axo academy

GST Certification Course

Study Material

Chapter 12
How to Calculate
 Chapter 12
How to calculate
Case Scenarios

Question 1: Dushyant rents out a commercial building owned by him to Bharat for the month of
December, for which he charges a rent of `19,50,000. Dushyant pays the maintenance charges of `
1,00,000 (for the December month) as charged by the local society. These charges have been
reimbursed to him by Bharat. Further, Bharat had given ` 2,50,000 to Dushyant as interest free
refundable security deposit. Further, Dushyant has paid the municipal taxes of ` 2,85,000 which he has
not charged from Bharat. You are required to determine the value of supply and the GST liability of
Dushyant for the month of December assuming CGST and SGST rates to be 9% each.
Note: All the amounts given above are exclusive of GST.

Solution: Computation of the value of supply and the GST liability of Dushyant for the month of
December
Particulars Amount (`)
Rent of the commercial building 19,50,000
Maintenance charges paid to the local society, reimbursed by Bharat [Being reimbursed 1,00,000
by the tenant - Bharat, such charges ultimately form part of the rent paid by Bharat to
Dushyant and thus, will form part of the value]
Interest free refundable security deposit [Being refundable, the security deposit does Nil
not constitute consideration in terms of section 2(31) of the CGST Act, 2017 and thus, is
not includible in the value]
Municipal taxes paid by Dushyant [Being an expenditure incurred by the supplier, the Nil
same is not includible in the value since such taxes are not charged to the recipient.]
Value of supply 20,50,000
CGST @ 9% 1,84,500
SGST @ 9% 1,84,500

Question 2: Royal Manufacturers, a registered supplier of machinery, supplied a special purpose

machine to Dharam Furnishers for which it charges a price of ` 9,00,000. Further, it charged the
following additional amounts in relation to said supply:
S. No. Particulars Transit insurance
1 Transit insurance 16,500
2 Packing charges 13,500
3 Extra charges for designing the machine 30,000
4 Freight 18,000

Following additional information is also available -

(a) Cash discount @ 2% on price of machinery has been allowed to Dharam Furnishers at the time of
supply and also recorded in invoice.

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 (b) GST rate – 18%.

Calculate value of supply of the special purpose machine.

Solution: Computation of value of the special purpose machine

Particulars
Price of machinery 9,00,000
Add: Transit insurance [Note 1] 16,500
Packing charges [Note 2] 13,500
Extra design charges [Note 3] 30,000
Freight [Note 1] 18,000
Total 9,78,000
Less: 2% cash discount on price of machinery [` 9,00,000 × 2%] [Note 4] 18,000

Value of taxable supply 9,60,000

Notes:

(1) The given supply is a composite supply involving supply of goods (special machine) and services
(transit insurance and freight) where the principal supply is the supply of goods. As per section 8(a) of
the CGST Act, 2017, a composite supply is treated as a supply of the principal supply involved therein
and charged to tax accordingly.

(2) All incidental expenses including packing charged by the supplier to the recipient of a supply are
includible in the value of supply in terms of section 15(2)(c) of CGST Act, 2017.

(3) Any amount charged for anything done by the supplier in respect of the supply of goods at the
time of, or before delivery of goods is includible in the value of supply in terms of section 15(2)(c) of
CGST Act, 2017. Thus, extra designing charges are to be included in the value of supply.

(4) Cash discount was given at the time of supply and also recorded in invoice, so the same is not to
be included while computing value of supply in terms of section 15(3)(a) of CGST Act, 2017.

Question 3: AKJ Foods Pvt. Ltd. gets an order for supply of processed food from a customer. The
customer wants the consignment tested for gluten or specified chemical residues. AKJ Foods Pvt. Ltd.
does the testing 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 his argument correct in the light of section 15?

Solution: Section 15(2) mandates the addition of certain elements to transaction value to arrive at
taxable value. Clause (c) of section 15(2) 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 taxable value.

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

Question 4: Ayushman Medical Centre, a clinical establishment, offers the following services:

S Particulars Amount
No.
1 Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of 10,00,000
section 2(h) of Clinical Establishments Act, 2010.

2 Plastic surgeries. [One such surgery was conducted to repair cleft lip of a new born baby. 20,00,000
Consideration of ` 1,00.000 was charged for the same

3 Air ambulance services to transport critically ill patients from distant locations to 1,00,000
Ayushman Medical Centre.

4 Alternative medical treatments by way of Ayurveda. Such therapy is a recognized system 2,50,000
of medicine in terms of section 2(h) of Clinical Establishments Act, 2010.

*Given values are excluding GST

Ayushman Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells. You are required to compute the value of supply and GST liability [CGST &
SGST or IGST] of Ayushman Medical Centre, if any, in the light of relevant GST provisions. Note — All
the services provided by Ayushman Medical Centre are intra-State supplies. Assume the rates of CGST,
SGST and IGST to be 9%, 9% and 18% respectively.

Solution: Health care services provided by, inter alia, a clinical establishment in India are exempt from
GST vide Notification No. 12/2017.The definition of 'health care services' stipulates that such services
must be provided in any recognized system of medicines.

As per section 2(h) of Clinical Establishments Act, 2010 recognised system of medicine means
allopathy, yoga, Naturopathy, ayurveda, homeopathy, siddha and unani system of medicines or any
other system of medicines as may be recognised by the Central Government. Accordingly, value of
supply and GST liability of Ayushman Medical Centre will be computed as follows:
S No. Particulars Amount
Reiki healing treatments [Not a recognized system of medicines] 10,00,000
Plastic surgeries [` 20,00,000 – ` 1,00,000] ['Health care services' specifically 19,00,000
excludes, inter alia, cosmetic or plastic surgery except when undertaken to
restore/reconstruct anatomy/functions of body affected due to congenital defects,
developmental abnormalities. injury or trauma]
Air ambulance services to transport critically ill patients from distant locations to NIL
the Medical Centre ['Health care services' specifically includes services by way of
transportation of the patient to and from a clinical establishment
Alternative medical treatments by way of Ayurveda [Being a recognized system of NIL
medicines]

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 Value of Supply 29,00,000
CGST @ 9% 2,61,000
SGST @ 9% 2,61,000

Note: Services provided by cord blood banks by way of preservation of stem cells or any other service
in relation to such preservation are exempt from GST. Therefore, services provided in relation to
preservation of stem cells by the cord blood bank operated by Ayushman Medical Centre will be
exempt from GST.

Question 5: Quantum Plast Private Limited, Delhi supplies plastic granulation machine to Capscom
Ltd. Delhi. It furnishes the following details in respect of such supply:
Particulars Amount
List price of the machine (exclusive of taxes and discounts) 1,00,000
Corrugated Boxes used for packing the machine (not included in price above) 1,000
Subsidy received from Delhi Government on sale of such machine (considered in price 5,000
above
Discount @2% is offered on list price of the machine (recorded in the invoice for the
machine)
Determine the value of taxable supply made by Quantum Plast Private Limited.

Solution: Computation of value of taxable supply

Particulars Amount
List price of the goods (exclusive of taxes and 1,00,000
discounts)
Add: Corrugated Boxes used for packing the machine 1,000
[Includible in the value as per section 15(2)(c)]
Add: Subsidy received from Delhi Government on ------
sale of such machine [Subsidy received from State
Government is not included the value in terms of
section 15(2)(e)]
TOTAL 1,01,000
Less: Discount © 2% on ` 1,00,000 [Since discount is 2,000
known at the time of supply, it is deductible from the
value in terms of section 15(3)(a)]
Value of taxable 99,000

Question 6: Shiv Shankar Ltd., a registered supplier in Mumbai (Maharashtra), has supplied goods to
Narad Traders and Nandi Motors Ltd. located in Ahmedabad (Gujarat) and Pune (Maharashtra)
respectively. Shiv Shankar Ltd. has furnished the following details for the current month:
S No. Particulars Narad Traders Nandi Traders
1 Price of the goods (excluding GST) 10,000 30,000
2 Packing charges 500
3 Commission 500
4 Weighment charges 2,000

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 5 Discount for prompt payment (recorded in 1,000
the invoice.
Items given in points (ii) to (v) have not been considered while arriving at price of the goods given in
point (i) above.

Compute the GST liability [CGST & SGST or IGST, as the case may be] of Shiv Shankar Ltd. for the given
month. Assume the rates of taxes to be as under:
CGST 9%
SGST 9%
IGST 18%
Make suitable assumptions, wherever necessary.

Note: The supply made to Narad Traders is an inter-State supply.

Solution: Computation of GST liability

S No. Particulars Narad Traders Nandi Motors
1 Price of the goods 10,000 30,000
2 Add: Packing charges (Note 1) 500
3 Add: Commission (Note 1) 500
4 Add: Weighment charges (Note 1) 2,000
5 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.

Question 7: 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 ` 3 lakh a year compared
to ` 5 lakh a year for other students. What would be the taxable value of the service of coaching and
instruction provided by the institution?

Solution: 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 from
the Government but is from a philanthropic association. Therefore, the subsidy is to be added back to
the price to arrive at the taxable value, which comes to ` 5 lakh a year.

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 Question 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 offers 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 concomitant tax adjustments
made?

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

Question 9: Rajesh & Co. provides financial and management consultancy to a group of companies for
an annual retainership fee of ` 15 lakh. It is given a room in the head office of the group for its exclusive
use. Rajesh & Co. pays GST on the amount of ` 15 lakh. Is the value for the service provided by Rajesh
& Co., correct under GST laws? If not, please elaborate.

Solution: Rajesh & Co. gets an office room free of cost, which is an additional non-monetary
consideration for its services. The market value of the rent of the room must be added to the retainer
fee (` 15 lakh) in order to arrive at the value of the taxable service provided by Rajesh & Co, as per rule
27 of the CGST Rules relating to valuation.

Question 10: Singhal Brothers, registered in Uttarakhand has supplied 30 tons of a chemical @ ` 50,000
per ton (excluding taxes) to P of Uttarakhand on September, 20XX. Invoice for the supply has also been
issued on the same date. Further, following additional amounts were also charged from P:-
Particulars Amount
Freight 1,80,000
Packing charges 1,10,000
Weighing charges 20,000
Cost of instrument specially purchased by Singhal Brothers to 3,10,000
manufacture the chemical.

As per the terms of the contract of supply, Singhal Brothers is required to get the chemical inspected
by an independent testing agency before the delivery of the same to P. P has paid such inspection
charges amounting to ` 12,000 directly to the testing agency Singhal Brothers has also received `
50,00,000 as a subsidy from State Government for setting up chemical manufacturing plant in
Uttarakhand.

P is required to make payment within 15 days of supply in terms of the contract. However, P delayed
the payment of consideration and made payment in November, 20XX thus paid ` 15,000 as interest.
You are required to calculate the GST liability in this case and due date of deposit. Assume the rate of
GST to be 18%.

Note:- Singhal Brothers and P are not related and price is the sole consideration for the supply.

Solution: Computation of GST liability of Singhal Brothers

Particulars Amount

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 Price of chemicals (` 50,000 x 30 tons) [Note-1] 15,00,000
Freight [Note-2] 1,80,000
Packing charges [Note-3] 1,10,000
Weighing charges [Note-3] 20,000
Cost of special instrument [Note-4] 3,10,000
Inspection charges [Note-5] 12,000
Government subsidy [Note-6] --
Interest for late payment [Note 7] (` 15,000 x 12,712
100/118)
Value of taxable supply 21,44,712
Tax liability for the month of September 20XX
Value of taxable supply (` 21,44,712- ` 12,712) [Note- 21,32,000
8]
CGST @ 9% 1,91,880
SGST @ 9% 1,91,880
Tax liability for the month of November 20XX
Interest for late consideration [Note-9] 12,712
CGST payable @ 9% 1,144
SGST payable @ 9% 1,144
Due date of deposit of GST
Particulars Time of Supply Due date of deposit [Note-11]

GST liability of `3,83,760 for the September 8, 20XX October 20, 20XX
taxable supply made by Singhal
Brothers [Note-101]
Interest amounting to ` 2,288 November, 20XX December 20, 20XX
[Note-9]
Notes:

1. As per section 15(1) of the CGST Act, 2017, the value of a supply is the transaction value i e , the
price actually paid or payable for the said supply when the supplier and the recipient of the supply are
not related and the price is the sole consideration for the supply.

2. The given supply is a composite supply involving supply of goods (chemical) and services (freight)
where the principal supply is the supply of goods. As per section 8(a) of the CGST Act, 2017, a
composite supply is treated as a supply of the principal supply involved therein and charged to tax
accordingly thus, tax rate applicable to the goods (chemical) has been considered.

3. All incidental expenses including packing charged by the supplier to the recipient of a supply are
includible in the value of supply in terms of section 15(2)(c) of CGST Act, 2017.

4. Any amount charged for anything done by the supplier in respect of the supply of goods at the time
of or before delivery of goods is includible in the value of supply in terms of section 15(2)(c) of CGST
Act, 2017.

5. Any amount that the supplier is liable to pay in relation to supply but incurred by the recipient of
supply and not included in the price actually paid for the goods is includible in the value of supply in
terms of section 15(2)(b) of CGST Act, 2017.

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 6. Subsidies not directly linked to the price and provided by the Central Government and State
Governments are not includible in the value of supply in terms of section 15(2)(e) of the CGST Act,
2017.

7. Interest for the delayed payment of any consideration for any supply is includible in the value of
supply in terms of section 15(2)(d) of the CGST Act, 2017. The interest has to be considered as cum tax
value and tax payable thereon has to be computed by making back calculations in terms of rule 35of
CGST Rules, 2017.

8. The tax liability for the month of September, 20XX will not include the tax payable on the amount
of interest as the tax liability for the delayed payment of interest arises on the date of receipt of
interest in terms of section 12(6) of CGST Act, 2017.

9. As per section 12(6) of the CGST Act, 2017, the time of supply in case of addition in value by way of
interest for delayed payment of consideration for goods is the date on which the supplier receives
such addition in value Thus, the time of supply of interest received on account of delayed payment of
consideration is the date of receipt of interest.

10. The time of supply will be the time of issue of invoice. Thus in the present case, the time of supply
would be date of issue of invoice i.e. September 8, 20XX.

11. As per section 39(1) of CGST Act, 2017 every person registered under regular scheme of payment
of tax has to furnish the prescribed return on or before 20'h of the succeeding month. Further, section
39(7) provides that every regular registered person is liable to pay tax due to the Government by the
last date on which he is required to furnish such return. Thus, GST is liable to be paid on or before 20th
of the succeeding month.

Question 11: A manufacturer of machinery supplied a special machine to LM Furnishers. Following

details are provided in relation to amounts charged:
Particulars Amount
Price of machinery excluding taxes (before 6,00,000
cash discount)
Transit insurance 11,000
Packing charges 9,000
Extra charges for designing the machine 20,000
Freight 12,000

Charges mentioned in (ii) to (v) are not included in (i) above.

Other information furnished is –

(a) Cash discount @ 2% on price of machinery has been allowed to the customer at the time of supply
and also recorded in invoice.

(b) GST rate - 18%

Calculate value of supply of the special machine

Solution: Computation of value of special machine

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 Particulars Amount

Price of machinery 6,00,000

Add. Transit insurance [Note 1] 11,000
Packing charges [Note 2] 9,000
Extra design charges [Note 3] 20,000
Freight [Note 1] 12,000
Total: 6,52,000
Less 2% cash discount on price of machinery [` 6,00,000 12,000
x 2%] [Note 4]
Value of taxable supply 6,40,000

Notes:

1. The given supply is a composite supply involving supply of goods (special machine) and services
(transit insurance and freight) where the principal supply is the supply of goods. As per section 8(a) of
the CGST Act, 2017, a composite supply is treated as a supply of the principal supply involved therein
and charged to tax accordingly thus, tax rate applicable to the goods (special machine) has been
considered.

2. All incidental expenses including packing charged by the supplier to the recipient of a supply are
includible in the value of supply in terms of section 15(2)(c) of CGST Act, 2017.

3. Any amount charged for anything done by the supplier in respect of the supply of goods at the time
of, or before delivery of goods is includible in the value of supply in terms of section 15(2)(c) of CGST
Act, 2017. Thus, extra designing charges are to be included in the value of supply.

4. Cash discount was given at the time of supply and also recorded in invoice, so the same is not to
be included while computing value of supply in terms of section 15(3)(a) of CGST Act, 2017.

Question 12: Ram Ltd., Delhi supplies a machine to B Private Ltd, Delhi. From the following details
furnished, determine the value of taxable supply made by Ram Ltd.
Particular Amount(Rs)
List price of the machine (exclusive of taxes and discounts) 5,00,000
Corrugated boxes used for packing the machine (not included in price above) 1,500
Subsidy received from Delhi Government on sale of such machine (considered in price 5,000
above)
Discount @2.5% offered on list price of machine (recorded in the invoice for machine)
Solution:

In accordance with the provisions of Section 15, the value if taxable supply shall be calculated as
below:
Particular Amount (Rs)
List price of the machine (exclusive of taxes and discounts) 5,00,000
Less: Discount @2.5% on list Price 12,500
Add: Corrugated boxes used for packing the machine 1,500
Subsidy received from Delhi Government on sale of such machine. Not Taxable

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 Value of Taxable Supply 4,89,000

Question 13: Sohan Advertisers conceptualised and designed the advertising campaign for a new
product launched by New Moon Pvt Ltd for a consideration of Rs.5,00,000/-. Sohan Advertisers owed
Rs.20,000/- to one of its vendors in relation to the advertising service provided by it to New Moon Pvt
Ltd. Such liability of Sohan Advertisers was discharged by New Moon Pvt Ltd. New Moon Pvt Ltd
delayed the payment of consideration and thus, paid Rs.15,000/- as interest. Determine the value of
taxable supply made by Sohan Advertisers.

Solution:

In accordance with the provisions of Section 15, the value if taxable supply shall be calculated as
below:

Particular Amount (Rs)

Service charges 5,00,000
Add: Payment made by New Moon Pvt. Ltd to vendors of Sohan Advertisers 20,000
Add: Interest for delay in payment of consideration 15,000
Value of Taxable Supply 5,35,000

Question 14: Shri Krishna Pvt. Ltd., a registered supplier, furnishes the following information relating
to goods sold by it to Shri Balram Pvt. Ltd.
S. No Particular Amount (Rs)
(i) Price of the goods (excluding below taxes & charges) 1,00,000
(ii) Municipal tax 5,000
(iii) Inspection Charges 15,000
(iv) Weighment charges (Such charges were paid by Shri Balram Pvt. Ltd. to 3,000
Radhe Pvt Ltd on behalf of Shri Krishna Pvt. Ltd.)
(v) Late fees for delayed payment inclusive of GST (However, these charges 2,000
were ultimately waived by Shri Krishna Pvt. Ltd.)

Solution:

In accordance with the provisions of Section 15, the value if taxable supply shall be calculated as
below:
Particular Amount (Rs)
Price of the goods (excluding below taxes & charges) 1,00,000
Add: Municipal tax 5,000
Add: Inspection Charges 15,000
Add: Payment made by recipient on behalf of supplier 3,000
Late fees for delayed payment inclusive of GST (Not includible since the NIL
same is waived off)
Value of Taxable Supply 1,23,000

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 Question 15: Mohan Ltd, a registered supplier, has supplied machinery to A Ltd (a supplier
registered in the same State). It provides following particulars regarding the same:
S.No Particular Amount (Rs)
(i) Price of machinery (exclusive of taxes and discounts) 5,50,000
(ii) Part fitted in the machinery at the premises of A Ltd (Amount has been 20,000
paid by A Ltd directly to the supplier. However, it was Mohan Ltd.’s liability
to pay the said amount. The said amount has not been recorded in the
invoice issued by Mohan 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) Mohan 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.

Solution:

In accordance with the provisions of Section 15, the value if taxable supply shall be calculated as
below:
Particular Amount (Rs)
Price of machinery (exclusive of taxes and discounts) 5,50,000
Less: Discount @ 2% on price of the machinery 11,000
Add: Payment made by recipient on behalf of supplier 20,000
Add: Installation and testing charges for machinery 25,000
Additional discount @ 1% at year end Nil
Value of Taxable Supply 5,84,000

Question 16: M/s Guru Enterprises (Delhi), a registered taxpayer, made a taxable supply to M/S Y
Ltd (Delhi). The value related details of the said supply are as follows:

S. No Particular Amount (Rs)

(i) Price of goods (Does not include any tax or discounts) 10,00,000

(ii) Tax levied by the municipal authority 10,000

(iii) Subsidy received from M/s Jiva Enterprises Pvt Ltd (The price above is 1,00,000
after consideration of such subsidy amounts)

(iv) Amount incurred by M/s Y Ltd for post-delivery inspection (Charges 5,000
incurred post receipt of goods by M/S Y Ltd)

In respect of the above supply, M/s Guru enterprises had procured some raw material from M/s X Ltd,
for which it owed Rs 25,000. The said amount was directly paid by M/S Y Ltd to M/s X Ltd and is not
included in the price of goods mentioned above.

The payment of consideration for the said supply was delayed by M/S Y Ltd and hence an interest
amount of Rs 20,000 was also charged by M/s Guru Enterprises.

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 The applicable tax rate on such supply is as follows CGST @ 6%, SGST @ 6% and IGST @ 12%

You are required to determine the taxable value as well as the applicable tax liability amounts for the
said transaction.

Solution:

Computation Of Taxable Value & Tax Liability:

Particular Amount (Rs)

Price of goods (exclusive of tax and discounts) 10,00,000

Add: Tax levied by Municipal Authority 10,000

Add: Subsidy received from Jiva Enterprises Pvt Ltd (Subsidy provided by non- 1,00,000
government bodies and which is directly linked to the price is includible in
the value in terms of Section 15)

Add: Post-delivery inspection charges -

Add: Payment made by recipient on behalf of supplier 25,000

Add: Interest (It has been presumed that interest is inclusive of GST (Rs 20,000 x 17857
100/112))

Value of Taxable Supply 11,52,857

CGST @6% 69,171

SGST @6% 69,171

Question 17: Mr. A sold a bike for Rs. 34,000 with exchange of old bike. Determine the value of supply
for the purpose of levy of GST in following Cases:

Case 1: Open Market price of the new bike is Rs. 52,000. Old Bike can be sold in the market for Rs.
20,000.

Case 2: Open Market price of the new bike is not available. Old Bike can be sold in the market for Rs.
20,000.

Case 3: Open Market price of the new bike as well as old bike is not available. A bike with the same
features of other company is selling in the market for Rs. 51,000.

Case 4: Open Market price of the new bike as well as old bike is not available. Product of same like
kind & quality is also not available in the market. Cost of purchase of the bike is Rs. 47,000.

Solution:

Case 1: In this case Open Market Value is available. Hence, Value of Supply will be Rs. 52,000.

Case 2: In this case Open Market Value of new bike is not available. Hence, Value of Supply will be:

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 Consideration in money i.e., Rs. 34,000+ Amount in money as is equivalent to the consideration not in
money i.e., Rs. 20,000 = Rs. 54,000.

Case 3: In this case Open Market Value of new bike as well as old bike is not available. Value of like
kind bike of another company i.e., Rs. 51,000 will be considered as value of supply.

Case 4: In this case Open Market Value of new bike as well as old bike is not available. Also, Value of
like kind bike is not available. Hence, value of supply will be Cost of acquisition plus 10% i.e., Rs.
47,000+ Rs. 4,700 Rs. 51,700.

Question 18: Black and White Pvt Ltd has provided the following particulars relating to goods sold by
it to Colourful Pvt Ltd:

• List price of the goods (exclusive of taxes and discounts) - Rs 50,000

• Tax levied by municipal authority on the sale of such goods – Rs 5000

• CGST and SGST chargeable on the goods - Rs 10,440

• Packing charges (not included in price above) - Rs 1,000

Black and White Pvt Ltd received Rs 2,000 as a subsidy from a NGO on sale of such goods. The price of
Rs 50,000 of the goods is after considering such subsidy. Black and White Ltd offers 2% discount on
the list price of the goods which is recorded in the invoice for the goods.

Determine the value of taxable supply made by Black and White Pvt. Ltd.

Solution:

Computation of Value of Taxable Supply:

Particular Amount (Rs)

List price of the goods (exclusive of taxes and discounts) 50,000

Less: Discount @ 2% on Rs 50,000 1,000

Add: Tax levied by municipal authority on the sale of such goods 5,000

CGST and SGST chargeable on the goods Not Taxable

Add: Packing charges 1,000

Add: Subsidy received from NGO (Subsidy received from a non-government 2,000
body is includible in the value of supply)

Value of Taxable Supply 57,000

Question 19: Anju 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

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 availed for security of her office, tax on which is payable under reverse charge. Input tax involved in
such bill is Rs 2,700.

Anju 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 Anju is right? Explain with reasons.

Solution:

The amount available in the Electronic Credit Ledger can 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, Anju is
wrong and she will need to pay GST of Rs 2,700 on security service through Electronic Cash Ledger.

Question 20: X Pvt. Ltd., a money changer, has exchanged US $10,000 to Indian rupees @ 74 per US
$. X Pvt. Ltd. wants to value the supply in accordance with rule 32(2)(b) of CGST Rules.

Determine the value of supply made by X Pvt. Ltd.

Solution:

As per rule 32(2)(b) of CGST Rules, the value in relation to the supply of foreign currency, including
money changing, is deemed to be-

(i) 1% of the gross amount of currency exchanged for an amount 1,00,000, subject to a minimum
amount of * 250; up to

(ii) 1,000 and 0.5% of the gross amount of currency exchanged for an amount exceeding 1,00,000 and
up to 10,00,000.

Therefore, the value of supply, made by X Pvt. Ltd., under rule 32(2)(b) of CGST Rules is computed as
under:

Particular Amount (Rs) Amount (Rs)

Value of currency exchanged in Indian rupees [Rs 74 x US 7,40,000

$10,000]

Up to 1,00,000 1,000

For 6,40,000 [0.50% x 6,40,000] 3,200

Value of Supply 4,200

Question 21: H Manufacturers Ltd., registered in Mumbai (Maharashtra), is a manufacturer of

footwear. It imports a footwear making machine from USA. H Manufacturers Ltd. enters into a

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 contract with Rudra Logistics, a licensed customs broker with its office at Ahmedabad (Gujarat), to
meet all the legal formalities in getting the said machine cleared from the customs station.

Apart from this, H Manufacturers Ltd. authorizes Rudra Logistics to incur, on its behalf, the expenses
in relation to clearance of the imported machine from the customs station and bringing the same to
the warehouse of H Manufacturers Ltd. which shall be reimbursed by H Manufacturers Ltd. to Rudra
Logistics on the actual basis in addition to agency charges.

Rudra Logistics provided following details in the invoice issued by it to H Manufacturers Ltd.

Particular Amount (Rs)

Agency charges 5,00,000

Unloading of machine at Kandla port, Gujarat 50,000

Charges for transportation of machine from Kandla port, Gujarat to its Rudra Logistics' 25,000
godown in Ahmedabad, Gujarat

Charges for transportation of machine from Rudra Logistics' Ahmedabad godown to the 28,000
warehouse of H Export Import House in Mumbai, Maharashtra

Prepared and submitted Bill of Entry and paid customs duty 5,00,000

Dock dues paid 50,000

Port charges paid 50,000

Hotel expenses 45,000

Travelling expenses 50,000

Telephone expenses 2,000

Compute the value of supply made by Rudra Logistics with the help of given information.

Solution:

Value of supply made by Rudra Logistics is as follows:

Particular Amount (Rs)

Agency charges 5,00,000

Add: Unloading of machine at Kandla port, Gujarat Nil

Add: Charges for transportation of machine from Kandla port, Gujarat to its Nil
Rudra Logistics' godown in Ahmedabad, Gujarat

Add: Charges for transportation of machine from Rudra Logistics' Ahmedabad Nil
godown to the warehouse of H Export Import House in Mumbai,
Maharashtra

Add: Customs duty Nil

Add: Dock dues paid Nil

Add: Port charges paid Nil

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 Add: Hotel expenses 45,000

Add: Travelling expenses 50,000

Add: Telephone expenses 2,000

Value of Supply 5,97,000

Question 22: Raman Ltd, a registered supplier in Mumbai (Maharashtra), has supplied goods to Sahil
Traders and Jogi Motors Ltd located in Ahmedabad (Gujarat) and Pune (Maharashtra) respectively.
Raman Ltd has furnished the following details for the current month:

Particular Sahil Traders Jogi Motors

Price of the goods (excluding GST) 20,000 15,000

Packing charges 600

Commission 400

Weighment charges 1,000

Discount for prompt payment (recorded in the invoice) 500

Items given in points (i) to (v) have not been considered while arriving at price of the goods of
Raman Ltd given in point(i) above.

Compute the GST liability (CGST & SGST or IGST, as the case may be) for the given month. You may
note that the supply mode to Sahil Traders is on inter-state supply. Assume the rates of taxes to be
as under:

CGST : 9% , SGST : 9% , IGST : 18%

Solution:

In accordance with the provisions of Section 15, the value if taxable supply shall be calculated as
below:

Particular Sahil Traders Jogi Motors

Price of the goods (excluding GST) 20,000 15,000

Add: Packing charges 600

Add: Commission 400

Add: Weighment charges 1,000

Less: Discount for prompt payment (recorded in the 500

invoice)

Value Of Taxable Supply 21,000 15,500

CGST @9% - 1,395

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 SGST @9% - 1,395

IGST @18% 3,780 -

Payment of Tax

Question 1: Mr. Ram have following balance in his Electronic Credit Ledger:

IGST Rs.50,000

CGST Rs.45,000

SGST Rs.45,000

For the month of June 2022 Mr. Ram has following GST liability:

Outward Liability: IGST 25000

CGST 30000
SGST 30000

Tax Payable under Reverse Charge 35000

Late Fees 5000

Interest 2000

Calculate the amount which was to be paid in cash and Balance in Credit Ledger.

Solution: Statement Showing Payment of GST liability:

Particular Total Cash CGST Credit SGST Credit IGST Credit

Balance in Credit Ledger 1,40,000 - 45,000 45,000 50,000

IGST Outward Liability 25,000 - - - (25,000)

CGST Outward Liability 30,000 - (30,000) - -

SGST Outward Liability 30,000 - - (30,000) -

Reverse Charge Liability 35,000 35,000 - - -

Late Fees 5,000 5,000 - - -

Interest 2,000 2,000 - - -

Total Payment 1,27,000 42,000 30,000 30,000 25,000

Balance in Credit Ledger - 15,000 15,000 25,000

Question 2: Mr. Nimit, a supplier of goods, pays GST under, regular scheme. He is not eligible for any
threshold emption. He has made the following outward taxable supplies in the month of March 2022.

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 Intra-state supplies of goods Rs.6,00,000

Inter-state supplies of goods Rs.2,00,000

He has also furnished the following information in respect of purchases made from registered
dealers during March 2022.

Intra-state purchase of goods Rs 4,00,000

Inter-state purchase of goods Rs.50,000

Balance of ITC available at the beginning of March 2022:

CGST Rs.15,000

SGST Rs.35,000

IGST Rs.20,000

Compute the net GST payable by Mr. Nimit for the month of March 2022.

Rate of CGST SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies.

Solution: Computation of Output GST Liability of Mr Nimit (March 2022):

Particular Taxable Amount CGST(Rs) SGST(Rs) IGST(Rs)

Intra-state supplies of goods 6,00,000 54,000 54,000 -

Inter-state supplies of goods 2,00,000 - - 36,000

Total 54,000 54,000 36,000

Computation of Input GST Credit of Mr. Nimit (March 2022):

Particular Taxable Amount CGST(Rs) SGST(Rs) IGST(Rs)

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

Intra-state purchase of taxable 4,00,000 36,000 36,000 -

Inter-state purchase of taxable 50,000 - - 9,000

Total 51,000 71,000 29,000

Computation of Net GST Payable in Cash (August 2020):

Particular CGST (Rs.) SGST (Rs.) IGST (Rs)

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

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 Less: Utilization of ITC

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

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

Set-off of SGST credit firstly against SGST liability and - (54,000) (7,000)
then against IGST liability

Net GST Payable in Cash 3,000 Nil Nil

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

Question 3: Explain the order in which liability of taxable person has to be discharged under GST laws.

Solution: Section 49(8) of CGST Act, 2017 prescribes the chronological order in which the liability of a
taxable person has to be discharged:

(a) self -assessed tax and other dues for the previous tax periods have to be discharged first.

(b) self -assessed tax and other dues for the current tax period have to be discharged next.

(c) Once these two steps are exhausted, thereafter any other amount payable including demand
Assessed by officer is to be discharged.

In other words, the liability if any, arising out of demand notice and adjudication proceedings comes
last. This sequence has to be mandatorily followed.

The expression “other dues” referred above mean interest, penalty, fee or any other amount payable
under the Act or the rules made thereunder.

Question 4: Can one use input tax credit for payment of interest, penalty, and payment under reverse
charge?

Solution: No, one cannot use input tax credit for payment of interest, penalty, and payment under
reverse charge. As per Section 49 (4) of the CGST Act, 2017 the amount available in the electronic
credit ledger may be used for making any payment towards 'output tax'.

As per Section 2 (82) of the CGST Act 2017, output tax means, the CGST/SGST chargeable under this
Act on taxable supply of goods and/or services made by him or by his agent and excludes tax payable
by him on reverse charge basis.

Therefore, input tax credit cannot be used for payment of interest, penalty, and payment under
reverse charge.

Question 5: M/s XYZ has a turnover of Rs. 2 Crores in a previous financial year. He is filing his GST
return in the month of January 2020. He has entered the following amount in return-

Export turnover- 5 Crores

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 Exempted turnover – 6 Crores.

Taxable turnover- 40Lac

Whether Rule 86(b) is applicable or not on M/s XYZ?

Solution: Rule 86B is not applicable in this case. As the taxable turnover in a month is less than
Rs. 50 Lac.

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