16 INTERMEDIATE EXAMINATION: MAY, 2023

PAPER 4B - INDIRECT TAXES

QUESTIONS

(1) All questions should be answered on the basis of the position of GST law as
amended up to 31.10.2022.
(2) The GST rates for goods and services mentioned in various questions are
hypothetical and may not necessarily be the actual rates leviable on those goods
and services. Further, GST compensation cess should be ignored in all the
questions, wherever applicable.
Manavtaa Trust is a charitable trust registered under section 12AB of the Income-tax Act, 1961.
The trust is well known for its educational, charitable and religious activities. The trust became
liable to registration under GST in the current financial year since it exceeded the threshold limit
for registration and thus, got itself registered in the State of Gujarat in the month of May.
In the month of June, a multinational company, Dhruvtara Ltd., gifted 500 laptops worth ` 50
lakh to the trust free of cost for the charitable purposes, without any intention of seeking any
business promotion from the same. Manavtaa Trust distributed these laptops for free in the
same month to the needy students for facilitating them in their higher studies.
Manavtaa Trust owns a higher secondary school – Manavtaa Higher Secondary School - in
Gujarat. In the month of July, the trust availed security personnel services from ‘Perfect
Security Solutions’, Gujarat, a proprietorship concern, for security of the school premises for a
consideration of ` 2,00,000. It also received legal consultancy services from ‘Maya & Co.’ a
firm of advocates for the issues relating to the said school for ` 1,20,000, in the same month.
Manavtaa Trust furnished the following information regarding the expenses incurred by it in
the month of August; all transactions being inter-State:
(i) Services received and used for supplying taxable outward supplies – ` 3,50,000.
(ii) Catering services received for students of Manavtaa Higher Secondary School
– ` 2,00,000.
(iii) Buses purchased with seating capacity of 25 persons including driver – ` 10,50,000
(Buses were delivered in the first week of September).
Manavtaa Trust provided the following information in respect of the services provided by it
during the month of August:
(i) It runs an old age home for senior citizens. Nominal monthly charges of ` 15,000 for
boarding, lodging and maintenance are charged from each member. Total number of
members is 20.

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 PAPER – 4: TAXATION 17

(ii) It rents out a community hall situated within the precincts of a temple managed by it on
15th August for a religious function in first half for `5,000 and for an art exhibition in
second half for ` 6,000.
(iii) It rents out the rooms in the precincts of said temple to the devotees for a rent of ` 950
per room per day. Total rent collected in August amounts to ` 35,000.
All the figures given above are exclusive of taxes wherever applicable. Aggregate turnover of
Manavtaa Trust for the preceding financial year was ` 15 lakh. All the conditions necessary
for availment of ITC are fulfilled subject to the information given. Manavtaa Trust intends to
avail exemption from GST wherever applicable.
Based on the information given above, choose the most appropriate answer to the following
questions-
1. Which of the following activities of Manavtaa Trust does not amount to supply under the
GST law?
(a) Free laptops distributed to the needy students
(b) Boarding, lodging and maintenance of the senior citizens by the old age home run
by the trust
(c) Renting of community hall situated within the precincts of the temple managed by
the trust
(d) Renting of rooms in the precincts of the temple managed by the trust
2. Compute the value of inward supplies on which tax is payable by Manavtaa Trust under
reverse charge, for the month of July.
(a) ` 2,00,000
(b) ` 3,20,000
(c) ` 1,20,000
(d) Nil
3. Compute the value of exempt supply made by Manavtaa Trust for the month of August.
(a) ` 3,00,000
(b) Nil
(c) ` 3,35,000
(d) ` 35,000
4. Compute the value of taxable supply made by Manavtaa Trust for the month of August.
(a) ` 3,00,000
(b) ` 11,000

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 18 INTERMEDIATE EXAMINATION: MAY, 2023

(c) Nil
(d) ` 35,000
5. Determine the amount of ITC that can be credited to the Electronic Credit Ledger of
Manavtaa Trust, in the month of August assuming rate of GST to be 18%.
(a) ` 36,000
(b) ` 63,000
(c) ` 1,89,000
(d) ` 2,88,000
6. Mr. Prithviraj, registered under GST, is engaged in supplying services (as discussed in
the table below) in Maharashtra. He has furnished the following information with respect
to the services provided/ received by him, during the month of February:
S. Particulars Amount
No. (`)
(i) Carnatic music performance given by Mr. Prithviraj to promote a 1,40,000
brand of readymade garments (Intra-State transaction)
(ii) Outdoor catering services availed for a marketing event organised 50,000
for his prospective customers (Intra-State transaction)
(iii) Services of transportation of students provided to Subhaskar 1,00,000
College providing education as part of a curriculum for obtaining a
recognised qualification (Intra-State transaction)
(iv) Legal services availed for official purpose from an advocate 1,75,000
located in Gujarat (Inter-State transaction)
(v) Services provided to Wealth Bank as a business correspondent 2,00,000
with respect to accounts in a branch of the bank located in urban
area (Intra-State transaction)
(vi) Recovery agent’s services provided to a car dealer (Intra-State 15,000
transaction)
(vii) General insurance taken on a car (seating capacity 5) used for 40,000
official purposes (Intra-State transaction)
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) All inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.

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 PAPER – 4: TAXATION 19

(iv) The turnover of Mr. Prithviraj was ` 2.5 crore in the previous financial year.
Compute the net GST payable in cash, by Mr. Prithviraj for the month of February.
7. Determine whether GST is payable in each of the following independent transactions:
(i) Dhruv Developers sold a plot of land in Greater Noida after levelling, laying down of
drainage lines, water lines and electricity lines.
(ii) Deccan Shipping Pvt. Ltd., registered under GST in Andaman and Nicobar islands,
provided the passenger transportation services to the local residents in the ferries
owned by it from Neil Island to Havelock Island.
8. State the person liable to pay GST in the following independent services provided:
(i) Siddhi Builders, registered in Haryana, rented out 20 residential units owned by it in
Sanskriti Society to Rudra Technologies, an IT based firm registered in the State of
Haryana, for accommodation of its employees.
(ii) M/s. Purohit Consultants, a partnership firm registered in Delhi as a regular tax
payer, paid sponsorship fees of ` 70,000 at a seminar organized by a private NGO
(a partnership firm) in Delhi.
9. Briefly enumerate the contraventions which make a registered person liable to
cancellation of registration, as prescribed under rule 21 of the CGST Rules, 2017.
10. State the order in which every taxable person discharges his tax and other dues under
GST law, as provided under section 49 of the CGST Act, 2017.

SUGGESTED ANSWERS

Question Answer
No.

1 (a) Free laptops distributed to the needy students

2 (d) Nil

3 (c) ` 3,35,000

4 (b) ` 11,000

5 (b) ` 63,000

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 20 INTERMEDIATE EXAMINATION: MAY, 2023

6. Computation of GST payable

Particulars Value of CGST SGST IGST
supply @ 9% (`) @ 9% @ 18%
(`) (`) (`)
GST payable under forward charge
Carnatic music performance given to 1,40,000 12,600 12,600 Nil
promote a brand of readymade
garments
[Carnatic music performance by
Mr. Prithviraj is not exempt from GST
even though the consideration charged
does not exceed ` 1,50,000 since said
performance has been made by him as
a brand ambassador.]
Services of transportation of students 1,00,000 9,000 9,000 Nil
provided to Subhaskar College
[Services of transportation of students
provided to an educational institution
other than an institution providing pre-
school education or education up to
higher secondary school, are not
exempt.]
Services provided to Wealth Bank as a 2,00,000 18,000 18,000 Nil
business correspondent
[Services provided by a business
correspondent to a banking company
are not exempt when such services are
provided with respect to accounts in its
urban area branch.]
Services provided as a recovery agent 15,000 1,350 1,350 Nil
[Tax is payable under forward charge
since recovery agent’s services are
being provided to a person other than
banking company/financial institution/
non-banking financial company.]
Total GST payable under forward 40,950 40,950 Nil
charge (A)
GST payable under reverse charge
Legal services availed from an advocate 1,75,000 Nil Nil 31,500

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 PAPER – 4: TAXATION 21

[Legal services received by a business

entity with aggregate turnover in the
preceding financial year exceeding
threshold limit for registration (` 20 lakh)
are not exempt and tax on the same is
payable under reverse charge.]
Total GST payable under reverse Nil Nil 31,500
charge (B)
Total GST payable [(A)+(B)] 40,950 40,950 31,500
Computation of total ITC available
Particulars Value of CGST SGST IGST
supply @ 9% @ 9% @ 18%
(`) (`) (`) (`)
Outdoor catering services availed 50,000 Nil Nil Nil
[ITC on outdoor catering services is
blocked except when such services are (i)
used by the taxpayer who is in the same
line of business or (ii) provided by the
employer to its employees under a
statutory obligation.]
Legal services availed 1,75,000 Nil Nil 31,500
[ITC is available as said services are used
in course or furtherance of business.]
General insurance taken on a car (seating 40,000 Nil Nil Nil
capacity 5) used for official purposes
[ITC on motor vehicles for transportation
of persons with seating capacity ≤ 13
persons (including the driver) is blocked
except when the same are used for (i)
making further taxable supply of such
motor vehicles (ii) making taxable supply
of transportation of passengers (iii)
making taxable supply of imparting
training on driving such motor vehicles.
Further, ITC is not allowed on services of
general insurance relating to such
ineligible motor vehicles.]
Total ITC available Nil Nil 31,500

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 22 INTERMEDIATE EXAMINATION: MAY, 2023

Computation of net GST payable in cash

Particulars CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`)
GST payable under forward charge 40,950 40,950 Nil
Less: ITC of IGST1 (15,750) (15,750) -
IGST IGST
25,200 25,200 Nil
Add: GST payable under reverse charge in cash Nil Nil 31,500
[Tax payable under reverse charge, being not an
output tax, cannot be set off against ITC and thus,
will have to be paid in cash.]
Net GST payable in cash 25,200 25,200 31,500
Note: CGST and SGST is payable on the intra-State transaction and IGST is payable on
the inter-State transactions.
7. (i) GST is not payable by Dhruv Developers on sale of plot of land. Circular No.
177/09/2022 GST dated 03.08.2022 clarifies applicability of GST on sale of land
after levelling, laying down of drainage lines etc. As per Para 5 of Schedule III of
the CGST Act, 2017, ‘sale of land’ is neither a supply of goods nor a supply of
services. Therefore, the sale of land does not attract GST. Land may be sold either
as it is or after some development such as levelling, laying down of drainage lines,
water lines, electricity lines, etc. It is clarified that sale of such developed land is
also sale of land and is covered by Para 5 of Schedule III and accordingly, does not
attract GST.
(ii) Transportation of passenger services provided by the private operator - Deccan
Shipping Pvt. Ltd. - are exempt from GST. Circular No. 177/09/2022 GST dated
03.08.2022 clarifies the applicability of GST on private ferry tickets. Transportation
of passengers by public transport, other than predominantly for tourism purpose, in
a vessel between places located in India is exempt from GST vide Notification No.
12/2017 CT (R) dated 28.06.2017. It is clarified that this exemption would apply to
tickets purchased for transportation from one point to another irrespective of
whether the ferry is owned or operated by a private sector enterprise or by a
PSU/Government.

1ITC of IGST can be utilised towards payment of CGST and SGST in any proportion and in any order.
Therefore, there can be multiple ways of setting off of IGST credit against CGST and SGST liability and
accordingly, in the given case, amount of net GST payable in cash under the heads of CGST and
SGST will vary. However, total amount of net GST payable in cash will be ` 81,900 in each case.

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 PAPER – 4: TAXATION 23

It is further clarified that, the expression ‘public transport’ used in the said
exemption notification only means that the transport should be open to public. It can
be privately or publicly owned. Only exclusion is on transportation wh ich is
predominantly for tourism, such as services which may combine with transportation,
sightseeing, food and beverages, music, accommodation such as in shikara, cruise
etc.
8. (i) Services provided by way of renting of residential dwelling for use as residence is
exempt from GST. However, where the residential dwelling is rented to a registered
person, said exemption is not available. Further, tax on service provided by way of
renting of residential dwelling to a registered person is payable by the recipient
under reverse charge.
Therefore, in the given case, Rudra Technologies is liable to pay GST on the
residential dwellings taken on rent by it from Siddhi Builders, under revers e charge
mechanism.
(ii) In case of services provided by any person by way of sponsorship to any body
corporate or partnership firm, GST is liable to be paid under reverse charge by such
body corporate or partnership firm located in the taxable territory.
Since in the given case, sponsorship services are being provided by the private
NGO to a partnership firm – M/s. Purohit Consultants, GST is payable by Purohit
Consultants on said services under reverse charge.
9. Rule 21 of the CGST Rules, 2017 prescribes the contraventions which make a registered
person liable to cancellation of registration. As per said rule, the registration granted to a
person is liable to be cancelled, if the said person -
(a) does not conduct any business from the declared place of business.
(b) issues invoice/bill without supply of goods/services in violation of the provisions of
this Act, or the rules made thereunder.
(c) violates the provisions of section 171 of the CGST Act. Section 171 contains
provisions relating to anti-profeetering measure.
(d) violates the provision of rule 10A of the CGST Rules relating to furnishing of bank
account details.
(e) avails input tax credit in violation of the provisions of section 16 of th e CGST Act or
the rules made thereunder.
(f) furnishes the details of outward supplies in Form GSTR-1 under section 37 of the
CGST Act for one or more tax periods which is in excess of the outward supplies
declared by him in his valid return under section 39 for the said tax periods.

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 24 INTERMEDIATE EXAMINATION: MAY, 2023

(h) being a registered person required to file return under section 39(1) of the CGST
Act for each month or part thereof (i.e. monthly return filer), has not furnished
returns for a continuous period of 6 months.
(i) being a registered person required to file return under proviso to section 39(1) of the
CGST Act for each quarter or part thereof (i.e. quarterly return filer), has not
furnished returns for a continuous period of 2 tax periods.
10. Section 49 of the CGST Act, 2017 stipulates that every taxable person shall discharge
his tax and other dues under the GST law in the following order, namely:–
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the
demand determined under section 73 or section 74.

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