SUGGESTED SOLUTION

CA INTERMEDIATE
SUBJECT- INDIRECT TAX

Test Code – INU 2216

BRANCH - () (Date :)

Head Office : Shraddha, 3rd Floor, Near Chinai College, Andheri (E), Mumbai – 69.
Tel : (022) 26836666

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ANSWER : 1
No. Answer
1 (d) (i), (ii) and (iii)
2 (c) Either (i) or (ii)
3 (d) Within 30 days from the date of service of thecancellation order.
4 (c) IGST Rs. 3,600
5 (c) Mr. Z is liable to obtain registration as he makesthe inter-State supply of goods.
6 (b) Zero
7 (c) No, as services in the course of employment does not constitute supply and
therefore, aggregate turnover is less than Rs. 20 lakh.
(7  2 MARKS = 14)
ANSWER : 2(A)
This is a supply that is valued as per transaction value under section 15(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. Once waived, the interest is
not payable and is therefore, not to be added to the value.
(4 MARKS)

ANSWER : 2(B)

Computation of GST liability of Mr. Nikunj for the month of August

S.No. Particulars (Rs.) GST (Rs.)

(i) Intra-State supply of goods
CGST @ 9% on Rs. 6,00,000 54,000
SGST @ 9% on Rs. 6,00,000 54,000 1,08,000
(ii) Inter-State supply of goods
IGST @ 18% on Rs. 2,00,000 36,000
Computation of total ITC

Particulars CGST @ SGST @ IGST @

9% (Rs.) 9%(Rs.) 18% (Rs.)
Opening ITC 15,000 35,000 20,000
Add: ITC on Intra-State purchasesof 36,000 36,000
goods valuing Rs. 4,00,000
Add: ITC on Inter-State purchasesof 9,000
goods valuing Rs. 50,000
Total ITC 51,000 71,000 29,000
Computation of minimum GST payable in cash

Particulars CGST @ SGST @ IGST @

9% (Rs.) 9% (Rs.) 18% (Rs.)

GST payable 54,000 54,000 36,000

Less: ITC credit of IGST to be first utilised (29,000)

towards payment of IGST

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 ITC of CGST to be utilised for payment of (51,000)
CGST and IGST in that order.

ITC of SGST to be utilised for payment of (54,000)

SGST and IGST in that order.

ITC of SGST to be utilised for payment of (7,000)-

IGST, only after ITC of CGST has been SGST
utilisedfully.

Minimum GST payable incash 3,000 Nil Nil

(8 MARKS)

ANSWER : 3(A)

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. Hence, the value of supply will be Rs. 2,00,000.

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

(6 MARKS)

ANSWER : 3(B)

As per section 29 of the CGST Act, 2017, the proper officer may cancel the registration of a
person from such date, including any retrospective date, as he may deem fit, where,-
(a) a registered person has contravened such provisions of the Act or the rules made
thereunder as may be prescribed; or
(b) a person paying tax under composition scheme has not furnished returns for three
consecutive tax periods; or
(c) any registered person, other than a person specified in clause (b), has not furnished
returns for a continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not
commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement, or suppression of
facts:
Thus, in view of the above-mentioned provisions, suo-motu cancellation of registration of Mr. X by
proper officer is valid in law since Mr. X, a voluntarily registered person, has not commenced his
business within 6 months from the date of registration.
Further, where the registration of a person is cancelled suo-motu by the proper officer, such
registered person may apply for revocation of the cancellation to such proper officer, within 30
days from the date of service of the order of cancellation of registration.
However, the said period of 30 days may, on sufficient cause being shown and for reasons to be
recorded in writing, be extended for a period not exceeding 30 days by Additional/Joint
Commissioner and by further period not exceeding 30 days by Commissioner.

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Thus, considering the above provisions, the contention of Department is not valid in law as
extension can be sought in the prescribed time limit for revocation of cancellation of registration.
The contention raised by Mr. X is valid in law as extension in time limit is allowed on sufficient
cause being shown and for reasons to be recorded in writing.

(6 MARKS)

ANSWER : 4(A)

Computation of GST liability

S. Particulars Narad Nandi

No. Traders Motors
(Rs.) Ltd. (Rs.)
(i) Price of goods 10,000 30,000
(ii) Add: Packing charges (Note-1) 500
(iii) Add: Commission (Note-1) 500
(iv) Add: Weighment charges (Note-1) - 2,000
(v) Less: Discount for prompt payment (Note - 2) - 1,000
Value of taxable supply 11,000 31,000
IGST payable @ 18% (Note-3) 1,980
CGST payable @ 9% (Note-4) 2,790
SGST payable @ 9% (Note-4) 2,790
Notes:
1. Incidental expenses, including commission and packing, charged by supplier to recipient of
supply is includible in the value of supply. Weighment charges are also incidental expenses,
hence includible in the value of supply [Section 15 of the CGST Act, 2017].
2. Since discount is known at the time of supply, it is deductible from the value in terms of
section 15 of the CGST Act, 2017.
3. Since supply made to Narad Traders is an inter-State supply, IGST is payable in terms of
section 5 of the IGST Act, 2017.
4. Since supply made to Nandi Motors Ltd. is an intra-State supply, CGST & SGST is payable on
the same.
(6 MARKS)
ANSWER : 4(B)
(1) Section 24 of the CGST Act, 2017 provides that persons making any inter -State taxable
supply of goods are required to obtain registration compulsorily under GST laws irrespective of
the quantum of aggregate turnover.
However, as per section 23 of the CGST Act, 2017, an agriculturist, to the extent of supply of
produce out of cultivation of land, is not liable to registration.
Heera is exclusively engaged in cultivation and supply of potatoes. Thus, he is not liable to
registration irrespective of the fact that he is engaged in making inter -State supply of
goods. Further, Heera will not be liable to registration, in the given case, even if his turnover
exceeds the threshold limit.
(2) As per section 22 of the CGST Act, 2017 read with Notification No. 10/2019 CT dated
07.03.2019, 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

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 exceeds the threshold limit. The threshold limit for a person making exclusive intra-State
taxable supplies of goods is as under:-
a. Rs. 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
b. Rs. 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry,
Sikkim, Telangana and Uttarakhand.
c. Rs. 40 lakh for 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.
Since Aanya is making taxable supplies from Telangana, she will not be eligible for higher threshold
limit available in case of exclusive supply of goods. The applicable threshold limit for registration for
Aanya in the given case is Rs. 20 lakh. Thus, she is liable to get registered under GST.
(6 MARKS)

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