TEST PAPER

Basic Concept, Supply, Charge, Composition Scheme

TIME : 1.15 HRS MM : 40
1. Sudama Associates, a registered supplier, disposes the computers owned by the business
without consideration and it has not claimed input tax credit on such computers. Examine
whether the disposal of computers by Sudama Associates qualifies as deemed supply under
Schedule I. 3 MARKS

2. AB Industries enters into a contract with an actor – Chandragupta - to act as a brand

ambassador of products manufactured by AB Industries. The duration of the contract is 5
years and the contract fee payable to Chandragupta for being a brand ambassador is Rs50
lakh per annum. As per the terms of the contract, in case the contract is terminated by
Chandragupta before the end of the contract period, Chandragupta will have to repay to AB
Industries, 50% of the contract fee received by him till the time of termination of contract. At
the end of 3rd year, Chandragupta terminates the contract with AB Industries. Chandragupta
has received the contract fee for 3 years at the time of termination of contract. He abides by
the terms of the contract. You are required to determine whether the given transaction(s)
qualifies(y) as supply(ies). 3 MARKS

3. Shivaji Pvt. Ltd., a registered supplier, supplies the following goods and services for
construction of buildings and complexes -
 excavators for required period at a per hour rate
 manpower for operation of the excavators at a per day rate
 soil-testing and seismic evaluation at a per sample rate.
The excavators are invariably hired out along with operators. Similarly, excavator operators
are supplied only when the excavator is hired out. For a given month, the receipts (exclusive
of GST) of Shivaji Pvt. Ltd. are as follows:
 Hire charges for excavators - Rs18,00,000
 Service charges for supply of manpower for operation of the excavator - Rs20,000
 Service charges for soil testing and seismic evaluation at three sites - Rs2,50,000
Compute the GST payable by Shivaji Pvt. Ltd. for the given month. Assume the rates of GST to
be as under: Hiring out of excavators – 12% , Supply of manpower services and soil-testing
and seismic evaluation services – 18%. 6 MARKS

4. Vikramaditya is a salaried employee and is planning to do trading in stock market for which
he has opened a trading account with Vaydaa Brokers. During the month, Vikramaditya
undertook share transaction amounting to Rs35,00,000. Vikramaditya needs your advice
whether such share contracts undertaken by him amount to supply and are liable to GST.
3 MARKS
5. Panini Private Limited, Jaipur, agrees to sponsor a sports event organized by Pink City Club
in Jaipur. Panini Private Limited has paid an amount of Rs5,00,000 for such sponsorship of
the sports event. Consequently, said event was named after the brand name of Panini Private
Limited. Examine who is the person liable to pay tax in the given case. 2 MARKS

6. Varun & Arun Associates started a partnership firm of architects in Bhopal (Madhya
Pradesh) on 1st April. The firm provides architecture services in Madhya Pradesh only. It
provided the following details of its turnover during the current financial year:
April - June Rs20 lakh
July - Sept Rs30 lakh
Oct - Dec Rs20 lakh
The firm has obtained the registration under section 22 with effect from 1st July and opts to
pay tax under composition scheme. Determine the tax liability of Varun & Arun Associates
for the quarters: April – June, Jul-Sept and Oct-Dec.
Note: The rates of tax on architectural services are CGST- 9% and SGST-9%. 5 MARKS
7. Examine whether the suppliers are eligible for composition levy under section 10 in the
following independent cases in the beginning of the current financial year.
(a) Technology Enterprises, registered in Jalandhar, Punjab, is engaged in manufacturing
and supplying computer systems. Its aggregate turnover in the preceding financial
year is Rs125 lakh. Technology Enterprises supplies the computer systems
manufactured by it within the State of Punjab only. With a view to expand its business
operations, it will also start providing the repairing services of computer systems in
Punjab in the current financial year.
(b) M/s. Siddharth & Sons, registered in Delhi, owns a restaurant ‘Tasty Foods’ with a
turnover of Rs112 lakh in the preceding financial year. In view of the growing
customer demand, it will also start intra-State trading of juices in Delhi.
(c) Sitaram Associates, registered in Sikkim, is engaged in running a restaurant chain ‘Veg
Kitchen’ in the State. It has a turnover of Rs73 lakh in the preceding financial year. In
the current financial year, it decides to shut down the food chain owing to huge losses
being incurred in the said business. Instead, it will start providing intra-State architect
services.
(d) Deepti Services Ltd., registered in Uttarakhand, is exclusively providing intra-State
hair styling services. It has turnover of Rs34 lakh in the preceding financial year.
Will your answer be different, if Deepti Services Ltd. also start intra-State supply of
beauty products along with providing hair styling services in the current financial
year? 4*2=8 MARKS

8. Mr. Prem is running a restaurant in New Delhi. In the preceding financial year, it has an
aggregate turnover of Rs120 lakh from the restaurant services. In the current financial year,
apart from restaurant service, he also wants to provide food delivery services to other small
restaurants. He estimated the turnover of such services is upto Rs5 lakh.
Mr. Prem wishes to opt for composition scheme under sub-sections (1) and (2) of section 10
in the current financial year. You are required to advise him for same. 4 MARKS
9. M/s Heeralal and Sons, registered in Karnataka, has opted to avail the benefit of composition
scheme under sub-sections (1) and (2) of section 10 from 1st April. It has furnished the
following details for the quarter ended on 30th June.
S. No. Items Rs
(i) Taxable turnover of goods within the State 15,00,000
(ii) Exempted turnover of goods (exempted by way of 17,00,000
notification) within the State
Total Turnover 32,00,000
Using the above information, calculate tax to be paid by the firm for quarter ended on 30th
June in following independent situations:
(i) M/s Heeralal and Sons is a manufacturer
(ii) M/s Heeralal and Sons is a trader 6 MARKS