REVISION TEST PAPER

TAXATION

SECTION B: GOODS AND SERVICES TAX

(1) All questions should be answered on the basis of the position of

GST law as amended up to 30.06.2024.
(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.

QUESTIONS

Case Scenario
Vintage Cinemas Pvt. Ltd. (VCPL) is a leading chain of multiplexes operating in
several States across India. The company has its corporate office in Mumbai,
Maharashtra and is registered under GST in multiple States including
Maharashtra. The company offers movie tickets, food and beverages and
other entertainment-related services.
The turnover of the company in the preceding financial year as per the
audited financial statements was ` 175 crore. The company crossed the
aggregate turnover of ` 35 crore till June in the current year.
In July, VCPL opened a new multiplex in Gujarat wherein the commercial
operations will commence from August 1.
Due to operations in multiple States, the finance and accounts operations are
handled by a centralized team at the corporate office. The same team is also
responsible for filing the GST returns for all the GST registrations of the
company.
The company is also engaged in leasing of space to independent vendors in
its food court against rental charges for the purpose of increasing the source
of revenue.

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The company obtained a new office building in Mumbai under a rental

agreement and paid an amount of ` 5 crore as refundable security deposit to
the owner of the premises. The term of the rental agreement is 5 years.
The company also dispatched advertisement material worth ` 35 lakh from
Maharashtra to Gujarat Multiplex for the upcoming movies by way of
transport through road in September. The company claimed input tax credit
on such advertisement material at the time of receipt in Maharashtra.
The rate of tax applicable on all inward and outward supplies is 18% IGST, 9%
CGST and 9% SGST unless otherwise specified.
On the basis of the facts given above, choose the most appropriate answer to
Q.1 to Q.5 below -
1. Which of the following statements is correct under GST law in relation to
the registration requirements of the company (VCPL) in relation to its
operations to be commenced in the State of Gujarat?
(a) VCPL is not required to take GST registration for Gujarat multiplex
till turnover of Gujarat multiplex does not cross ` 20 lakh.
(b) VCPL is required to take GST registration in Gujarat while
commencing business in Gujarat as aggregate turnover of VCPL
has already exceeded ` 20 lakh in the current financial year.
(c) VCPL is allowed to add Gujarat multiplex as additional place of
business under the existing GST registration in Maharashtra.
(d) VCPL is required to take GST registration only from next financial
year subject to the condition that turnover of current financial year
for Gujarat multiplex exceeds ` 20 lakh.
2. Which of the following statements is true in relation to filing of return by
VCPL?
(a) VCPL is required to file a single consolidated GST return for all
States.
(b) VCPL is required to file separate GST return for each State where it
is registered.

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(c) VCPL is required to file returns only for the Maharashtra State
where its corporate office is located.
(d) VCPL has an option to file return in the State with the highest
turnover.
3. VCPL is required to levy GST on rental charges ________________.
(a) only if the turnover of tenant exceeds ` 20 lakh.
(b) only if the turnover of tenant exceeds ` 1.5 crore.
(c) only if the total rental charge collection in hands of VCPL exceeds
` 20 lakh.
(d) irrespective of the turnover of the tenant or the amount of rental
charge collection in the hands of VCPL.
4. In respect of the refundable security deposit given by VCPL,
____________________.
(a) GST is payable on the deposit amount by the owner of the
premises.
(b) GST is payable on the deposit amount by VCPL.
(c) there is no requirement to pay GST by the owner or VCPL.
(d) GST is payable in equal proportion over the term of rent
agreement by the owner of premises.
5. VCPL is ___________________for the advertisement material sent from
Maharashtra Office to Gujarat office in relation to the upcoming movies.
(a) not liable to issue any document as the transaction is between
entities having same PAN.
(b) liable to issue only a delivery challan.
(c) liable to issue only a bill of supply.
(d) liable to generate a tax invoice as well as an E-Way Bill.
6. M/s Consultease Services Private Limited, a company registered under
GST in Mumbai, Maharashtra, offers business consultancy, digital

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marketing and project management services across India. The company

recorded the following transactions in October:
1. Consultancy services for market analysis: Provided consultancy
services for market analysis to XYZ Ltd., a registered client in
Chennai, Tamil Nadu (Inter-State), for ` 4,50,000. Additionally, the
company paid an amount of ` 4,500 as professional tax applicable
in the State of Maharashtra as per requirement of local state
legislation. The amount of professional tax was recovered
separately from XYZ Ltd.
2. Digital Marketing Services for Launch Event: Conducted digital
marketing for an upcoming product launch for Mr. A based in
Rajasthan, who is an unregistered person under GST. The agreed
fee for the said services is ` 3,00,000. Out of the agreed fee, an
amount of ` 25,000 is incurred by Mr. A. The company was liable
to pay the same in relation to the supply and the net payment
received by the company was ` 2,75,000 (exclusive of any tax).
3. Travelling payment for the team: The employees incurred an
amount of ` 50,000 on travel to Kolkata for client project and
claimed a reimbursement of the same from the company. As a
policy, company charged such expenses from the clients on actual
basis.
4. Discount passed on to customer: Post supply discount was
offered to a customer amounting to ` 50,000 against a supply for
which invoice was issued in September. The customer has not
reversed the input tax credit relating to such discount.
5. Recovery of late payment charges: The company received an
amount of ` 1,00,000 as late payment charges for delay in
payment for consideration from a client whose service contract
was completed in June.
6. Purchase of car: A car was purchased in the name of company for
use by the director. The total cost of car was ` 10,50,000 (inclusive
of IGST amounting to ` 1,50,000).

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7. Insurance services: The company paid for insurance of the above

new car amounting to ` 25,000 which includes IGST amounting to
` 2,300.
8. Procurement of services: The company received inter-State
supply of services used for business purpose on which GST paid
was Rs. 45,000. Said credit was not restricted under any provision
of GST laws.
9. Sponsorship: The company sponsored a sports event wherein it
paid an amount of ` 2,00,000 to the event organizers.
You are required to compute the following for the month of October:
(a) Total value of supply
(b) output tax payable by the Company.
(c) net GST payable in cash.
Note
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) All the amounts given above are exclusive of taxes.
(iii) There was no opening balance of input tax credit.
(iv) The turnover of the company was ` 10 crores in the previous
financial year.
(v) All the transactions are inter-State, unless otherwise specified.
7. Mr. Bholuram, a supplier located in Meerut, U.P. supplied the bedsheets,
pillow covers and blankets to a Governmental agency, registered in U.P.
under a contract. The total contract value is ` 4,61,000 excluding GST.
The value of supply is bifurcated as below:
400 Blankets for ` 600 each ` 2,40,000
850 Bed Sheets for ` 180 each ` 1,53,000
1700 Pillow Covers for ` 40 each ` 68,000

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Is Governmental agency required to deduct tax at source (while making

the payment to Mr. Bholuram) under section 51 of the CGST Act, 2017
and if yes, determine the amount of tax to be deducted source?
8. Blue Panda Pvt. Ltd. is a manufacturing company that supplies goods to
various registered dealers across India. The company had an aggregate
6 crore in the financial year 2023-24. The finance team of
the company is not sure whether e-invoicing provisions are applicable to
the company and is of the view that under e-invoicing system, invoices
need to be generated directly on the e-invoicing portal instead of its
ERP system.
You are required to advise the finance team on the following questions:-
(a) What is e-invoicing, and whether it would apply to Blue Panda Pvt.
Ltd.?
(b) Does Blue Panda Pvt. Ltd. need to create its invoices directly on
the e-invoicing portal?
9. Briefly examine the place of supply in the following independent cases.
(a) Ms. Shanti (unregistered resident of Gujarat) went to meet her
parents at the native place Patna, Bihar and buys a medical
insurance policy for her parents from an insurance company –
MNT Insurers- of Patna (registered in Bihar). The location of the
recipient of services in the records of the MNT Insurers is Patna.
(b) Lakhan Singh Transports Pvt. Ltd., a Goods Transportation
Agency registered in Noida, Uttar Pradesh, is hired by Ram Trade
Links (registered supplier in New Delhi) to transport its
consignment of goods from its warehouse in Delhi to the house
of a buyer located in Roorkee, Uttar Pradesh.
(c) Mr. Karan (Mumbai) takes a post-paid mobile connection in
Mumbai from the service provider - Freesia Ltd. and gives his
residence address at Mumbai as the address for billing with the
said company.

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10. List the accounts and records which are not required to be maintained
by a supplier who has opted for composition scheme, as per the
provisions of the GST laws.

SUGGESTED ANSWERS

MCQ No. Most Appropriate

Answer
1. (b)
2. (b)
3. (d)
4. (c)
5. (d)

6. (a) Computation of total value of supply

Particulars IGST (`)

Consultancy services provided to XYZ Ltd. 4,54,500
(As per section 15 of the CGST Act, 2017, the value
of supply includes the amount of any tax paid under
any law other than GST. Accordingly, the amount of
professional tax is includible in the value of
services.)
Digital marketing services provided to Mr. A 3,00,000
(The amount incurred by the recipient on behalf of
the supplier is includible in the value of supply.)
Travelling expenses recovered from the client 50,000
(Incidental expenses like travelling expenses
incurred in course of supply is includible in value of
supply.)

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Post supply discount -

(No adjustment of post supply discount is allowed
as the customer has not reversed the input tax
credit.)
Late payment charges 1,00,000
(The late payment charges recovered are includible
in GST and liable to tax at the time of receipt of
amount.)
Total value of supply for October 9,04,500

(b) Computation of output tax payable

Particulars IGST (`)

Total value of outward supply 9,04,500
Total output tax payable @ 18% 1,62,810
(Company is liable to pay GST on sponsorship
services under reverse charge, but the tax payable
under reverse charge is not included in the value
of output tax.)
(c) Computation of net GST payable in cash

Particulars IGST (`)

Total output tax 1,62,810
Less: Input Tax Credit [Refer Working Note below] (81,000)
Net GST payable (A) 81,810
Add: GST payable under reverse charge for receipt 36,000
of sponsorship services (B)
[Tax on sponsorship services availed by a body
corporate from any person is payable under reverse
charge. Since the tax payable under reverse charge
is not an output tax, ITC cannot be utilized to pay
GST payable under reverse charge. Thus, it has to be
paid in cash.]
Total GST payable in cash (A) +(B) 1,17,810

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Working Note:
Computation of ITC available

Particulars IGST (`)

Purchase of car for use by director -
(ITC on motor vehicles for transportation of persons with

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. Purchase of car for use by director
is not a specified purpose.)
Insurance of car -
(ITC is not allowed on services of insurance relating to
the motor vehicles on which ITC is blocked.
Since, the car is not used for any of the eligible purposes,
ITC thereon is blocked and thus, ITC on insurance taken
on such car is also blocked)
ITC on receipt of services 45,000
(ITC is available on services used in the course or
furtherance of business.)
ITC on sponsorship services 36,000
(ITC is available on services used in the course or
furtherance of business.)
Total ITC available 81,000

7. As per section 51 of the CGST Act, 2017, it is mandatory for the

following persons to deduct tax at source from payments made to the
suppliers of taxable goods and/or services:-
(a) Central/State Government department or establishment;
(b) local authority; or
(c) Governmental agencies; or
(d) such notified persons

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The tax would be deducted @ 1% (each under CGST and SGST) of the
payment made to the supplier of taxable goods and/or services, where
the total value of such supply, under a contract, exceeds ` 2,50,000
(excluding the amount of Central tax, State tax, Union Territory tax,
Integrated tax and cess indicated in the invoice). Thus, individual
supplies may be less than ` 2,50,000/-, but if total value of supplies
under a contract is more than ` 2,50,000/-, TDS has to be deducted.
In the given case, Mr. Bholuram has made supplies to a Governmental
agency and total value of supply under a contract exceeds ` 2,50,000, it
is mandatory for Governmental agency to deduct TDS @1% each under
CGST and SGST on the net value of taxable supplies.
The amount of TDS required to be deducted each under CGST & SGST
each is ` 4,610.
8. (a) E-invoicing is a system for electronically reporting Business-to-
Business (B2B) invoices to the GST system for certain notified
taxpayers whose turnover exceeds ` 5 crore in any financial year from
2017-18 onwards. Since Blue Panda Pvt. Ltd. had an aggregate
turnover of ` 6 crore in FY 2023-2024, it is required to issue
e-invoices for its B2B transactions.
(b) No, Blue Panda Pvt. Ltd. does not need to create invoices directly
on the e-invoicing portal. The company will continue generating its
GST invoices using its own Accounting/Billing/ERP system. The
only requirement is that these invoices must be reported to the
Invoice Registration Portal (IRP) for validation and issuance of a
unique Invoice Reference Number (IRN).
9. (a) The place of supply of insurance services provided to a person other
than a registered person, be the location of the recipient of services
on the records of the supplier of services. Thus, in the given case, the
place of supply is the location of the recipient of services in the
records of the supplier, i.e. Patna.
(b) The place of supply of services by way of transportation of goods,
including by mail or courier to a registered person, is the location
of such person. Thus, in the given case, the recipient being

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registered, the place of supply is the location of recipient, i.e. New

Delhi.
(c) The place of supply of telecommunication services including data
transfer, broadcasting, cable and direct to home television services
to any person in case of mobile connection for telecommunication
and internet services provided on post-paid basis, be the location
of billing address of the recipient of services on the record of the
supplier of services. Thus, in the given case, the place of supply is
the location of billing address of the recipient, i.e. Mumbai.
10. A supplier who has opted for composition scheme is not required to
maintain following records:
(a) Stock of goods: Accounts of stock in respect of goods received
and supplied by him, and such accounts shall contain particulars of
the opening balance, receipt, supply, goods lost, stolen, destroyed,
written off or disposed of by way of gift or free sample and the
balance of stock including raw materials, finished goods, scrap and
wastage thereof.
(b) Details of tax: Account, containing the details of tax payable
(including tax payable under reverse charge), tax collected and
paid, input tax, input tax credit claimed, together with a register of
tax invoice, credit notes, debit notes, delivery challan issued or
received during any tax period.

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