immediately preceding the date of grant of registration, ie on
23.02.2024, only within 1 year from the date of issue of tax invoice by the supplier.
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Computation of Eligible ITC Available:

Particulars CGST (₹) SGST (₹) IGST (₹)

Capital goods (Person taking voluntary registration cannot Nil Nil Nil
avail ITC on capital goods held on the day immediately
preceding the date of grant of registration)
Inputs procured on 13th February 2023 (ITC not available Nil Nil Nil
because the invoice date is prior to 23rd February 2023)

Inputs procured on 10th October 2023. 15,000 15,000 Nil

Inputs procured on 1st February 2024 11,250 11,250 Nil

Inputs procured on 8th February 2024 Nil Nil 10,800

Value of Taxable supplies 26.250 26,250 10,800

Computation of Minimum Net GST To Be Paid In Cash By Vishnu Limited For The Month of February
2024:

Particulars CGST (₹) SGST (₹)

Output tax liability for the month 31,000 31,000

Less: ITC {IGST credit is utilized first for payment of CGST & (5,400) (IGST) (5,400) (IGST)
SGST liability in equal proportion.

CGST & SGST credit is utilized for payment of CGST liability & (25,600) (25,600)
SGST liability respectively.} (CGST) (SGST)

Net GST Payable In Cash Nil Nil

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CHAPTER - 8 EXEMPTIONS UNDER GST

ILLUSTRATION 1
Exempt supply includes supply of any goods or services or both which attracts nil rate of tax and which
may be wholly exempt from tax, but excludes non-taxable supply. Discuss the validity of the statement.

Ans.

The statement is not fully valid in law. Exempt supply has been defined as supply of any goods or
services or both which attracts nil rate of tax or which may be wholly exempt from tax and includes
non-taxable supply.

ILLUSTRATION 2
(Health Care Sector) Compute the value of taxable supply in the hands of Fortis hospital and the GST
payable thereon. GST, if any, would be charged extra.

Particulars Amount (Rs)

Receipts of diagnostic center 50 lakhs

Ambulance services to transport ill patients from hospital to home 1 lakh

Ambulance services to transport ill patients from home to hospital 2 lakhs

Lip enhancement surgery carried out for Anushka Sharma 80 lakhs

Hair removal surgery carried out for Anil Kapoor 20 lakhs

Cosmetic surgery on account of injury suffered during accidents 10 lakhs

Life-saving operation carried out in ICU (the amount includes ₹ 5 lakhs worth of 20 lakhs
consumables used during the operation)

Ans.

Computation of GST Liability of Fortis Hospital:

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Particulars Amount (Rs)

Receipts of diagnostic center Exempt
Ambulance services to transport ill patients from hospital to home Exempt
Ambulance services to transport ill patients from home to hospital Exempt

Lip enhancement surgery carried out for Anushka Sharma 80 lakhs

Hair removal surgery carried out for Anil Kapoor 20 lakhs

Cosmetic surgery on account of injury suffered during accidents Exempt

Life-saving operation carried out in ICU (the amount includes ₹5 lakhs worth of Exempt
consumables used during the operation)
Value of Taxable Services 100 lakhs
GST Liability @ 18% 18 lakhs

ILLUSTRATION 3
(Health Care Sector) Good Health Medical Centre, a clinical establishment, offers following services:

(i) Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of
Section 2(h) of Clinical Establishments Act, 2010.

(ii) Plastic surgeries. One such surgery was conducted to repair cleft lip of a new born baby.
(iii) Air ambulance services to transport critically ill patients from distant locations to the Medical
Centre.

(iv) Palliative care for terminally ill patients. On request, such care is also provided to patients at their
homes. (Palliative care is given to improve the quality of life of patients who have a serious or
life-threatening disease but the goal of such care is not to cure the disease)

(v) Alternative medical treatments by way of yoga.

Good Health Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells. Good Health Medical Centre is of the view that since it is a clinical
establishment, all the services provided by it as well as all the services provided to it are exempt from
payment of GST.

You are required to examine the situation in the light of relevant statutory provisions.
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Ans.

Health care services provided by a clinical establishment in any recognized system of medicines in
India are exempt from payment of GST. Eligibility for exemption in respect of each service offered by
Good Health Medical Centre is examined below:

(i) Taxable. Since reiki healing is not a recognized system of medicine in terms of section 2(h) of
Clinical Establishments Act, 2010, it would not be exempt.

(ii) Health care service does not include cosmetic or plastic surgery, except when undertaken to
restore or to reconstruct anatomy or functions of body affected due to congenital defects,
developmental abnormalities, injury or trauma. Therefore, plastic surgeries will not be entitled to
the said exemption and thus, GST would be payable thereon. However, plastic surgery conducted
to repair a cleft lip will be eligible for exemption as it reconstructs anatomy or functions of body
affected due to congenital defects (cleft lip).

(iii) Exempt. Health care service includes services by way of transportation of the patient to and from
a clinical establishment. Thus, air ambulance services to transport critically ill patients to Good
Health Medical Centre would be eligible for exemption.

(iv) Exempt. Health care service means any service by way of diagnosis or treatment or care for
illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in
India. It is immaterial whether such service is provided at the clinical establishment or at the
home of the patient or at any other place.

(v) Exempt. Since yoga is a recognized system of medicine in terms of Section 2(h) of Clinical
Establishments Act, 2010, the same would be eligible for exemption.

Further, no exemption is available in respect of services provided by cord blood banks by way of
preservation of stem cells or any other service in relation to such preservation. Therefore, services
provided in relation to preservation of stem cells by the cord blood bank operated by Good Health
Medical Centre will be taxable.

It is important to note that exemption is available for health care services provided BY a clinical
establishment and not for services provided TO a clinical establishment. Therefore, Good Health
Medical Centre's contention that since it is a clinical establishment, all the services provided to it are
also exempt from GST is not correct in law.
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ILLUSTRATION 4
(Health Care Sector) Well-Being Hospital has received the following amounts in lieu of various services
rendered by it. You are required to determine its GST liability from the details furnished below
assuming the rate of GST to be 18% (amounts given below are exclusive of GST):

S.No. Particulars ₹ (in lakhs)

(i) Services provided by cord blood bank unit by way of preservation of stem 24
cells
(ii) Hair transplant services 100

(iii) Mortuary services 10

(iv) Plastic surgery to restore anatomy of a child affected due to an accident 30

(v) Pranic healing treatments. Such treatment is not a recognized system of 120
medicine in terms of Section 2(h) of the Clinical Establishments Act, 2010
(vi) Naturopathy treatments. Such treatment is a recognized system of 80
medicine in terms of section 2(h) of the Clinical Establishments Act, 2010

Well-Being Hospital does not have its own ambulances so it avails ambulance services from Life
Savers, ambulance service provider, to transport critically ill patients from various locations to the
Hospital. Examine whether Life Savers would be charging any GST from Well Being Hospital on the
services provided by them.

Ans.

Computation of GST Liability of Well-Being Hospital:

Particulars ₹ (in lakhs)

Services provided by cord blood bank by way of preservation of stem cells (services 24
provided by cord blood banks by way of preservation of stem cells or any other
service in relation to such preservation are taxable)
Hair transplant services (Hair transplant services are specifically excluded from the 100
meaning of health care services, and thus not eligible for exemption)
Mortuary services (Mortuary services are covered under Schedule III of CGST Act. -
Such services are neither treated as supply of goods nor as supply of services. -
Hence, the same are not liable to GST)
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Plastic surgery to restore anatomy of a child affected due to an accident (Health care -
service does not include cosmetic or plastic surgery, except when undertaken to
restore or to reconstruct anatomy or functions of body affected due to congenital
defects, developmental abnormalities, injury or trauma. Thus, plastic surgery
performed to restore anatomy of a child affected due to an accident is exempt)
Pranic healing treatments (Pranic healing treatment is not a recognized system of 120
medicine, and thus not eligible for exemption)

Naturopathy treatments (Naturopathy is a recognized system of medicine, and thus -

eligible for exemption)
value of Taxable Services 244

GST Liability 43.92

Services by way of transportation of the patient in an ambulance are exempt irrespective of the status
of the service provider. Therefore, ambulance services provided by Life Savers are exempt from GST.

ILLUSTRATION 5
(Amusement/Entertainment Sector) Kesar Maharaj, a renowned classical dancer, gave a classical
dance performance in an auditorium. Consideration charged for the said performance is ₹1,48,000. Is
Kesar Maharaj liable to pay GST on the consideration received for the said performance if such
performance is not for promotion of any product/services? If yes, determine his GST liability. Will your
answer be different if:

(i) Consideration charged by Kesar Maharaj for the said performance is ₹ 1,00,000 ?
(ii) Kesar Maharaj is a brand ambassador of a food product and aforesaid performance is for the
promotion of such food product?
(iii) Kesar Maharaj gives a contemporary Bollywood style dance performance?

Note: Wherever applicable, GST has been charged separately.

Ans.

Services by an artist by way of performance in folk or classical art forms of music, dance, or theatre
are exempt if the consideration charged for such performance is not more than ₹1,50,000 per event.
However, exemption will not apply to services provided by such artist as a brand ambassador.
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In view of the aforesaid provisions, services provided by Kesar Maharaj are exempt from GST as
consideration for the classical dance performance has not exceeded ₹1,50,000. Therefore, his GST
liability is nil.

(i) If the consideration charged for the said performance by Kesar Maharaj is ₹1,60,000, he will be
liable to pay GST on the same as although the performance is by way of classical art form of
dance, consideration charged for such performance has exceeded ₹1,50,000. His GST liability
would, therefore, be ₹ 28,800 (₹1,60,000 × 18%).

(ii) If Kesar Maharaj is a brand ambassador of a food product and aforesaid performance is for the
promotion of such food product, he will be liable to pay GST as aforesaid exemption is not
applicable to services provided by an artist as a brand ambassador. His GST liability would,
therefore, be ₹ 26,640 (1,48,000 × 18%).

(iii) If Kesar Maharaj gives a contemporary Bollywood style dance performance, such performance
will not be eligible for aforesaid exemption. The reason for the same is that although the
consideration charged does not exceed ₹1,50,000, said performance is not in folk or classical
art forms of dance. Hence, GST would be payable on the same. His GST liability would, therefore,
be ₹ 26,640 (1,48,000 × 18%).

ILLUSTRATION 6
(Transportation Of Passengers) Mr A boarded Rajolhani Express (fully AC train) from Kanpur on July 5,
2022 and disembarked at New Delhi. He hired a car from a local cab operator for the whole day on a
lumpsum consideration and visited Delhi's historical monuments. In the night, he took the Metro to
International Airport and boarded a flight to Mumbai. At Mumbai Airport, he used a radio taxi for going
to his hotel. Mr A returned to Kanpur from a different train, Pushpak Express in sleeper class. With
reference to the provisions of GST law, examine the leviability of GST on the various modes of travel
undertaken by Mr A.

Ans.

(i) Rail travel in AC train: Not covered in exemption list and thus, liable to GST.
(ii) Travel in a car rented for the whole day on a lumpsum consideration: since travel by only metered
cabs is covered in exemption list, travel in a car rented for the whole day on a lumpsum
consideration will be liable to GST.
(iii) Metro travel: Covered in exemption list and hence, not taxable.
(iv) Air travel: Not covered in exemption list and thus, liable to GST.
SIR
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(v) Radio taxi travel: Not covered in exemption list and thus, liable to GST.
(vi) Rail travel in sleeper class: Covered in exemption list and hence, not taxable.

ILLUSTRATION 7
(Transportation of Passengers) 'Tours and Travel Agency' furnishes the following information relating
to services provided. State whether the followings services are liable to GST or not.

• Public transport used to travel within a state through waterway (inland waterway)
• Transportation of public in a AC-stage carriage
• Travelling by auto rickshaw
• Public transportation of passenger through metro, monorail or tramway
• Service of transportation in a vessel used for tourism purpose only

Ans.
Determination of Taxability of Various Modes of Transportation:

S.No. Particulars Taxability

(i) Public transport used to travel within a state through waterway (inland Exempt
waterway) {Transportation of passengers through inland waterways is
covered under exemption list}
(iii) Transportation of public in a AC stage carriage {Not covered under exemption Taxable
list}
(iii) Travelling by auto rickshaw {Covered under exemption list} Exempt
(iv) Public transportation of passenger through metro, monorail or tramway Exempt
{covered under exemption list}
(v) Service of transportation in a vessel used for tourism purpose only Taxable
{Not covered under exemption list since predominant purpose is tourism}

ILLUSTRATION 8
(Transportation of Passengers) High Alps Cable Car Co runs a cable car to transport pilgrims uphill to
a mountain top where a holy shrine is situated. Examine whether High Alps Cable Car Co is required to
pay any GST.
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Ans.

Transport of passengers, with or without accompanied belongings, by ropeway, cable car or aerial
tramway is taxable. Therefore, transportation of pilgrims by cable car to the holy shrine situated at
the mountain top will be taxable. However, if High Alps Cable Car Co has been registered as a charitable
trust u/s 12AA of the Income Tax Act, 1961 and transportation of passengers by cable car to the holy
shrine has been provided by High Alps Cable Car Co as part of its objective of advancement of religion,
exemption can be availed.

ILLUSTRATION 9
(Transportation of Goods) 'Big Goods Transportation Agency' provided the following services during
the month ended September 30, 2022. State whether the followings services are liable to GST or not.

• Transportation of goods by a courier agency

• Goods transportation (consignment note issued)
• Transportation of goods through national waterways (inland waterways)
• Goods transportation by air from Bangalore to Delhi

Ans.

Determination of Taxability of Various Modes of Transportation:

S.No. Particulars Taxability

(i) Transportation of goods by a courier agency Taxable
{Services of courier agency are not covered under exemption list and
thus taxable}
(ii) Goods transportation (consignment note issued) Taxable
{Services of goods transport agency are not covered under
exemption list and thus taxable}
(iii) Transportation of goods through national waterways (inland Exempt
waterways)
{Transportation of goods through inland waterways is covered under
exemption list}

(iv) Goods transportation by air from Bangalore to Delhi Taxable

{Transportation of goods through air is not covered under exemption
list and thus taxable}
SIR
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ILLUSTRATION 10
(Transportation of Goods) Babloo Transporters, a Goods Transport Agency, transported relief materials
meant for victims of Kerala floods, a natural disaster, by road from Dellhi to Ernakulam, for a company.
Babloo Transporters is of the view that it is not liable to pay GST on the said services provided as said
services are exempt. You are required to advice it on the said issue.

Ans.

Services provided by a goods transport agency, by way of transport in a goods carriage of relief
materials meant for victims of, inter alia, natural or man-made disasters, calamities, are exempt from
GST. Therefore, services provided by Babloo Transporters will be exempt from GST.

ILLUSTRATION 11
(Financial/Banking Sector) 'ABC Bank Ltd' furnishes the following information relating to services
provided. Compute the GST liability of 'ABC Bank Ltd' assuming that the amount of GST has been
charged separately.

S.No. Particulars Amount (Rs)

(i) Interest on overdraft 5,00,000

(iii) Commission on sale of foreign currency to other banks 4,00,000

(iv) Received processing charges related to money borrowed 50,000
(v) Commission on sale of US Dollar ($) to general public 25,000

Ans.
Computation of Value of Taxable Services and GST Liability of ABC Bank Ltd:

S.No. Particulars Amount (RS)

(i) Interest on overdraft {Time value of money in the form of interest is Exempt
exempt from GST}
(iii) Commission on sale of foreign currency to other banks {Sale of foreign Exempt
currency by a bank to
another bank is exempt from GST}
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(iv) Received processing charges related to money borrowed {Not covered 50,000
under exemption list}
(v) Commission on sale of US Dollar ($) to general public {Sale of foreign 25,000
currency by a bank to public is not covered under exemption list and thus
taxable}
Value of Taxable Services 75,000

GST Liability 13,500

ILLUSTRATION 12
(Financial/Banking Sector) Euro Bank Ltd furnishes the following information relating to services
provided. Compute the value of taxable supplies and GST liability of Euro Bank Ltd. GST has been
charged separately.

Particulars Amount (₹ in lakhs)

Interest on overdraft 5,00,000

Interest on loans with a collateral security 6,00,000
Interest on corporate deposits 10,00,000
Administrative charges (over and above interest) on loans, advances and 6,00,000
deposits
Value of foreign exchange services provided to general public 15,00,000
Service charges relating to issuance of Certificates of Deposit (CDs) 20,00,000

Ans.
Computation of Value of Taxable Services and GST Liability of Euro Bank Ltd:

Particulars Amount (₹ in lakhs)

Interest on overdraft {Covered under exemption list} Nil

Interest on loans with a collateral security {Covered under exemption list} Nil

Interest on corporate deposits {covered under exemption list} Nil

Administrative charges on loans, advances and deposits {Not covered 6,00,000

under exemption list}
SIR
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Sale of foreign exchange to general public {Not covered under exemption 15,00,000
list}
Service charges relating to issuance of Certificates of Deposits {Not 20,00,000
covered under exemption list}
Value of Taxable Services 41,00,000
GST Liability 7,38,000

ILLUSTRATION 13
(Sports Sector) Virat Kohli furnishes the following information of the various receipts. Compute the
value of taxable services and GST thereon. GST, if any, would be charged extra.

Particulars Amount (₹ in lakhs)

Receipts from BCCI for playing cricket for India at international level ₹ 100 lakhs

Receipts from Royal Challengers Bangalore - a franchisee of Indian Premier ₹ 200 lakhs
League (not a recognized sports body)
Receipts from Hindustan Unilever Ltd for acting as the brand ambassador of ₹ 100 lakhs
'Fair & Handsome'
Khel Ratna Award received from government of India ₹ 10 lakhs

Ans.

Computation of GST Liability of Virat Kohli:

Particulars Amount (₹ in lakhs)
Receipts from BCCI for playing cricket for India at international level Exempt

Receipts from Royal Challengers Bangalore (not a recognized sports body) 200 lakhs
Receipts from HUL for acting as the brand ambassador of 'Fair & Handsome' 100 lakhs

Khel Ratna Award received from Indian Govt (Activity does not qualify as Not a supply
supply)
Value of Taxable Services 300 lakhs
GST Liability 54 lakhs
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ILLUSTRATION 14
(Sports Sector) An individual acts as a referee in a football match organized by Sports Authority of
India. He has also acted as a referee in another charity football match organized by a local sports club,
in lieu of a lump sum payment. Discuss whether any GST is payable on the activities undertaken by
him?

Ans.

• Services provided to a recognized sports body by an individual, inter alia, as a referee in a sporting
event organized by a recognized sports body is exempt from GST.

• Since in the first case, the football match is organized by Sports Authority of India, which is a
recognized sports body, services provided by the individual as a referee in such football match will
be exempt.

• However, when he acts as a referee in a charity football match organized by a local sports club, he
would not be entitled to afore-mentioned exemption as a local sports club is not a recognized
sports body and thus, GST will be payable in this case.

ILLUSTRATION 15
(Sports Sector) Poorva acts as a Team Manager for Indian Sports Authority (15A), a recognized sports
body, for a tennis tournament organized by a multinational company and received a remuneration of
₹ 2,00,000. Determine whether GST is payable on the remuneration received by Poorva.

Ans.

Services provided by a team manager to a recognised sports body for participation in a sporting event
are exempt from GST provided said sporting event is organised by a recognized sports body. In the
given case, the services are being provided by a team manager to a recognised sports body, but the
sporting event is not organised by a recognised sports body. Therefore, the services provided by
Poorva are not exempt from GST.

ILLUSTRATION 16
(Food/Agricultural Sector) Compute the GST liability of ABC Agro Products from the following details
furnished by them with respect to the activities undertaken by them:
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S.No. Particulars Amount (Rs)

(i) Supply of farm labour 2,50,000
(ii) Warehousing of biscuits 2,00,000
(iii) Sale of rice on commission basis 70,000

(iv) Leasing of vacant land to a dairy farm 1,50,000

(v) Leasing of vacant land to a stud farm 1,30,000
(vi) Leasing of vacant land to a poultry farm 2,50,000
(vii) Testing undertaken for soil of a farm land 83,500
(viii) Training of farmers on use of new pesticides and fertilizers developed 10,000
through scientific research

Ans.

Computation of GST Liability of ABC Agro Products:

S.No. Particulars Amount (Rs)

(i) Supply of farm labour {Covered under exemption list} -

(ii) Warehousing of biscuits {Taxable since biscuit is not an agricultural 2,00,000
produce}

(iii) Sale of rice on commission basis {Taxable since rice is not an 70,000
agricultural produce}

(iv) Leasing of vacant land to a dairy farm {Not taxable since rearing of -
animals is included in the scope of exemption list}

(v) Leasing of vacant land to a stud farm {Taxable since rearing of horses 1,30,000
has been excluded from the scope of exemption list}
(vi) Leasing of vacant land to a poultry farm {Not taxable since rearing of -
animals is included in the scope of exemption list}
(vii) Testing undertaken for soil of a farm land {Covered under exemption list} -

(viii) Training of farmers on use of new pesticides/fertilizers developed -

through scientific research {Not taxable since agricultural extension
services have been included in the exemption list}
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Value of Taxable Services 4,00,000

GST Liability 72,000

Note 1: It is assumed that the values given are exclusive of GST.

ILLUSTRATION 17
(Food/Agricultural Sector) 'Rock Farmer Association' is engaged in providing services relating to
agriculture. Compute its GST liability from the following details furnished by it with respect to the
activities undertaken by it.

S.No. Particulars Amount (Rs)

(i) Cultivation of ornamental flowers 42,000

(ii) Packing of tomato ketchup 54,000

(iii) Warehousing of potato chips 1,65,000

(iv) Sale of tea leaves on commission basis 68,000

(v) Packaging of pulses in retail packs 42,000

(vi) Training of farmers on use of scientific tools and agro machinery 10,000

(vii) Leasing of vacant land to a stud farm 1,63,000

(viii) Grading of wheat according to its quality 42,000

(ix) Testing of samples from plants for pest detection 1,21,500

(x) Rearing of silk worms 83,500

Ans.

Computation of GST Liability of Rock Farmer Association:

S.No. Particulars Amount (Rs)

(i) Cultivation of ornamental flowers {Floriculture activity is covered -

under exemption list}
(ii) Packing of tomato ketchup {Taxable since tomato ketchup is not an 54,000
agricultural produce}
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(iii) Warehousing of potato chips {Taxable since potato chips is not an 1,65,000
agricultural produce}
(iv) Sale of tea leaves on commission basis {Not taxable since tea is an -
agricultural produce}
(v) Packaging of pulses in retail packs {Packaging meant for retail 42,000
markets is not covered under exemption list and thus taxable?
(vi) Training of farmers on use of scientific tools and agro machinery {Not -
taxable since agricultural extension services have been included in the
exemption list}
(vii) Leasing of vacant land to a stud farm {Taxable since rearing of horses 1,63,000
has been excluded from the scope of exemption list}
(viii) Grading of wheat according to its quality {Not taxable since wheat is -
an agricultural produce}
(ix) Testing of samples from plants for pest detection {Not taxable} -
(x) Rearing of silk worms {sericulture activity is covered under exemption -
list}
Value of Taxable Services 4,24,000
GST Liability 76,320

ILLUSTRATION 18
(Public Convenience Services) Discuss whether the following services provided are chargeable to GST
or not:

(a) A Ltd has constructed Delhi-Jaipur Highway under Public Private Partnership Agreement with
Delhi Govt. After construction, A Ltd has been authorized to collect toll charges for providing
access to newly developed 8 lane highway. A Ltd has given the job of toll collection on its behalf
to B Ltd (commission being 10% of toll collection).

(b) Charges are collected by a developer for distribution of electricity within a residential complex.

Ans.

(a) A Ltd is not liable to pay GST because services by way of access to road/bridge on payment of
toll charges are covered under exemption list and thus not taxable. Services of toll collection by
B Ltd on behalf of A Ltd (ie, an agency authorized to levy toll) are taxable because no exemption
is available in respect of such services.
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(b) Services of transmission/distribution of electricity are covered under the exemption list only if
such services are provided by an electricity transmission or distribution utility. A private
developer is not covered within the scope of an electricity transmission or distribution utility and
thus services provided by him would be taxable.

ILLUSTRATION 20
(Education Sector) 'Study Hard Institute' provided the following services during the month of July
2022. Compute the value of taxable services and GST liability of 'Study Hard Institute' for the month
of July 2022.

S.No. Particulars Amount (Rs)

(i) Fees collected from Creche (a nursery school) 2,50,000
(ii) Collection of fees from students of Higher Secondary (a school) 5,00,000
(iii) Collection of fees for giving coaching for entrance exam of IIT 3,00,000
(iv) Collection of fees from the students registered under unapproved 2,50,000
vocational educational course

Ans.
Computation of GST Liability of 'Study Hard Institute':

S.No. Particulars Amount (Rs)

(i) Fees collected from Creche (a nursery school) Exempt
{Pre-school education covered under exemption list and thus exempt}
(ii) Collection of fees from students of Higher Secondary (a school) Exempt
{school education covered under exemption list and thus exempt}
(iii) Collection of fees for giving coaching for entrance exam of IIT 3,00,000
{Private coaching not covered under exemption list and thus taxable}
(iv) Collection of fees from the students registered under unapproved 2,50,000
vocational educational course
{Unapproved vocational educational course not covered under
exemption list and thus taxable}

Value of Taxable Services 5,50,000

GST Liability 99,000
SIR
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ILLUSTRATION 21
(Education Sector) Sarvshiksha, an Educational Trust, runs a play school, 'Tiny Tots' and a higher
secondary school, 'Pinnacle Academy'. It also runs a coaching centre which provides coaching for IIT-
JEE entrance examinations to meritorious students of economically weak background. It also provides
coaching classes for examinations of certified Public Accountant, USA. Examine the leviability of GST
in each case.

Ans.

Services provided by an educational institution to students are exempt from GST. Educational
institution has been defined to mean an institution which, inter alia, provides the following education:
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time
being in force.

Therefore, GST will not be leviable on services relating to education rendered by the play school (pre-
school), 'Tiny Tots' and the higher secondary school, 'Pinnacle Academy' run by Sarvshiksha, the
Educational Trust.

Since, coaching given by private coaching institutes/centers is not a part of a curriculum for obtaining
recognized qualification, the same is not covered under the exemption list. Therefore, coaching
classes for IIT-JEE entrance examinations and CPA examinations will not be covered under exemption
list and thus, will be liable to GST. It is immaterial that coaching is given to economically weak students
or for a national level entrance examination or an international examination.

ILLUSTRATION 22
(Education Sector) Industrial Training Institute (ITI), Manikpuri offers a short term Modular Employable
Skill Course in Information & Communication Technology Sector. The said course is approved by the
National Council of Vocational Training (NCVT). ITI, Manikpuri is registered with the Directorate General
of Employment and Training, Ministry of Labour and Employment. Revenue raised a demand for GST
on the services provided by ITI Manikpuri. Examine whether the demand raised by Revenue is correct
in law.

Ans.
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Services provided by an educational institution by way of education as a part of an approved

vocational education course are covered under exemption list. A Modular Employable Skill Course,
approved by the National Council of Vocational Training, run by a person registered with the
Directorate General of Employment and Training, Union Ministry of Labour and Employment is an
approved vocational education course.

Since, the course offered by ITI Manikpuri falls under the definition of approved vocational education
course, the same will be covered under exemption list and thus, ITI Manikpuri will not be liable to pay
GST. Therefore, the demand raised by Revenue is not correct in law.

ILLUSTRATION 23
(Education Sector) Indiana Engingering college, a recognised educational institution, has conducted
an entrance test examination for various courses run by it and charged entrance fees from the
applicants. Determine whether Indiana Engineering College is liable to pay GST on the same.

Ans.

Services provided by an educational institution by way of conduct of entrance examination against

consideration in the form of entrance fee are exempt from GST. Since in the given case, services
provided by Indiana Engineering college, an educational institution, are by way of conduct of entrance
examination against entrance fee, the same is exempt and thus, GST is not payable in this case.

ILLUSTRATION 24
(Legal services) XY Legal is a firm of advocates (partners are X and Y, having equal profit sharing ratio).
Following are the details of services provided by XY Legal during FY 2022-23:

• Legal services of ₹8,00,000 provided to Mr A, an advocate of Bombay High Court (Gross receipts of
Mr A are always more than ₹ 70,00,000 per annum);
• Legal services of ₹ 32,00,000 provided to PQR Legal (a firm of 10 advocates);
• Legal services of ₹ 6,00,000 provided to MrC (a salaried employee). The services are provided to
MrC in a personal legal matter not connected with the employer;

• Legal services of ₹11,00,000 provided to D Ltd (Turnover of D Ltd during FY 2021-22 was ₹8,00,000);
and

• Legal services of ₹ 5,00,000 provided to E Ltd (Turnover of E Ltd during FY 2021-22 was ₹70,00,000).

Above figures are exclusive of GST. Find out:

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(a) GST payable by the service provider (ie, XY Legal); and

(b) GST payable by the service recipients (ie Mr A, PQR Legal, Mr C, D Ltd and E Ltd).

Ans.
Computation of GST Liability:

Particulars SP's SR's

Liability Liability
Legal services to Mr A (an advocate) (Covered under exemption list, Nil Nil
thus no GST)

Legal services to PQR Legal (a firm of advocates) (Covered under Nil Nil
exemption list, thus no GST)

Legal services to Mr C (non-business entity) (Covered under Nil Nil

exemption list, thus no GST)

Legal services to D Ltd (Covered under exemption list because the Nil Nil
turnover of D Ltd during the preceding financial year does not
exceed ₹20,00,000)
Legal services to E Ltd (Not covered under exemption list because Nil ₹90,000
the turnover of E Ltd during the preceding financial year exceeds ₹ (₹5L × 18%)
20,00,000)

ILLUSTRATION 25
(Legal Services) Vakil & Vakil, a firm of lawyers rendered legal advice to Mr B (a professional architect)
and MNO Ltd (an advertising agency) during October 2022. Both Mr B and MNO Ltd got themselves
registered under GST in FY 2020-21 as per the provisions of Section 22 of CGST Act. Who is liable to
pay GST in this case?

Will your answer be different if Mr B and MNO Ltd sought legal advice from Mr A, a lawyer?

Ans.

• Legal services provided by an individual advocate/a firm of advocates to any business entity
located in taxable territory are taxable under reverse charge. However, legal services provided by
an individual advocate/a firm of advocates to a business entity whose turnover during the
preceding FY does not exceed ₹ 20 lakhs are exempt from GST.
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• In the given case, Mr B and MNO Ltd have got themselves registered under GST in FY 2021-22 as
per the provisions of Section 22 of CGST Act. This implies that their turnover during FY 2021-22 is
more than ₹20 lakhs.

• Therefore, legal services provided by vakil and vakil (a firm of advocates) to Mr B and MNO Ltd
during October 2022 will not be exempt from GST since the turnover of Mr B & MNO Ltd during FY
2021-22 exceeds ₹ 20 lakhs. Further, Mr B & MNO Ltd will be liable to pay GST under reverse charge.

• The answer would remain same if Mr B and MNO Ltd sought legal advice from Mr A, a lawyer since
the law remains the same irrespective of the fact whether legal advice is sought from a firm of
lawyers or an individual lawyer.

ILLUSTRATION 26
(Renting of immovable Property) Mr Dhingra rendered the following services by renting his properties
located in Gujarat for various uses:

Particulars Amount (Rs)

Land let out to Jumbo Circus 1,50,000
A building let out to Singhania classes for providing coaching to CA students 5,00,000
A vacant land used for horticulture 3,00,000
A building let out to EXIM Ltd for use as a corporate office 8,00,000

Ans.

Services by way of renting of residential dwelling for use is residence is covered under exemption list.
The following services are taxable as no exemption is available in respect of such services:

• Letting out land to Jumbo Circus

• Letting out building for providing coaching to CA students
• Letting out building for use as corporate office

Computation of Value of Taxable Services and GST Liability of Mr Dhingra:

Particulars Amount (Rs)

• Land let out to Jumbo Circus 1,50,000

• Building let out to Singhania classes for providing coaching to CA students 5,00,000
SIR
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• Vacant land used for horticulture (Horticulture is included in the definition of Exempt
agriculture. Services relating to agriculture by way of renting of vacant land is
covered in exemption list)

• Building let out to EXIM Ltd for use as corporate office 8,00,000

Value of Taxable Services 14,50,000

GST Liability 2,61,000

ILLUSTRATION 27
(Renting of Immovable Property) Ekta Charitable Trust, registered u/s 10 (23C) (v) of the Income Tax
Act, 1961, manages a temple in Rohini, Delhi. It has given on rent a community hall, located within temple
premises, to public for celebration of Teej Mela. Rent charged is ₹ 9,500, You are required to determine
whether the services provided by Ekta Charitable Trust are liable to GST.

Ans.

Services by a person by way of renting of precincts of a religious place meant for general public,
owned. or managed by an entity registered as a trust or an institution u/s10(23C)(v) of the Income
Tax Act are exempt provided renting charges of premises, community halls, kalyanmandapam or open
area are less than ₹10,000 per day. Thus, in the given case, renting of community hall by Ekta
Charitable Trust is exempt from GST, as rent is less than ₹ 10,000 per day.

ILLUSTRATION 28
(Renting of Motor Vehicles) A State Transport Undertaking has hired motor vehicles meant to carry 8-
10 passengers from Fast Cab Renting, a motor vehicle renting company. Give your comments as to
whether any GST is payable in this case.

Ans.

Services by way of giving on hire, inter alia, to a State Transport Undertaking, a motor vehicle meant
to carry more than 12 passengers is exempt from GST. Since the motor vehicles given on hire by Fast
Cab Renting to the State Transport Undertaking are meant to carry 8-10 passengers, the same would
not be eligible for exemption and would thus, be liable to GST.
SIR
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ILLUSTRATION 29
(Renting of Motor Vehicles) ST Ltd has given on hire 5 trucks to Titu Transporters of Delhi (a goods
transport agency) for transporting good's in Central and West Delhi. The hiring charges for the trucks
are ₹7,500 per truck per day. Examine whether GST is payable in the given case.

Ans.

GST is not payable in case of hiring of trucks to Titu Transporters. Services by way of giving on hire,
inter alia, to a goods transport agency, a means of transportation of goods are exempt.

ILLUSTRATION 30
(Comprehensive Question) Determine the applicability of GST in each of the following independent
cases:

(a) Margin earned from trading in equity shares.

(b) Margin from trading in futures.
(c) Commission charged by a bank on sale of foreign exchange to an authorized foreign exchange
dealer.

(d) Services provided to a Higher Secondary School affiliated to CBSE Board by an IT company in
relation to development of a software to be used for enhancing the quality of classroom
teaching.

(e) Services provided by a bus operator by way of transportation of passengers in air-conditioned

buses.

Ans.

(a) Margin earned from trading in equity shares: Equity shares are covered within the meaning of
'securities' and margin earned from sale and purchase of securities is not liable to GST.

(b) Margin for trading in futures: Futures are covered within the meaning of 'securities' and margin
earned from sale and purchase of securities is not liable to GST.

(c) Commission charged by bank: Exemption list covers sale and purchase of foreign exchange
between banks or authorized dealers of foreign exchange or between banks and such dealers.
Consequently, it is not chargeable to tax.
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(d) Services provided to a Higher Secondary school affiliated to CBSE Board by an IT company in
relation to development of a software to be used for enhancing the quality of classroom
teaching: Only the following specific services provided TO a school have been exempted:
• transportation of students, faculty and staff;
• catering, including any mid-day meals scheme sponsored by the Government;
• security or cleaning or house-keeping services performed in such educational institution; or
• services relating to admission to, or conduct of examination by, such institution.

Services of development of software provided to a school are not covered under any of the
specific services given above, Thus, the same will be liable to GST.

(e) Services provided by a bus operator by way of transportation of passengers in air-conditioned

buses: Services of transportation of passengers by air-conditioned buses (stage carriage as well
as contract carriage) are taxable.

ILLUSTRATION 31
(Comprehensive Question) Discuss whether the following services are chargeable to GST or not:

(a) A hockey player gets fees from Indian Hockey Federation for participating in an international
event.

(b) Sonakshi Sinha, a brand ambassador of Colgate Palmolive Ltd, gets ₹15 lacs for advertising its
products.

(c) Mr Amit, an organizer, provided services to Mr Kumar in respect of a business exhibition held in
Patna.

(d) Mr Chandra Bhusan provided the services by conducting religious rites at the birth ceremony of
a child.
(e) Services provided as a match referee directly to Sports Authority of India for ₹ 2,50,000.
(f) Security services provided to a Government recognized educational institution for ₹3,00,000.
(g) Performing music concert by a renowned Carnatic singer in consideration for ₹1,40,000.
(h) Collection of admission fee for music concert with fee of ₹1,000 per person.

Ans.

(a) Exemption list exempts services provided by a player to a recognized sports body by
participating in a sporting event. Therefore, fees received by a hockey player from Indian Hockey
Federation for participating in an international event shall be exempt from GST.
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(b) Services provided by a person/artist as brand ambassador are not covered under the scope of
exemption list. Therefore, amount of ₹15 lakhs received by Sonakshi Sinha from Colgate
Palmolive Ltd for advertising its products as a brand ambassador shall be liable to GST.

(c) Services provided by an organizer to any person in respect of a business exhibition held outside
India are exempt from GST. Since services provided by organizer (Mr Amit) to Mr Kumar are in
respect of a business exhibition held in Patna (ie, in India), such services will be liable to GST.

(d) Services provided by a person by way of conduct of any religious ceremony are exempt from
GST. Thus, services provided by Mr Chandra Bhusan by conducting religious rites at the birth
ceremony of a child will be exempt.

(e) Services provided by an individual to a recognised sports body as a referee are exempt. Since, in
the given case, sports Authority of India is a recognised sports body, services provided as a
match referee to it are exempt.

(f) Services provided to an educational institution by way of security services performed therein
are exempt. Since Government recognized educational institution is covered within the meaning
of 'educational institution' as given under the exemption list, security services provided to it are
exempt from GST.

(g) Performance of an artist in classical art forms of music are exempt if the consideration charged
for such performance is not more than ₹1,50,000. Since the consideration charged for performing
music concert by a renowned carnatic singer is ₹1,40,000, such services are exempt from GST.

(h) Services by way of right to admission to a musical performance are exempt provided the
consideration for such admission does not exceed ₹ 500 per person. Since, in the given case, the
admission fee for music concert exceeds ₹ 500 per person, such services are fully taxable.

ILLUSTRATION 32
(Comprehensive Question) Examine the taxability of the following amounts as per the relevant
provisions of GST law:

S.No. Particulars Amount (Rs)

(i) Admission to a Railway Museum 50,000

(ii) Admission to a Telly Award Function (Value per ticket per person is ₹ 5,10,000
510)
(iii) Transportation of milk by a goods transport agency 1,50,000
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(iv) Fees charged for yoga camp conducted by a charitable trust 5,00,000

(v) Amount charged by cord blood banks by way of preservation of stem 50,000
cells
(vi) Amount charged by business correspondent from banking company 1,00,000
for the services provided to the rural branch of a bank with respect to
Savings Bank Accounts
(vii) Service provided by commentators to a recognized sports body 5,20,000

(viii) Services by way of waxing of apples to provide it an artificial sheen 1,00,000

for increasing its marketability
(ix) Transportation of patients to ABC Nursing Home and Bheem 1,20,000
Multispecialty Hospital, in an ambulance owned by XYZ Ltd

Ans.

Determination of Taxability of Various Services:

S.No. Particulars Taxability

(i) Admission to a Railway Museum Exempt
{Admission to museums is covered under exemption list}
(iii) Admission to a Telly Award Function (Value per ticket per person is ₹ Fully Taxable
510)
{Admission to award functions is exempt only if the ticket price does
not exceed ₹ 500 per person}

(iii) Transportation of milk by a goods transport agency Exempt

{Transport of milk by GTA is covered under exemption list}
(iv) Fees charged for yoga camp conducted by a charitable trust Exempt
{Services by an entity registered u/s 12AA of the Income Tax Act, 1961
by way of charitable activities are exempt from GST. Activities
relating to advancement of yoga are included in the definition of
charitable activities}

(v) Amount charged by cord blood banks by way of preservation of stem Fully Taxable
cells
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{Services provided by cord blood banks by way of preservation of

stem cells or any other service in relation to such preservation are
taxable as no exemption is available for such services}
(vi) Amount charged by business correspondent for the services Exempt
provided to the rural branch of a bank with respect to savings Bank
Accounts
{Services by business facilitator or a business correspondent to a
banking company with respect to accounts in its rural area branch
have been exempted from GST}

(vii) Service provided by commentators to a recognized sports body Fully Taxable

{Services provided to a recognized sports body by an individual as a
player, referee, umpire, coach or team manager are exempt from GST.
However, services provided by commentators are taxable}

(viii) Waxing of apples to provide it an artificial sheen for increasing its Exempt
marketability
{Waxing of fruits & vegetables is covered under exemption list}

(ix) Transportation of patients to ABC Nursing Home and Bheem Exempt

Multispecialty Hospital, in an ambulance owned by XYZ Ltd
{Ambulance services provided by an entity which is not a clinical
establishment or an authorized medical practitioner are also exempt
from GST}

ILLUSTRATION 33
(Miscellaneous Question) Examine which of the following independent services are exempt from GST:
(a) Food supplied by the canteen run by a hospital to the in-patients as advised by the doctors.
(b) An RWA, registered under GST, collects the maintenance charges of ₹ 6,500 per month per
member.

Ans.

(a) Services by way of health care services by a clinical establishment, an authorised medical
practitioner or para-medics are exempt from GST. Food supplied to the in-patients by a canteen
run by the hospital, as advised by the doctor/ nutritionists, is a part of composite supply of
healthcare and not separately taxable.
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(b) Supply of service by a RWA (unincorporated body or a non-profit entity registered under any law)
to its own members by way of reimbursement of charges or share of contribution up to an
amount of ₹7,500 per month per member for providing services and goods for the common use
of its members in a housing society/a residential complex are exempt from GST. Hence, in the
given case, services provided by the RWA are exempt from GST since the maintenance charges
collected per month per member do not exceed ₹7,500.

ILLUSTRATION 34
JP Charitable Institution, an entity registered u/s I2AA of income Tax Act, 1961 and registered in GST,
has furnished you the following details with respect to the activities undertaken by it during the month
of January 2024. You are required to compute its GST liability from the information given below,
assuming the rate of GST as 18%. Brief reasoning should be part of your answer.

S.No. Tax Liability Amount (₹)

(1) Membership fees received from members 10,00,000

(2) Amount received for advancement of educational programs relating 4,00,000

to abandoned or orphaned or homeless children
(3) Amount received for renting of commercial property owned by Trust 5,00,000

(4) Amount received for counselling of terminally ill person 3,50,000

(5) Fees charged for Yoga Camp conducted by Trust 2,00,000

Answer

Charitable activities provided by an entity registered u/s 12AA of the Income Tax Act, 1961 are exempt
from levy of GST. Out of all the activities listed in the question, the following activities are covered
within the meaning of 'charitable activities' as given under the GST law:

• Public health by way of care or counselling of terminally ill persons

• Advancement of religion, spirituality or yoga
• Advancement of educational programmes or skill development relating to abandoned, orphaned or
homeless children

• Preservation of environment including watershed, forests and wildlife

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Computation of Value of Taxable Supply of J.P. Charitable Institution & Its GST Liability (January 2024):

S.No. Particulars Amount (₹)

(1) Membership fees received from members 10,00,000

(Not covered within the meaning of 'charitable activities')
(2) Amount received for advancement of educational programs relating to Exempt
abandoned or orphaned or homeless children
(Covered within the meaning of 'charitable activities')
(3) Amount received for renting of commercial property owned by Trust 5,00,000
(Not covered within the meaning of 'charitable activities')

(4) Amount received for counselling of terminally ill person Exempt

(Covered within the meaning of 'charitable activities')

(5) Fees charged for Yoga camp conducted by Trust (Covered within the Exempt
meaning of 'charitable activities')
(6) Amount received relating to preservation of Forest & Wildlife (Covered Exempt
within the meaning of 'charitable activities')
Value of Taxable Supply 15,00,000
CGST Liability - ₹ 1,35,000; SGST Liability - ₹1,35,000

ILLUSTRATION 35
M/s Apna Bank Limited, a Scheduled Commercial Bank, has furnished the following details for the
month of August 2023. Compute the value of taxable supply. Give reasons with suitable assumptions.

S.No. Particulars Amount

Excluding GST
(i) Extended housing loan to its customers 100 Crores
(ii) Processing fees collected from its customers on sanction of loan 20 crores

(iii) Commission collected from its customers on bank guarantee 30 Crores

(iv) Interest income on credit card issued by the bank 40 Crores
(v) Interest received on housing loan extended by the bank 25 Crores

(vi) Minimum balance charges collected from current account and saving 1 Crore
account holder
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Answer
Computation of value of Taxable supply:

S.No. Particulars Amount

Excluding GST
(i) Extended housing loan to its customers Nil
{Since money does not constitute goods, extending housing loan is not
a supply}
(ii) Processing fees collected from its customers on sanction of loan 20 Crores
{interest does not include processing fee on sanction of the loan;
hence the same is taxable}
(iii) Commission collected from its customers on bank guarantee 30 Crores
{Any commission collected over and above interest on loan, advance or
deposit is taxable}
(iv) Interest income on credit card issued by the bank 40 crores
{Services by way of extending loans in so far as the consideration is
represented by way of interest are exempt from tax. However, interest
involved in credit card services is taxable}
(v) Interest received on housing loan extended by the bank Nil
{Services by way of extending loans in so far as the consideration is
represented by way of interest are exempt from tax}
(vi) Minimum balance charges collected from current account and saving 1 Crore
account holder
{Any charges collected over and above interest on loan, advance or
deposit are taxable}

Value of Taxable Supply 91 Crore

ILLUSTRATION 36
Anand Trust, Kolkata is registered u/s 12AA of the Income Tax Act, 1961. It has provided following
particulars relating to the activities carried out by it for the month of March 2024:
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S.No. Particulars Amount (₹)

(i) Donation received against display of name of a city based school in 5,00,000
annual religious book published by the Trust
(ii) Receipts from sale of food in Anand food court, located in the Trust 2,00,000
premises

(iii) Refundable deposit of ₹ 2,00,000 and annual fees of ₹ 1,00,000 received 3,00,000
from restaurants (located in West Bengal) using brand name and logo of
Anand Food Court
(iv) Donation received for Pooja organized in Trust premises on occasion of 1,00,000
'Shivratri'
(v) Receipts from Skill Development Program for Senior Citizens (aged 4,00,000
more than 65 years) residing in Kolkata

(vi) Amount received for activities relating to preservation of Tigers in 3,00,000

Sunderbans, West Bengal
(vii) Letting out of precincts of a religious place owned by the Trust in 2,00,000
Kolkata (Rent ₹ 10,000 per day)

From the given information, you are required to calculate the value of taxable supply.

Answer
Computation of Value of Taxable Supply:

Particulars Amount (₹)

Donation received against publishing the name of a school in annual religious 5,00,000
publication of the Trust {Being a non-charitable activity, the service provided by
the Trust is not eligible for exemption from GST}

Receipts from sale of food in food court in the premises of the Trust 2,00,000
{Being a non-charitable activity, the service provided by the Trust is not eligible
for exemption from GST}

Annual fees received from restaurants for use of brand name and logo of food 1,00,000
court
{Being a non-charitable activity, the service provided by the Trust is not eligible
for exemption from GST. However, deposit being refundable in nature cannot be
construed as consideration}
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Donation received for pooja organized in Trust premises on occasion of 'Shivratri' Nil
{Services of conduct of a religious ceremony are exempt from GST}
Receipts from skill development program for senior citizens (aged more than 65 4,00,000
years) residing in Kolkata {skill development program conducted by the Trust for
persons over the age of 65 years is not a charitable activity since such persons
are not residing in rural area, but in an urban area (Kolkata). Being a non-
charitable activity, said service provided by the Trust is not eligible for
exemption from GST}
Amount received for activities relating to preservation of Tigers in Sunderbans, Nil
West Bengal {Being a charitable activity of preservation of wildlife, the service
provided by the Trust is eligible for exemption from GST}
Letting out of precincts of religious place owned by the Trust in Kolkata 2,00,000
{Renting of precincts of a religious place meant for general public owned by a
charitable trust is exempt only when the rent is less than ₹ 10,000 per day. Since
the rent is ₹ 10,000 per day, the same is not eligible for exemption?

Total Value Of Taxable Supply 14,00,000

ILLUSTRATION 37
Green Agro Services, a registered person provides the following information relating to its activities
during the month of February 2024:

S.No. Gross Receipts From Amount (₹)

(i) Services relating to rearing of sheeps 6,00,000

(ii) Services by way of artificial insemination of horses 4,00,000

(iii) Processing of sugarcane into jaggery 8,00,000

(iv) Milling of paddy into rice 7,50,000

(v) Services by way of fumigation in a warehouse of agricultural produce 1,80,000

All the above receipts are exclusive of GST. Compute the value of taxable supplies under GST laws for
the month of February 2024.
SIR
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Answer

Computation of Value Of Taxable Supplies:

Particulars Amount (₹)

Services relating to rearing of sheeps Nil

{Exempt since services relating to rearing of all life forms of animals, except
horses, for food etc are exempt}

Services by way of artificial insemination of horses 4,00,000

{Not exempt since services of artificial insemination are exempt only of livestock
other than horses}
Processing of sugarcane into jaggery 8,00,000
{Not exempt, since processes which alter the essential characteristics of
agricultural produce are not exempt
and processing of sugarcane into jaggery changes the essential characteristics
of sugarcane}

Milling of paddy into rice 7,50,000

{Not exempt, since this process, being carried out after cultivation is over, is not
an intermediate production process in relation to cultivation of plants and it also
changes the essential characteristics of paddy}

Services by way of fumigation in a warehouse of agricultural produce {No 1,80,000

exemption available under GST}

Value of Taxable Supplies

ILLUSTRATION 38
Satya sai Residents Welfare Association, a registered person under GST has 30 members each paying
₹ 8,000 as maintenance charges per month for sourcing of goods and services from third persons for
common use of its members. The Association purchased a water pump for ₹ 59,000 (inclusive of GST
of ₹ 9,000) and availed input services for ₹ 23,600 (inclusive of GST of ₹ 3,600) for common use of its
members during February 2024.

Compute the total GST payable, if any, by Satya Sai Residents Welfare Association, for February 2024.
GST rate is 18%. All transactions are intra-state. There is no opening ITC and all conditions for ITC are
fulfilled.
SIR
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Answer

Computation of Total GST Payable By Satya Sai Residents Welfare Association:

Particulars Amount (₹)

Maintenance charges received (₹8,000 × 30 members) 2,40,000

{Services by RWA to its members for sourcing of goods or services from a third
person for the common use of its members in a housing society are exempt
provided the share of contribution per month per member is upto ₹7,500;
otherwise, entire amount is taxable}
Total GST Payable @ 18% {1t has been assumed that maintenance charges are 43,200
exclusive of GST}

Residents Welfare Association is entitled to take ITC of GST paid by them on capital goods, goods and
input services, used by it for making supplies to its members and use such ITC for discharge of GST
liability on such supplies where the amount charged for such supplies is more than ₹ 7,500 per month
per member. Thus, Satya Sai Residents Welfare Association can avail ITC of GST paid on water pump
purchased (₹9,000) and input services availed (₹3,600).

Net GST payable in that case will come out ₹ 30,600 {₹ 43,200 - (₹ 9,000 + ₹3,600)}.

ILLUSTRATION 39
M/s AB Ltd, a registered company of Chennai, Tamil Nadu has provided following services for the month
of October 2023. All the above amounts are exclusive of GST.

Particulars Amount (₹)

Services of transportation of students, faculty and staff from home to college 2,50,000
and back to Commerce College, (a private college) providing degree courses in
BBA, MBA, B.Com., M.Com

Online monthly magazine containing question bank and latest updates in law to 1,00,000
students of PQR Law College offering degree courses in LLB and LLM

Housekeeping services to T Coaching Institute 50,000

Security services to N Higher secondary School 3,25,000

Services of providing breakfast, lunch and dinner to students of ABC Medical 5,80,000
College offering degree courses recognized by law in medical field
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Compute the taxable supplies of M/S AB Ltd for the month of October 2023 with necessary
explanations.

Answer

Computation of Value of Taxable Supplies:

Particulars Amount (₹)

Services of transportation of students, faculty and staff to Commerce College 2,50,000

{Not exempt, since transportation services provided to an educational institution
are exempt only if such institution provides pre-school education or education
up to higher secondary school or equivalent}

Online monthly magazine to students of PQR Law College Nil

{Services of supply of online educational journals provided to an educational
institution providing qualification recognized by law are exempt}
Housekeeping services to T Coaching Institute {Not exempt} 50,000
Security services to N Higher Secondary School Nil
{Security services provided to an educational institution providing education up
to higher secondary school are exempt}

Services of providing breakfast, lunch and dinner to students of ABC Medical 5,80,000
College
{Not exempt, since catering services provided to an educational institution are
exempt only if such institution provides pre-school education or education up to
higher secondary school or equivalent}

Value Of Taxable Supplies 8,80,000

ILLUSTRATION 40
Mr Dhanwan, an individual registered supplier of Ahmedabad (Gujarat), received the following amount
towards rendering of the intra-state supply of various services in the month of January 2023:

S.No. Particulars Amount (₹)

(i) Consideration received from security and housekeeping services 60,000

provided to "Holy Foundation", an
educational institution providing services by way of pre-school
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education, outside the school premises on its annual day function.

(iii) Amount received as an honorarium for participation as guest anchor on 2,25,000

"Apna TV" in relation to a debate.

(iii) Sum received as hiring charges for provision of non-air conditioned 1,50,000
contract carriage for transportation of employees to and from the work
to M/s Siddhi Pvt Ltd, a registered person under the GST. Such hiring is
for 3 months. Use of the contract carriage is at the disposal of the
company.

(iv) Amount received from provision of training in recreation activities of 90,000

music.
(v) Renting of residential Hat to Mr Sahil (proprietor of M/s Dayaram & Sons), 30,000
a registered person under GST for the purpose of his own residence (in
personal capacity)

You are required to computer the value of supply on which GST is to be paid by Mr Dhanwan for the
month of January 2023. All the amounts stated above are exclusive of.G5T, wherever applicable.
Suitable notes should form part of the answer.

Answer

Computation of Value of Supply On Which EST Needs To Be Paid By Mr Dhanwan For The Month Of
January 2023:

Particulars Amount (₹)

Security and housekeeping services provided to "Holy Foundation", an 60,000

educational institution providing services by way of pre-school education,
outside the school premises on its annual day function.
{Security and housekeeping services provided within the premises of a school
are exempt. Security and housekeeping services provided to Holy Foundation for
its annual day function organised outside the school premises will be taxable as
only the security and housekeeping services performed within the premises of
a school are exempt}
SIR
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Honorarium received for participation as guest anchor on "Apna TV" in relation to 2,25,000
a debate
{Services provided by guest anchors in lieu of honorarium attract GST liability as
no exemption has been prescribed in respect of the said services}

Hiring charges for provision of non-AC contract carriage for transportation of 1,50,000
employees to and from the work to M/s Siddhi Pvt Ltd, a registered person under
the GST. Such hiring is for 3 months. Use of the contract carriage is at the
disposal of the company.
{Exemption is available for passenger transportation services by non-AC
contract carriages where transportation takes place over a pre-determined
route on a pre-determined schedule. The said exemption is not available where
contract carriage is hired for a period of time, during which the contract carriage
is at the disposal of the service recipient and the recipient is thus free to decide
the manner of usage (route and schedule)}

Amount received from provision of training in recreation activities of music. Exempt

{Exemption is available in respect of services provided by an individual by way of
training or coaching in recreational activities relating to arts or culture}

Renting of residential flat to Mr Sahil (proprietor of M/s Dayaram & Sons), a Exempt
registered person under GST for the purpose of his own residence (in personal
capacity)
{Exemption is available where residential dwelling is rented out to a registered
person for use as residence provided the renting is in a personal capacity having
no connection with the business or profession of the said registered person}

Value Of taxable Supplies 4,35,000

ILLUSTRATION 41
Mr Ravindra, a registered person in Bhopal, Madhya Pradesh has provided the following information
regarding outward transactions made during the month of January 2024:

(i) He was appointed by recognized sports body as a chief selector of hockey team and received
₹ 5,00,000 as remuneration.

(ii) Services of pure labour contract was provided for construction of independent residential unit
for ₹ 1,80,000.
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(iii) He rented out his warehouse for warehousing of sugarcane and received rental income of ₹
75,000.

(iv) Provided services to Municipal Corporation of Bhopal for slum improvement and upgradation
for ₹ 6,50,000.

(v) He has charged consideration of ₹ 1,25,000 against western music dance performance in an
event.

You are required to compute the taxable value of supply on which GST is to be paid by Mr Ravindra for
the month of January 2024.

All the amounts stated above are exclusive of GST, wherever applicable. Suitable notes should form
part of answer.

Answer

Computation of Value of Supply On Which GST Needs To Be Paid By Mr Ravindra For The Month Of
January 2024:

Particulars Amount (₹)

Remuneration received as a chief selector of hockey team 5,00,000

{Taxable since services provided to a recognized sports body by an individual
only as a player, referee, umpire, coach or team manager are exempt}
Service of pure labour contract for construction of independent residential unit Exempt
{Services of pure labour contracts of construction of original works pertaining
to a single residential unit otherwise than as a part of a residential complex are
exempt}

Rental income from warehousing of sugarcane Exempt

{Warehousing of sugarcane (being an agricultural produce) is exempt}

Services to Municipal corporation of Bhopal for slum improvement and Exempt

upgradation
{Services provided to a local authority by way of slum improvement and
upgradation are exempt. It has been assumed that either the services provided
are pure services or composite supply where value of supply of goods is upto
25% of value of such supply and consequently, said supply has been considered
as exempt from GST}
SIR
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Consideration received against western music dance performance in an event 1,25,000

{Taxable, since the amount is received for western music dance performance.
Exemption is available for performance in folk or classical art forms of music or
dance, if the consideration charged for such performance is not more than ₹
1,50,000}

Value Of Taxable Supplies 6,25,000

ILLUSTRATION 42
ABC Infra, is a partnership firm registered under GST. It furnishes the following details about services
provided during the month of February 2024:

S.No. Particulars Amount (₹)

(i) Consideration received from neighbouring Housing Cooperative 5,00,000
Society as ABC infra agrees to install effluent plant for treatment of
wastewater even though there is no legal requirement to do so.
(ii) Consideration received from distribution of passes for cricket match 2,42,500
organized as firm's annual event.
Total 500 passes have been distributed.
(iii) Services given of booking air tickets in economy class for flight 1,20,000
between Mumbai to Manipur.
(iv) Services given for construction of buildings to State Government in 8,20,000
relation to function entrusted to Municipality under Article 243W of the
Constitution. Construction material used of ₹ 2,79,375 is included in the
given figure.

All supplies mentioned above are intra-state supplies. GST rates for CGST, SGST, IGST are 9%, 9%, 18%
respectively. Compute the GST payable by the ABC infra for the month of February 2024.

Answer

Computation of GST Payable By ABC Infra For The Month of February 2024:
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Particulars Amount (₹)

Consideration received from neighbouring Housing Cooperative Society for 5,00,000

voluntary installation of effluent plant {Taxable since no exemption is available in
respect of such services}

Consideration received from distribution of passes for cricket match organized Exempt
as firm's annual event {Price per pass is ₹ 485 (₹2,42,500/500 passes). Exemption
is available in respect of tickets of sporting events provided the ticket price
doesn't exceed ₹ 500}

Services given of booking air tickets in economy class for flight between Mumbai Exempt
to Manipur. {Exemption is available where flight originates/terminates in north-
eastern region}
Services given for construction of buildings to State Government in relation to 8,20,000
function entrusted to Municipality under Article 243 W of the Constitution
{Exemption is available in case of pure services as well as composite supply
where value of supply of goods is upto 25% of value of such supply. No
exemption is available in the present case because the value of supply of goods
is more than 25% of value of total supply?

Total value of taxable supply 13,20,000

CGST & SGST Payable @ 9% Each 1,18,800

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CHAPTER - 9 PLACE OF SUPPLY

ILLUSTRATION 1
In case of a domestic B2B supply, what is the place of supply where goods are removed?

Ans.

As per Section 10(1)(a), the place of supply of goods is the location of the goods at the time at which
the movement of goods terminates for delivery to the recipient.

ILLUSTRATION 2
What will be the place of supply if the goods are delivered by the supplier to another person on the
direction of a third person?

Ans.

As per Section 10(1)(b), it would be deemed that the third person (ie, billing party) has received the
goods and the place of supply of such goods will be the principal place of business of such person.

ILLUSTRATION 3
What is the place of supply where the goods or services are supplied on board a conveyance, such as
a vessel, an aircraft, a train or a motor vehicle?

Ans.

As per Section 10(1)(e), in respect of goods, the place of supply is the location at which such goods
are taken on board. However, in respect of services, the place of supply is the location of the first
scheduled point of departure of that conveyance for the journey in terms of Section 12(10).

ILLUSTRATION 4
The place of supply in relation to immovable property (situated in India) is the location of immovable
property. Suppose a road is constructed from Delhi to Mumbai covering multiple states. What will be
the place of supply of construction services?
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Ans.

Where the immovable property is located in more than one state, the supply of service is treated as
made in each of the States in proportion to the value for services separately collected or determined,
in terms of the contract or agreement entered into in this regard or, in the absence of such contract
or agreement, on such other reasonable basis as may be prescribed in this behalf [Explanation to
Section 12(3)].

In the absence of a contract or agreement between the supplier and recipient of services in this
regard, the proportionate value of services supplied in different States/UTs (where the immovable
property is located) is computed on the basis of the area of the immovable property lying in each
State/UTS [Rule 4 of the IGST Rules].

ILLUSTRATION 5
What would be the place of supply of services provided by an event management company for
organizing a sporting event for a sports Federation which is held in multiple States?

Ans.

In case of an event, if the recipient of service is registered, the place of supply of services for
organizing the event is the location of such person. However, if the recipient is not registered, the place
of supply is the place where event is held.

Since the event is being held in multiple states and a consolidated amount is charged for such
services, the place of supply will be deemed to be in each State in proportion to the value for services
determined in terms of the contract or agreement entered into in this regard [Explanation to Section
12(7)].

In the absence of a contract or agreement between the supplier and recipient of services, the
proportionate value of services made in each State (where the event is held) will be computed in
accordance with Rule 5 of the IGST Rules by the application of generally accepted accounting
principles.

ILLUSTRATION 6
What is the place of supply of services by way of transportation of goods, including by mail or courier
when both the supplier and the recipient of the services are located in India?
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Ans.

If the recipient is registered, the location of such person is the place of supply. However, if the recipient
is not registered, the place of supply is the place where the goods are handed over for transportation.
Further, if the goods are transported outside India, the destination of such goods is the place of supply
[Section 12(8)].

ILLUSTRATION 7
What will be the place of supply of passenger transportation service, if a person travels from Mumbai
to Delhi and back to Mumbai?

Ans.

If the person is registered, the place of supply of passenger transportation service will be the location
of recipient. If the person is not registered, the place of supply for the forward journey from Mumbai
to Delhi will be Mumbai, the place where he embarks [Section 12(9)].

However, for the return journey, the place of supply will be Delhi as the return journey has to be treated
as separate journey [Explanation to Section 12(9)].

ILLUSTRATION 8
What is the place of supply for mobile connection? Can it be the location of supplier?

Ans.

The location of supplier of mobile services cannot be the place of supply as the mobile companies are
providing services in multiple states and many of these services are inter-state. The consumption
principle will be broken if the location of supplier is taken as place of supply and all the revenue may
go to a few states where the suppliers are located.

The place of supply for mobile connection would depend on whether the connection is on postpaid or
prepaid basis. In case of postpaid connections, the place of supply is the location of billing address of
the recipient of services on the record of supplier of services.

In case of pre-paid connections, if the service is supplied:

• through a selling agent or a re-seller or a distributor of SIM card or re-charge voucher, the place of
supply is the place address of the selling agent or re-seller or distributor as per the record of the
supplier at the time of supply; or
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• by any person to the final subscriber, the place of supply is the location where such pre-payment
is received or such vouchers are sold;

• in other cases, the place of supply is the address of the recipient as per the records of the supplier
of services and where such address is not available, the place of supply shall be location of the
supplier of services.

However, if the recharge is done through internet/e-payment, the location of recipient of service on
record of the supplier will be taken as the place of supply [section 12(11)].

ILLUSTRATION 9
A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in Manali. What
is the place of supply?

Ans.

The place of supply in case of banking services to any person shall be the location of the recipient of
services on the records of the supplier of services. However, if the location of recipient of services is
not on the records of the supplier, the place of supply shall be the location of the supplier of services,
ie Kullu-Manali, Himachal Pradesh [Section 12(12)].

ILLUSTRATION 10
An unregistered person from Gurugram travels by Air India flight from Mumbai to Delhi and gets his
travel insurance done in Mumbai. What is the place of supply of insurance services?

Ans.

When insurance service is provided to an unregistered person, the location of the recipient of services
on the records of the supplier of insurance services is the place of supply. So, Gurugram is the place
of supply [Section 12(13)].

ILLUSTRATION 11
Examine the following independent cases and determine the place of supply:

(i) Mr Joy, an unregistered person of Kolkata, West Bengal sends a courier through Kolkata, West
Bengal based Mohan Courier Agency to his sister in Mumbai, Maharashtra.
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(ii) Mr Nitin, an unregistered person, resides at Rewa, Madhya Pradesh books a two-way air journey
ticket from Prayagraj, Uttar Pradesh to Jaipur, Rajasthan on 6th September and back. He leaves
Prayagraj on 11th September in a morning flight and land in Jaipur the same day. He leaves
Jaipur on 15th September in a late-night flight and lands in Prayagraj the next day.

(iii) Rimjhim Pvt Ltd, located at Lucknow, Uttar Pradesh, purchases a manufacturing machine from
Manav Steel industries Ltd, located at Jaipur, Rajasthan, for being installed in its factory located
at Haridwar, Uttarakhand.

Answer

(i) The place of supply of services by way of transportation of goods by courier provided to an
unregistered person is the location at which such goods are handed over for their
transportation. Therefore, the place of supply, in the given case is Kolkata, West Bengal.

(ii) The place of supply of passenger transportation service to an unregistered person is the place
where the passenger embarks on the conveyance for a continuous journey wherein the return
journey is treated as a separate journey, even if the tickets for onward and return journey are
issued at the same time.

Therefore, the place of supply for the outward and return journey are the locations where Mr
Nitin embarked on the conveyance for the continuous journey, ie Prayagraj, Uttar Pradesh for
outward journey and Jaipur, Rajasthan, for return journey.

(iii) If the supply involves goods which are to be installed at site, the place of supply is the place of
such installation. Therefore, the place of supply, in the given case is Haridwar, Uttarakhand.

ILLUSTRATION 12
Part (i) -2 Marks: Garima having its permanent residence in Bhavnagar, Gujarat purchased car from
Kiara Motors of Jaipur, Rajasthan to take the advantage of %ower registration charges and road tax.
Garima took the delivery of the car from Jaipur and returned with car to her residence in Bhavnagar,
Gujarat. Address of Garima recorded in the invoice issued by Kiara Motors mentions only the name of
the state, ie Gujarat. Garima is an unregistered person whereas Kiara Motors is a registered person
under GST. Determine the place of supply for supply made by Kiara Motors to Garima.

Part (ii) - 3 Marks: Aakar Advertisement Agency, a registered person in Nagpur, Maharashtra, wants to
display the products of its clients at most prominent places in different states. It toak on rights to use
the space on hoardings mounted on fixed surface attached to earth, situated in Udaipur, Rajasthan
and in Gwalior, Madhya Pradesh from G.N. Enterprise registered in state of Chhattisgarh. Aakar
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Advertisement Agency has exclusive right to use the space and also to manage the advertisements
on the hoardings. What will be the place of supply of services provided by the G.N. Enterprise to the
Aakar Advertisement Agency?

Answer

Part (i): As per Section 10(1) (Ca) of the IGST Act, 2017, in case of supply of goods to unregistered
persons where the address of the unregistered person is recorded in the invoice, the place of supply
shall be the location as per the address of unregistered person recorded in the invoice. In such
situations, simply mentioning the State of unregistered person instead of complete address would be
sufficient.

In the present case, goods have been supplied by Kiara Motors (a registered supplier of Jaipur,
Rajasthan) to Garima (an unregistered customer having permanent residence in Bhavnagar, Gujarat).
Since the transaction is B2C supply, the place of supply shall be Gujarat, ie the state of unregistered
person recorded in the invoice.

Part (ii): The arrangement between G.N. Enterprise (a person registered in Chattisgarh) and Aakar
Advertisement Agency (a person registered in Nagpur, Maharashtra) involves supply/sale of space on
hoardings mounted on fixed surface attached to earth for display of advertisements. Further, Aakar
Advertisement Agency has exclusive right to use the space and also to manage the advertisements
on the hoardings.

The hoardings mounted on fixed surface attached to earth should be considered as immovable
structure or fixture as it has been embedded in earth. Further, place of supply of any service provided
by way of supply/sale of space on an immovable property or grant of rights to use an immovable
property shall be governed by the provisions of Section 12(3) of the IGST Act.

Therefore, the place of supply of service, in the present case, shall be the location where such hoarding
is located, ie Udaipur, Rajasthan and Gwalior, Madhya Pradesh. Further, since the hoarding is located
in more than one State/UT, the service is deemed to have been supplied in each of the respective
States/UTs, in proportion to the value for the services determined in terms of the contract or
agreement entered into in this regard and in the absence of a contract or agreement, as per Rule 4 of
the IGST Rules.

ILLUSTRATION 13
Quick Deal Enterprises (a registered dealer based in Ahmedabad, Gujarat) opens a new branch office
at Hissar, Haryana. It purchases a building for office from Ruhani Builders (Hissar) along with pre-
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installed office furniture and fixtures (price for furniture and fixtures negotiated and paid for
separately). Determine place of supply of the pre-installed office furniture and fixtures.

Ans.

Section 10(1)(c) of the IGST Act, 2017, stipulates that if the supply does not involve movement of goods,
the place of supply is the location of goods at the time of delivery to the recipient. Since there is no
movement of office furniture and fixtures in the given case, the place of supply of such goods is their
location at the time of delivery to the recipient, ie Quick Deal Enterprises - Hissar, Haryana.

ILLUSTRATION 14
What shall be the place of supply in the following cases?

(i) Mr X (New Delhi) boards the New Delhi-Kota train at New Delhi. He sells the goods taken on board
by him (at New Delhi), at Jaipur during the journey.

(ii) Mr W, an unregistered person, purchases coffee and snacks on board an Airjet Mumbai-New Delhi
flight. The food items were loaded into the aircraft at Mumbai.

(iii) Ms P (New Delhi) boards a New Delhi-Kolkata flight to attend a business meeting at Kolkata. She
buys food items in the flight. The food items were loaded into the aircraft at New Delhi. The
Airlines is registered in New Delhi and Kolkata.

(iv) MS S, an unregistered person, (New Delhi) is travelling from New Delhi to Kanpur, Uttar Pradesh
in a train. The train starts at New Delhi and stops at three stations before reaching Kanpur. The
food items were loaded into the train at Aligarh (Uttar Pradesh) - 2nd Station. Ms 5 buys food
items/ goods on board the train.

Ans.

(i) As per Section 10(1)(e) of the IGST Act, 2017, the place of supply of goods is the location at which
the goods are taken on board ie, New Delhi and not Jaipur where they have been sold.

(ii) As per Section 10(1)(e) of the IGST Act, 2017, the place of supply of goods by Airjet to Mr W is the
location at which the goods are taken on board ie, Mumbai.

(iii) As per Section 10(1)(e) of the IGST Act, 2017, the place of supply of food items by the airlines to
Ms P is the location at which the goods are taken on board ie, New Delhi. It is irrelevant whether
the buyer is registered or unregistered.
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(iv) As per Section 10(1)(e) of the IGST Act, 2017, the place of supply is the location at which the
goods are taken on board ie, Aligarh. The location at which MS S boards the train is irrelevant.

ILLUSTRATION 15
Determine the place of supply in independent cases as under:

1. A company in Pune contracts with a Pune based architect to design a structure for their new
office to be located in Bangalore.

2. Mr A of Jaipur entered into a lease agreement with Mr B of Jaipur whereby he leased out his farm
in Nagpur to Mr B.

3. Mr A, an employee of ABC Ltd Kolkata, goes on an official tour to Hyderabad and stays in a hotel
there, booked in the name of his company.

4. Mr X of Mumbai arranged for destination wedding of his son at Pushkar (Rajasthan). He booked a
resort at Pushkar for the accommodation of his guests and also for performing the marriage
ceremony. Apart from providing the resort for the marriage purpose, decoration was also
provided.

5. ABC Ltd of Mumbai, hires a professional firm of Interior Decorators in Delhi to design its office in
Canada.

Ans.

The place of supply of services shall be determined as under:

Case Place of Supply Reasons

1. A company in Pune contacts Bangalore Though the supplier of service and

with a Pune based architect the recipient are both located in
to design a structure for their Pune, place of supply would be the
new office in Bangalore. place where the immovable property
is located ie Bangalore as per
Section 12(3) of IGST Act, 2017.

2. Mr A of Jaipur entered into a Nagpur Though the supplier and the

lease agreement with Mr B of recipient are both in Jaipur,
Jaipur whereby he leased out Rajasthan but any service provided
his farm in Nagpur to Mr B. by way of grant of rights to use
immovable property is covered
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u/s 12(3) of the IGST Act, 2017,

therefore the place of supply shall
be the location of the immovable
property, here being Nagpur.

3. Mr A an employee of ABC Ltd Hyderabad This being the accommodation

Kolkata, goes on an official service, is covered u/s 12(3) of the
tour to Hyderabad and stays IGST Act, 2017, accordingly, the place
in a hotel there, booked in the of supply shall be the location of the
same of his company. immovable property (ie Hyderabad).
The location of the supplier and the
receiver is irrelevant.

4. Mr × of Mumbai arranged for Pushkar (Rajasthan) The place of supply of service for
destination wedding of his (For both the supplies, accommodation provided for
son at Pushkar (Rajasthan). ie accommodation at organising the marriage is governed
He booked a resort at resort & decoration) by Section 12(3) of the IGST Act, 2017,
Pushkear for the hence, the place of supply shall be
accommodation of his guests the place of location of the resort.
and also performing the The provision of service of decorator,
marriage ceremony. being ancillary to the services of
Apart from providing the organising the marriage is covered
resort for the marriage by section 12(3) of the IGST Act, 2017,
purpose, decoration was also hence, the place of supply shall be
provided. the place of location of the
immovable property.

5. ABC Ltd of Mumbai, hires a Mumbai Since the immovable property is

professional firm of interior intended to be located outside India,
decorators in Delhi to design therefore, as per Section 12(3) of the
its office in Canada. IGST Act, 2017, the place of supply
shall be the location of the recipient
of service, ie Mumbai.
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ILLUSTRATION 16
Princeton Academy (P) Ltd is a leader in executive education and corporate training. It is located in
Mumbai. It organises a corporate training programme on transfer Pricing at JW Marriott, Mumbai. From
the list of participants, a few names are given below:

• Employees of A Ltd, Dellhi [X and Y (from tax department) attended the training programme].
• Employees of B Airways Ltd, Bengaluru (2, P, Q and R attended the training programme).
• C, an individual (he is a research scholar).

A Ltd is a registered GST dealer in Delhi. Likewise, B Airways Ltd is a registered GST dealer in Bengaluru,
X, Y, Z, P, Q, R and C are not registered under GST. What is the place of supply?

Ans.

As per Section 12(5) of the IGST Act, 2017, in respect of training and performance appraisal services to
registered recipient, the place of supply of services shall be the location of the registered recipient.
However, in respect of training and performance appraisal services to unregistered recipient, the place
of supply of services shall be the place of performance of such services. Keeping in mind the above
provisions, the place of supply of services will be as follows:

• Employee of A Ltd: A Ltd is a registered GST dealer in Delhi. Place of supply shall be the location of
recipient (ie, Delhi).
• Employees Of B Airways Ltd: B Airways Ltd is a registered GST dealer in Bengaluru. Place of supply
of services will be the location of recipient (ie, Bengaluru).
• C, Individual Research Scholar: C is not registered under GST. Service is actually performed in
Mumbai. Place of supply of service will be Mumbai.

ILLUSTRATION 17
Airways registered under GST and located in Mumbai operates flight from Mumbai-Delhi-Mumbai, Mr
TYN who is unregistered person, purchase air ticket for Mumbai-Delhi-Mumbai. Only one ticket is
issued to him showing both the route. Find the place of supply of service.

Ans.

As per section 12(9) of the IGST Act, 2017, in respect of passenger transportation services to
unregistered person, the place of supply of service for forward journey shall be the place where
passenger embarks on the conveyance for a continuous journey. However, the return journey shall be
treated as a separate journey. Thus, the place of supply of services in this case is place of
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embarkation, ie Mumbai (Maharashtra). For return journey, the place of supply shall be place of
embarkation, ie Delhi.

ILLUSTRATION 18
M/s Kingsize Airlines has issued a ticket/pass to Mr Saxena for travelling to anywhere in India.
Determine the place of supply in this case.

Ans.

As per section 12(9) of the IGST Act, 2017, the place of supply of passenger transportation service to a
person other than a registered person, shall be the place where the passenger embarks on the
conveyance for a continuous journey. In the above case, the place of embarkation will not be available
at the time of issue of invoice as the right to passage is for future use. Accordingly, place of supply
cannot be the place of embarkation.

Where the right to passage is given for future use and the point of embarkation is not known at the
time of issue of right to passage, the default rule shall apply ie, the place of supply of service made to
any person other than a registered person shall be the location of the recipient where the address on
records exists and the location of the supplier of services in other cases.

ILLUSTRATION 19
In terms of Section 12 of IGST Act, what is the place of supply in the following cases:

(i) Mr X (Kolkata) gets a landline phone installed at his home from skybel Ltd.
(ii) Mr Y (Mumbai) gets a DTH installed at his home from RT Ltd.
(iii) Mr D (Mumbai) takes a post-paid mobile connection in Mumbai from Skybel Ltd.
(iv) MrE (New Delhi) gets his post-paid bill paid online from Goa.
(v) MrC (Pune) purchases a pre-paid card from a selling agent in Mumbai.
(vi) Mr F (Puducherry) gets a pre-paid number orecharged from a telecom company owned store in
Chennai.

Ans.
(i) The place of supply will be the location where the telecommunication line is installed, ie Kolkata.
(ii) The place of supply will be the location where the DTH is installed, ie Mumbai.
(iii) The place of supply will be the location of billing address of the recipient, ie Mumbai.
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(iv) Where the payment is being made for a post-paid bill through electronic mode, the place of
supply shall be the location of the recipient in the records of the supplier, ie New Delhi.
(v) The place of supply is the address of the selling agent or re-seller, ie Mumbai.
(vi) The place of supply is the location where such pre-payment is received, ie Chennai.

ILLUSTRATION 20
Mr Harsha being a registered stock-broker at BSE, located in Mumbai. He has clients in Chennai,
Kolkata, and Bengaluru. He purchases and sells shares of clients located in Chennai, Kolkata and
Bengaluru. Find the place of supply of service and GST liability?

Ans.

As per Section 12(12) of the IGST Act, 2017, in respect of stock broking services to registered person,
the place of supply of service shall be the location of recipient of service on the records of supplier of
service. Thus, the place of supply service in this case is the location of recipient of service, ie Chennai,
Kolkata & Bengaluru respectively.

• Location of Supplier - Mumbai (Maharashtra)

• Place of Supply - Different Locations (Chennai, Kolkata & Bengaluru)
• Nature of supply - Since the location of the supplier and place of supply are in two different States
in each of the three supplies, the supply qualifies to be an inter-state supply and shall attract levy
of IGST.

ILLUSTRATION 21
A Ltd is engaged in fertilizer manufacturing in Karnataka. It has GST registration from Karnataka (A Ltd
does not have registration in any other State/Union Territory). X is head of finance department of the
company. X goes to Mumbai to attend a 3 day conference on international finance organised by IIM-
Ahmedabad at Nariman Point, Mumbai. For this purpose, he incurs the following expenditure-

1. Bengaluru-Mumbai air ticket (paid to Air Vistara, Karnataka): ₹ 26,000 + GST

2. Conference participation fee (paid to IIM-Ahmedabad, at the time of registration in Mumbai):
₹1,50,000 + GST
3. Hotel expenditure (paid to Taj Hotels, Mumbai): ₹ 60,000 + GST
4. Mumbai-Bengaluru air ticket (paid to Air India, Mumbai): ₹32,000 + GST
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These expenses are paid by cheque by A Ltd. Recipient of supply is A Ltd (GSTIN of A Ltd is given on
tax invoices). What is the place of supply in these cases?

Ans.

1. Bengaluru-Mumbai Air Ticket: This service is pertaining to transportation of passengers. It is

covered u/s12 (9) of IGST Act. If the recipient is a registered person, place of supply of service is
the location of recipient of service. A Ltd is registered in Karnataka. Place of supply of service is in
Karnataka. Location of supplier is in Karnataka. Consequently, it is intra-state supply.

2. Conference Participation: Training services are covered u/s 12(5) of IGST Act. If the recipient is a
registered person, place of supply of service is the location of recipient of service. A Ltd is
registered in Karnataka. Place of supply of service is in Karnataka. Location of supplier is in
Ahmedabad, Gujarat. Thus, it is inter-state supply.

3. Lodging Accommodation By Taj Hotels: It is covered by Section 12(3) of IGST Act. Place of supply
of service is the location of hotel building (ie, Mumbai). Location of supplier is in Mumbai. It is,
therefore, intra-state supply.

4. Mumbai-Bengaluru Air Ticket: As discussed in I above, place of supply of service is in Karnataka.

Location of supplier is in Mumbai. Consequently, it is inter-state supply.
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CHAPTER - 10 REGISTRATION

ILLUSTRATION 1
Determine the effective date of registration in following cases:

(a) The aggregate turnover of Dhampur Footwear Industries of Delhi has exceeded the applicable
threshold limit of ₹40 lakhs on 1st September. It submits the application for registration on 20 th
September. Registration certificate is granted to it on 25th September.

(b) Mehta Teleservices is an architect in Lucknow. Its aggregate turnover exceeds ₹ 20 lakhs on 25th
October. It submits. the application for registration on 27th November. Registration certificate is
granted to it on 5th December.

Ans.

(a) Every supplier becomes liable to registration if his turnover exceeds the applicable threshold limit
(₹40 lakhs in this case) in a financial year. Since in the given case, the turnover of Dhampur
industries exceeded ₹40 lakhs on 1st September, it becomes liable to registration on said date.

Further, since the application for registration has been submitted within 30 days from such date,
the registration shall be effective from the date on which the person becomes liable to registration.
Therefore, the effective date of registration is 1st September.

(b) Since in the given case, the turnover of Mehta Teleservices exceeds the applicable threshold limit
(₹ 20 lakhs in this case) on 25th October, it becomes liable to registration on said date.

Further, since the application for registration has been submitted after 30 days from the date such
person becomes liable to registration, the registration shall be effective from the date of grant of
registration. Therefore, the effective date of registration is 5th December.

ILLUSTRATION 2
In order to be eligible for grant of registration, a person must have a Permanent Account Number (PAN)
issued under the income Tax Act, 1961. State one exception to it.
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Ans.

A Permanent Account Number is mandatory to be eligible for grant of registration. One exception to
this is a NRTP (nonresident taxable person). A non-resident taxable person may be granted registration
on the basis of other prescribed documents instead of PAN. He has to submit a self-attested copy of
his valid passport along with the application signed by his authorized signatory who is an Indian
resident having valid PAN and application will be submitted in a different prescribed form.

ILLUSTRATION 3
State which of the following suppliers are liable to be registered:

(a) Agent supplying taxable goods on behalf of some other taxable person and its aggregate turnover
does not exceed the applicable threshold limit during the financial year.

(b) An agriculturist who is only engaged in supply of produce out of cultivation of land and its
aggregate turnover exceeds the applicable threshold limit during the financial year.

Ans.

(a) Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds the
applicable threshold limit in a financial year. However, as per section 24, a person making taxable
supply of goods/services or both on behalf of other taxable persons whether as an agent or not is
liable to be compulsorily registered even if its aggregate turnover does not exceed the applicable
threshold limit during the financial year.

(b) As per section 23, an agriculturist who is only engaged in supply of produce out of cultivation of
land is not required to obtain registration even if his turnover exceeded the applicable threshold
limit for registration.

ILLUSTRATION 4
Pure Oils, Delhi has supplied machine oil and high-speed diesel in the month of April as per the details
given in table below. Pure oils is not yet registered.

Particulars Amount (in ₹)

Supply of machine oils in Delhi 15,00,000

Supply of high-speed diesel in Delhi 10,00,000

Supply of machine oil made by Pure Oils from its branch located in Punjab 10,00,000
SIR
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The amounts given above are excluding GST. Determine whether Pure oils is liable for registration.

Ans.

As per Section 22, a supplier is liable to be registered in the State/Union Territory from where he makes
a taxable supply of goods and/or services, if his aggregate turnover in a financial year exceeds the
threshold limit. The threshold limit for a person making exclusive intra-state taxable supplies of goods
is as under:

• ₹10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
• ₹20 lakhs for the States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana and
Uttarakhand.

• ₹40 lakhs for the rest of India except persons engaged in making supplies of ice cream and other
edible ice, whether or not containing cocoa, pan masala and tobacco and manufactured tobacco
substitutes.

The threshold limit for a person making exclusive taxable supply of services or supply of both
goods & services is as under:

• ₹10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
• ₹20 lakhs for the rest of India.

As per Section 2(6), aggregate turnover includes the aggregate value of:

• all taxable supplies,

• all exempt supplies,
• exports of goods and/or services and
• all inter-state supplies of persons having the same PAN.

The above is computed on all India basis. Further, the aggregate turnover excludes Central Tax, State
Tax, Union Territory Tax, integrated Tax and Cess. Moreover, the value of inward supplies on which tax
is payable under reverse charge is not taken into account for calculation of 'aggregate turnover'.

Section 9 (2) provides that CGST is not leviable on five petroleum products (ie, petroleum crude, motor
spirit (petrol), high speed diesel, natural gas and aviation turbine fuel). As per section 2(47), exempt
supply includes non-taxable supply. Thus, supply of high speed diesel in Delhi, being a non-taxable
supply, is an exempt supply and is, therefore, includible while computing the aggregate turnover. In the
backdrop of the above-mentioned discussion, the aggregate turnover of pure oils for the month of
April is computed as under:
SIR
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Particulars Amount (in Rs)

Supply of machine oils in Delhi 15,00,000

Supply of high-speed diesel in Delhi 10,00,000

Supply of machine oil made by Pure Oils from its branch located in Punjab 10,00,000

Aggregate Turnover 35,00,000

Pure Oils is making exclusive supply of goods and hence the threshold limit for registration would be
₹ 40,00,000. Since the aggregate turnover does not exceed ₹40,00,000, pure oils is not liable to be
registered.

ILLUSTRATION 5
What will be your answer if in Question 4 above, in S.No. (ii), Pure Oils supplies the high speed diesel in
Delhi in the capacity of an agent of Mixed Oils Ltd?

Ans.

Section 24 provides that an agent who is engaged in making taxable supplying of goods on behalf of
other taxable persons, shall be liable to obtain registration irrespective of the threshold turnover limit.
However, in the present case, if Pure Oils supply high speed diesel on behalf of Mixed oil Ltd in Delhi as
its agent, it shall still not be liable to obtain registration in Delhi since Section 24 comes into play only
when agent is making taxable supply of goods on behalf of principal whereas in the given case, Pure
oils is supplying non-taxable goods on behalf of Mixed oils Ltd.

ILLUSTRATION 6
Examine whether the supplier of goods is liable to get registered in the following independent cases:

(a) Raghav of Assam is exclusively engaged in intra-state taxable supply of readymade garments.
His turnover in the current financial year (FY) from Assam showroom is ₹33 lakhs. He has another
showroom in Tripura with a turnover of ₹II lakhs in the current FY.

(b) Pulkit of Panjim, Goa is exclusively engaged in intra-state taxable supply of shoes. His aggregate
turnover in the current financial year is ₹ 22 lakhs.

(c) Harshit of Himachal Pradesh is exclusively engaged in intra-state supply of pan masala. His
aggregate turnover in the current financial year is ₹ 24 lakhs.
SIR
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Ans.

Section 22 provides that a supplier is liable to be registered in the State/Union Territory from where
he makes a taxable supply of goods and/or services, if his aggregate turnover in a financial year
exceeds the threshold limit. The threshold limit for a person making exclusive intra-state taxable
supplies of goods is as under:

• 10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
• ₹20 lakhs for the States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana and
Uttarakhand.

• ₹40 lakhs for the rest of India except persons engaged in making supplies of ice cream and other
edible ice, whether or not containing cocoa, pan masala and tobacco and manufactured tobacco
substitutes.

In the light of the afore-mentioned provisions, the answer to the independent cases is as under:

(a) Raghav is eligible for higher threshold limit of turnover for registration, ie ₹ 40 lakhs as he is
exclusively engaged in intrastate supply of goods. However, since Raghav is engaged in supplying
readymade garments from a special Category State, ie Tripura, the threshold limit gets reduced
to ₹ 10 lakhs. Thus, Raghav is liable to get registered under GST as his turnover exceeds ₹10 lakhs.
Further, he is required to obtain registration in both Assam and Tripura as he is making taxable
supplies from both the States.

(b) The applicable threshold limit for registration for Pulkit in the given case is ₹ 40 lakhs as he is
exclusively engaged in intra-state taxable supply of goods in Goa. Thus, he is not liable to get
registered under GST as his turnover is less than the threshold limit.

(c) Harshit being exclusively engaged in supply of pan masala is not eligible for higher threshold limit
of ₹ 40 lakhs. The applicable threshold limit for registration in this case is ₹ 20 lakhs. Thus, Harshit
is liable to get registered under GST.

ILLUSTRATION 7
Examine whether the supplier is liable to get registered in the following independent cases:

(a) Ankit of Assam is exclusively engaged in intra-state supply of taxable sewices. His aggregate
turnover in the current financial year is ₹ 25 lakhs.

(b) Sanchit of Assam is engaged in intra-state supply of both taxable goods and services. His
aggregate turnover in the current financial year is ₹ 30 lakhs.
SIR
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Ans.

Section 22 provides that a supplier is liable to be registered in the State/Union Territory from where
he makes a taxable supply of goods and/or services, if his aggregate turnover in a financial year
exceeds the threshold limit. The threshold limit for a person making exclusive taxable supply of
services or supply of both goods and services is as under:

• ₹10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
• ₹20 lakhs for the rest of India.

(a) Though Ankit is dealing in Assam, he is not entitled for higher threshold limit for registration as
the same is applicable only in case of exclusively supply of goods and he is exclusively engaged
in providing services. Thus, the applicable: threshold limit for registration in this case is ₹ 20 lakhs
and hence, Ankit is liable to get registered under GST.

(b) Since Sanchit is engaged in supply of both taxable goods and services, the applicable threshold
limit for registration in his case is ₹ 20 lakhs. Thus, Sanchit is liable to get registered under GST
as his turnover is more than the threshold limit.

ILLUSTRATION 8
What are the advantage of taking registration in GST?

Ans.

Registration will confer following advantages to the business:

• Legally recognized as supplier of goods or services.

• Proper accounting of taxes paid on the input goods or services which can be utilized for payment
of GST due on supply of goods or services or both by the business.

• Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on
the goods or services supplied to purchasers or recipients.

• Become eligible to avail various other benefits and privileges rendered under the GST laws.

ILLUSTRATION 9
Can a person without GST registration collect GST and claim ITC?
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Ans.

A person without GST registration can neither collect GST from his customers nor can claim any input
tax credit of GST paid by him.

ILLUSTRATION 10
If a person is making taxable supplies from different States, with the same PAN number, can he operate
with a single registration?

Ans.

Every person who is liable to take a registration will have to get registered separately for each of the
states where he has a business operation (and making taxable supplies) provided his aggregate
turnover exceeds applicable threshold limit.

ILLUSTRATION 1
Can a person having multiple places of business in a state obtain separate registrations for each place
of business?

Ans.

Section 25 provides that a person having multiple places of business in a state may obtain a separate
registration for each place of business, subject to such conditions as may be prescribed.

ILLUSTRATION 11
Is there a provision for a person to get himself voluntarily registered though he may not be liable to
pay GST?

Ans.

Section 25 provides that a person, though not liable to be registered u/s 22 or 24, may get himself
registered voluntarily, and all provisions of this Act, as are applicable to a registered taxable person,
shall apply to such person.

ILLUSTRATION 12
Can the Department, through the proper officer, suo-moto proceed to register a person under GST?
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Ans.

Section 25 provides that where a person who is liable to be registered under GST law fails to obtain
registration, the Proper officer may, without prejudice to any action which may be taken under CGST
Act, or under any other law for the time being in force, proceed to register such person in the manner
as is prescribed in the CGST Rules.

ILLUSTRATION 13
Whether the registration granted to any person is permanent?

Ans.

Yes, the registration certificate once granted is permanent unless surrendered, cancelled, suspended
or revoked.

ILLUSTRATION 14
Is it necessary for the UN bodies to get registration under GST?

Ans.

Section 25 of the CGST Act provides that all notified UN bodies, Consulate or Embassy of foreign
countries and any other class of persons so notified would be required to obtain a unique identification
number (UIN) from the GST Common Portal. The structure of the said ID would be uniform across the
states in conformity with GSTIN structure and the same will be common for the Centre and the States.
This UIN will be needed for claiming refund of taxes paid on notified supplies of goods and services
received by them, and for any other purpose as may be notified.

ILLUSTRATION 15
What is the responsibility of the taxable person making supplies to UN bodies?

Ans.

The taxable supplier making supplies to UN bodies is expected to mention the UIN on the invoices and
treat such supplies as supplies to another registered person (B2B).
SIR
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ILLUSTRATION 16
What is the validity period of the registration certificate issued to a casual taxable person and non-
resident taxable person?

Ans.

The certificate of registration issued to a casual taxable person or a non-resident taxable person shall
be valid for the period specified in the application for registration or 90 days from the effective date
of registration, whichever is earlier. However, the Proper officer, at the request of the said taxable
person, may extend the validity of the aforesaid period of 90 days by a further period not exceeding
90 days.

ILLUSTRATION 17
What happens when the registration is obtained by means of willful misstatement, fraud or
suppression of facts?

Ans.

In such cases, the registration may be cancelled with retrospective effect by the Proper officer.

ILLUSTRATION 18
Is there an option to take centralized registration for services under GST Law?

Ans.

No, the taxpayer has to take separate registration in every state from where he makes taxable supply
of services.

ILLUSTRATION 19
What could be the liabilities (in so far as registration is concerned) on transfer of a business?

Ans.

The transferee or the successor shall be liable to be registered with effect from such transfer or
succession and he will have to obtain a fresh registration with effect from the date of such transfer or
succession.
SIR
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ILLUSTRATION 20
At the time of registration, will the assessee have to declare all his places of business?

Ans.

Yes. The principal place of business and place of business have been separately defined u/s 2(89) &
2(85) of the CGST Act respectively. The taxpayer will have to declare the principal place of business
as well as the details of additional places of business in the registration form.

ILLUSTRATION 21
Does cancellation of registration impose any tax obligations on the person whose registration is so
cancelled?

Ans.

As per Section 29(5) of the CGST Act, every registered taxable person whose registration is cancelled
shall pay an amount, by way of debit in the Electronic Cash Ledger, equivalent to the credit of input
tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in
stock or capital goods or plant and machinery on the day immediately preceding the date of such
cancellation or the output tax payable on such goods, whichever is higher.

ILLUSTRATION 22
Mr Allan, a non-resident person, wishes to provide taxable supply of goods. He has no fixed place of
business or residence in India. He seeks your advice on the following aspects, relating to CGST Act,
2017:

(i) When shall he apply for registration?

(ii) Is PAN mandatory for his registration?
(iii) What is the period of validity of RC granted to him?
(iv) Will he be able to extend the validity of his registration? If yes, what will be the period of
extension?

Answer

(i) Mr Allan, being a non-resident taxable person, should apply for registration, irrespective of the
threshold limit, at least 5 days prior to the commencement of business.
SIR
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(ii) No, PAN is not mandatory for his registration. He has to submit a self-attested copy of his valid
passport along with the application signed by his authorized signatory who is an Indian
Resident having valid PAN.

However, in case of a business entity incorporated or established outside India, the application
for registration shall be submitted along with its tax identification number or unique number
on the basis of which the entity is identified by the Government of that country or its PAN, if
available.

(iii) Registration certificate granted to Mr Allan will be valid for:

• Period specified in the registration application, or
• 90 days from the effective date of registration whichever is earlier.

(iv) Yes, Mr Allan can get the validity of his registration extended. Registration can be extended
further by a period not exceeding 90 days.

ILLUSTRATION 24
Answer the following questions with respect to casual taxable person under the CGST Act, 2017:

i. Who is a casual taxable person?

ii. Can a casual taxable person opt for the composition scheme?
iii. When is the casual taxable person liable to get registered?
iv. What is the validity period of the registration certificate issued to a casual taxable person?
v. Can the validity of registration certificate issued to a casual taxable person be extended? If
yes, what will be the period of extension?

Answer

(i) Casual taxable person ('CTP') means a person who occasionally undertakes transactions
involving supply of goods and/or services in the course or furtherance of business, whether as
principal, agent or in any other capacity, in a State/UT where he has no fixed place of business.

(ii) No, a casual taxable person cannot opt for the composition scheme.

(iii) CTP is liable to obtain registration compulsorily under GST laws, at least 5 days prior to the
commencement of business.

(iv) The registration certificate issued to a casual taxable person will be valid for:
SIR
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• the period specified in the registration application; or

• 90 days from the effective date of registration,
whichever is earlier.
(v) Yes, the validity of registration certificate issued to a CTP can be extended further for a
maximum period of 90 days.

ILLUSTRATION 25
BBD Pvt Ltd of Gujarat exclusively manufactures and sells product ' 2 ' which is exempt from GST vide
notifications issued under relevant GST legislations. The company sells ' 2 ' only within Gujarat and is
not registered under GST laws. The turnover of the company for FY 2022-23 was ₹ 50 lakhs. The
company expects the sales to grow by 10% in the current year, ie FY 2023-24.

However, effective from 01.01.2024, exemption available on ' z ' was withdrawn by the Central
Government and G5T @ 5% was imposed thereon. The turnover of the company for the nine months
ended on 31.12.2023 was ₹42 lakhs.

BBD Pvt Ltd is of opinion that it does not require to get itself registered under GST for current FY 2023-
24. Examine the above scenario and advise BBD Pvt Ltd whether it needs to get registered under GST
or not?

Answer

For a supplier exclusively engaged in intra-state supply of goods, the threshold limit of turnover to
obtain registration in the State of Gujarat is ₹ 40 lakhs. However, a person exclusively engaged in the
business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax is
not liable to registration.

Therefore, since BBD Put Ltd was engaged exclusively in supplying exempted goods till 31.12.2023, it
was not required to be registered till that day; though voluntary registration was allowed.

The position, however, will change from 01.01.2024 as the supply of goods become taxable from that
day and the turnover of BBD Pvt Ltd is more than ₹ 40 lakhs. Since the aggregate turnover limit of ₹
40 lakhs includes exempt turnover also, turnover of ' 2 ' till 31.12.2023 will be considered for determining
the threshold limit even though the same was exempt from GST. Therefore, BBD Pvt Ltd needs to
register within 30 days from 01.01.2024.
SIR
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ILLUSTRATION 26
Happy Trader, a sole proprietorship firm, started a business of dealing in supply of both exempted as
well as taxable goods in Assam. Happy Trader has furnished the following details relating to the sales
made for the month of April 2023. All amounts are exclusive of GST.

S.No. Particulars Amount (₹)

(i) Intra-state sale of goods chargeable with GST @ 12% 15,00,000

(ii) Intra-state sale of non-taxable goods 5,00,000

(iii) Intra-state sale of alcoholic liquor for human consumption 2,00,000

(iv) Intra-state sale of tobacco 3,00,000

With reference to the above and provisions of CGST Act, 2017:

(i) Compute the aggregate turnover.

(ii) Examine whether Happy Trader is liable to be registered under the Act, with reasons for the same.

(iii) What is the threshold limit for taking registration in this case?

Answer

i. Computation of Aggregate Turnover of Happy Trader:

Particulars Amount (₹)

Intra-state sale of goods chargeable with GST @ 12% 15,00,000
{Aggregate turnover includes value of all outward taxable supplies}

Intra-state sale of non-taxable goods 5,00,000

{Non-taxable supply, being an exempt supply is included in aggregate
turnover}

Intra-state sale of alcoholic liquor for human consumption 2,00,000

{sale of alcoholic liquor for human consumption, being a non-taxable supply,
is an exempt supply and is therefore, included in aggregate turnover}
Intra-state sale of tobacco 3,00,000
{Aggregate turnover includes value of all outward taxable supplies}
Aggregate Turnover 25,00,000
SIR
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(ii) & (iii) Every person engaged in making a taxable supply is required to obtain registration if his
aggregate turnover exceeds ₹ 20 lakhs in a financial year. An enhanced threshold limit for registration
of ₹ 40 lakhs is available to persons engaged exclusively in intra-state supply of goods in specified
states. However, it is not applicable in case such person is engaged in supply of tobacco. In view of the
same, the applicable threshold limit of registration for Happy Traders is ₹ 20 lakhs. Thus, it is liable to
be registered under the CGST Act as its aggregate turnover exceeds the said threshold limit.

ILLUSTRATION 27
Answer the following individual independent cases with reference to the provisions of registration
under the CGST Act, 2017 and the rules made there under:

i. Govardhan is an agriculturist engaged in supply of produce out of cultivation of land. He utilizes

services of Manu who is a commission agent as per the Agricultural Produce Marketing
Committee Act. Turnover of Manu is above the threshold limit prescribed. Manu wants to know
whether he is liable to get registered Under GST Act or not.

ii. Anubhav is dealing in supply of taxable goods and services in the state of Gujarat. His turnover
from intra-state supply of taxable goods is ₹ 16 lakhs and inter-state supply of taxable services
is ₹ 22 lakhs. He is of the opinion that his aggregate turnover is within the limit so he is not
required to get registered. Advise him.

Answer

i. A commission agent under APMC Act is not liable to be compulsorily registered since it provides
exempt services of sale/ purchase of agricultural produce on behalf of an agriculturist being a
non-taxable person as he supplies produce out of cultivation of land.

Moreover, such commission agents are otherwise also exempt from registration since any
person engaged exclusively in the business of supplying exempt services is not liable to
registration. Therefore, Manu is not liable to get registered under GST law.

ii. A supplier who is supplying both goods and services is required to obtain registration in the
State (other than special category States) from where he makes a taxable supply if his
aggregate turnover exceeds specified threshold limit of ₹ 20 lakhs in a financial year.

In the given case, the aggregate turnover of goods and services supplied by Anubhav (₹38 lakhs)
exceeds the threshold limit and thus, he is required to obtain registration.
SIR
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ILLUSTRATION 28
M/s Zen Put Ltd is a dealer in goods having registered office at Noida, UP and shops are located at
Noida, UP and Chennai, Tamil Nadu. A detail of various supplies both inward and outward undertaken
by them during June 2023 quarter are given in the table below: All the values given in the table are
inclusive of applicable GST (CGST/SGST/UTGST/GGST), wherever applicable. Applicable IGST Rate is
5% and CGST & SGST @ 2.5% each, on Inward & RCM supplies as well.

S.No. Particulars Amount(₹)

(i) Export of goods to China from Noida 20,00,000

(ii) Goods supplied to SEZ located at Delhi from Noida 15,00,000
(iii) Supply of goods directly to customer from location of job worker at 2,00,000
Lucknow (UP) after completion of job work. (Intra-State)
(iv) Sales from Chennai Shop (Inter-State) 11,00,000
(v) Local States at Noida (Intra-State) 25,00,000
(vi) Services of transport availed from M/s ABC Transport (Inter-State) 3,00,000
(vii) Commission paid to Mr Nagar, Sales Executive which is not part of 50,000
the terms of employment. (intra-State)

Calculate the aggregate turnover of M/s Zen Put Ltd for June 2023 quarter. Brief and suitable notes
should form part of your answer.

Answer

Computation of Aggregate Turnover of Zen Put Ltd:

S.No. Particulars Amount (₹)
{Excluding GST}
(i) Exports of goods to China from Noida {it has been assumed 20,00,000
that exports of goods have been made without payment of tax}

(ii) Goods supplied to SEZ located at Delhi from Noida {it has been 15,00,000
assumed that supply of goods to SEZ have been made without
payment of tax}
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(iii) supply of goods directly to customer from location of job 1,90,476

worker {includible in the aggregate turnover of Zen Put Ltd} (₹
2,00,000 × 100/105)

(iv) sales from Chennai shop (Inter-State) (₹ 11,00,000 × 100/105) 10,47,619

{includible in the aggregate turnover; further, IGST be excluded
from the same}
(v) Local sales at Noida (intra-state) (₹ 25,00,000 × 100/105) 23,80,952
{includible in the aggregate turnover; further, CGST and SGST
be excluded from the same}
(vi) Services of transport availed {inward supplies are not included Nil
in aggregate turnover}

(vii) commission paid to sales executive Nil

{inward supplies are not included in aggregate turnover}

Total Aggregate Turnover 71,19,047

ILLUSTRATION 29
P Ltd, a registered person, provided following information for the month of October 2023;

Particulars Amount (₹)

Intra-state outward supply 8,00,000

Inter-state exempt outward supply 4,00,000

Turnover of exported goods 20,00,000

Payment of IGST 1,20,000

Payment of CGST and SGST 45,000 each

Payment of custom duty on export 40,000

Payment made for availing GTA services 3,00,000

GST is payable on reverse charge for GTA services. Compute the aggregate turnover of P Ltd for the
month of October 2023. All amounts are exclusive of GST.
SIR
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Answer

The term aggregate turnover means the aggregate value of all taxable supplies, exempt supplies,
exports of goods or services or both and inter-state supplies of persons having the same Permanent
Account Number, to be computed on all India basis but excluding

• central tax, state tax, union territory tax, integrated tax and cess.
• the value of inward supplies on which tax is payable by a person on reverse charge basis.

In terms of the definition of the aggregate turnover given above, the aggregate turnover of P Ltd has
been computed as follows:

Particulars Amount (₹)

Intra-state outward supply 8,00,000

Inter-state exempt outward supply 4,00,000

Turnover of exported goods 20,00,000
Payment of IGST Nil

Payment of CGST and SGST Nil

Payment of customs duty on export 40,000
Payment made under reverse charge for availing GTA services Nil
Aggregate Turnover 32,40,000

ILLUSTRATION 30
M/s 5 Corporation has made default in furnishing returns. It has not filed returns from the month of
June 2023. The proper officer cancelled its registration with effect from 1st January 2024 by an order
dated !" January 2024. It applied for revocation of cancellation of registration and the order for
revocation of cancellation of registration was passed on 1st March 2024. What are the provisions
regarding filing returns before making such an application of revocation of cancellation of registration
for the given case?

Answer

• Where the registration is cancelled suo-moto by the appropriate officer, the registrant seeking
revocation of the order, has to apply for the revocation of cancellation within 90 days from the
date of service of the order of cancellation of registration.
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• Further, he has to furnish all the returns due till the date of such cancellation before the application
for revocation can be filed. Further, he should also pay any amount due as tax along with any
amount payable towards interest, penalty, and late fee in respect of the said returns.

• Thus, in the given case, before making an application for revocation of cancellation of registration,
M/s 5 corporation should file all returns due for the period from June 2023 till December 2023.

ILLUSTRATION 31
B Enterprises started its business activities in the month of January 2024 in the State of Karnataka.
It provides the following information:

S.No. Particulars Amount (₹)

1 Value of intra-state outward taxable supply of goods 7,00,000

2 Value of inter-state outward taxable supply of services 6,00,000
3 Value of intra-state outward supply on which tax is payable under 1,00,000
reverse charge mechanism
4 Value of intra-state outward supply of exempted good from its other 5,00,000
place of business in the State of Manipur (under same PAN)

From the information given above, you are required to calculate the aggregate turnover of B
Enterprises with necessary explanations and also specify with reason whether it is liable to get
registered under CGST Act or not.

Answer

Computation of Aggregate Turnover of B Enterprises, Karnataka {January 2024}:

Particulars (₹)

Intra-State outward taxable supply of goods 7,00,000

[Aggregate turnover includes value of all taxable supplies]

Inter-State outward taxable supply of services 6,00,000

[Aggregate turnover includes value of inter-state supplies]
Intra-State outward supply on which tax is payable under reverse charge 1,00,000
mechanism
[Aggregate turnover includes value of all taxable supplies whether taxable under
reverse charge or forward charge]
SIR
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REGISTRATION 10

Intra-State outward supply of exempted goods from Manipur 5,00,000

[Aggregate turnover includes value of exempt supplies made in all the States
under the same PAN]
Aggregate Turnover 19,00,000

• Persons making any inter-state taxable supply are required to obtain compulsory registration, but
in case of inter-state supply of taxable services, threshold limit of ₹ 20 lakhs is available. Such
threshold limit gets reduced to ₹ 10 lakhs in case of specified special Category States provided
taxable supply is being made therefrom.

• Since B Enterprises is making exempt supplies from Manipur, a specified Special Category State,
the applicable threshold limit of registration for B Enterprises would remain ₹ 20 lakhs. Thus, it is
not liable to be registered as its aggregate turnover does not exceed the threshold limit.

ILLUSTRATION 32
Q Ltd is engaged exclusively in supply of taxable goods from the following states. The particulars of
intra-state supplies for the month of May 2023 are as follows:

State Turnover (₹)

Madhya Pradesh 5,00,000

Gujarat 14,00,000
Tripura 12,00,000

i. Q Ltd seeks to know whether it is liable for registration under GST. Give your explanation.
ii. Will your answer be different if Q Ltd supplies only petrol & diesel from Tripura instead of any
other taxable goods?

Answer

Every person engaged in making a taxable supply is required to obtain registration if his aggregate
turnover exceeds ₹ 20 lakhs in a financial year. An enhanced threshold limit for registration of ₹ 40
lakhs is available to persons engaged exclusively in intra-state supply of goods in specified States.
However, the applicable threshold limit for registration gets reduced to ₹ 10 lakhs in case a person is
engaged in making supply from a specified special Category state provided such supply is a taxable
supply.
SIR
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i. Since Q Ltd is making supply of taxable goods from Tripura - a specified special Category State,
the applicable threshold limit will get reduced to ₹10 lakhs. Thus, it is liable to be registered
under GST as its aggregate turnover (₹31 lakhs) exceeds the applicable threshold limit of ₹ 10
lakhs.

ii. In case Q Ltd is making supply of non-taxable goods (petrol and diesel) from Tripura, the
applicable threshold limit will not be reduced to ₹ 10 lakhs; enhanced threshold limit of ₹ 40
lakhs will be applicable. Thus, it is not liable to be registered under GST as its aggregate
turnover (₹ 31 lakhs) does not exceed the said threshold limit.

ILLUSTRATION 33
Mr Q, a Casual Taxable Person of Gujarat state, is a trader of taxable notified handicraft goods. It makes
supplies to the states of Maharashtra, Rajasthan and Andhra Pradesh. Turnover for October 2023 is ₹
18 Lakhs.

i. Explain the provisions of registration for Casual Taxable person under GST. Examine whether Mr
Q is liable for registration or not?

ii. What will be the answer if Mr Q makes trading in taxable notified products instead of taxable
notified handicraft goods which involves 75% making on machine and 25% by hand?

Answer

i. A casual taxable person is required to obtain compulsory registration under GST irrespective
of the quantum of its aggregate turnover. However, a threshold limit of ₹ 20 lakhs (₹10 lakhs in
case of specified special category states) is available for registration to a casual taxable
person who:
• is making inter-state taxable supplies of notified handicraft goods and notified hand-made
goods,

• is availing the benefit of exemption from registration available to inter-state supply of

above-mentioned goods upto the aggregate turnover of ₹ 20 lakhs (₹10 lakhs in case of
specified special Category States), and

• has obtained a PAN and has generated an e-way bill.

In the given case, since Mr Q is engaged in supplying notified handicraft goods and its aggregate
turnover does not exceed ₹ 20 lakhs, he will not be liable to registration provided he fulfills other
conditions specified herein.
SIR
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ii. In case Mr Q is engaged in trading of notified products which are predominantly made by
machine, he will not be eligible for the exemption from registration under aforesaid provisions
and needs to take compulsory registration.

ILLUSTRATION 34
Nesamani started his business activities in the month of February 2023 in the State of Orissa. He
provided the following details:

S.No. Particulars Amount (₹)

(i) Outward supply of petrol (Intra-State) 4,00,000

(ii) Transfer of exempt goods to his branch in Rajasthan (Inter-State) 2,00,000

(iii) Outward supply of taxable goods by his branch in Uttar Pradesh (Intra- 5,00,000
State)

(iv) Outward supply of services on which tax is payable under RCM by the 6,00,000
recipient of services (intra-State)
(v) Inward supply of services on which tax is payable under RCM (Intra- 2,00,000
State)

From the information given above, compute the aggregate turnover of Nesamani and also decide
whether he is required to get registration under GST. Assume that the amounts given above are
exclusive of taxes.

Answer
Computation of Aggregate Turnover of Nesamani:

Particulars Amount (₹)

Outward supply of petrol 4,00,000

{Supply of petrol, being a non-taxable supply, is an exempt supply in aggregate
turnover}
Inter-State stock transfer of exempt goods 2,00,000
{Supply of taxable/exempt goods between distinct persons is includible}
Outward supply of taxable goods from Uttar Pradesh branch 5,00,000
{value of outward supplies under same PAN are includible}
SIR
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Outward supply of services taxable under reverse charge 6,00,000

{Includible in aggregate turnover}

Inward supply of services taxable under reverse charge -

{Excludible from the aggregate turnover}
Aggregate Turnover 17,00,000

For a supplier engaged in supply of goods and services from the States of Orissa and Uttar Pradesh,
the threshold limit of aggregate turnover to obtain registration is ₹ 20 lakhs. However, a person
required to pay tax under reverse charge has to obtain registration compulsorily as per section 24
irrespective of the quantum of turnover.

Since in the given case, Nesamani is required to pay tax under reverse charge, it is liable to obtain
registration compulsorily irrespective of his quantum of turnover.
SIR
VG

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CHAPTER - 11 TAX INVOICE, DEBIT NOTE, CREDIT NOTE

ILLUSTRATION 1
Sultan Industries Ltd, Delhi, entered into a contract with Prakash Entrepreneurs, Delhi, for supply of
spare parts of a machine on 7th September. The spare parts were to be delivered on 30th September.
Sultan Industries 4 td removed the finished spare parts from its factory on 29th September. Determine
the date by which invoice must be issued by sultan Industries Ltd under GST law.

Ans.

As per the provisions of section 31, invoice shall be issued before or at the time of removal of goods
for supply to the recipient, where the supply involves movement of goods. Accordingly, in the given
case, the invoice must be issued on or before 29th September.

ILLUSTRATION 2
MBM Caretakers, a registered person, provides the services of repair and maintenance of electrical
appliances. On April I, it has entered into an annual maintenance contract with P for its Air Conditioner
and Washing Machine. As per the terms of contract, maintenance services will be provided on the first
day of each quarter of the relevant financial year and payment for the same will also be due on the
date on which service is rendered. During the year, it provided the services on April, July 1, October I,
and January I in accordance with the terms of contract. When should MBM Caretakers issue the invoice
for the services rendered?

Ans.

Continuous supply of service means, inter alia, supply of any service which is provided, or agreed to
be provided continuously or on recurrent basis under a contract, for a period exceeding 3 months with
the periodic payment obligations. Therefore, the given situation is a case of continuous supply of
service as repair and maintenance services have been provided by MBM Caretakers on a quarterly
basis, under a contract, for a period of one year with the obligation for quarterly payment.

In terms of Section 31, in case of continuous supply of service, where due date of payment is
ascertainable from the contract (as in the given case), invoice shall be issued on or before the due
SIR
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date of payment. Therefore, in the given case, MBM Caretakers should issue quarterly invoices on or
before April 1, July 1, Oct 1, and Jan 1.

ILLUSTRATION 3
The aggregate turnover of Sangri Services Ltd, Delhi, exceeded ₹ 20 lakhs on 12th August. He applied
for registration on 3rd September and was granted the registration certificate on 6th September. You
are required to advice Sangri Services Ltd as to what is the effective date of registration in its case. It
has also sought your advice regarding period for issuance of Revised Tax Invoices.

Ans.

As per Section 25 read with CGST Rules, where an applicant submits application for registration within
30 days from the date he becomes liable to registration, effective date of registration is the date on
which he becomes liable to registration. Since, Sangri Services Ltd's turnover exceeded ₹20 lakhs on
12th August, it became liable to registration on same day. Further, it applied for registration within 30
days of so becoming liable to registration, the effective date of registration is the date on which he
becomes liable to registration, ie 12th August.

As per Section 31 read with CGST Rules, every registered person who has been granted registration
with effect from a date earlier than the date of issuance of certificate of registration to him, may issue
Revised Tax Invoices. Revised Tax Invoices shall be issued within 1 month from the date of issuance of
registration in respect of taxable supplies effected during the period starting from the effective date
of registration till the date of issuance of certificate of registration. Therefore, in the given case, Sangri
Services Ltd has to issue the Revised Tax Invoices in respect of taxable supplies effected during the
period starting from the effective date of registration (12th August) till the date of issuance of
certificate of registration (6th september) within 1 month from the date of issuance of certificate of
registration, ie on or before 6th October.

ILLUSTRATION 4
Shyam Fabrics has opted for composition levy scheme in the current financial year. It has approached
you for advice whether it is mandatory for it to issue a tax invoice. You are required to advise him
regarding same.

Ans. A registered person paying tax under the provisions of section 10 shall issue, instead of a tax
invoice, a bill of supply containing such particulars and in such manner as may be prescribed.
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Therefore, in the given case, Shyam Fabrics cannot issue tax invoice; instead it shall issue a Bill of
Supply.

ILLUSTRATION 5
Royal Fashions, a registered supplier of designer outfits in Delhi, decides to exhibit its products in a
Fashion show being organised at Hotel Park Royal, Delhi on 4th January. For the occasion, it gets the
service by way of makeover of its models from Aura Beauty Services Ltd, Ashok Vihar, for which a
consideration is ₹ 5,00,000 (excluding GST) has been charged. Aura Beauty Services Ltd issued a duly
signed tax invoice on 10th February showing the lumpsum amount of ₹ 5,90,000 inclusive of CGST and
SGST @ 9% each for the services provided. Answer the following questions:

(a) Examine whether the tax invoice has been issued within the time limit prescribed under law.
(b) Tax consultant of Royal Fashions objected to the invoice raised suggesting that the amount of
tax charged in respect of the taxable supply should be shown separately in the invoice raised by
Aura Beauty Services Ltd. However, Aura Beauty Services Ltd contended that there is no
mandatory requirement of showing tax component separately in the invoice. You are required to
examine the validity of the objection raised by tax consultant of Royal Fashions.

Ans.

(a) As per Section 31 read with the CGST Rules, in case of taxable supply of services, invoices should
be issued before or after the provision of service, but within a period of 30 days (45 days in case
of insurer/banking company or financial institutions including NBFCS) from the date of supply of
service.
In view of the said provisions, in the present case, the tax invoice should have been issued in the
prescribed time limit of 30 days from the date of supply of service, ie upto 3rd February. However,
the invoice has been issued on 10th February.

(b) Section 31 read with the CGST Rules, inter alia, provides that tax invoice in addition to other
mandatory details shall also contain the amount of tax charged in respect of taxable goods or
services (Central Tax, State Tax, Integrated Tax, Union Territory Tax or Cess). Further, where any
supply is made for a consideration, every person who is liable to pay tax for such supply shall
prominently indicate in all documents relating to assessment, tax invoice and other like documents,
the amount of tax which shall form part of the price at which such supply is made.

The objection raised by the tax consultant of Royal Fashions suggesting that the amount of tax
charged in respect of the taxable supply of makeover services should be shown separately in the
invoice raised by Aura Beauty Services Ltd, is valid in law.
SIR
VG

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ILLUSTRATION 6
Kidzee Toys Ltd, a wholesaler of toys registered in Chandigarh, is renowned in the local market for the
variety of toys and their reasonable prices. Kidzee Toys Ltd makes supply of 100 pieces of baby's
learning laptops and chat learning phones to Nancy General Store on 25th September by issuing a tax
invoice amounting to ₹1,00,000. However, the said toys were returned by Nancy General Store on 30th
September. Discuss which document Kidzee Toys Ltd is required to issue in such a case?

Ans.

As per Section 34, where one or more tax invoices have been issued for supply of any goods or services
or both and the goods supplied are returned by the recipient, the registered person, who has supplied
such goods or services or both, may issue to the recipient one or more credit notes for supplies made
in a financial year containing such particulars as may be prescribed. Therefore, Kidzee Ltd is required
to issue a credit note to Nancy General Store for the good returned.

ILLUSTRATION 7
Rana Sanga Ltd, a registered supplier has made following taxable supplies to its customer Babur in
the quarter ending 30th June:

Date Bill No Particulars Invoice Value (Including GST) (Rs)

5th April 102 Notebooks (10 in number) 1,200

10th May 197 Chart Paper (4 in number) 600

20th May 230 Crayon colors (2 packets) 500

2nd June 254 Poster colors (5 packets) 900

22nd June 304 Pencil box (4 sets) 700

Goods in respect of Bill No 102, 230 and 254 have been returned by Babur. You are required to advise
Rana Sanga Ltd whether it can issue a consolidated credit note against all the three invoices.

Ans.

Where one or more tax invoices have been issued for supply of any goods and/or services and

• the taxable value/tax charged in that tax invoice is found to exceed the taxable value/tax payable
SIR
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in respect of such supply, or

• where the goods supplied are returned by the recipient, or
• where goods and/or services supplied are found to be deficient,

the registered person, who has supplied such goods and/or services, may issue to the recipient one
or more credit notes for supplies made in a financial year containing prescribed particulars.

Thus, one (consolidated) or more credit notes can be issued in respect of multiple invoices issued in a
financial year without linking the same to individual invoices. Hence, in view of the above-mentioned
provisions, Rana sanga Ltd can issue a consolidated credit note for the goods returned in respect of
all the three invoices.

ILLUSTRATION 8
Chidanand Products Pvt Ltd is a registered supplier who has opted for composition levy in the current
FY. He wishes to know whether the issue of a bill of supply can be dispensed with under any
circumstances. You are required to advise him.

Ans.

Chidanand Products Put Ltd may not issue a bill of supply if the value of the goods or services or both
supplied is less than ₹200 subject to the condition that the recipient is an unregistered person and
the recipient does not require such bill of supply. A consolidated bill of supply for such supplies at the
close of each day in respect of all such supplies is required to be issued.

ILLUSTRATION 9
A registered person has to mandatorily issue separate invoices for taxable and exempted goods when
supplying both taxable as well as exempted goods to an unregistered person. Examine the validity of
the statement.

Ans.

The statement is not valid in law. As per the CGST Rules, where a registered person is supplying taxable
as well as exempted goods or services or both to an unregistered person, a single 'invoice-cum-bill of
supply' may be issued for all such supplies.
SIR
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ILLUSTRATION 10
A non-banking financial company can issue a consolidated tax invoice at the end of every month for
the supply made during that month. Examine the validity of the statement.

Ans.

The said statement is valid in law. A customer may avail numerous services from a non-banking
financial company in a given tax period. It may issue a consolidated tax invoice/statement/advice, any
other document in lieu thereof, by whatever name called may be issued/made available,
physically/electronically, for supply of services made during a month at the end of the month.

ILLUSTRATION 11
Sakthi Enterprises, Kolkata entered into a contract with Suraj Enterprises, Surat for supply of goods
and the delivery shall be made on or before 31!" October. The goods were removed from the factory at
Kolkata on 11th October. As per the agreement, the goods were to be delivered on or before 31st
October. Suraj Enterprises has received the goods on 14th October. Determine the time of issue of
invoice as per the provisions of CGST Act.

Ans.

A registered person supplying taxable goods shall issue a tax invoice, before or at the time of removal
of goods for supply to the recipient, where the supply involves movement of goods. Therefore, in the
given case, invoice has to be issued on or before 11th October (the time of removal of goods).

ILLUSTRATION 12
Trust and Fun Ltd, an event management company, has provided its services for an event at Kapoor
Film Agencies, Mumbai on 5th June. Payment for the event was made on 19th June. Determine the
time of issue of invoice as per the provisions of CGST Act.

Ans.

A registered person (other than an insurer/banking company/financial institution, including a NBFC)

supplying taxable services shall issue a tax invoice before or after the provision of service, but within
a period of 30 days from the date of supply of service. Thus, in the given case, invoice has to be issued
within 30 days of 5th June (date of supply of service), ie on or before, 5th July.
SIR
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ILLUSTRATION 13
Udai Singh, a registered supplier, has received advance payment with respect to services to be
supplied to Sujamal. His accountant asked him to issue the receipt voucher with respect to such
services to be supplied. However, he is apprehensive as to what would happen in case a receipt voucher
is issued, but subsequently no services are supplied. You are required to advise Udai singh regarding
the same.

Ans.

Udai singh is required to issue a receipt voucher at the time of receipt of advance payment with
respect to services to be supplied to sujamal. A receipt voucher is a document evidencing receipt of
advance money towards a supply of goods and/or services or both. A registered person, on receipt of
advance payment with respect to any supply of goods or services or both, shall issue a receipt voucher
or any other document, evidencing receipt of such payment.

Where, on receipt of advance payment with respect to any supply of goods or services or both the
registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is
issued in pursuance thereof, the said registered person may issue to the person who had made the
payment, a refund voucher against such payment. Therefore, in case subsequently no services are
supplied by Udai singh, and no tax invoice is issued in pursuance thereof, Udai Singh may issue a
refund voucher against such payment to sujamal.

ILLUSTRATION 14
Bhoj Raj, a registered person, has availed GTA services on which he is liable to pay tax under reverse
charge. He wishes to know whether he is required to issue an invoice. Please advise him discussing the
relevant provisions under CGST Act and rules thereunder.

Ans.

Bhoj Raj is required to issue an invoice with regard to the GTA services availed by him. A registered
person who is liable to pay tax u/s9 (3) or 9 (4) (ie, where the recipient is liable to discharge GST on
reverse charge basis) shall issue an invoice in respect of goods or services or both received by him
from the supplier on the date of receipt of goods or services or both.
SIR
VG

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ILLUSTRATION 15
Sitaram 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. Please advise him with reference to
the provisions of the CGST Act.

Ans.

Sitaram Textiles has to issue a delivery challan and not the tax invoice at the time of sending the goods
to job-worker. Rule 55, inter alia, stipulates that for the purposes of transportation of goods for job
work, the consignor may issue a delivery challan, serially numbered, in one or multiple series, in lieu of
invoice at the time of removal of goods for transportation, containing the following details, namely:

• Date and number of the delivery challan;

• Name, address and GSTIN of the consigner, if registered;
• Name, address and GSTIN or UIN of the consignee, if registered;
• Harmonised System of Nomenclature (HSN) code and description of goods;
• Quantity (provisional, where the exact quantity being supplied is not known);
• Taxable value;
• Tax rate and tax amount - Central Tax, State Tax, Integrated Tax, Union Territory Tax or Cess, where
the transportation is for supply to the consignee;

• Place of supply, in case of inter-state movement; and

• Signature.

The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner,
namely:

• the original copy being marked as ORIGINAL FOR CONSIGNEE;

• the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
• the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.

ILLUSTRATION 16
What are the documents and devices to be carried by person-in-charge of conveyance under Rule
138A of CGST Rules, 2017?
SIR
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Ans.

The person-in-charge of a conveyance has to carry:

(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped
to a Radio Frequency Identification Device embedded on to the conveyance [except in case of
movement of goods by rail or by air or vessel] in such manner as may be notified by the
commissioner.

ILLUSTRATION 19
Explain the meaning of consignment value of goods.

Ans.
Consignment value of goods shall be the value:

• determined in accordance with the provisions of Section 15,

• declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in respect
of the said consignment;

• includes the Central tax, State or Union territory tax, integrated tax and cess charged, if any, in the
document; and

• shall exclude the value of exempt supply of goods where the invoice is issued in respect of both
exempt and taxable supply of goods.

ILLUSTRATION 20
Mr X, a registered person has caused movement of goods of consignment value exceeding ₹50,000 in
relation to a supply and thus, generated e-way bill. However, after generation of e-way bill, he found a
mistake in the e-way bill and wants to edit it. You are required to advise Mr X whether he can do so with
the help of relevant provisions?

Ans.

If there is a mistake, incorrect or wrong entry in the e-way bill, then it cannot be edited or corrected.
Only option is cancellation of e-way bill within 24 hours of generation and generate a new one with
correct details.
SIR
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Thus, in view of the above-mentioned provisions, Mr X cannot edit the e-way bill. However, he can
cancel the e-way bill within 24 hours of generation and generate a new one with correct details.

ILLUSTRATION 21
Talli Lal, a registered person, has transported alcoholic liquor for human consumption of consignment
value of ₹ 1,50,000 from Delhi to Haryana. He has not generated e-way bill for the same. You are
required to examine the correctness of action taken by Talli Lal.

Ans.

E-way bill is not required to be generated where the goods being transported are alcoholic liquor for
human consumption. Thus, the action of Talli Limited of not generating the e-way bill is correct in law.

ILLUSTRATION 22
Dhananjay Associates registered in Gujarat deals in industrial grade iron and steel products. The
proprietor of Dhananjay Associates sold TMT Iron bars (GST applicable @18%) to a retailer in
Maharashtra at a value of ₹ 40,000 (excluding GST). As per the agreement of sale, goods are to be
delivered at the premises of retailer. The transportation cost of ₹ 7,000 has been charged separately
to deliver the same to the retailer in Maharashtra. In the above scenario, determine whether an e-way
bill is required to be issued under GST?

Ans.

Consignment value of goods is the value determined in accordance with the provisions of section 15,
and also includes the central tax, state or union territory tax, integrated tax and cess charged, if any,
in the document.

Further, since arranging freight is the liability of supplier, it is a case of composite supply and thus,
freight charges are to be added in the value of principal supply. Accordingly, the value of supply as per
section 15 in the given case would include the transportation cost in the invoice value, ie 47,000 (₹
40,000 + ₹7,000).

Consignment value = ₹47,000 × 118% = ₹55,460. Since the movement of goods is in relation to supply
of goods and the consignment value exceeds ₹ 50,000, e-way bill is mandatorily required to be issued
under GST in the given case.
SIR
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ILLUSTRATION 23
Mr Lakhan provides Continuous Supply of Services (CSS) to M/s TNB Limited. He furnishes the
following further information:

• Date of commencement of providing CSS - 01-10-2023

• Date of completion of providing CSS-31-01-2024
• Date of receipt of payment by Mr Lakhan - 30-03-2024

Determine the time of issue of invoice as per provisions of CGST Act, 2017, in the following
circumstances:

(i) If no due date for payment is agreed upon by both under the contract of CSS.

(ii) If payment is linked to the completion of service.

(iii) If M/s TNB Limited has to make payment on 25-03-2024 as per the contract between them.

Answer

(i) Where the due date of payment is not ascertainable from the contract, the invoice shall be issued
before or at the time when the supplier of service receives the payment. Thus, in the given case,
the invoice should be issued on or before 30.03.2024 (i.e., the date of receipt of payment By Mr
Lakhan).

(ii) If payment is linked to the completion of an event, the invoice should be issued on or before the
date of completion of that event. Since in the given case, payment is linked to the completion of
service, invoice should be issued on or before 31.01.2024 (i.e., the date of completion of service).

(iii) Where the due date of payment is ascertainable from the contract, the invoice should be issued
on or before the due date of payment. If M/s TNB Limited has to make payment on 25.03.2024 as
per the contract between them, the invoice should be issued on or before 25.03.2024.

ILLUSTRATION 24
Kartik & Co, a registered supplier under GST, provides the following information regarding various tax
invoices issued by it during the month of March 2024:

• Value of supply charged in an invoice was ₹ 2,50,000 against the actual taxable value of ₹ 2,30,000.
• Tax charged in an invoice was ₹ 32,000 against the actual tax liability of ₹ 68,000 due to wrong
HSN code being chosen while issuing invoice.
SIR
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• Value charged in an invoice was ₹ 3,20,000 as against the actual value of ₹ 4,20,000 due to wrong
quantity considered while billing.

Kartik & Co asks you to answer the following:

(i) Who shall issue a Debit/Credit Note under CGST Act, 2017?
(ii) Whether Debit Note or Credit Note has to be issued in each of the above circumstances and, if
so, quantify the amount for which it is to be issued.

(iii) What is the maximum time-limit available for declaring the credit note in the GST Return?

Answer

(i) The registered supplier (ie, Kartik & CO) is required to issue a debit/credit note in each of the
circumstances as explained in point (ii).

(ii) First Situation: A credit note is required to be issued as the taxable value in invoice exceeds the
actual taxable value. The credit note should be issued for the excess value of supply charged
in the invoice, ie, ₹ 20,000.

second situation: A debit note is required to be issued as the tax charged in the invoice is less
than the actual tax payable. The debit note should be issued for the amount of tax which is
charged less, ie ₹ 36,000.

Third situation: A debit note is required to be issued as the value of supply charged in the
invoice is less than the actual value. The debit note should be issued for the amount of value
which is charged less, ie ₹ 1,00,000.

(iii) The details of the credit note cannot be declared later than 30th November following the end
of the financial year in which such supply was made or the date of furnishing of the relevant
annual return, whichever is earlier.

ILLUSTRATION 25
M/sABC Ltd, is a contractor executing works contract service, situated in Tamil Nadu. It entered into an
agreement with M/s XYZ Ltd (another registered person in Tamil Nadu) to provide works contract
services in various states in South India. The precise location details were to be shared later. In this
regard, M/S ABC Ltd received an advance of ₹ I Crores (including GST).
You are to advise M/s ABC Ltd whether:
SIR
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(i) they are liable to pay tax under GST on such advance amount.

(ii) the tax liability is to be paid as (CGST + SGST) or IGST.

(iii) What would be the tax rate at which such tax liability is to be paid?

Answer

(i) supply includes inter alia all forms of supply made or agreed to be made. Thus, advance
payment for a supply agreed to be made is liable to tax. In case of services, the time of supply
is issue of invoice or receipt of payment, whichever is earlier. Therefore, in the given case, ABC
Ltd will be required to pay tax on advance of ₹ I crore at the time of receipt of advance.

(ii) Where at the time of receipt of advance, nature of supply is not determinable, the same is
treated as inter-state supply and thus, IGST is charged thereon.

(iii) Where at the time of receipt of advance, rate of tax is not determinable, tax is paid at the rate
of 18%.

ILLUSTRATION 26
M/s Xing Trans of Kolkata engaged in the trading of transmitters. On 20/05/2023, M/s Xing Trans have
sent 500 units of transmitters for exhibition at Chennai on sale or return basis. Out of the said 500
units, 300 units have been sold on 28/07/2023 at the exhibition. Out of remaining 200 units, 150 units
have been brought back to Kolkata on 25/11/2023 and balance 50 units have neither been sold nor
brought back. Explain the provisions under GST law relating to issue of invoices with exact dates on
which tax invoices needs to be issued by M/s Xing Trans.

Answer

• Where the goods being sent for sale or return are removed before the supply takes place, the tax
invoice shall be issued before or at the time of supply or 6 months from the date of removal,
whichever is earlier.

• In the given case, 500 units of transmitters have been sent for exhibition on sale or return basis
out of which 300 units are sold before 6 months from the date of removal. Thus, tax invoice for said
300 units needs to be issued before or at the time of supply of such goods, ie upto 28/07/2023.

• Remaining 200(150 + 50) units have neither been sold nor brought back till the expiry of 6 months
from the date of removal goods, ie 20/11/2023. Thus, tax invoice for said 200 units needs to be
issued upto 20/11/2023.
SIR
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ILLUSTRATION 27
"One consolidated e-way bill can be generated for multiple invoices". Comment on the validity of the
above statement with reference to GST law.

Answer

• The statement is invalid. Multiple invoices cannot be clubbed to generate one e-way bill. If multiple
invoices are issued by the supplier to recipient, for movement of such goods, multiple e-way bills
have to be generated.

• Thus, for each invoice, one e-way bill has to be generated, irrespective of the fact whether same
or different consignors or consignees are involved. However, after generating all these e-way bills,
one consolidated e-way bill can be prepared for transportation purpose, if goods are going in one
vehicle.

ILLUSTRATION 28
M/s Sakura Enterprises made an inter-state supply of taxable goods valued at ₹ 47,500 and exempt
goods valued at ₹ 2,000. Rate of IGST for taxable supply was 6%. Determine, with brief reasons,
whether e-way bill generation is mandatory for the above supply made by M/s Sakura Enterprises.

Answer

In the given case, consignment value of goods (including GST and excluding value of exempt supply) is
₹ 50,350 (47,500 × 106%). since there is a movement of goods of consignment value exceeding ₹
50,000, M/s Sakura Enterprises is mandatorily required to issue e-way bill.

ILLUSTRATION 29
When goods are transferred by principal to job worker, there no need to issue e-way bill. Comment on
the validity of the above statement with reference to GST Laws.

Answer

• Where goods are sent by a principal located in one state to a job-worker located in any other state,
the e-way bill shall be generated by the principal mandatorily irrespective of the value of the
consignment.
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• Where goods are sent by a principal located in one state to a job-worker located in the same state,
the e-way bill shall be generated by the principal if the consignment value of goods exceeds ₹
50,000.

ILLUSTRATION 30
Mr Venaram, proprietor of M/s Lalit Kirana Stores, is registered as a composition dealer in the Jodhpur
district of Rajasthan. He has not furnished the statement for payment of self-assessment tax in the
Form GST CMP-08 for two consecutive quarters. He placed an order for purchase of taxable goods
worth ₹ 5,50,000 with M/s Bob & Sons (a partnership firm), a registered dealer in the Bikaner district
of Rajasthan. M/s Bob & Sons has been regularly filing its GST return. M/s Bob & Sons wants to
generate e-way bill with respect to intra-state supply to be made to M/s Lalit Kirana Stores. Whether
M/s Bob & Sons is allowed to generate e-way bill as per the provisions of CGST Act, 2017? Answer with
proper reasoning.

Answer

• In order to ensure that registered persons do not make any default in filing of GST returns, a person
paying tax under composition scheme shall not be allowed to furnish the information in Part A of
Form GST EWB-01 in respect of his outward supplies if he has not furnished the statement for
payment of self-assessed tax (ie, GST CMP-08) for two consecutive quarters. However, e-way bills
can be generated in respect of inward supplies of the said person.

• In the present case, M/s Lalit Kirana has not furnished Form GST CMP-08 for two consecutive
quarters. He has placed an order for purchase of taxable goods with M/s Bob & Sons who has been
regularly filing his GST returns. Since M/s Bob & Sons is a regular return filer, M/S Bob & Sons is
allowed to generate e-way bill with respect to intra-state supply to be made to M/s Lalit Kirana
Stores.

ILLUSTRATION 31
Dream World Pvt Ltd is registered under GST in the State of Haryana. During FY 2023-24, its annual
aggregate turnover was ₹ 12 Crores. In the month of April 2024, it supplied goods worth ₹ 12 lakhs to
Nightmare Ltd (a registered taxable person).

(i) You are required to ascertain whether issue of e-invoice is mandatory in respect of this transaction?

(ii) What would be your answer if Nightmare Ltd is a SEZ (Special Economic Zone) unit?
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Answer

(i) A registered person whose aggregate turnover in any preceding financial year from FY 2017-18
onwards exceeds ₹ 5 crores, has been notified as class of persons who shall prepare e-invoice in
respect of B2B supplies (ie, supply of goods or services or both to a registered person) or for
exports. In the present case, Dream World Put Ltd (with annual aggregate turnover of ₹ 12 crores
in FY 2023-24) has supplied goods worth ₹ 12 lakhs to Nightmare Ltd (a registered taxable
person) in April 2024. As per the above stated law, issuance of e-invoice is mandatory in respect
of the present transaction.

(ii) In respect of supplies made by SEZ units, e-invoicing provisions are not applicable even if their
turnover exceeds ₹ 5 crores in the preceding financial year from FY 2017-18 onwards. However,
in case of supplies made by notified persons to SEZ units, e-invoices need to be issued.
Therefore, e-invoicing provisions shall be applicable in respect of supplies made by Dream World
Put Ltd to Nightmare Ltd even if Nightmare Ltd is a SEZ unit.

ILLUSTRATION 32
Mohan Enterprise is a registered person having principal place of business in Gandhinagar, Gujarat.
They received services of Advocate Sameer, a registered person from Ahmedabad, Gujarat. Shekhar,
an unregistered person provided services of labour to Mohan Enterprise. Explain the provisions
relating to issue of invoice by recipient Mohan Enterprise if he is liable to pay tax under reverse charge
on both the transactions u/s 9(3) or 9(4) of the CGST Act, 2017.

Answer

A registered person shall issue an invoice in respect of goods and/or services received by him
provided:

(i) He is liable to pay tax under reverse charge u/s 9(3) or 9(4) of the CGST Act, 2017 on such supplies;
and

(ii) Supplies are received from the supplier who is not registered on the date of receipt of goods
and/or services.

Supply of Legal Services By Advocate Sameer (Registered) To Mohan Enterprise: RCM is applicable in
case of legal services as per Section 9(3) of CGST Act. Since the supplier (ie, Advocate Sameer) is
registered, Mohan Enterprises is not required to issue an invoice in the present case.
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However, Mohan Enterprises shall be required to issue a payment voucher in respect of the present
transaction.

Supply of Labour Services By Shekhar (Unregistered) To Mohan Enterprise: Assuming that RCM is
applicable in the present case as per Section 9(4) of CGST Act, Mohan Enterprises is required to issue
an invoice in the present case because the supplier is unregistered under the GST laws.

Further, Mohan Enterprises shall be required to issue a payment voucher in respect of the present
transaction.
SIR
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CHAPTER - 12 ACCOUNTS & RECORDS

ILLUSTRATION 1
Who is required to maintain books of accounts and at which place in terms of section 35 read with
relevant rules?

Ans.

Every registered person shall keep and maintain, his books of accounts at his principal place of
business and books of accounts relating to additional place of business as mentioned in the certificate
of registration. Where more than one place of business is specified in the certificate of registration,
the accounts relating to each place of business shall be kept at such places of business.

ILLUSTRATION 2
Mr sky is engaged in the business of trading of mobiles. He is eligible for composition scheme and has
opted for the same. He seeks your advice for records which are not required to be maintained by him
as composition taxable person.

Ans.

A supplier who has opted for composition scheme is not required to maintain records relating to;

(a) Stock of Goods: Accounts of stock in respect of goods received and supplied by him, and such
accounts shall contain particulars of the opening balance, receipt, supply, goods lost stolen,
destroyed, written off or disposed of by way of gift or free sample and the balance of stock
including raw materials, finished goods, scrap and wastage thereof.

(b) Details of Tax: Account containing the details of tax payable (including tax payable under reverse
charge), tax collected and paid, input tax, imput tax credit claimed, together with a register of tax
invoice, credit notes, debit notes, delivery challan issued or received during any tax period.

Thus, Mr sky is not required to maintain above mentioned records.

SIR
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ILLUSTRATION 3
Mr Harsh Manjula is engaged in the business of works contract services and request your guidance as
to specific records required to be maintained by him under GST law, if any.

Ans.

Mr Harsh Manjula, executing works contract, shall keep separate accounts for works contract showing:

(a) the names and addresses of the persons on whose behalf the works contract is executed;
(b) description, value and quantity (wherever applicable) of goods/services received for the
execution of works contract;

(c) description, value and quantity (wherever applicable) of goods/services utilized in the execution
of works contract;

(d) the details of payment received in respect of each works contract; and the names and addresses
of suppliers from whom he received goods or services.

ILLUSTRATION 4
Chill chain cold is operating cold storage warehouse and seeks your guidance on the GST accounts
and records to be maintained by them in terms of section 35.

Ans.

Chill Chain Cold shall maintain records of the consigner, consignee and other relevant details of the
goods in the prescribed manner.

Chill Chain cold shall also maintain books of accounts with respect to the period for which particular
goods remain in the warehouse, including the particulars relating to dispatch, movement, receipt, and
disposal of such goods.

chill Chain cold shall store the goods in such manner that they can be identified item-wise and owner-
wise and shall facilitate any physical verification or inspection by the proper officer on demand.

ILLUSTRATION 5
Mr X is of the view that records are to be mandatorily maintained manually only. You are required to
examine the view taken by Mr X ?
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Ans.

The view taken by Mr X is not valid in law. Books of account include any electronic form of data stored
on any electronic device. The registered person may keep and maintain such accounts and other
particulars in electronic form stored on any electronic device and record so maintained shall be
authenticated by means of a digital signature. The registered person maintaining electronic records
shall produce, on demand, the relevant records or documents, duly authenticated by him, in hard copy
or in any electronically readable format.

Where the accounts and records are stored electronically by any registered person, he shall, on
demand, provide the details of such files, passwords of such files and explanation for codes used,
where necessary, for access and any other information which is required for such access along with
a sample copy in print form of the information stored in such files.

ILLUSTRATION 6
GoToDress is a chain of stores dealing in readymade garments through five showrooms in Delhi, It has
a single registration for all its showrooms in Delhi and has a principal place of business at Karol Bagh,
Delhi. One of the consultants has suggested GoToDress to maintain books of accounts of all of its five
showrooms at principal place of business at Karol Bagh, Delhi for better administration and control.
Give your comment on the above advice according to the provisions of GST law.

Answer

As per section 35 of the CGST Act, the books of accounts are to be maintained at principal place of
business as mentioned in the certificate of registration. Further, where his registration certificate is
covering multiple place of business (eg, a supplier operating from multiple place of business within a
State/Union Territory), then accounts relating to each such additional place of business shall also be
kept at each such additional place of business. Thus, GoToDress has to maintain records relating to
five showrooms at their respective showrooms.

In view of above provisions, advice given to GoToDress as to maintenance of records only at principal
place of business is not legally correct.

Single Entity With Multiple Places of Businesses:

Registration Accounts To Be Maintained

Multiple Registrations Each GSTIN = Deemed Distinct Person;

(GSTINs)
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Each registered unit shall maintain its accounts

separately, ie separate compliances are required.

Single Registration Single Place Of Business: Maintain accounts at

(GSTIN) such place.

Multiple Places Of Business:

• Maintain all accounts at principal place of
business; and

• Also maintain accounts relating to each

additional place of business at their respective
place of business.
SIR
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CHAPTER - 13 PAYMENT OF TAX

ILLUSTRATION 1
Examine the authority vested under CGST Act, 2017 for preventing a registered person from utilising the
input tax credit availed in a fraudulent manner?

Ans.

Every registered person, shall avail the input tax credit through a return filed u/s 39 of CGST Act, 2017.
ITC availed shall be credited to Electronic Credit Ledger u/s 41 of CGST Act, 2017. Where the
Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant
Commissioner, has reasons to believe that ITC available in Electronic Credit Ledger. has been
fraudulently availed or is ineligible, he may prohibit use of ITC for discharge of any liability u/s 49 or for
claim of any refund of any unutilised amount.

ILLUSTRATION 2
Mr A has deposited a sum of Rs 30,000 under minor head of 'Interest' column for the major head ' IGST
'. At the time of filing GSTR-3B for a particular tax period, he noticed that there is no sufficient amount
under the minor head 'Tax' towards payment of Rs 30,000. When approached with the Jurisdictional Tax
Officer, Mr A was guided to deposit the tax amount under proper head of account and claim a refund for
the remittance of amount deposited under head 'Interest'. Examine the relevant provisions of CGST Act,
2017 towards payment of tax and compliance with the law.

Ans.

Provisions of section 49 of CGST Act, 2017 permit a registered person for transferring the amount
deposited under any of the minor head (ie, tax, interest, penalty, fees or others) to any of the heads
under IGST/CGST/ SGST/UTGST and make the payment of the taxes there upon. Accordingly, Mr A need
not deposit the tax amount under head 'Tax' and claim a refund for the remittance of amount deposited
under head 'interest'. Instead of using Form GST PMT-09, such amount can be transferred suo-moto on
the common portal from 'Interest' to 'Tax' head and tax liability be paid.
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ILLUSTRATION 3
M/s PPC Ltd has availed input tax credit for Rs 54,000 IGST during February 2022 on a particular
purchase. Accounting records for the above purchase indicate that IGST paid to the supplier is Rs 45,000
as per the bill received. GSTR-1 uploaded by the supplier for the above supply indicates Rs 45,000 as
tax paid. Examine as per GST provisions, what value shall be updated in the ledgers maintained on behalf
of M/S PPC Ltd on the common portal.

Ans.

M/S PPC Ltd have accounted and paid Rs 45,000 as IGST to the supplier concerned. However, availment
of input tax credit has been made for Rs 54,000. As per Section 49 (2) of CGST Act, 2017, the input tax
credit as self-assessed in the return of a registered person shall be credited to his electronic credit
ledger. Accordingly, Electronic Credit Ledger of M/s PPC Ltd shall be updated with a value of Rs 54,000
as per self-assessed return to be filed for February 2022, though the input tax credit shown by the
supplier is only for Rs 45,000.

ILLUSTRATION 4
How many types of electronic ledger/register are there?

Ans.

Electronic Cash Ledger

• Electronic Credit Ledger

• Electronic Liability Register

ILLUSTRATION 5
M/s ABC & Co have defaulted in filing return u/s 39 of CGST Act, 2017 (ie, GSTR-3B) for March 2022 within
the specified due date. Reason for such delay is attributable to delay in closure of books for March 2022,
which have been finalised during May 2022. The GST Common Portal prompted for payment of late fees
payable u/s 47 of CGST Act, 2017 for a sum of Rs 2,000 under CGST and SGST each. Accountant of M/S
ABC & CO sought your confirmation for payment of such late fees through the balance available in
Electronic Credit Ledger for the late fees. Give your guidance in this regard.
SIR
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Ans.

Section 49 of the CGST Act, 2017 provides that the amount available in the Electronic Cash Ledger may
be used for making any payment towards tax, interest, penalty, fees or any other amount payable under
the provisions of this Act or the rules made there under in prescribed manner. Further, Section 49 also
provides that the amount available in the Electronic Credit Ledger may be used for making any payment
towards output tax in the prescribed manner.

Accordingly, as per the combined reading of the above provisions, late fees shall be paid only through
Electronic Cash Ledger and not possible through Electronic credit Ledger. Thus, contention of the
accountant of M/s ABC&CO is not correct and the above amount shown on the Common Portal has to be
deposited in Electronic Cash Ledger under appropriate minor head, through any of the specified modes.

ILLUSTRATION 6
What are the main features of GST payment process?

Ans.

The main features of GST payment process are as follows:

• Electronically generated challan from common Portal in all modes of payment and no use of
manually prepared challan

• Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of payment of tax
• Convenience of making payment online
• Realtime data for tax collection in electronic format
• Faster remittance of tax revenue to the Government Account
• Paperless transactions
• Speedy accounting and reporting
• Electronic reconciliation of all receipts
• Simplified procedure for banks
• Warehousing of digital challan

ILLUSTRATION 7
Are principles of unjust enrichment applicable for payment made under GST?
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PAYMENT OF TAX 13

Ans.

Yes, as per section 49 of the CGST Act, 2017 every person who has paid the tax on goods or services or
both shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such
tax to the recipient of such goods or services or both.

ILLUSTRATION 8
State the name of output tax under GST, where any of the input tax credit under GST can be availed?

Ans.

IGST {IGST, CGST, SGST, UTGST, ie all input tax credit can be availed against output tax liability known as
IGST).

ILLUSTRATION 9
Sahil is a supplier of taxable goods in Karnataka. He got registered under GST in the month of September
2022 and wishes to pay his IGST liability for the month. Since he is making the GST payment for the first
time, he is of the view that he needs to mandatorily have the online banking facility to make payment of
GST; offline payment is not permitted under GST. You are required to apprise Sahil regarding the various
modes of deposit in the Electronic Cash Ledger. Further, advise him with regard to following issues:

(a) Are manual challans allowed under GST?

(b) What is the validity period of the challan?
(c) Is cross utilization among major and minor heads of the Electronic Cash Ledger permitted?

Ans.

As per the provisions of CGST Act, 2017 read with relevant rules, the deposit in Electronic Cash Ledger
can be made through any of the following modes, namely:

• Internet banking through authorised banks;

• Credit Card/Debit Card through the authorised bank;
• National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) from any bank; or
• Over The Counter (OTC) payment through authorised banks for deposits up to Rs 10,000 per challan
pertax period, by cash, cheque or demand draft.

Thus, offline mode is also permitted under GST subject to specified conditions.
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(a) Manual or physical challans are not allowed under the GST regime. It is mandatory to generate
challans online on the GST Portal.

(b) Challan is valid for a period of 15 days.

(c) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee
or any other amount available in the Electronic Cash Ledger under the CGST Act, 2017 to the
Electronic Cash Ledger for Integrated Tax, Central Tax, State Tax or Union Territory Tax/Cess.

ILLUSTRATION 10
Suhasini is a registered software consultant, On account of her ill health, she could not provide any
services during October. However, she had to incur all the expenses relating to her office. She paid Rs
75,000 to various vendors. The total input tax involved on the goods and services procured by her is Rs
13,500. Out of the total bills paid by her, one bill for Rs 15,000 relates to security services availed for
security of her office, tax on which is payable under reverse charge. Input tax involved in such bill is Rs
2,700. Suhasini is of the opinion that for the month of october, no GST is payable from Electronic Cash
Ledger as she has sufficient balance of ITC for payment of GST under reverse charge on security
services. Do you think Suhasini is right? Explain with reasons.

Ans.

The amount available in the Electronic Credit Ledger may be used for making any payment towards
output tax.

Output tax in relation to a taxable person, means the tax chargeable on taxable supply of goods or
services or both made by him or by his agent but excludes tax payable by him on reverse charge basis.

Therefore, ITC cannot be used to pay the tax liability under reverse charge. The same is always required
to be paid through Electronic Cash Ledger and not Electronic Credit Ledger. Thus, Suhasini is wrong and
she will need to pay the GST of Rs 2,700 on security service through Electronic Cash Ledger.

ILLUSTRATION 11
Mr Manik provides the following information regarding his tax & other liabilities under GST Act as per
Electronic Liability Register:

S.No. Particulars Amount (₹) S.No. Particulars Amount (₹)

1. Tax due for the month of 25,000 4. Tax due for the month of 35,000
May June
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2. Interest due for the 2,000 5. Liability arising out of 48,000

month of May demand notice u/s 73
3. Penalty due for the 3,000
month of May

Mr Manik wants to clear his liability of demand notice u/s 73 first. Discuss the provisions of order of
discharge of GST liability u/s 49 (8) of CGST Act & advice to Mr Manik.

Answer

A chronological sequence has been prescribed 4/s49(8) of the CGST Act in which the liability of a taxable
person has to be discharged. Such sequence needs to be followed mandatorily.

• Self-assessed tax and other dues for the previous tax periods have to be discharged first;
• Self-assessed tax and other dues for the current period have to be discharged next; and
• Liability arising out of demand notice and adjudication proceedings comes last.

In light of the above stated law, the amounts specified in the question need to be paid in the following
chronological order:

• Tax, interest and penalty dues for the month of May amounting to ₹ 30,000 need to be discharged
first.
• Tax due for the month of June amounting to ₹ 35,000 needs to be discharged next.
• Liability arising out of demand notice amounting to ₹ 48,000 needs to be discharged last.

ILLUSTRATION 12
Mr Atul of Chennai is a registered dealer under GST. He has an opening balance of input tax credit of ₹
1,20,000 (IGST) lying in the electronic credit ledger relating to the month of November 2023. During the
month, a legal proceeding has been initiated under the GST law which resulted in a tax liability of ₹
80,000 (IGST, other than RCM liability). Mr Atul agrees with the tax liability and wants to use the balance
lying in the electronic credit ledger towards payment of same.

He seeks your opinion with regard to the provisions of GST laws as to whether he is allowed to use the
amount lying in the electronic credit ledger for making the payment of tax liability, payable as a
consequence of the proceeding?
SIR
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Answer

• As per Section 49, the amount available in the electronic credit ledger may be used for making any
payment towards output tax, subject to the provisions relating to the order of utilisation of ITC as
laid down u/s 49.

• Further, output tax in relation to a taxable person is defined as the tax chargeable on taxable supply
of goods or services or both but excludes tax payable on reverse charge mechanism. Accordingly, it
is clarified that any payment towards output tax, whether self-assessed in the return or payable as
a consequence of any proceeding instituted under the provisions of GST laws, can be made by
utilization of the amount available in the electronic credit ledger of a registered person.

• Therefore, Mr Atul is allowed to use the amount lying in the electronic credit ledger for making the
payment of tax liability payable as a consequence of legal proceeding.

ILLUSTRATION 13
GSTR-3B for the month of January 2024 has been filed by M/s Avisha Limited, a registered person, within
the due date prescribed by the CGST Act 2017 which is on February 20 th, 2024. It came to the notice of
the company that tax due for the month of January 2024 has been paid short by ₹ 16,000. The shortfall
of ₹16,000 has been paid through Cash Ledger and Credit Ledger at the time of filing GSTR-3B for the
month of February 2024 on March 20th , 2024 in the following manner:

Particulars Cash Ledger Credit Ledger

Shortfall ₹ 12,000 ₹4,000

Assume that electronic cash ledger and credit ledger carry sufficient balance for the above short fall.

(i) You are required to calculate the amount of interest payable if any u/s50 of the CGST Act.
(ii) Give the effect if GSTR-3B for the month of January 2024 had been filed belatedly on March 20,
2024 and all other conditions remaining same.

Calculation should be rounded off to nearest rupee. As 2024 is leap year, give effect of same.

Answer

Interest is payable in case of delayed payment of tax @ 18% p.a. from the date following the due date
of payment to the actual date of payment of tax.
SIR
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PAYMENT OF TAX 13

Above interest is payable on the net tax liability paid in cash only if return in Form GSTR-3B for a tax
period has been filed after the due date to furnish such return. Otherwise, interest is payable on gross
tax liability.

(i) Since Avisha Limited has furnished Form GSTR-3B for the month within the prescribed due date,
interest is payable on the gross tax liability deposited with a delay of 29 days {21.02.2024 −
20.03.2024 (both inclusive)}. Interest = ₹16,000 × 18% × 29/366 = ₹228 (rounded off)

(ii) If Avisha Limited has filed Form GSIR-3B for the month after the due date, ie on 20.03.2024, interest
is payable on the net tax liability paid through Electronic Cash Ledger only, for a delay of 29 days.
Interest = ₹12,000 × 18% × 29/366 = ₹171 (rounded off)
SIR
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TDS & TCS UNDER GST 14

CHAPTER - 14 TDS & TCS UNDER GST

ILLUSTRATION 1
Whether the rate of tax of 0.5% notified u/s 52 is CGST or SGST or a combination of both CGST and
SGST?

Ans.

The rate of TCS as notified under CGST Act is payable under CGST and the equal rate of TCS is expected
under the SGST Act also, in effect aggregating to 0.5%.

ILLUSTRATION 2
Is every e-commerce operator required to collect tax on behalf of actual supplier?

Ans.

Yes, every e-commerce operator is required to collect tax where consideration with respect to the
supply is being collected by the e-commerce operator.

However, no TCS is required to be collected in the following cases:

• On supply of services notified u/s9(5) of the CGST Act, 2017.

• On exempt supplies.
• On supplies on which the recipient is required to pay tax on reverse charge basis.

ILLUSTRATION 3
State whether the provisions pertaining to tax collected at source u/s 52 of CGST Act, will be applicable,
if Fitan Ltd sells watch on its own through its own website?

Ans.

As per Section 52, every electronic commerce operator not being an agent, shall collect an amount
calculated at such rate, as may be notified by the Government on the recommendations of the council,
SIR
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TDS & TCS UNDER GST 14

of the net value of taxable supplies made through it by other suppliers where the consideration with
respect to such supplies is to be collected by the operator. Hence, if the person sells on his own,
provisions pertaining to tax collected at source (TCS) won't be applicable.

ILLUSTRATION 4
There is no onus of filing any monthly & annual statements by ECO. Examine the technical veracity of
the statement by explaining relevant provisions.

Ans.

The given statement is invalid. An electronic statement has to be filed by the ECO containing details of
the outward supplies of goods and/ or services effected through it, including the supplies returned
through it and the amount collected by it as TCS during the month within 10 days after the end of the
each month in which supplies are made.

Additionally, the ECO is also mandated to file an Annual Statement on or before 31st day of December
following the end of the financial year.

The Commissioner has been empowered to extend the due date for furnishing of monthly and annual
statement by the person collecting tax at source.

ILLUSTRATION 5
State whether the provisions pertaining to tax collected at source u/s 52 of CGST Act, will be applicable,
if ABC Limited who is dealer of Royul brand sells watches through Slipkart, an electronic commerce
operator?

Ans.

As per Section 52, every electronic commerce operator not being an agent, shall collect an amount
calculated at such rate, as may be notified by the Government on the recommendations of the Council,
of the net value of taxable supplies made through it by other suppliers where the consideration with
respect to such supplies is to be collected by the operator. If ABC Limited who is dealer of Royul brand
sells watches through Slipkart, then the provision of TCS will be applicable to Slipkart.

ILLUSTRATION 6
Who is liable to collect TCS (collection of tax at source) under section 52 of the CGST Act, 2017. Briefly
explain the provisions relating to registration, filing of return and deposit of TCS to Government as per
SIR
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TDS & TCS UNDER GST 14

the provisions of Section 52 of the CG5T Act, 2017 and Rule 12 of the CGST Rules, 2017.

Answer

• Every Electronic Commerce operator (ECO), not being an agent, is liable to collect tax at source (TCS)
on the net value of taxable supplies made through it by suppliers, where the ECO collects the
consideration on behalf of the supplier for such supplies.

• Registration: Section 24 prescribes that an ECO is mandatorily required to obtain registration

irrespective of the turnover. A registration application in prescribed form needs to be submitted
through the common portal and the proper officer shall, after due verification, grant registration. On
a request or upon an enquiry or pursuant to any other proceeding under GST law, if the proper officer
is satisfied that a person is no longer liable to collect the tax at source, he may cancel his
registration.

• Returns: Such ECO shall furnish a monthly statement in Form GSTR-8 containing the details of the
outward supplies of goods and/or services effected through it, including supplies returned through
it and the amount collected by it as TCS during the month within 10 days after the end of each month
in which tax has been collected at source. Further, an annual statement also needs to be filed in Form
GSTR-9B on or before 31st December following the end of the financial year.

• Deposit of TCS: By 10th of the month succeeding the month in which TCS has been collected.

ILLUSTRATION 7
Mohan, a registered person in Salem, Tamil Nadu, makes intra-state supply of taxable goods amounting
to ₹ 13,57,000inclusive of GST to a Public Sector Undertaking (PSU). Consideration for same received in
5 equal instalments from PSU.

Tax rate applicable: CGST 9%, SGST 9%, IGST18%. What will be your view with respect to applicability of
TDS provisions as per Section 51 of CGST Act 2017 regarding above transaction?

What is the period by which TDS is required to be deposited to the Government account?

Answer

• In case of supply of goods to PSU, TDS needs to be deducted u/s 51 of CGST Act if the total value of
supply under a contract (excluding the amount of GST indicated in the invoice) exceeds ₹ 2,50,000.
Thus, individual supplies may be less than ₹ 2,50,000 but if the value of supply under a contract is
more than ₹ 2,50,000, TDS needs to be deducted as per rates prescribed.
SIR
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• In the present case, the value of contract exclusive of GST shall be ₹ 11,50,000 (₹13,57,000 × 100/
118). Since the total value of contract exclusive of GST exceeds ₹ 2,50,000, TDS provisions shall apply
in the present case and a total amount of ₹ 23,000 needs to be deducted as TDS (₹11,500 pertaining
to CGST & SGST each). The fact that the payment is being made by PSU in 5 equal instalments is of
no relevance.

• The amount of TDS deducted by payee needs to be deposited to the Government account on
monthly basis by 10th day of the succeeding month.

ILLUSTRATION 8
Yash Shoppers, a registered supplier of Jaipur, is engaged in supply of various goods and services
exclusively to government departments, agencies, local authority and persons notified u/s 51.

You are required to determine the amount of tax, if any, to be deducted from each of the receivables
given below (independent cases) assuming that the payments as per the contract values are made on
31!" October. The rates of CGST, SGST and IGST may be assumed to be 6%, 6% and 12% respectively.

• Supply of computer stationery to Public Sector Undertaking (PSU) located & registered in Mumbai.
Total contract value is ₹ 2,72,000 (inclusive of GST).

• Supply of air conditioner to GST department located & registered in Delhi. Total contract value is ₹
2,55,000 (exclusive of GST).

• Supply of generator renting service to Municipal Corporation of Jaipur (not exempt under GST law).
Total contract value is ₹ 3,50,000 (inclusive of GST).

Ans.

S.No. Particulars Total Contract Value Tax To Be Deducted

[Excluding GST] (₹)
CGST @ SGST @ IGST @
1% (₹) 1% (₹) 2% (₹)

(i) Supply of computer stationery 2,42,857 - - -

to PSU in Mumbai {No TDS since {2,72,000 × 100/112}
the total value of supply under
the contract excluding IGST
(being inter-state supply) does
not exceed ₹ 2,50,000}
SIR
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TDS & TCS UNDER GST 14

(ii) Supply of air conditioner to GST 2,55,000 - - 5,100

Department in Delhi {Since the
total value of supply under the
contract excluding IGST (being
inter-state supply) exceeds
₹2,50,000, tax is required to be
deducted?

(iii) Supply of a generator renting 3,12,500 3,125 3,125 -

service to Municipal {3,50,000 × 100/112}
Corporation of Jaipur
{Since the total value of supply
under the contract excluding
CGST and SGST (being intra-
state supply) exceeds ₹
2,50,000, tax is required to be
deducted}

Total 3,125 3,125 5,100

ILLUSTRATION 1
x booked a Hotel in Udaipur, Rajasthan through an e-commerce portal for an amount of ₹ 25,000. As
per the terms and conditions, the amount was payable at the hotel at the time of check in. Whether TCS
provisions shall apply in the present case?

Ans.

As per the provisions of section 52 of the CGST Act, 2017, TCS provisions shall apply only when the ECO
is receiving the consideration for supply from the recipient of supply. In the present case, the supplier
(ie, the hotel) is directly receiving the consideration from the recipient of the services (ie, Mr X). Hence,
TCS provisions shall not apply in the present case.
SIR
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RETURNS UNDER GST 15

CHAPTER - 15 RETURNS UNDER GST

ILLUSTRATION 1
Mr X, a regular taxpayer, did not make any taxable supply during July 2023. Is he required to file GSTR-
3B?

Ans.

A regular taxpayer is required to furnish a return u/s39 for every month even if no supplies have been
effected during such period. In other words, filing of Nil GSTR-3B is also mandatory. Therefore, Mr X is
required to file GSTR-3B even if he did not make any taxable supply during July 2023.

ILLUSTRATION 2
If a return has been filed, how can it be revised if some changes are required to be made?

Ans.

In GST since the returns are built from details of individual transactions, there is no requirement for
having a revised return. Any need to revise a return may arise due to the need to change a set of invoices
or debit/credit notes. Instead of revising the return already submitted, the system allows changing the
details of those transactions (invoices or debit/credit notes) that are required to be amended. They can
be amended in any of the future GSTR-1 in the tables specifically provided for the purposes of amending
previously declared details.

As per section 39(9), omission or incorrect particulars discovered in the return filed 4/s39 can be
rectified in the return to be filed for the month during which such omission or incorrect particulars are
noticed. Any tax payable as a result of such error or omission will be required to be paid along with
interest. The rectification of errors/omissions is carried out by entering appropriate particulars in
"Amendment Tables" contained in GSTR-1. However, no such rectification of any omission or incorrect
particulars is allowed after 30th November of the succeeding financial year or the actual date of
furnishing of relevant annual return, whichever is earlier.
SIR
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RETURNS UNDER GST 15

ILLUSTRATION 3
M/s Cavenon Enterprises, a registered supplier of designer wedding dresses under regular scheme, has
aggregate annual turnover of ₹ 30 lakhs in the preceding financial year. It is of the view that in the
current financial year, it is permitted to file its statement of outward supplies (GSTR-1) on a quarterly
basis while its accountant advises it to file the same on a monthly basis. You are required to advise M/s
Cavenon Enterprises on the same.

Ans.

Section 37 stipulates that GSTR-1 is required to be filed on monthly basis by 10th day of the immediately
succeeding month (practically, extended to Ith day of the immediately succeeding month). However,
presently, as a measure of easing the compliance requirement for small taxpayers, the details of
outward supplies of goods or services or both to a registered person can be furnished, for the first and
second months of a quarter, up to a cumulative value of ₹ 50 L in each of the months, using invoice
furnishing facility (IFF) electronically on the common portal, from the 1st day of the month succeeding
such month till the 13th day of the said month. The taxpayers opting for furnishing details of outward
supply on quarterly basis can file GSTR-1 on quarterly basis. The option to file return on quarterly basis
is available for taxpayers having aggregate turnover up to ₹ 5 crores in preceding financial year.

In view of the same, M/S Cavenon Enterprises can file its GSTR-I on quarterly basis if it has opted to
furnish the outward supply related details on quarterly basis and filing IFF on monthly basis as its
aggregate turnover does not exceed ₹ 5 crore in the preceding financial year.

ILLUSTRATION 4
Mr Kohli is a registered supplier in the State of Gujarat. He is filing GSTR-1 every month. During the month
of February, he went out of India and thus, could not do any business transaction during that month. He
believes that as there is no transaction, there is no need to file GSTR-1 for the month of February. Is he
correct? Explain.

Ans.

No, Mr Kohli is not correct. GSTR-I needs to be filed even if there is no business activity in the tax period.
Therefore, in the given case, even though Mr Kohli was out of India and thus, could not do any business
transaction during the month of February, he is still required to file GSTR-1 for that month.
SIR
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RETURNS UNDER GST 15

ILLUSTRATION 5
Mr Kalpesh is a registered dealer in Kerala paying tax under composition levy from 1th April. However,
he opts to pay tax under regular scheme from 1st December. Is he liable to file GSTR-4 for the month of
November? Discuss.

Ans.

Where a taxpayer opts to withdraw from the composition scheme, he has to file GSTR-4 for the period
prior to his opting for payment of tax under regular scheme. Therefore, in the given case, Mr Kalpesh is
liable to file GSTR-4 for the month of November since he was paying tax under composition scheme
during the month of November.

ILLUSTRATION 6
Mrs Zarina, a registered dealer in Rajasthan, did not file GSTR-3B for the month of June but she wants
to file GSTR-3B for the month of July. Is it possible? Answer with reference to Section 39 of the CGST
Act.

Ans.

As per Section 39, a registered person is not allowed to furnish a return for a tax period if the return for
any of the previous tax periods has not been furnished by him. Therefore, in the given case, Mrs zarina
cannot file GSTR-3B for July if she has not filed GSTR-3B for the preceding month, ie, June.

ILLUSTRATION 7
Mr X has not made any outward supply during the month of September. However, Mr X has procured
certain input services during the month. Mr X is of the opinion that he can file Nil GSTR-3B for the month
of September through SMS. Whether the understanding of Mr X is correct? Explain.

Ans.

Nil GSTR-3B means that the return has nil or no entry in all its Tables. Since in the present case Mr XX
has received certain input services, he cannot file Nil GSTR-3B through SMS as the said input services
will need to be disclosed in the Table for Eligible ITC in GSTR-3B.
SIR
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RETURNS UNDER GST 15

ILLUSTRATION 8
Mr A is a Chartered Accountant in practice and is registered under GST. On a query regarding return filing
process by a potential client, Mr A has represented him as a GST practitioner. Mr A is of the view that
since he is a qualified Chartered Accountant with a GST registration in the name of his proprietorship
firm, he also qualifies as GST practitioner. Is the understanding of Mr A correct? Discuss.

Ans.

The understanding of Mr A is not correct. A chartered Accountant can become a GST practitioner (GSTP).
However, holding a certificate of practice as a Chartered Accountant and having GST registration does
not imply that such Chartered Accountant is a GST practitioner as well. For becoming a GSTP, even a
Chartered Accountant in practice has to follow the enrolment process of GSTP as provided under the
GST law and only upon approval of such enrolment can a chartered Accountant represent himself as a
GSTP.

ILLUSTRATION 9
Quicktax, a GST return filing service provider, has asked its clients to provide the scanned copies of the
tax invoices issued to B2B customers for uploading on the GST portal and filing the return. Whether the
process followed by Quicktax is correct?

Ans.

No, the process followed by Quicktax is not correct. The registered persons supplying goods or services
to B2B customers are required to upload the invoice wise details of supplies made during the tax period.
However, there is no requirement to upload the scanned copies of the invoices issued to the customers
on the GST portal at the time of filing returns.

Only information required as per GST returns is to be captured in the return filing utility and the same is
to be uploaded on the GST portal and not the scanned copies of the actual invoices.

ILLUSTRATION 10
X Ltd is winding up its business in Rajasthan. The Tax Consultant of X Ltd has suggested that X Ltd will
have to file either the annual return or the final return at the time of voluntary cancellation of registration
in the State of Rajasthan. Do you agree with the stand taken by Tax Consultant of X Ltd? Offer your
comments.
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RETURNS UNDER GST 15

Ans.

No, the stand taken by Tax Consultant of X Ltd is not correct. Annual return is required to be filed by
every registered person paying tax as a normal taxpayer. Final return is filed by the registered persons
who have applied for cancellation of registration within three months of the date of cancellation or the
date of cancellation order, whichever is later.

In the given case, XLtd, a registered person, is winding up its business and has thus, applied for
cancellation of registration. Therefore, it is required to file both annual return and final return.

ILLUSTRATION 11
Mr Sameer a registered person under GST, is unable to file GSTR-1, reason being showed that tax payable
under GSTR-I which has been filed in respect of last tax period exceeds the tax payable under GSTR-3B
which has been filed for the corresponding tax period. Explain the procedure to be followed by the
department and Mr Sameer for the same as per the provisions of Rule 88C of the CGST Rules 2017.

Answer

Refer the relevant legal portion given in the book

SIR
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GST Master Questions 16

CHAPTER - 16 GST Master Questions

ILLUSTRATION 1
Evershine Pvt Ltd, a GST registered supplier located in Jaipur, Rajasthan is engaged in taxable supply of
packaging goods and consultancy services. It provides following details of various activities undertaken
during the month of September 2023:
i. Details of Outward Supplies:
1. Supply of goods of ₹ 18,00,000 to Vaidehi Enterprises, a registered person of Udaipur, Rajasthan.
Further, received ₹ 50,000 from Vaidehi Enterprises towards freight charges (as agreed to deliver
the goods at Vaidehi Enterprises' premises) which was not included in above value of supply.

2. Supply of goods worth ₹ 35,00,000 to Calc. Exim, a registered person of Prayagraj, Uttar Pradesh.
Further, the amount of ₹60,000 charged separately (not included above) from Calc. Exim on
account of municipal taxes levied in relation to such outward supply.

3. Supply of services to Sunshine Ltd, a registered person in Jodhpur, Rajasthan before discount
worth ₹ 6,00,000. Further, discount of ₹ 30,000 which has been given at the time of supply of
service and duly recorded in the invoice.

4. It delivered the goods worth ₹ 2,00,000 to Jeevan Solutions, a registered person located at
Bikaner, Rajasthan on the direction of Raghu Enterprise, a registered person of Mumbai,
Maharashtra and tax invoice was issued by Evershine Pvt Ltd to Raghu Enterprise of Mumbai,
Maharashtra.

ii. Details of inward Supplies:

1. Purchased raw material goods worth ₹ 20,00,000 from PQR Ltd, a GST registered dealer, located
at Kanpur, Uttar Pradesh. Goods worth ₹ 1,00,000 out of total purchases were not received during
the month.

2. Purchased machinery for manufacturing process worth ₹ 2,00,000 from MPQ Pvt Ltd, a GST
registered dealer, located at Bengaluru, Karnataka. Company has claimed depreciation under
Income Tax Act 1961 on full value of the machine, including the GST component.
SIR
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GST Master Questions 16

3. Purchased truck worth ₹ 15,00,000 from GST registered dealer, located at Ajmer, Rajasthan for
transportation of its goods. GST rate on truck is CGST 14%, SGST 14%, IGST 28%.

4. Purchased car (having seating capacity of 7 persons) costing ₹ 10,00,000 excluding GST from
Mihir Autamobiles Pvt Ltd, a GST registered dealer, located at Ajmer, Rajasthan for use of its
director for official purpose. GST rate on car is CGST 14%, SGST 14%, IGST 28%.

5. Purchased goods worth ₹ 5,00,000 from DEF Buildwell Pvt Ltd, a registered person of Jaipur,
Rajasthan for construction of an additional floor of factory building, of Evershine Pvt Ltd.

Opening balance of ITC as on the beginning of September 2023: CGST ₹ 20,000, 5GST ₹ 50,000 and IGST
₹ 75,000.

Rate of GST applicable on both inward and outward supply of goods & services: CGST 9%, SGST 9% and
IGST 18%, except where otherwise provided.

Notes:

i. All the figures mentioned above are exclusive of taxes.

ii. Subject to the information given above, conditions necessary for claiming ITC were complied
with.
iii. All inward supplies are used for taxable goods only.
iv. Brief and suitable notes should form part of your answer.

Calculate the amount of net minimum GST payable in cash by Evershine Pvt Ltd for the manth of
September, 2023.

Answer

Computation of Minimum Net GST Payable In Cash By Evershine Put Ltd For The Month Of September
2023:

Particulars value of CGST @ SGST @ IGST @

supply (₹) 9% (₹) 9% (₹) 18% (₹)

Outward intra-state supply of goods to Vaidehi 18,50,000 1,66,500 1,66,500 Nil

Enterprises
{The transaction would qualify as intra-state
supply because goods are being supplied in the
same state. Since arranging freight is the liability
of supplier, it is a composite supply and thus,
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GST Master Questions 16

freight charges are added to the value of

principal supply?

Outward inter-state supply of goods to Calc Exim 35,60,000 Nil Nil 6,40,800
{The transaction would qualify as inter-state
supply because goods are being supplied by the
supplier outside his own state. Further, municipal
tax charged separately is includible in value
since it is a tax levied under a law other than GST
law}

Outward intra-state supply to Sunshine Ltd 5,70,000 51,300 51,300 Nil

{The transaction would qualify as intra-state
supply because services are being supplied to a
person located in the same state. Discount given
at the time of supply is deductible from the value
since it is being duly recorded in the invoice}

Outward inter-state supply to Raghu Enterprise 2,00,000 Nil Nil 36,000

{Place of supply in case of bill to ship model is
principal place of business of the billing party at
whose instructions the goods are being
delivered by the supplier to recipient, In the
present case, the place of supply shall be
Mumbai, Maharashtra and thus, the transaction
would qualify as an inter-state supply}

Total Output Tax 2,17,800 2,17,800 6,76,800

Less: ITC available
* IGST credit to be utilized first towards payment of IGST Nil Nil (4,17,000)

* CGST credit utilized for payment of CGST and IGST in that (2,17,800) Nil (12,200)
order
* SGST credit utilized for payment of SGST and IGST in that Nil (2,17,800) (42,200)
order
Minimum Net GST Payable In Cash Nil Nil 2,05,400
SIR
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Working Note - Computation of ITC Available:

Particulars Value (₹) CGST (₹) SGST (₹) IGST (₹)

Opening Balance 20,000 50,000 75,000
Inter-state purchase of raw material 19,00,000 Nil Nil 3,42,000
{ITC is not available on goods worth ₹ {19L×18%}
1,00,000 since not received during the
month}
Purchase of machinery 2,00,000 Nil Nil Nil
{ITC is not available since depreciation
has been claimed on the GST
component}

intra-state purchase of truck 15,00,000 2,10,000 2,10,000 Nil

{ITC on motor vehicles used for {15L × 14%} {15L × 14%}
transportation of goods is available}

Purchase of car 10,00,000 Nil Nil Nil

{ITC on motor vehicles for
transportation of persons with seating
capacity up to 13 persons (including
driver) is blocked, except when used
for specified purposes?
Purchase of goods for construction of 5,00,000 Nil Nil Nil
an additional floor {ITC on goods used
in construction of immovable property
(other than plant or machinery) on
one's own account is blocked if
capitalized in the books?
Total ITC 2,30,000 2,60,000 4,17,000

ILLUSTRATION 2
Miss Nitya (proprietor of M/s Honest Enterprises), a registered supplier of taxable goods and services
in the state of West Bengal, pays GST under regular scheme. It is not eligible for any threshold
exemption. It provided the following information for the month of December 2023:
SIR
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GST Master Questions 16

S.No. Particulars Amount (₹)

Outward Supply:
(i) Intra-state supply of goods to M/s Natural & Sons 7,00,000

(ii) Intra-state transfer of goods to its branch office in the state of West 1,00,000
Bengal. Both places are under the same GSTIN.
(iii) Provided inter-state supply of sponsorship service to XYZ Ltd of 80,000
Chennai
(iv) Advance received for future supply of management consultancy service 40,000
to Mr Sharad (Intra-state supply)
Inward Supply (Intra-State):
(i) Purchase of taxable goods from registered suppliers 8,00,000

(ii) Availed works contract service for repair of office building. Amount of 30,000
repair was debited in the P&L A/c
(iii) Availed legal service from an advocate to represent the matter in the 50,000
Court relating to collection of disputed proceed from customers.

Notes:

i. Rate of CGST, SGST and IGST on all supplies are as below:

Particulars CGST SGST IGST

Goods 2.5% 2.5% 5%

Supply of services 9% 9% 18%

ii. Both inward and outward supplies given above are exclusive of taxes.
iii. All the conditions necessary for availing the ITC have been fulfilled.
iv. Working note should form part of the answer.

Compute the net minimum GST payable in cash by M/s Honest Enterprises for the month of December
2023.
SIR
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GST Master Questions 16

Answer

Computation of Net GST Payable in Cash By M/s Honest Enterprises For The Month of December 2023:
Particulars CGST (₹) SGST (₹) IGST (₹)

Outward intra-state supply of goods to M/s 17,500 17,500 -

Natural & Sons [7L × 2.5%] [7L × 2.5%]

Outward intra-state transfer of goods to Not A Supply Not A Supply -

another branch registered under the same
GSTIN
{Transfer of goods between two locations
registered under the same GSTIN doesn't
qualify as supply, since for a transaction to
qualify as supply, the transaction should take
place between two separately registered
persons under GST law}
outward inter-state supply of sponsorship - - Recipient
services to XYZ Ltd of Chennai {Sponsorship To Pay Tax
services are covered under RCM where the said
Under RCM
services are provided to a partnership firm or a
body corporate. In the present case, since
sponsorship services are being provided to XYZ
Ltd (a company), tax on such services needs to
be paid by XYZ Ltd under RCM}

Advance received for future supply of 3,600 3,600 -

[40,000 × 9%] [40,000 × 9%]
management consultancy service to Mr Sharad
(intra-state supply)
{in case of supply of services, advances are
taxable as and when they are received.
Therefore, on the advance amount of ₹ 40,000
received in the month of December 2023, tax
needs to be paid on the said amount in
December 2023 itself even though the services
will be provided in future?

Total Output Tax 21,100 21,100 -

SIR
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Less: Input Tax Credit {CGST credit set-off (21,100) (21,100) -

against CGST liability and SGST credit set-off
against SGST liability}
Net GST Payable In Cash (FCM Liability) Nil Nil Nil

RCM Liability on Legal Services To Be 4,500 4,500 Nil

Discharged in Cash

Working Note - Computation of ITC Available:

Particulars CGST (₹) SGST (₹)

Intra-state purchase of taxable goods from registered 20,000 20,000

[8 L × 2.5%] [8L × 2.5%]
suppliers {ITC is available as the goods are used in the course
of furtherance of business}

Intra-state procurement of works contract service for repair 2,700 2,700

of office building. Amount of repair was debited in the P&L A/C [30,000 × 9%] [30,000 × 9%]
{ITC on works contract services in connection with
construction of immovable property is blocked. The word
'construction' includes repairs where the repairs are
capitalized. In the present case, repairs qualify as 'revenue
repairs' and not as 'capital repairs' since the amount of repairs
is debited to P&L A/C. Therefore, ITC shall be available in the
present case as revenue repairs of immovable property are
outside the scope of 'blocked credits' as explained u/s17 (5)
of CGST Act}
Intra-state procurement of legal services from an advocate to 4,500 4,500
represent a business related matter {Tax is payable under [50,000 × 9%] [50,000 × 9%]
RCM where legal services are obtained by a registered
business entity from any advocate. Therefore, in the present
case, tax on such services needs to be paid by M/s Honest
Enterprises under RCM. Further, ITC is also available on such
legal services as these are used in the course or furtherance
of business?

Total ITC Available 27,200 27,200

Less: ITC Utilized For Discharging FCM Liability (21,100) (21,100)
SIR
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ITC To Be C/f To January 2024 6,100 6,100

ILLUSTRATION 3
Jino Enterprises, a partnership firm is a regular taxable person registered in Guwahati, Assam and is
engaged in supply of airconditioners and its accessories as well as air-conditioned repairing services.
Details of their various activities for the month of October 2023 are as follows:

(i) Intra-state supply of air-conditioner to customers in Assam; freight is separately charged in invoices
for delivery of goods at customer's doorstep.

Value of goods ₹ 4,00,000

Value of freight charges charged separately in above invoices ₹ 1,00,000

(ii) Intra-state supply of repairing services wherein apart from charging service charges, cost of
parts/spares provided to customers is also charged and consideration for the same is separately
mentioned in the invoices.

Value of services component of invoices ₹3,00,000

Value of parts/spares component in invoices ₹50,000

(iii) In order to enhance their sales and to clear the stock of old models of air-conditioner, Jino
Enterprises made combo offers to customers wherein, if a customer purchases an air-conditioner
along with a stabilizer, the same is offered at a combo price of ₹ 20,000 as against the original
price of ₹ 30,000 (air-conditioner ₹ 22,000 & stabilizer ₹ 8,000) if these are purchased separately.
During October 2023, Jino Enterprises had made inter-state supply of 10 numbers of such combo
products.

(iv) Purchased business class air tickets for intra state travel from Guwahati Airport, Assam to
Dibrugarh Airport, Assam for its executive employees relating to business of the concern. Basic
Air fare was ₹ 40,000 and airlines charges GST @ 2.5% CGST, SGST each on basic freight, in case
the same is applicable.

Additional Information:

a) All the figures mentioned above are exclusive of taxes.

SIR
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b) In respect of few of the invoices relating to FY 2022-23, involving ITC of CGST ₹ 20,000, SGST of ₹
20,000 & IGST ₹ 80,000 was not taken earlier. Jino Enterprises now want to avail credit in respect
of such invoices in the current month.

c) The rates of GST applicable on various supplies are as follows:

Nature of Supply CGST SGST IGST

Air-Conditioner, Parts and Accessories (Except Stabilizers) 6% 6% 12%
Services 9% 9% 18%
Stabilizers 9% 9% 18%
Freight 6% 6% 12%

Calculate the amount of minimum CGST, SGST & IGST tax payable in cash by Jino Enterprises for the
month of October 2023. Note: Working Notes (legal provisions) should form part of your answer.

Answer
Computation of Net GST Payable In Cash By Jino Enterprises For The Month of October 2023:

Particulars CGST (₹) SGST (₹) IGST (₹)

Outward intra-state supply of ACs to customers 30,000 30,000 -

[5 L × 6%] [5L × 6%]
in Assam
{Where the supplier agrees to deliver the goods
at the buyer's premises and arranges for
transport, the contract of supply becomes a
composite supply; the principal supply being
the supply of goods. Therefore, outward freight
becomes part of the value of the composite
supply and GST is payable thereon at the same
rate as applicable for the relevant goods.}

Outward intra-state supply of repairing services 30,000 30,000 -

[50,000 × 6% [50,000 × 6%
{Supply of repairing services wherein cost of
(+)3L × 9%] (+) 3L × 9%]
parts/spares and service charges are
separately mentioned in the invoices, can
neither be regarded as composite supplies nor
as mixed supplies, ie, all supplies carry
SIR
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independent significance. The value of

parts/spares shall be taxed @ 6% CGST and 6%
SGST whereas the value of service charges shall
be taxed @ 9% CGST and 9% SGST.}

outward inter-state supply of ACs with - - 36,000

[2L × 18%]
stabilizers (20,000 × 10)
[supply of ACs with stabilizers is a mixed supply.
Being a mixed supply, the supply shall be
treated as a supply of that particular supply
which attracts the highest rate of tax and taxed
accordingly. Thus, it will be taxed @ 9% CGST
and 9% SGST.J
Total Output Tax 60,000 60,000 36,000
Less: Input Tax Credit [Refer Working Note
below]
> IGST credit first utilized towards payment of (39,000) IGST (5,000) IGST (36,000)
IGST. Remaining amount utilized towards CGST IGST
and SGST in a manner which is most beneficial
to the taxpayer

> CGST credit set off against CGST liability and (21,000) CGST (21,000) SGST -
SGST credit set off against SGST liability as
CGST credit cannot be utilized towards payment
of SGST and vice versa.
Net GST Payable in Cash Nil 34,000 Nil

Working Note - Computation of ITC Available:

Particulars CGST (₹) SGST (₹) IGST (₹)

Business class air tickets for intra-state travel from 1,000 1,000 -
[40,000 × [40,000 ×
Guwahati Airport, Assam to Dibrugarh Airport, Assam
2.5%] 2.5%]
{Exemption would have been available if the ticket was
booked for economy class; no exemption is available if
the ticket is booked for business class. ITC is available
SIR
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as the services are used in the course of furtherance

of business?

ITC on invoices pertaining to FY 2022-23 20,000 20,000 80,000

{ITC on invoices pertaining to FY 2022-23 can be
availed till 30th Nov 2023 or the date of filing of annual
return for FY 2022-23, whichever is earlier. Assuming
that the annual return for FY 2022-23 hasn't been filed
till October 2023, ITC on invoices pertaining to FY
2022-23 can be availed in the month of October 2023}

Total ITC Available 21,000 21,000 80,000

ILLUSTRATION 4
Ajay Limited, a registered dealer in Patna (Bihar), is engaged in various types of supplies. The company
provided the following details for the month of January 2023:

S.No, Particulars Amount (₹)

(i) Outward supply of goods made during the month to various non-related As given in
persons: particulars
Particulars Market value (₹) Transaction Value (₹) column

(a) in the State of Bihar 3,00,000 4,00,000

(Intra-State)
(b) to other States (inter- 2,00,000 1,00,000
State)

(ii) Services provided to the State Government of Karnataka for conducting a 5,00,000
computer training programme for its employees. Total expenditure incurred
for the said programme was ₹ 90,000, of which ₹ 63,000 was borne by the
State Govt (inter-State transaction)
(iii) Stock transfer without consideration to its branch at Gaya (Bihar). Branch Nil
has separate GSTN for convenience of accounting and billing. Value as per
Section 15 - ₹ 20,000 (intra-state)
(iv) Intra-State inward supply of various services for use in the course or 6,50,000
furtherance of business (30 invoices)
SIR
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Additional information:

a) All the amounts given above are exclusive of taxes.

b) During the course of arranging and filing documents, the accountant of Ajay Limited observed that
an invoice for ₹ 30,000 (excluding tax) dated 02.12.2022 was omitted to be recorded in the books
of accounts and no payment was made against the same till the end of January 2023. This invoice
was issued by Mr Mukesh of Patna, from whom Ajay Limited had taken cars on rental basis. Invoice
included cost of fuel also. (intra-State transaction).

c) Rate of GST applicable on various supplies are as follows:

Nature of supply CGST SGST IGST

Car rental service 2.5% 2.5% 5%

All other inward and outward supplies 9% 9% 18%

d) No opening balance of input tax credit exists in the beginning of the month.
e) Out of the 30 invoices of inward supply received, 6 invoices with taxable value amounting to ₹
1,50,000 were e-invoices in which invoice Reference Number (IRN) was not mentioned. However, all
the invoices were duly reflected in GSTR-2B for the month of January 2023, since the suppliers had
filed their GSTR-1.

f) Subject to the information given above, conditions necessary for claiming ITC were complied with.

You are required to calculate the amount of net GST liability payable in cash by Ajay Limited for the
month of January 2023. Brief notes for treatment given for each item should form part of your answer.

Answer

Computation of Net GST Payable In Cash By Ajay Ltd For The Month of January 2023:
Particulars CGST (₹) SGST (₹) IGST (₹)

Outward intra-State supply of goods made in the 36,000 36,000

State of Bihar [4,00,000×9%] [4,00,000×9%]
{Value of supply is the transaction value of the
goods}

Outward supply of goods made to other States - - 18,000

{Value of supply is the transaction value of the [1,00,000×18%]
goods}
SIR
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Inter-State services provided to State - - 90,000

Government of Karnataka for conducting a [5,00,000 × 18%]
computer training programme
{Not exempt since the State Government has
borne less than 75% of total expenditure of the
training programme?

Intra-State stock transfer to Gaya Branch with 1,800 1,800 -

[20,000 × 9%] [20,000 × 9%]
separate registration
{Supply of goods between distinct persons in
course or furtherance of business qualifies as
supply even if made without consideration?

Total Output Tax 37,800 37,800 1,08,000

Less: Input Tax Credit [Refer Working Note (37,800) (37,800) (7,200)(CGST)
below] [CGST credit should be utilized for (CGST) (SGST) (7,200)(SGST)
payment of CGST and IGST in that order.
Similarly, SGST credit should be utilized for
payment of SGST and IGST in that order. ITC of
CGST cannot be utilized for payment of SGST
and vice versa.]

Net GST Payable in Cash Nil Nil 93,600

Working Note - Computation of ITC Available:

Particulars CGST (₹) SGST (₹) IGST (₹)
Intra-State inward supply of services [₹ 6,50,000 - 45,000 45,000 -
₹1,50,000] [SL × 9%] [SL × 9%]
{ITC cannot be claimed on the e-invoices without IRN
since an e-invoice without IRN is not treated as valid
document for claiming ITC}

Cars taken on rental basis from Mr Mukesh - - -

{Tax on renting of motor car services wherein cost of
fuel is included in consideration provided by a non-
body corporate to a body corporate and invoice is
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issued charging CGST/SGST @ 2.5% is payable under

reverse charge.
Time of supply of such services is 1st February being
earlier of date of payment, or date immediately
following 60 days since issue of invoice by the
supplier. Since the time of supply of renting of motor
car services in the given case does not fall in January,
tax liability on the same does not arise in said month.
Further, ITC on renting of motor car services received
is blocked on the assumption that Ajay Ltd is not
engaged in the same line of business, ie business of
renting of cars?

total ITC Available 45,000 45,000 -

ILLUSTRATION 5
Zeon Ltd, a GST registered supplier located in Ranchi, Jharkhand, is engaged in the manufacturing of
washing machines & mixer grinders. It provides you the details of various activities undertaken during
the month of September 2023 as follows:

S.No. Particulars Amount (₹)

(i) Outward supplies made during the month: 29,00,000

(a) Within Jharkhand - ₹ 24,00,000
(b) Outside Jharkhand - ₹ 5,00,000
(ii) Purchase of raw materials from registered dealers within Jharkhand 7,00,000
which includes materials worth ₹ 2,00,000 purchased from Mr Krishna, a
registered person who is paying tax under composition scheme.
(iii) Bus purchased from a registered dealer in Tatanagar, Jharkhand. Bus 12,00,000
used to ferry its 25 workers to and from factory.

Assume the rates of GST applicable on various supplies as follows:

Nature of supply CGST SGST GST

Composition supplies 0.5% 0.5% -
Bus 14% 14% 28%
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Raw material 6% 6% 12%

Washing machines & mixer grinders 9% 9% 18%

Opening balances of input tax credit as on 01.09.2023 were as follows:

CGST (₹) SGST (₹) IGST (₹)

20,000 5,000 95,000

Notes:

(i) All the figures mentioned above are exclusive of taxes.

(ii) Both inward & outward supplies within the State of Jharkhand are to be considered intra-State
supplies and outside the State of Jharkhand are inter-State supplies.

(iii) Subject to information given above, all the other conditions necessary for availing ITC have been
fulfilled.

Calculate the amount of net minimum GST payable in cash by zeon Ltd for the month of September
2023. Brief and suitable notes should form part of your answer.

Answer

Computation of Minimum Net GST Payable In Cash By Zeon Ltd (September 2023):

Particulars CGST (₹) SGST (₹) IGST (₹)

Outward supplies made within 2,16,000 2,16,000 -

(24,00,000 × 9%) (24,00,000 × 9%)
Jharkhand

Outward supplies made outside - - 90,000

(5,00,000 × 18%)
Jharkhand

Total Output Tax 2,16,000 2,16,000 90,000

Less: Input Tax Credit [Refer Working - (5,000) IGST (90,000) IGST
Note below]
* IGST credit be first utilized for
payment of IGST liability. Remaining
IGST credit has been utilized for
payment of SGST liability since the
SIR
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SGST liability is to be kept at

minimum.

*After exhausting IGST credit, CGST (2,16,000) CGST (2,03,000) SGST -

and SGST credit to be utilized. CGST
credit to be utilized for payment of
CGST and SGST credit to be utilized
for the payment of SGST. ITC of CGST
cannot be utilized for payment of
SGST and vice versa.

Minimum Net GST payable in Cash Nil 8,000 Nil

ITC TO Be Carried Forward Next Month 2,000 Nil Nil

Working Note - Computation of ITC Available:

Particulars CGST (₹) SGST (₹) IGST (₹)

Opening balance 20,000 5,000 95,000

Purchase of raw materials from registered dealers 30,000 30,000 -
(5L × 6%) (5L × 6%)
within Jharkhand [₹7L − ₹2L] {ITC on purchases of
goods worth ₹ 2,00,000 on which tax has been
paid under composition scheme is blocked. ITC on
remaining purchases worth ₹ 5,00,000 is available,
being supply of goods used/intended to be used
in the course/furtherance of business}

Bus purchased from dealer in Jharkhand used to 1,68,000 1,68,000 -

ferry 25 workers to and from factory {ITC on motor (12L × 14%) (12L × 14%)
vehicles for transportation of persons with
seating capacity > 13 persons (including the
driver) used for any purpose is allowed}

Total ITC Available 2,18,000 2,03,000 95,000

ILLUSTRATION 6
X Electronics is a registered manufacturer of electrical appliances. It made contract with dealers, that
purchase of ACs of capacity 1.5 Ton in the month of October 2023 of quantity of more than 50 units will
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entitle them for 10% discount. inter-state supply made during the month of October 2023 is ₹ 50,00,000.
Details of intra-state supply:

Particulars Amount (₹)

Supply of Microwave Oven 15,00,000

Supply of Refrigerators with Stabilizers being a mixed supply, rate of GST on 40,00,000
Refrigerator is 28% (14% CGST & 14% SGST), rate of GST on Stabilizer is 18% ( 9%
CGST & 9% SGST)

Supply of ACs of capacity 1.5 Ton @ ₹ 50,000 per Air Conditioner. X Electronics 50,00,000
made supply of ACs to only one dealer named Mr L.

Intra-state inward supplies are:

Particulars Amount (₹)

Raw material 20,00,000

Paid gym membership for employees {Not obligatory for X Electronics under 50,000
any law}
Truck purchased for transportation of goods 30,00,000

Opening Balance of ITC: CGST: ₹ 58,000; SGST: ₹ 70,000 ; IGST: ₹ 10,00,000

Note: Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively for both inward & outward supplies
except where specifically provided. Both inward and outward supplies are exclusive of taxes. All the
conditions for availing the ITC have been fulfilled.

Compute the net GST payable in cash by X Electronics for the month of October 2023.

Answer

Computation of Net GST payable in Cash By × Electronics (October 2023):

Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

I-intra-state supply:

Supply of microwave oven 15,00,000 1,35,000 1,35,000 -

Supply of refrigerators with 40,00,000 5,60,000 5,60,000 -

stabilizers {Being mixed supply,
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the supply shall be treated as a

supply of that particular supply
which attracts the highest rate of
tax and taxed accordingly. Thus,
it will be taxed @ 14% CGST and
14% SGST}

Supply of 100 ACs (₹ S0L/₹ 45,00,000 4,05,000 4,05,000 -

50,000) {Since 100 ACs have (₹50 L × 90%)
been supplied, discount @ 10%
will be available}
II - Inter-State supply: 50,00,000 - - 9,00,000
Total Output Tax Liability 11,00,000 11,00,000 9,00,000

Less: Input Tax Credit (Refer Working Note below)

> IGST credit first utilized towards payment of IGST. 1,00,000 - 9,00,000
Remaining amount can be utilized towards CGST and (IGST) (IGST)
SGST in any order and in any proportion.

> CGST credit set-off against CGST liability and SGST 5,08,000 5,20,000 -
credit set-off against SGST liability as CGST credit (CGST) (SGST)
cannot be utilized towards payment of SGST and vice
versa.

Net GST Liability Payable In Cash 4,92,000 5,80,000 Nil

Working Note - Computation of ITC Available with X Electronics:

Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹)

Opening balance of ITC 58,000 70,000 10,00,000

Raw material 20,00,000 1,80,000 1,80,000 -

Gym membership for employees {ITC on 50,000 Nil Nil -
membership of a health and fitness centre is
blocked if there is no statutory obligation for
the employer to provide the same}
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Truck purchased for transportation of goods 30,00,000 2,70,000 2,70,000 -

{ITC on motor vehicles used for
transportation of goods is not blocked}

Total ITC 5,08,000 5,20,000 10,00,000

Note: In the above answer, tax payable in cash has been computed by setting-off the IGST credit against
CGST liability. However, since IGST credit can be set-off against CGST and SGST liability in any order and
in any proportion, the same can be set-off against CGST and/or SGST liabilities in different other ways
as well. In all such cases, net CGST and net SGST payable in cash will differ though the total amount of
net GST payable (₹10,72,000) in cash will remain the same.

ILLUSTRATION 7
Star Ltd, a registered supplier in Karnataka has provided the following details for supply of one machine:

Particulars Amount (₹)

(1) List price of machine supplied [exclusive of items given below from (2) to 80,000
(4)]

(2) Tax levied by Local Authority on sale of such machine 6,000

(3) Discount of 2% on the list price of machine was provided (recorded in the
invoice of machine)
(4) Packing expenses for safe transportation charged separately in the 4,000
invoice

Star. Ltd received ₹ 5,000 as subsidy from a NGO on sale of each such machine. The price of ₹ 80,000
of the machine is after considering such subsidy. During the month of February 2023, Star Ltd supplied
three machines to Intra-State customers and one machine to inter-state customer.

Star Ltd purchased inputs (intra-state) for ₹ 1,20,000 exclusive of GST for supplying the above four
machines during the month. Balance of ITC at the beginning of February 2023 was:

CGST SGST IGST

₹ 18,000 ₹ 4,000 ₹ 26,000

SIR
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Notes:

i. Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively for both inward and outward
supplies.

ii. All the amounts given above are exclusive of GST.

iii. All the conditions necessary for availing the ITC have been fulfilled.

Compute the minimum net GST payable in cash by Star Ltd for the month of February 2023.

Answer
Computation of value of Taxable supply:

Particulars Amount (₹)

List price of the machine 80,000

Add: Tax levied by Local Authority on the sale of machine {Tax other than GST, if 6,000
charged separately, are includible in the value in terms of Section 15 of the CGST Act}

Add: Packing expenses for safe transportation {includible in the value as per Section 4,000
15 of the CGST Act}

Add: Subsidy received from a NGO on sale of each machine {Subsidy received from a 5,000
non-government body and which is directly linked to the price, the same is included
in the value in terms of Section 15 of CGST Act}
Total 95,000

Less: Discount @2% on ₹ 80,000 {Since discount is known at the time of supply and (1,600)
recorded in invoice, it is deductible from the value in terms of Section 15 of the CGST
Act}
value of Taxable Supply 93,400

Computation of Minimum Net GST Payable In Cash By Star Ltd:

Particulars CGST (₹) SGST (₹) IGST (₹)

sale of machine 25,218 25,218 16,812

intra-State sales = ₹93,400 × 3 machines (2,80,200 × 9%) (2,80,200 × 9%) (93,400 × 18%)
= ₹2,80,200
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Inter-State sales = ₹93,400 × 1 machine =

₹93,400
Total Output Tax 25,218 25,218 16,812

Less: Set-off of IGST against IGST and - - (9,188) (16,812)

SGST {IGST credit first be utilized towards
payment of IGST, remaining amount can be
utilized towards CGST and SGST in any
order and in any proportion}

Less: Set-off of CGST against CGST and (25,218) (14,800) -

SGST against SGST {CGST credit cannot
be utilized towards payment of SGST and
vice versa}

Minimum Net GST Payable in Cash Nil 1,230 Nil

Working Note - Computation of Total ITC Available:

Particulars CGST (₹) SGST (₹) IGST (₹)

Opening balance of ITC 18,000 4,000 26,000
Add: Inputs purchased during the 10,800[1.2L×9%] 10,800[1.2L×9%]
month
Total ITC Available 28,800 14,800 26,000

ILLUSTRATION 8
Girish Trading Private Limited, a body corporate registered in the State of West Bengal, pays GST under
the regular scheme. It is not eligible for any threshold exemption. The company has provided the
following information regarding its outward taxable supplies for the month of May 2023:

• Intra-state supply of goods - ₹ 50,00,000

• Inter-state supply of goods - ₹ 22,00,000

Following are the details of inward taxable supplies received during the month of May 2023:

• Intra-state purchase of goods from Registered Supplier - ₹ 6,10,000

• inter-state purchase of goods from Registered Supplier - ₹ 16,00,000
SIR
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Additional information:

• The Company has no brought forward ITC credit for the month of May 2023.
• Girish Trading Private Limited had additionally collected ₹ 1,000 as penalty for delay in payment by
one of his customers (Not included in value of outward supplies mentioned above).

• The Company has paid ₹ 12,000 (intra-state supply) as rent for hiring of a motor vehicle for the
business use by one of its directors for the month of March 2023 (Not included in value of inward
supplies mentioned above). Invoice for the same dated 7th April 2023 was received in the month of
April 2023.

• The Company had placed an order for receiving goods (intra-state supply) worth ₹ 1,10,000 latest by
30th May 2023. However, due to vehicle breakdown, the goods were delivered only on 15th June 2023.
Invoice was received on 31st May 2023 (Included in value of inward supplies mentioned above).

Notes:

• Applicable Rate of CGST, SGST and IGST is 9%, 9% and 18% respectively.
• Amount of inward and outward supplies stated above are exclusive of taxes.

Compute the net GST liability (CGST, SGST, IGST) of Girish Trading Private Limited for the month of May
2023.

Answer
Computation of Net GST Liability of Girish Trading Private Limited (May 2023):

Particulars CGST (₹) SGST (₹) IGST (₹)

Output Tax:

Intra-state supply of goods 4,50,000 4,50,000 -

(₹50L × 9%) (₹50L × 9%)
Inter-state supply of goods - - 3,96,000
(₹22L × 18%)
Penalty on delayed payment - - 153
{includible in value in terms of section 15 (₹ 1,000 × 18/118)
of the CGST Act; it has been assumed that
the amount of penalty collected is
inclusive of GST}
SIR
VG

16.22 By – CA VIVEK GABA SIR

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GST Master Questions 16

Total Output Tax (A) 4,50,000 4,50,000 3,96,153

Input Tax:
Intra-state purchase of goods ₹ SL 45,000 45,000 -
(6,10,000 − 1,10,000) {ITC on goods worth (₹5L × 9%) (₹5L × 9%)
₹ 1,10,000 is not available as such goods
are not received in the month of May}

Inter-state purchase of goods - - 2,88,000

(₹16 L × 18%)
Rent paid for hiring of a motor vehicle - - -
{ITC blocked in terms of section 17 of the
CGST Act, 2017}
Total ITC (B) 45,000 45,000 2,88,000

Net GST Liability {(A) − (B)} 4,05,000 4,05,000 1,08,153

ILLUSTRATION 9
KNK Ltd, a registered supplier of Mumbai is a manufacturer of heavy machines. Its outward supplies
(exclusive of GST) for the month of January 2023 are as follows:

S.No. Particulars Amount (₹)

(i) Inter-state taxable supply of goods 85,00,000

(ii) Intra-state taxable supply of goods 15,00,000

Applicable rate of CGST, SGST and IGST on outward supply are 9%, 9% and 18% respectively. Details of
GST paid on inward supplies during the month of January 2023 are as follows:

S.No. Particulars CGST Paid SGST Paid (₹)

(₹)
(i) Raw-Materials A (of which 70% of inputs procured were used 60,000 60,000
and 30% were in stock at the end of the January 2023)
(ii) Raw-Materials B (of which 90% material received in factory 50,000 50,000
and remaining material completely damaged due to a road
accident on the way to factory. There was no negligence on
the part of the KNK Ltd)
(iii) Construction of pipelines laid outside the factory premises 30,000 30,000
SIR
VG

16.23 By – CA VIVEK GABA SIR

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GST Master Questions 16

(iv) Insurance charges paid for trucks used for transportation of 55,000 55,000
goods

Additional Information:

i. There is no opening balance of any Input Tax Credit and all the conditions necessary for availing
ITC have been fulfilled.

ii. Details of GST paid on inward supplies are available in GSTR-2B except for item (i) ie, Raw Material
A, for which supplier has not filed its GSTR-1 for the month of January 2023, hence corresponding
input Tax Credit (ITC) is not reflecting in GSTR-2B of KNK Ltd in January 2023.

Compute the following:

(i) Amount of eligible Input Tax Credit (ITC) available for the month of January 2023.
(ii) Net minimum GST payable in Cash, for the month of January 2023 after using available Input Tax
Credit.

Working notes should form part of your answer.

Answer
Computation of Amount of Eligible ITC Available (January 2023):

S.No. Particulars CGST (₹) SGST (₹)

(i) Raw Materials A Nil Nil
{Corresponding invoices not uploaded by the supplier}

(ii) Raw Materials B (90%) 45,000 45,000

{ITC on goods destroyed is blocked u/s 17 of the CGST Act,
2017}
(iii) Construction of pipelines laid outside the factory premises Nil Nil
{ITC on works contract services availed for construction of
plant and machinery is allowed but pipelines laid outside the
factory premises are excluded from the definition of plant and
machinery and hence, ITC thereon is blocked}
(iv) Insurance charges paid for trucks used for transportation of 55,000 55,000
goods
SIR
VG

16.24 By – CA VIVEK GABA SIR

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GST Master Questions 16

{ITC on motor vehicles used for transportation of goods is

allowed. Further, ITC is also allowed on insurance services
relating to motor vehicles, ITC on which is allowed}
Total Eligible ITC 1,00,000 1,00,000

Computation of Minimum Net GST Payable In Cash (January 2023):

Particulars Value (₹) CGST @ 9% SGST @ 9% IGST @ 18%
(₹) (₹) (₹)

Inter-state outward supplies 85,00,000 - - 15,30,000

Intra-state outward supplies 15,00,000 1,35,000 1,35,000 -

Total Output Tax Payable 1,35,000 1,35,000 15,30,000

Less: Set-off of CGST and SGST credit against (1,00,000) (1,00,000) -

CGST and SGST liability respectively

Minimum Net GST Payable in Cash 35,000 35,000

SIR
VG

16.25 By – CA VIVEK GABA SIR

9643036663 (only WhatsApp)
“If You Think You Can, Then You Can Do Anything”
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