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Mock Test Paper - Series II: April, 2024

Date of Paper: 10 April, 2024
Time of Paper: 2 P.M. to 5 P.M.
FINAL COURSE: GROUP – II
PAPER – 5: INDIRECT TAX LAWS
ANSWERS
Part-I Multiple Choice Questions
Question Answer
No.
1 (b) Kolkata office ` 10,000, Mumbai office ` 3,660
2 (c) ` 40,000
3 (a) `1,78,000
4 (d) ` 50 crores
5 (c) ` 2,160 payable as IGST.
6 (c) ` 1,58,400
7 (c) Input tax credit is not available
8 (b) GST is applicable and the place of supply is Gujarat.
9 (b) No, M/s Sudhankar Enterprises is not required to take
registration under GST as its aggregate turnover is
below the threshold limit for registration. However, it
is required to obtain a unique enrolment number under
GST.
10 (d) M/s Jaggi Enterprises is eligible for obtaining the CEN
as it is registered in multiple States with same PAN.
After obtaining CEN, it can use it for generating e-way
bills and updating Part-B throughout the country.
11 (c) Yes, e-way bill is required to be generated mandatorily
in case of inter-State transfer of goods by principal to
job worker irrespective of value of consignment.
12 (b) Yes, M/s Jaggi Enterprises can generate a
consolidated e-way bill containing the details of
different EWBs even if all the EWBs have different
validity periods and even if it is transporting
consignments of different consignees in a single
conveyance.
13 (c) Lucas (P) Ltd.: ` 5 crore and Noah : ` 60 lakh
14 (a) ` 95
15 (d) (i) and (ii)

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Part-II Descriptive Questions

1. Computation of ITC available with Gehna Ltd.
S. Particulars Eligible input tax credit
No. CGST SGST IGST
(`) (`) (`)
1. Raw Material
Purchased from local registered 9,562.50 9,562.50
suppliers [Note 1(i)] (` 1,06,250 x
9%)
Purchased from local unregistered Nil Nil
suppliers [Note 1(ii)]
Purchased from Punjab from 18,000
registered supplier [Note 1(i)]
(` 1,00,000 x 18%)
Raw material imported from USA 22,732
[Note 1(iii)]
2. Consumables [Note 2] (` 1,56,250- 11,250 11,250
` 31,250) x 9%]
3. Monthly rent for the factory building 9,000 9,000
to the owner in Rajasthan [Note 3]
4. Salary paid to employees on rolls Nil Nil Nil
[Note 4]
5. Premium paid on life insurance 18,000 18,000 -
policies taken for specified
employees [Note 5]
(` 2,00,000 x 9%)
Total 47,812.50 47,812.50 40,732
Add: Opening balance of ITC 20,000 15,000 15,000
Total ITC [Note 7] 67,812.50 62,812.50 55,732

Computation of net GST payable

Particulars CGST SGST IGST
(`) (`) (`)
Intra-State supply 78,750 78,750
Inter-State supply 67,500
Exports under LUT [Note 6] Nil Nil Nil
Total output tax liability 78,750 78,750 67,500
Less: ITC 67,812.50 62,812.50 55,732
Net GST payable (rounded off) 10,938 15,938 11,768

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Notes:
1. (i) Credit of input tax (CGST & SGST/ IGST) paid on raw materials
used in the course or furtherance of business is available.
(ii) Tax on procurements made by a registered person from an
unregistered supplier is levied only in case of notified goods and
services. Therefore, since no GST is paid on such raw material
purchased, there does not arise any question of ITC on such raw
material.
(iii) IGST paid on imported goods qualifies as input tax. Therefore,
credit of IGST paid on imported raw materials used in the course
or furtherance of business is available.
2. ITC on consumables, being inputs used in the course or furtherance of
business, is available. However, since levy of GST on high speed diesel
has been deferred till a date to be notified by Government, there cannot
be any ITC of the same.
3. ITC on monthly rent is available as the said service is used in the course
or furtherance of business.
4. Services by employees to employer in the course of or in relation to his
employment is not a supply in terms of section 7 read with Schedule III
to the CGST Act, 2017. Therefore, since no GST is paid on such
services, there cannot be any ITC on such services.
5. ITC on life insurance service is available if the same is obligatory for an
employer to provide to its employees under any law for the time being in
force.
6. Export of goods is a zero rated supply. A zero rated supply under
LUT/bond is made without payment of IGST.
7. Since export of goods is a zero rated supply, there will be no apportionment
of ITC and full credit will be available.
2. (a) In the given situation, three supplies are involved:
(i) Services provided by Revive Pvt. Ltd. to audiences by way of
admission to music concert.
(ii) Services provided by Sajal (P) Ltd. to Revive Pvt. Ltd. by way of
organising the music concert.
(iii) Services provided by Hotel OPX to Sajal (P) Ltd. by way of
accommodation in the Hotel lawns for organising the music concert.
The CGST and SGST or IGST liability in respect of each of the above
supplies is determined as under:
(i) The place of supply of services provided by way of admission to,
inter alia, a cultural event shall be the place where the event is
actually held.

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Therefore, the place of supply of services supplied by Revive Pvt.

Ltd. (Ludhiana, Punjab) to audiences by way of admission to the
music concert is the location of the Hotel OPX, i.e. Gurugram,
Haryana.
Since the location of the supplier (Ludhiana, Punjab) and the place
of supply (Gurugram, Haryana) are in different States, IGST will be
leviable. Therefore, IGST leviable will be computed as follows:
Consideration for supply (400 tickets @ ` 5,000 per ticket)
= ` 20,00,000
IGST @ 18% on value of supply = ` 20,00,000 x 18% = ` 3,60,000.
(ii) The place of supply of services provided by way of organization of,
inter alia, a cultural event to a registered person is the location of
such person.
Therefore, the place of supply of services supplied by Sajal (P) Ltd.
(Delhi) to Revive Pvt. Ltd. (Ludhiana, Punjab) by way of organising
the music concert is the location of the registered person, i.e.
Ludhiana (Punjab).
Since the location of the supplier (Delhi) and the place of supply
(Ludhiana, Punjab) are in different States, IGST will be leviable.
Therefore, IGST leviable will be computed as follows:
Consideration for supply = ` 10,00,000
IGST @ 18% on value of supply = ` 10,00,000 x 18% = ` 1,80,000
(iii) The place of supply of services, by way of accommodation in any
immovable property for organizing, inter alia, any cultural function
shall be the location at which the immovable property is located.
Therefore, the place of supply of services supplied by Hotel OPX
(Gurugram, Haryana) to Sajal (P) Ltd. (Delhi) by way of
accommodation in Hotel lawns for organising the music concert
shall be the location of the Hotel OPX, i.e. Gurugram, Haryana.
Since the location of the supplier (Gurugram, Haryana) and the
place of supply (Gurugram, Haryana) are in the same State, CGST
and SGST will be leviable. Therefore, CGST and SGST leviable
will be computed as follows:
Consideration for supply = ` 4,00,000
CGST @ 9% on value of supply = ` 4,00,000 x 9% = ` 36,000
SGST @ 9% on value of supply = ` 4,00,000 x 9% = ` 36,000
If the price for the entry ticket is fixed at ` 450, answer will change
in respect of supply of service provided by way of admission to
music concert, as mentioned in point (i) above. There will be no
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IGST liability if the consideration for the ticket is ` 450 as the inter-
State services by way of right to admission to, inter alia, musical
performance are exempt from IGST, if the consideration for right to
admission to the event is not more than ` 500 per person.
However, there will be no change in the answer in respect of
supplies mentioned in point (ii) and (iii) above.
(b) The value of the imported goods is determined under rule 8 of the
Customs Valuation (Determination of Value of Imported Goods) Rules,
2007 (hereinafter referred to as Import Valuation Rules) if the same
cannot be determined under the earlier rules. However, the order of
application of rules 7 and 8 can be reversed at the request of the importer
and with the approval of the proper officer.
Thus, request of Mr. T for determination of value under rule 8 is legally
acceptable, if the same is also approved by the proper officer.
Assuming that the request of Mr. T has been approved by the proper
officer, the assessable value of the imported goods under rule 8 will be
the sum of-
(a) the cost of materials and fabrication or other processing;
(b) an amount for profit and general expenses
(c) the cost or value of all other expenses under rule 10(2) of the said
rules.
Computation of assessable value
Particulars Amount ($)
Cost of materials 2,000
Add: Fabrication charges 1,000
Other chargeable expenses 400
Other indirect costs 250
Cost of the goods at Mr. R’s factory 3,650
Add: Net profit margin @ 20% of FOB, i.e. 25% of total 1,000
cost
Total cost till US port = Cost of the goods at factory
+Freight from factory to US port and loading
charges at US port = $ 4,000 [$ 3,650 + $ 250 +
$ 100]
FOB value = Total cost till port + profit = $ 5,000
($ 4,000 +$ 1,000)
Add: Freight & loading/unloading charges 1,000
[In case of import by air, the cost of transport,
loading, unloading and handling charges
associated with the delivery of the imported
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goods to the place of importation are restricted to

20% of FOB value]
Insurance charges 50
Assessable value 5,700
Assessable value in Indian Rupees (Exchange rate - ` 3,99,000
70 per $)

3. (a) (i) Total GST credit (CGST+ SGST + IGST) of ` 18,000 specifically
attributable to Ganganagar Branch, Rajasthan will be distributed as
IGST credit of ` 18,000 only to Ganganagar Branch, Rajasthan [Since
recipient and input service distributor (ISD) are located in different
states].
(ii) IGST credit of ` 1,50,000, CGST credit of ` 15,000 and SGST credit
of ` 15,000 specifically attributable to Mumbai Branch, Maharashtra
will be distributed as IGST credit of ` 1,50,000, CGST credit of
` 15,000 and SGST credit of ` 15,000 respectively, only to Mumbai
Branch, Maharashtra [Since recipient is located in the same State
in which ISD is located].
(iii) CGST credit of ` 60,000, SGST credit of ` 60,000 and IGST credit
of `1,20,000 have to be distributed among the three branches and
Mumbai Branch, Maharashtra in proportion of their turnover of the
last quarter.
- Ganganagar Branch, Rajasthan will get: ` 48,000 [` 2,40,000
x (` 10,00,000/ ` 50,00,000)] as IGST credit.
- Madhugiri Branch, Karnataka will get: ` 24,000 [` 2,40,000 x
(` 5,00,000/ ` 50,00,000)] as IGST credit.
- The credit attributable to a recipient is distributed even if such
recipient is making exempt supplies.
- Kosala Branch, UP will get: ` 72,000 [` 2,40,000 x
(` 15,00,000/ ` 50,00,000)] as IGST credit.
- Mumbai Branch, Maharashtra will get:
` 24,000 [` 60,000 x (` 20,00,000/ ` 50,00,000)] as CGST credit,
` 24,000 [` 60,000 x (` 20,00,000/ ` 50,00,000)] as SGST credit
and
` 48,000 [` 1,20,000 x (` 20,00,000/ ` 50,00,000)] as IGST credit.
(iv) ITC of ` 10,000 of March (last year) cannot be distributed in March
this year as ITC available for distribution in a month is to be
distributed in the same month.
(b) It has been clarified vide a Circular that in case of printing of books where
only content is supplied by the person who owns the usage rights to the
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intangible inputs while the physical inputs including paper used for
printing belong to the printer, supply of printing [of the content supplied
by the recipient of supply] is the principal supply and therefore, such
supplies would constitute supply of service.
In case of supply of printed envelopes by the printer using its physical
inputs including paper to print the design, logo etc. supplied by the
recipient of goods, predominant supply is supply of goods and the supply
of printing of the content [supplied by the recipient of supply] is ancillary
to the principal supply of goods and therefore, such supplies would
constitute supply of goods.
Accordingly, the time of supply of books and envelopes will be governed
by sections 12 and 13 of the CGST Act, 2017 respectively.
The time of supply of goods is the earlier of, the date of issue of
invoice/last date on which the invoice is required to be issued or date of
receipt of payment. However, Notification No. 66/2017 CT dated
15.11.2017 specifies that 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) of the CGST Act, 2017, i.e. date
of issue of invoice or the last date on which invoice ought to have been
issued in terms of section 31 of the CGST Act, 2017.
The invoice for supply of goods should be issued before or at the time of
removal of goods for supply to the recipient, where supply involves
movement of goods. Therefore, in the given case, the last date by which
invoice ought to have been issued is 7 th April. Thus, the time of supply
of envelopes for the purpose of payment of tax is 7 th April.
The time of supply of services is the earlier of the dates arrived at by
methods (A) and (B), as follows:
(A) Date of invoice or date of receipt of payment (to the extent the
invoice or payment covers the supply of services), whichever is
earlier, if the invoice is issued within the prescribed time.
(B) Date of provision of service or date of receipt of payment (to the
extent the payment covers the supply of services), whichever is
earlier, if the invoice is not issued within the prescribed time.
Since in the given case, invoice for the services is not issued within 30
days, the time of supply for the advance received is the date of receipt
of payment, i.e. 20 th March being earlier than the date of provision of
service. However, the time of supply for the balance payment is the date
of provision of service, i.e. 10 th April being earlier than the date of receipt
of balance payment.

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(c) This issue has been addressed by the Supreme Court in the case of
Commissioner of Customs v. Tullow India Operations Ltd. (2005) 189
ELT 401 (SC). The Apex Court has observed that if a condition is not
within the power and control of the importer and depends upon the acts
of public functionaries, non-compliance of such a condition, subject to
just exceptions cannot be held to be a condition precedent which would
disable it from obtaining the benefit for all times to come.
In the given case also the certificate has not been granted within a
reasonable time. Therefore, in view of the above-mentioned judgement,
the importer M/s Clear Energy Ltd. cannot be blamed for the lapse by
the authorities. The Directorate General of Hydrocarbons is under the
Ministry of Petroleum and Natural Gas and such a public functionary is
supposed to grant the essentiality certificate within a reasonable time so
as to enable the importer to avail of the benefits under the notification.
4. (a) The supply of gaming software is in the nature of OIDAR service.
The transaction is for personal consumption of Mr. Goldy and the
payment has also been made from the personal bank account of Mr.
Goldy and not from the bank account of his GST registered firm.
Therefore, being an unregistered person receiving OIDAR service in
taxable territory, Mr. Goldy is a non-taxable online recipient.
Services received from a provider of service located in a non- taxable
territory by an individual in relation to any purpose other than commerce,
industry or any other business or profession is exempt from IGST.
However, such exemption is not available in case of OIDAR services.
Therefore, being an OIDAR service provided by a supplier located
outside India and received by a non-taxable online recipient, the same
is liable to GST.
Tax on service supplied by any person located in a non-taxable territory
to any person other than non-taxable online recipient is payable by the
recipient of such service under reverse charge. Therefore, tax on OIDAR
services provided by the company located in USA to Mr Goldy, a non-
taxable online recipient, will be payable by such company under forward
charge.
(b) As per para 3 of Schedule II to the CGST Act, 2017 any treatment or
process which is applied to another person’s goods is a supply of
services and accordingly is subject to GST rate applicable for services.
In the given case, M/s Siddhi Tools (job worker) undertakes the process
of mounting the steel cabinets of Anuj Pvt. Ltd. (principal) on metal
frames. In view of para 3 of Schedule II to the CGST Act, 2017 cited

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above, the mounting activity classifies as a service even though the

metal frames are also supplied as a part of the mounting activity.
Accordingly, the job charges will be chargeable to GST at a rate of 18%,
which is the applicable rate for services.
Further, the value of steel cabinets will not be included in the value of
taxable supply made by M/s Siddhi Tools as the supply of cabinets does
not fall within the scope of supply to be made by M/s Siddhi Tools. M/s
Siddhi Tools is only required to mount the steel cabinets, which are to
be supplied by Anuj Pvt. Ltd., on metal frames, which are to be supplied
by it.
As regards sale of waste generated during the job work, since M/s Siddhi
Tools is registered, the tax leviable on the supply will have to be paid by
it Such supply will be treated as supply of goods and subject to GST rate
applicable for metal waste.
Accordingly, the GST liability of M/s Siddhi Tools will be computed as
under:
Particulars Amount (`)
Job charges 5,00,000
GST @ 18% (A) 90,000
Sale of metal waste 45,000
GST @ 12% (B) 5,400
Total GST payable (A) + (B) 95,400

(c) As per Baggage Rules, 2016, tourist of foreign origin, excluding infant,
is allowed duty free clearance of
(i) travel souvenirs; and
(ii) Articles up to the value of ` 15,000 (excluding inter alia fire arms,
cartridges of fire arms exceeding 50 and cigarettes exceeding 100
sticks), if carried on in person.
Computation of customs duty payable `
Travel souvenir Nil
Articles carried on in person 1,50,000
Cigarettes [100 sticks can be accommodated in 10,000
General Free Allowance (GFA)]
Fire arms cartridge (50 cartridges can be 25,000
accommodated in GFA)
Baggage than can be accommodated in GFA 1,85,000
Less: GFA 15,000
Baggage on which duty is payable 1,70,000
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Duty payable @ 38.50% (including 10% Social 65,450

welfare surcharge)

Note: Fire arms, cartridges of firearms exceeding 50 and cigarettes

exceeding 100 sticks are not chargeable to rate applicable to baggage.
These items are charged @ 100% applicable to baggage under Heading
9803 of the Customs Tariff.
5. (a) Due date for payment of tax for the month of April is 20 th May.
Where self-assessed tax is not paid within 30 days from due date of
payment of such tax, penalty equivalent to 10% of tax or ` 10,000,
whichever is higher, is payable. Thus, option to pay tax within 30 days
of issuance of SCN to avoid penalty, is not available in case of self-
assessed tax.
Since in the given case, Henry & Co. has not paid the self-assessed tax
within 30 days of due date [i.e. 20 th May], penalty equivalent to:
(i) 10% of tax, viz., ` 9,000 (10% of ` 90,000) or
(ii) ` 10,000,
whichever is higher, is payable by him under the CGST Act, 2017.
Equivalent amount of penalty is payable under the SGST/UTGST Act
2017.
Hence, the stand taken by the Department that penalty will be levied on
Henry & Co. is correct, but the amount of penalty of ` 45,000 under the
CGST Act, 2017 is not correct.
(b) An appeal against orders passed by the State Benches of the Tribunal
would lie to the High Court if the High Court is satisfied that such an
appeal involves a substantial question of law.
However, appeal against orders passed by the Principal Bench of the
Tribunal would lie to the Supreme Court and not High Court. Only the
Principal Bench of the Tribunal can decide appeals where one of the
issues involved relates to the place of supply.
Since the issue involved in Mr. Raman’s case relates to place of supply,
the appeal in his case would have been decided by the Principal Bench
of the Tribunal. Thus, Mr. Raman will have to file an appeal with the
Supreme Court and not with the High Court.
(c) In any of the following circumstances the goods shall be considered to
have been removed improperly from a warehouse–
(a) where any warehoused goods are removed from a warehouse in
contravention of section 71 of the Customs Act, 1962;

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(b) where any warehoused goods have not been removed from a
warehouse at the expiration of the period during which such goods
are permitted to remain in a warehouse;
(c) where any goods in respect of which a bond has been executed
and which have not been cleared for home consumption or export
are not duly accounted for to the satisfaction of the proper officer.
6. (a) Yes, the concerned officer, jurisdictional officer or applicant aggrieved
by any advance ruling may appeal to the Appellate Authority for Advance
Ruling (AAAR) within 30 days [extendible by another 30 days] from the
date on which such ruling is communicated to him in the prescribed form
and manner.
The AAAR must pass an order confirming or modifying the ruling
appealed against within a period of 90 days of the filing of an appeal,
after hearing the parties to the appeal.
If members of AAAR differ on any point referred to in appeal, it shall be
deemed that no advance ruling can be issued in respect of the question
under appeal. A copy of the advance ruling pronounced by the AAAR is
sent to applicant, concerned officer, jurisdictional officer and to the
Authority.
(b) The authority shall discharge the following functions, namely:-
(i) to determine whether the reduction in tax rate or the benefit of input
tax credit has been passed on by the seller to the buyer (hereinafter
collectively referred to as ‘benefit’) by reducing the prices
(ii) to identify the taxpayer who has not passed on the benefit
(iii) to order
(a) reduction in prices
(b) return to the recipient, an amount equivalent to the amount
not passed on by way of commensurate reduction in prices
along with interest at the rate of 18% from the date of
collection of the higher amount till the date of the return of
such amount or recovery of the amount not returned, as the
case may be.
If the eligible person does not claim return of the amount or is
not identifiable, the amount must be deposited in the
Consumer Welfare Fund;
(c) imposition of penalty
(d) cancellation of registration

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(iv) to furnish a performance report to the GST Council by the 10 th of

the month succeeding each quarter [Rule 127 of the CGST Rules,
2017]
OR
Alternative Answer
(b) Any decision, order, summons, notice or other communication under the
CGST Act , 2017 and the rules made thereunder can be served by any
one of the following methods:
(a) Giving/tendering directly including by a courier to the addressee or
authorised representative or to any adult member of family residing
with the taxable person; or
(b) By Registered post/speed post/courier with acknowledgement due
at the last known place of business or residence; or
(c) By Email to the e-mail address provided at the time of registration
or as amended from time to time; or
(d) By making the same available at common portal; or
(e) Publication in newspaper circulating in the locality in which the
addressee is last known to have resided, carried on business or
personally worked for gain; or
(f) If none of the above modes is practicable then by Affixing at last
known place of business or residence and if such mode is not
practicable for any reason, then by affixing a copy thereof on the
notice board of the office of the concerned officer or authority
concerned.
[Note: Any 4 points may be mentioned.]
(c) Annual Advance authorisation would be issued to exporters having past
export performance in at least preceding two financial years, to enable
them to import the inputs required by them on annual basis.
Advance authorization for annual requirement shall only be issued for
items, notified in standard input output norms (SION) and not on basis
of ad hoc norms under self-declared authorisations where SION does
not exist.
Annual Advance Authorisation in terms of CIF value of imports will be
granted upto 300% of FOB value of physical exports in preceding
financial year and/or FOR value of deemed exports in preceding year or
` 1 crore, whichever is higher.

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