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Question Paper

Indirect Tax Laws Duration: 65

Details: Test – 1(Ch-1) Marks: 35

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Q-1

Examine whether the following activities would amount to supply under section 7 of the
CGST Act:

(a) Damodar Charitable Trust, a trust who gets the eye treatment of needy people done free of
cost, donates clothes and toys to children living in slum area.

(b) 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

(c) Raman is an Electronic Commerce Operator in Chennai. 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.

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

(6 Marks)

Q-2

Diksha is engaged in supplying a bouquet of good and services in the State of Maharashtra. She
has furnished the following information with regard to the supplies made by her in the month
of July

Particulars Amount

Supply of a laptop along with the laptop bag to a customer of Mumbai 89,000

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Supply of 10,000 kits (at Rs. 50 each) to Riddhi Stores in Kota (Rajasthan). 5,00,000
[Each kit consists of 1 hair oil, 1 beauty soap and 1 hair comb.]

100 kits are given as free gift to Mumbai customers (all unrelated) on the -
occasion of Diksha's birthday. Each kit consists of 1 hair oil and 1 beauty soap.
Cost of each kit is Rs. 35. Input tax credit has not been taken on the goods
contained in the kit.

Event management services provided free of cost to her brother (wholly -

dependent on her) for his son’s marriage function in Indore (Madhya
Pradesh). [Cost of providing said services is Rs. 80,000.]

300 chairs and 20 coolers hired out to Krishna Garden, Ajmer (Rajasthan) 48,000
[Value includes cost of transporting the chairs and coolers from Diksha’s
godown at Mumbai to Krishna Garden, Ajmer.]

Assume rates of GST to be as under:-

S. No. Particulars Rate of GST

1. Laptop 18%

2. Laptop bag 28%

3. Hair oil 18%

4. Beauty soap 28%

5. Hair comb 12%

6. Event management service 5%

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 7. Service of renting of chairs and coolers 12%

8. Transportation service 5%

From the above information, examine each of the above supplies made by Diksha for the
month of July and determine the rate of GST applicable on the same.

(5 Marks)

Q-3

“Diligent Force” a professional training institute gets its training material of “Aptitute
Quotient” printed from “Durga printing House” a printing press. The content of the material is
provided by the Diligent Force who owns the usage rights of the same while the physical inputs
including paper used for printing belong to the Durga Printing House.
Ascertain whether supply of training material by the Durga Printing House constitutes supply of
goods or supply of services?

(5 Marks)

Q-4 (a)

Answer the following questions:

(a) 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 of the CGST Act.
(b) Prithvi Enterprises appoints Champak to procure certain goods from the market. Champak
identifies various suppliers who can provide the goods as desired by Prithvi Enterprises, and

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asks a supplier – Satya Manufacturers to send the goods and issue the invoice directly to Prithvi
Enterprises.
You are required to determine whether Champak can be considered as an agent of Prithvi
Enterprises in terms of Schedule I of the CGST Act ?

(4 Marks)

Q-4 (b)

Nandeeshwar Manufacturers sends certain category of yarn for processing to the job worker.
The job worker undertakes the processing work on the yarn as per the requirement of
Nandeeshwar Manufacturers. During the process, the job worker uses his own material also.
The processed yarn is sold by Nandeeshwar Manufacturers directly from the job worker
premises. Balance quantity of yarn and waste material is sent back by the job worker to
Nandeeshwar Manufacturers. The job worker is of the opinion that he is using his own material
also in the processing and hence the supply to Nandeeshwar Manufacturers is in the nature of
supply of goods as well as services. Do you agree with the opinion of job worker?

(4 Marks)

Q-5

Consider the following statements and determine in each case whether they will be
considered as supply or not as per section 7

(a) Aniket Sharma has recently purchased Maruti Wagon-R from ocean motors. After few
months he went for regular servicing of the car. Servicing department of the company carried
out some labor services and also changed some spare parts of the car such as A.C filters,
wipers, etc. GST rate applicable on labor services is 5% and on supply of spare parts in 18%.
Accountant of Ocean motors at the time of issuing invoice to Aniket charged 5% GST on the
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taxable value considering such transaction as composite supply. Although value of both the
goods and services were shown separately in the invoice. You as a statutory auditor of the
company determine whether treatment done by accountant is correct or not?

(b) Spark ltd is engaged in the business of development of artificial intelligence technologies.
For this purpose, they have purchased various super computers but ITC have not been claimed
on these items. Due to unforeseen conditions they have to shut the business and permanently
transferred the assets to a US based company Tesla Inc. for a consideration of $1 Lakh. Payment
is received in foreign convertible exchange.

(c) Mr. Deepak is engaged in supply of IT services all over in India. He has availed consultancy
services for the purpose of his business from an Israel based company but not made any
payment to such company as his wife Mrs. Sucheta holds 26% shares in that company.

(d) Mr. Raj belongs to Haryana is an agent of M/s Delta Pvt ltd which belongs to Delhi. For the
ease of doing business Mr. Raj undertakes to supply the furniture to the wholesalers of Haryana
on behalf of M/s Delta Pvt ltd. In the month of Jan 2021 M/s Delta has supplied furniture to Mr.
Raj worth ₹10000 without consideration. Mr. Raj has further supplied such goods to the
respective wholesalers in the market at the same price at which he has received the goods
issuing the invoice in the name of M/s Delta Pvt ltd. Mr. Raj and M/s Delta both are having
separate GSTIN in their respective states/UT.

(6 Marks)

Q-6 MCQ Question

1. Mr. James Stewart is a registered person under GST in the State of Maharashtra who sells
footwear to his customers locally within the same State. He has been appointed as an agent by
Toto Shoes Ltd., a company registered under GST in the State of Karnataka. During a financial
year, Toto Shoes Ltd., sends taxable goods worth Rs. 5.00 crore from its Bengaluru store to Mr.
James Stewart who sells such goods for Rs. 5.00 crore by raising invoices using the GSTIN of
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Toto Shoes Ltd. Mr. James Stewart receives a commission of Rs. 60.00 lakh from Toto Shoes (P)
Ltd., during the said financial year.

Compute the value of supply of Toto Shoes (P) Ltd. and Mr. James Stewart for the financial year
assuming that amounts given above are exclusive of GST, wherever applicable.

(a) Toto Shoes (P) Ltd.: Nil and James Stewart: Rs. 5.6 crore

(b) Toto Shoes (P) Ltd.: Rs. 5 crore and James Stewart: Rs. 5.6 crore

(C) Toto Shoes (P) Ltd.: Rs. 5 crore and James Stewart:Rs. 60 lakh

(d) Toto Shoes (P) Ltd.: Rs. 5.6 crore and James Stewart: Nil

2. Korelal Printon (P) Ltd., a registered person under GST in the State of Jammu & Kashmir, is
engaged in the business of offset printing and is providing services to various book publishers. A
publisher situated in the State of Himachal Pradesh, a registered person under GST, sent
content of the books to be printed by Korelal Printon (P) Ltd. in PDF format. The publisher also
sent paper worth Rs. 4.00 lakh (excluding GST) to the printer, free of cost for the purposes of
printing its books on 10th February. Korelal Printon (P) Ltd. raised an invoice of Rs. 1.50 lakh
(exclusing GST) against printing of books and returned the printed books through challan to the
publisher on 20th August.

The Proper Officer intercepted the vehicle and claimed that Korelal Printon (P) Ltd. should have
sent the invoice of Rs. 5.50 lakh, i.e. including the value of free of cost paper supplied by the
publisher. You may suitably advice which one of the following is the correct option-

(a) The value of supply of paper for job work is to be included in the invoice in terms of section
15 of the CGST Act, 2017.

(b) The goods sent for job work i.e. paper sent for printing is a composite supply.

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(c) Korelal Printon (P) Ltd. has entered into an agreement of printing books. Therefore, he is
liable to pay tax on the gross value of Rs. 5.50 lakh.

(d) Korelal Printon (P) Ltd. has entered into an agreement of printing books. Therefore, he is
liable to pay tax on the net value of Rs. 1.50 lakh.

3. M/s. Vishu Megamart, a store located and registered under GST in Rajasthan, has come out
with big discount offers at the time of Diwali on various gift items. In order to attract more
customers, it has decided to supply a gift pack containing 5 packets of Jeeraram’s Namkeen
(200 gram each) taxable @ 12%, 1 packet of Roasted Smoked Almonds (100 gram) taxable @
18%, 1 packet of Cournville Chocolate (50 mg) taxable @ 28% and 1 bottle of Teal Fresh Juice (1
litre) taxable @ 18% in a single basket for a single price of Rs. 1,000. State the type of supply
and the tax rate applicable on the same.

(a) Composite supply; tax rate of the principal item, i.e. Namkeen @18%

(b) Composite supply; highest tax rate out of all items, i.e. 28% applicable to chocolates

(c) Mixed supply; tax rate of principal item, i.e. Namkeen @18%

(d) Mixed supply; highest tax rate out of all items, i.e. 28% applicable to chocolates

4. Pyarelal Singh, registered under GST in Lucknow, Uttar Pradesh, is appointed as a delcredre
agent by Sunnykart Co. (P) Ltd. He sells eye opticals to his customers locally within the same
State. Sunnykart Co. (P) Ltd. is also registered under GST in the State of Uttar Pradesh.

During the current financial year, Sunnykart Co. (P) Ltd. supplied taxable goods worth Rs. 10
crore whose open market value is Rs. 10.05 crore, from its Allahabad unit to Pyarelal Singh.
Pyarelal Singh has further sold these goods for Rs. 10.10 crore by raising invoices using his own
GSTIN. Pyarelal Singh has received a commission of Rs. 75 lakh from Sunnykart Co. (P) Ltd.

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during the year and has guaranteed the payment of the value of such goods from the
customers to Sunnykart Co. (P) Ltd.

Pyarelal Singh has also provided financial assistance in the form of larger credit period to his
customers, on which he has also earned interest of Rs. 15 lakh. Compute the value of supply of
Sunnykart Co. (P) Ltd. and Pyarelal Singh for the current financial year assuming that both of
them wish to adopt minimum value of supply to the extent possible.

(a) Sunnykart Co. (P) Ltd.: Rs. 9.09 crore and Pyarelal Singh: Rs. 11.00 crore.

(b) Sunnykart Co. (P) Ltd.: Rs. 10.05 crore and Pyarelal Singh: Rs. 10.85 crore

(c) Sunnykart Co. (P) Ltd.: Rs. 10.15 crore and Pyarelal Singh: Rs. 10.85 crore

(d) Sunnykart Co. (P) Ltd.: Rs. 10.15 crore and Pyarelal Singh: Rs. 75.00 lakh

5. M/s. Jolly Electronics (P) Ltd., is an authorized dealer of M/s. GG Micro Ltd., located and
registered in Lucknow, Uttar Pradesh. It has sold following items to Mr. Alla Rakha (a
consumer):

Product Amount (Rs.)

Refrigerator (500 litres) taxable @ 18% 40,000/ -

Stabilizer for refrigerator taxable @ 12% 5,000/-

LED television (42 inches) taxable @ 12% 30,000/-

Split air conditioner (2 Tons) taxable @ 28% 35,000/-

Stabilizer for air conditioner taxable @12%. 5,000/-

Total value 1,15,000/-

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M/s. Jolly Electronics (P) Ltd. has given a single invoice, indicating price of each item separately
to Mr. Alla Rakha. Mr. Alla Rakha, has given a single cheque of Rs. 1,00,000/- for all the items as
a composite discounted price. State the type of supply and the tax rate applicable on the same.

(a) Composite supply; Highest tax rate applicable to split air conditioner, i.e. 28%

(b) Mixed supply; Highest tax rate applicable to split air conditioner, i.e. 28%

(c) Supply other than composite and mixed supply; Highest tax rate applicable to split air
conditioner i.e. 28%

(d) Supply other than composite and mixed supply; respective tax rate applicable to each item.

(1×5 = 5 Marks)

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