Previous Exams Trend Analysis
YearQuestion No. CompulsoryChapter NameMarksCategory Jan. 2021 1YesPaymentofTax14Practical 2(a)Placeofsupply9Practical 2(b)TypesofDuty5Practical 3(a)AccountsandRecords5Practical 3(b)Refund5Theory 3(c)(i)GSTinIndia-AnIntroduction2Theory 3(c)(ii)AccountsandRecords2Theory 4(a)InputTaxCredit5Practical 4(b)AppealsandRevisions4Theory 4(c)LevyofexemptionsfromCustoms Duty 5Theory 5(a)Importation,Exportationand TransportationofGoods 5Theory 5(b)LevyofexemptionsfromCustoms Duty 5Theory 5(c)GSTinIndia-AnIntroduction4Theory or5(c)OffencesandPenalties4Theory 6(a)ValueofSupply5Practical 6(b)PaymentofTax4Practical 6(c)TypesofDuty5Practical July 2021 1YesPaymentofTax14Practical 2(a)ChargesofGST9Practical 2(b)InputTaxCredit5Practical 2(c)ValuationundertheCustoms Act,1962 3(a)TimeofSupply5Practical 3(b)ChargesofGST5Practical 3(c)DutyDrawback2Practical 4(a)Registration5Practical 4(b)(i)Refund4Practical 4(b)(ii)AccountsandRecords I-7
YearQuestion No. CompulsoryChapter NameMarksCategory 4(c)TypesofDuty5Practical 5(a)DemandsandRecovery5Practical 5(b)AppealsandRevisions5Practical 5(c)DutyDrawback4Practical 6(a)Liabilitytopaytaxincertaincases5Practical 6(b)AssessmentandAudit4Practical 6(c)DutyDrawback5Practical Dec. 2021 1YesPaymentofTax14Practical 2(a)ValueofSupply9Practical 2(b)ValuationunderCustoms5Practical 3(a)ExemptionsunderGST5Theory 3(b)PlaceofSupply4Theory 3(c)Levy&ExemptionsfromCustomsDuty 5Practical 4(a)RefundunderGST5Practical 4(b)Registration4Theory 4(c)TypesofDuty5Theory 5(a)OffencesandPenalties5Theory 5(b)DemandandRecovery4Theory 5(c)Importation,Exportationand Transportationofgoods 5Practical 6(a)AccountsandRecords4Theory or6(a)Refunds4Theory 6(b)MiscellaneousProvisions5Theory 6(c)DutyDrawback5Theory May 2022 1YesInputTaxCredit14Practical 2(a)ExemptionsfromGST9Practical 2(b)ValuationundertheCustoms Act,1962 5Practical 3(a)(i)ExemptionsfromGST2Practical 3(a)(ii)ValueofSupply2Practical 3(a)(iii)Placeofsupply1Practical 3(b)SupplyunderGST4Practical 3(c)ClassificationofImportedand Exportedgoods 5Theory 4(a)PaymentofTax5Practical 4(b)(i)Registration2Practical 4(b)(ii)AccountsandRecords2Theory I-8 PREVIOUSEXAMSTRENDANALYSIS
YearQuestion No. CompulsoryChapter NameMarksCategory 4(c)Importation,Exportationand TransportationofGoods 5Practical 5(a)AppealsandRevisions5Theory 5(b)InputTaxCredit4Practical 5(c)(i)Importation,Exportationand TransportationofGoods 3Theory 5(c)(ii)ValuationundertheCustoms Act,1962 2Theory 6(a)TaxInvoice,DebitandCredit Notes 4Theory or6(a)Liabilitytopaytaxincertaincases4Theory 6(b)Inspection,Search,Seizureand Arrest 5Theory 6(c)ForeignTradePolicy5Theory Nov. 2022 1YesPaymentofTax14Practical 2(a)InputTaxCredit9Practical 2(b)ValuationundertheCustoms Act,1962 5Practical 3(a)PlaceofSupply5Theory 3(b)ValueofSupply4Theory 3(c)LevyofExemptionsfromCustomsDuty 5Theory 4(a)PaymentofTax5Theory 4(b)Registration4Practical 4(c)ValuationundertheCustoms Act,1962 5Practical 5(a)OffencesandPenalties5Practical 5(b)OffencesandPenalties4Practical 5(c)Importation,Exportationand TransportationofGoods 5Practical 6(a)AdvanceRuling4Theory Or6(a)PaymentofTax4Theory 6(b)AssessmentandAudit5Theory 6(c)ForeignTradePolicy5Theory May 2023 1YesPaymentofTax 14 Practical 2(a)ValueofSupply 9 Practical 2(b)ValuationunderCustomsAct 5 Practical 3(a)Exemption 5 Practical 3(b)ChargesofGST 4 Practical 3(c)ValuationunderCustomsAct 5 Theory 4(a)Refund 5 Practical PREVIOUSEXAMSTRENDANALYSIS I-9
YearQuestion No. CompulsoryChapter NameMarksCategory 4(b)Account&Records 4(c)TypesofDuties 5 Practical 5(a)Demand&Recovery 5 Practical 5(b)AdvanceRuling 4 Theory 5(c)Import&Exportation 5 Practical 6(a)Offences&Penalties 4 Theory or6(a)Appeal&Revision 4 Theory 6(b)Assessment&Audit 5 Theory 6(c)GSTinIndia 5 Theory I-10 PREVIOUSEXAMSTRENDANALYSIS
Chapter No. Name of Chapter Study Material Chapter Part I - Goods & Services Tax (75 Marks) 1GSTinIndia-AnIntroduction1 2SupplyunderGST2 3ChargesofGST3 4ExemptionsofGST4 5PlaceofSupply5 6TimeofSupply6 7ValueofSupply7 8InputTaxCredit8 9Registration9 10TaxInvoice,CreditandDebitNotes10 11Accountsandrecords&E-wayBill11 12PaymentofTax12 13Returns13 14Refunds15 15JobWork16 16ElectronicCommerce16 17AssessmentandAudit17 18Inspection,Search,SeizureandArrest18 19DemandsandRecovery19 20LiabilitytoPayTaxinCertainCases20 21OffencesandPenalties21 22AppealsandRevisions22 23AdvanceRuling23 24MiscellaneousProvisions24 Part II - Customs & FTP (25 Marks) 25LevyofandExemptionsfromCustomsDuty1 26TypesofDuty2 27ClassificationofImportedandExportedGoods3 28ValuationundertheCustomsAct,19624 29Importation,ExportationandTransportationofGoods5 I-11
Chapter-wise Comparison with Study Material
Chapter No. Name of Chapter Study Material Chapter 30Warehousing6 31DutyDrawback7 32Refund8 33ForeignTradePolicy,20239 I-12 CHAPTER-WISECOMPARISONWITHSTUDYMATERIAL
PAGE Chapter-wise Marks Distribution I-5 Previous Exams Trend Analysis I-7 Chapter-wise Comparison with Study Material I-11 PART I GOODS & SERVICES TAX Chapter 1 GSTinIndia-AnIntroduction 1.3 Chapter 2 SupplyunderGST 2.1 Chapter 3 ChargesofGST 3.1 Chapter 4 ExemptionsofGST 4.1 Chapter 5 PlaceofSupply 5.1 Chapter 6 TimeofSupply 6.1 Chapter 7 ValueofSupply 7.1 Chapter 8 InputTaxCredit 8.1 Chapter 9 Registration 9.1 Chapter 10 TaxInvoice,CreditandDebitNotes 10.1 Chapter 11 AccountsandRecords&E-WayBill 11.1 Chapter 12 PaymentofTax 12.1 I-13 Contents
PAGE Chapter 13 Returns 13.1 Chapter 14 Refund 14.1 Chapter 15 JobWork 15.1 Chapter 16 ElectronicCommerce 16.1 Chapter 17 AssessmentandAudit 17.1 Chapter 18 Inspection,Search,SeizureandArrest 18.1 Chapter 19 DemandsandRecovery 19.1 Chapter 20 LiabilitytoPayinCertainCases 20.1 Chapter 21 OffencesandPenalties 21.1 Chapter 22 AppealsandRevision 22.1 Chapter 23 AdvanceRuling 23.1 Chapter 24 MiscellaneousProvisions 24.1 PART II CUSTOMS & FTP Chapter 25 LevyofExemptionsfromCustomsDuty 25.3 Chapter 26 TypesofDuty 26.1 Chapter 27 ClassificationofImportedandExportedGoods 27.1 Chapter 28 ValuationundertheCustomsAct,1962 28.1 Chapter 29 Importation,ExportationandTransportationofGoods 29.1 Chapter 30 Warehousing 30.1 I-14 CONTENTS
PAGE Chapter 31 DutyDrawback 31.1 Chapter 32 Refund 32.1 Chapter 33 ForeignTradePolicy,2023 33.1 CONTENTS I-15
8.1 CONDITIONS FOR AVAILING INPUT TAX CREDIT [SECTION 16 OF CGST ACT]
Q.1. Mr. Vijay, a registered supplier, receives 100 invoices (for inward supply of goods/services) involving GST of ` 10 lakh, from various suppliers during the month of October. Compute the ITC that can be claimed by Mr. Vijay in his GSTR-3B for the month of October to be filed by 20th November in the following independent cases assuming that GST of ` 10 lakh is otherwise eligible for ITC:
Case I: Out of 100 invoices, 80 invoices involving GST of ` 6 lakh have been uploaded by the suppliers in their respective GSTR-1s filed on the prescribed due date therefor.
Case II: Out of 100 invoices, 95 invoices involving GST of ` 9.8 lakh have been uploaded by the suppliers in their respective GSTR-1s filed on the prescribed due date therefor.
[RTP, Nov. 2021]
Presume the details of such invoices have been communicated to Registered person in GSTR-2B.
Ans. Section16(2)oftheCGSTAct,2017providescertainconditionsforavailingITCwhereinoneof theconditionsisthatthetaxpayermustbeinpossessionofthetaxinvoiceorothertaxpaying documentinrespectofwhichheisclaimingtheITC.Rule36oftheCGSTRules,2017laysdown thedocumentsandotherconditionsbasiswhichtheregisteredpersoncanclaimITC.Sub-rule (4)ofrule36oftheCGSTRules,2017stipulatesthatITCcannotbeavailedbyaregistered personinrespectofinvoicesordebitnotes,thedetailsofwhichhavenotbeenuploadedbythe suppliersinGSTR-1.
Inaccordancewiththeaforesaidprovisions,giventwocaseshavebeenanalysedasunder:
Case I
ITCtobeclaimedbyMr.VijayinhisGSTR-3Bforthemonthofoctobertobefiledby20th Novemberwillbecomputedasunder—
[ReferNote1below]
Inrespectof20invoicesnotuploadedin GSTR-1 4lakhZero
[ReferNote2below]
Total 10 lakh 6 lakh
Notes:
(1)InrespectofinvoicesuploadedbythesuppliersintheirGSTR-1,fullITCcanbeavailed.
(2)TheITCinrespectofinvoicesnotuploaded cannot be claimed byMr.Vijay.Thus,in respectof20invoicesnotuploadedinGSTR-1s,theITChasnotbeenallowed.
TAXMANN ® 8.1 8 CHAPTER
)
Invoices Amount of ITC involved in the invoices (`
Amount of ITC that can be availed (`) Inrespectof80invoicesuploadedinGSTR-16lakh6lakh
Case II
ITCtobeclaimedbyMr.VijayinhisGSTR-3Bforthemonthofoctobertobefiledby20th Novemberwillbecomputedasunder-
Notes:
(1)InrespectofinvoicesuploadedbythesuppliersintheirGSTR-1,fullITCcanbeavailed.
(2)SameasNote(2)ofCase-I.
8.2 BLOCK CREDIT UNDER SECTION 17(5)
Q. 2.ABC company Ltd. of Bengaluru is manufacturing and registered supplier of machine. It has provide the following details for the month of November 2021
Detail of GST paid on inward supplies during the months:
only 50% of material has been received, remaining 50% will be received in next month
Company Ltd. provided service of hiring of machines along with man power for operation. As per the trade practice machines are always hired out along with operators and also operators are supply only when machine are hired out.
Receipt on outward supplied (exclusive of GST) for the month of November 2021 are also followed:
all the transactions are inter-State and the rates of IGST to be as under:
i. Sales of machine 5%
ii. Services of hiring of machine 12%
iii. Supply of man power operator service 18%
Compute the amount of input tax credit available and also the net GST payable for the month of November 2021 by giving necessary explanations for treatment of variable items.
Note - Opening balance of input tax credit is nil. [MTP, May/Nov. 2018, 10 Marks]
TAXMANN ® 8.2 PARTI:GOODS&SERVICESTAX
InvoicesAmount of ITC involved in the invoices (`) Amount of ITC that can be availed (`) Inrespectof95invoicesuploadedin GSTR-1 9.8lakh9.8lakh [ReferNote1below] Inrespectof5invoicesnotuploaded inGSTR-1 0.2lakhZero [ReferNote2below] Total10 lakh9.8 lakh
Item GST Paid (`) Health insurance
employees.20,000 Raw
18,000 Work contractor’s services used for installation of plant and machinery 12,000 Purchase of manufacturing machine directly send to job worker’s premises under challan. 50,000 Purchase of car used by director for the business meeting only 25,000 Outdoor catering service availed for business meeting.8,000
of factory
material for which invoice has been received and GST has also been paid for full amount but
ABC
Items Amounts Hiring receipt for machine 5,25,000 Service charged for supply of man power operators 2,35,000 Assumed
Ans.Computation of net GST payable by ABC Company Ltd.
Working Notes:
(1) Computation of Input Tax Credit (ITC) available with ABC Company Ltd. in the month of November 2021.
Healthinsuranceoffactoryemployees
(As per section 17(5)(b)(iii) of the CGST Act, 2017 ITCofhealthinsuranceis blockedinthegivencasesincesaidservicesarenotnotifiedbyGovernmentas obligatoryforemployertoprovidetoitsemployeesunderanylaw.)
Rawmaterialreceivedinfactory
(Wherethegoodsagainstaninvoicearereceivedinlots/instalments,ITCis alloweduponreceiptofthelastlot/instalment vide firstprovisotosection16(2) oftheCGSTAct,2017.Therefore,ABCCompanyLtd.willbeentitledtoITCof rawmaterialsonreceiptofsecondinstalmentinDecember,2021.)
Work’scontractor’sserviceusedforinstallationofplantandmachinery
(As per Section 17(5)(c) of CGST Act, 2017 providesthatITConworkscontract servicesisblockedwhensuppliedforconstructionofimmovableproperty(other thanplantandmachinery)exceptwhenthesameisusedforfurthersupplyof workscontractservice.
Thoughinthiscase,theworkscontractserviceisnotusedforsupplyofworks contractservice,ITCthereonwillbeallowedsincesuchservicesarebeingused forinstallationofplantandmachinery.)
Manufacturingmachinerydirectlysenttojobworker’spremisesunderchallan
(As per Section 19(5) of CGST Act, 2017 ITConcapitalgoodsdirectlysentto jobworker’spremisesunderchallanisallowed)
Purchaseofcarusedbydirectorforbusinessmeetingsonly
1.(Section 17(5)(a) of CGST Act, 2017 ITConmotorvehiclesisallowed onlywhenthesameareused:
(1)formakingtaxablesupplyof-(i)furthersupplyofsuchvehicles,
(ii)transportationofpassengers,(iii)impartingtrainingondriving, flying,navigatingsuchvehiclesand(iv)motorvehiclehavingseating capacity>13persons
(2)fortransportationofgoods.
SinceABCCompanyLtd.isasupplierofmachineanditdoesnotuse thecarfortransportationofgoods,ITCthereonwillnotbeavailable.)
Outdoorcateringserviceavailedforbusinessmeetings
(Section 17(5)(b)(i) of CGST Act, 2017 ITConoutdoorcateringisblocked exceptwherethesameisusedformakingfurthersupplyofoutdoorcateringor anelementofataxablecompositeormixedsupply.
SinceABCCompanyLtd.isasupplierofmachine,ITCthereonwillnotbe available.)
12,000
50,000
Nil
Nil
Total ITC available62,000
TAXMANN ® CH.8:INPUTTAXCREDIT 8.3
ParticularsGST payable (` ) GrossGSTliability[Referworkingnote(2)below]91,200 Less:Inputtaxcredit[Referworkingnote(1)below]62,000 Net GST liability29,200
ParticularsGST (` )
Nil
Nil
(2) Computation of gross GST liability
Notes:
Sincemachineisalwayshiredoutalongwithoperatorsandoperatorsaresuppliedonly whenthemachinesarehiredout,itisacaseofcompositesupply,whereintheprincipal supplyisthehiringoutofmachines[Section2(30)oftheCGSTAct,2017readwithsection 2(90)ofthatAct].Therefore,serviceofsupplyofmanpoweroperatorswillalsobetaxedat therateapplicableforhiringoutofmachines(principalsupply),whichis12%,interms ofsection8(a)oftheCGSTAct,2017.
Intheaboveanswer,theamountsgiveninthesecondtableofthequestionhavebeentaken as“Receiptsonoutwardsupply”.IfthesamearetakenasGSTpaid,thegrossGSTliability willbe ` 7,60,000(5,25,000+2,35,000)andthesamecanbedirectlysetoffagainstinput taxcreditavailable.Thus,netGSTliabilitywillworkoutto ` 6,98,000(7,60,000-62,000).
Q. 3.With reference to the provisions of section 17 of the CGST Act, 2017, examine the availability of input tax credit under the CGST Act, 2017 in the following independent cases:—
(i) MBF Ltd., an automobile company, has availed works contract service for construction of a foundation on which a machinery (to be used in the production process) is to be mounted permanently.
(ii) Shah & Constructions procured cement, paint, iron rods and services of architects and interior designers for construction of a commercial complex for one of its clients.
(iii) ABC Ltd. availed maintenance & repair services from “Jaggi Motors” for a truck used for transporting its finished goods.
Ans.
Statutory ProvisionIn the given case
(i)Section 17(5)(c) of the CGST Act, 2017 :- Input taxcreditisblockedinrespectofworkscontract serviceswhensuppliedforconstructionofan immovableproperty(otherthanplantandmachinery)exceptwhereitisaninputservicefor furthersupplyofworkscontractservice.
Further,theterm “plant and machinery” means apparatus,equipmentandmachineryfixedto earthbyfoundationorstructuralsupportthatare usedformakingoutwardsupplyofgoodsand/ orservices and includes such foundation or structural support butexcludesland,buildingor othercivilstructures,telecommunicationtowers, andpipelineslaidoutsidethefactorypremises.
(ii)Section 17(5)(d) of the CGST Act, 2017:-Input taxcreditisblockedongoodsand/orservices receivedbyataxablepersonforconstructionof animmovableproperty(otherthanplantand machinery) on his own account eventhoughsuch
ITCis available inrespectofworks contractserviceavailedbyMBFLtd. asthesameisusedforconstruction ofplantandmachinerywhichisnot blockedundersection17(5)(c)ofthe CGSTAct,2017.
Thetaxablepersonhasusedthegoods andservicesforconstructionofimmovablepropertyforsomeotherpersonandnotonitsownaccount.Hence, ITCinthiscasewillbe allowed.
TAXMANN ® 8.4 PARTI:GOODS&SERVICESTAX
Value received (` ) Rate of GSTGST payable (` ) Hiringreceiptsformachine5,25,00012%63,000 Servicechargesforsupplyofmanpoweroperators 2,35,00012%28,200 Gross GST liability91,200
Statutory ProvisionIn the given case goodsand/orservicesareusedinthecourseor furtheranceofbusiness.
(iii)As per section 17(5) of the CGST Act, 2017 :ITCisallowedonrepairandmaintenanceservices relatingtomotorvehicles,whichareeligiblefor inputtaxcredit.Further,aspersection17(5)(a) ITCisallowedonmotorvehicleswhichareused fortransportationofgoods.
Q. 4.A company has entered to an agreement with a customer for the manufacture and supply of cement pipes for their exclusive use. A company manufactured the product but before receiving the inspection certificate, their customer rejected some quantity of goods on the grounds of quality. As per agreement, the rejected quantity will be destroyed in front of the customer and shall not be sold. Examine the issue in the light of statutory provisions and suggest future course of action to the assessee as to whether any liability arises as per the provisions of GST law. [Nov. 2018, Old, 4 Marks]
Ans. Section17oftheCGSTAct,2017blocksITCinrespectofdestroyedgoods. Accordingly,sinceinthegivencasethecementpipeshavebeendestroyed,ITCattributableto suchpipeswillnotbeallowed[Section17(5)(h)oftheCGSTAct,2017].
Thus,inthegivencase,ifthecredithasalreadybeenavailed,thesamewillneedtobereversed.
8.3 BLOCK CREDIT UNDER SECTION 17(5) & CONDITIONS FOR AVAILING ITC [SECTION 16]
Q. 5.PQR Company Ltd., a registered supplier of Bengaluru (Karnataka), is a manufacturer of goods. The company provides the following information pertaining to GST paid on input supplies during the month of April, 2022:
contractor’s service used for repair of factory building which is debited in the profit and loss account of company.
purchased the capital goods for ` 4,00,000 and claimed depreciation of ` 44,800 (@ 10%) on the full amount of ` 4,48,000 under Income-tax Act, 1961.
(i) In the month of September, 2021, PQR Company Ltd. availed input tax credit of ` 2,40,000 on purchase of raw material which was directly sent to job worker’s premises under a challan on 25-09-2021. The said raw material has not been received back from the Job worker up to 30-04-2022.
(ii) All the above input supplies except (ii) above have been used in the manufacture of taxable goods.
Compute the amount of net Input Tax Credit available for the month of April, 2022 with necessary explanations for your conclusion for each item. You may assume that all the other conditions necessary for availing the eligible input tax credits have been fulfilled. [Nov. 2018, 7 Marks]
TAXMANN ® CH.8:INPUTTAXCREDIT 8.5
Yes,ITCisallowed.
Sl. No. ItemsGST paid in (` ) (i)Life Insurance premium paid by the company on the life of factory employees as per the policy of the company 1,50,000 (ii)Raw materials purchased
is
delivery
38,000 (iii)Raw materials purchased which are
zero
outward
50,000
iv)Works
30,000
v
48,000
for which invoice
missing but
challan is available.
used for
rated
supply.
(
(
)Company
Other Information:-
Ans. Computation of Input Tax Credit (ITC) available with PQR Ltd. for the month of April, 2022
Particulars
LifeInsurancepremiumpaidbythecompanyonthelifeoffactoryemployees [Note1] Nil Rawmaterialspurchased[Note2]Nil Rawmaterialsusedforzeroratedoutwardsupply[Note3]50,000 Workcontractor’sservice[Note4]30,000 Capitalgoodspurchasedwhereinthedepreciationisclaimedonthetaxcomponent[Note5] Nil
Total ITC available80,000
Notes:
(1) As per Section 17(5) of the CGST Act, 2017 :- ITConlifeinsuranceserviceisavailable onlywhenthesameisnotifiedbytheGovernmentasbeingobligatoryforanemployerto providetoitsemployeesunderanylawforthetimebeinginforce.Intheabsenceofany information,itisassumedthatsuchserviceshavenotbeennotifiedintheinstantcaseand thus,theITCthereonisblocked.
(2) As per Section 16 of the CGST Act, 2017 :- ITCcannotbetakensinceinvoiceismissing anddeliverychallanisnotavaliddocumenttoavailITC.
(3) As per Section 16 of the IGST Act, 2017 :- ITCcanbeavailedformakingzero-rated supplies,notwithstandingthatsuchsupplymaybeanexemptsupply.
(4) As per Section 17(5) of the CGST Act, 2017 :- ITCisblockedonworkscontractservices forconstructionofanimmovablepropertyexceptwhen Itisinputserviceforfurthersupplyofworkscontractservice
Immovablepropertyisplantandmachinery
Constructionincludesreconstruction,renovation,additionsoralterationsorrepairs,to theextentofcapitalization,tothesaidimmovableproperty.
ITConexpensesincurredonre-construction,renovation,additionsoralterationsand repairswouldbeallowedincasesuchexpensesarechargedtorevenueandnotcapitalized.
(5) As per Section 16(3) of the CGST Act, 2017 :- ITCisnotavailablewhendepreciationhas beenclaimedonthetaxcomponentofthecostofcapitalgoodsundertheIncome-taxAct.
(6) As per Section 19 of the CGST Act, 2017 :- TheprincipalisentitledtotakeITCofinputs sentforjobworkevenifthesaidinputsaredirectlysenttojobworker.However,where saidinputsarenotreceivedbackbytheprincipalwithinaperiodof1yearofthedateof receiptofinputsbythejobworker,itshallbedeemedthatsuchinputshadbeensupplied bytheprincipaltothejobworkeronthedaywhenthesaidinputswerereceivedbythe jobworker.
Hence,theITCtakenbyPQRCompanyLtd.inSeptember,2021isvalidandsince1year periodhasyetnotlapsedinApril,2022,therewillbenotaxliabilityonsuchinputs.
EXAMINER’S COMMENT
Someexamineeswereunawarethattheinputtaxcreditinrespectofrawmaterialsusedfor zeroratedoutwardsupplycanbeavailedintermsofsection16ofIGSTAct,2017.Theyalso wronglydisallowedinputtaxcreditinrespectofworkcontractor’sservice,whichisallowedin thegivencase vide section17(5)ofCGSTAct,2017astherepairofbuildingisdebitedtoP&L Accountandnotcapitalizedalongwiththeimmovableproperty.
TAXMANN ® 8.6 PARTI:GOODS&SERVICESTAX
`
Q. 6.Siddhi Ltd. is a registered manufacturer engaged in taxable supply of goods. Siddhi Ltd. purchased the following goods during the month of January, 2022. The following particulars are provided:
1.Capital goods purchased on which depreciation has been taken on full value including input tax thereon
2.Goods purchased from Ravi Traders (Invoice of Ravi Traders is received in month of January, 2022, but goods were received in month of March, 2022)
3.Car purchased for making further supply of such car. Such car is destroyed in accident while being used for test drive by potential customers
4.Goods used for setting up telecommunication towers being immovable property
5.Goods purchased from Pooja Ltd. (Full payment is made by Siddhi Ltd. to Pooja Ltd. against such supply, but tax has not been deposited by Pooja Ltd.
6.Truck purchased for delivery of output goods80,000
Determine the amount of input tax credit (ITC) available by giving necessary explanations for treatment of various items as per the provisions of the CGST Act, 2017. You may assume that all the necessary conditions for availing the ITC have been complied with by Siddhi Ltd. [May 2019, (Old), 5 Marks]
Ans.Computation of ITC available with Siddhi Ltd.
1.Capitalgoods[Sincedepreciationhasbeenclaimedonthetaxcomponentof thevalueofthecapitalgoods,ITCofsuchtaxcannotbeavailedintermsof section16oftheCGSTAct,2017.]
2.GoodspurchasedfromRaviTraders[ITCinrespectofgoodsnotreceived cannotbeavailed(Section16oftheCGSTAct,2017).Sincethegoodshave beenreceivedinthemonthofMarch,2020,ITCthereoncanbeavailedin March,2020andnotJanuary2022eventhoughtheinvoiceforthesamehas beenreceivedinJanuary2022]
3.Carspurchasedformakingfurthersupply[ThoughITConmotorvehiclesused forfurthersupplyofsuchvehiclesisnotblocked,ITCongoodsdestroyedfor whicheverreasonisblocked(Section17(5)oftheCGSTAct,2017).]
4.Goodsusedforsettingtelecommunicationtowers[ITCongoodsusedbya taxablepersonforconstructionofimmovablepropertyonhisownaccount isblockedevenwhensuchgoodsareusedinthecourseorfurtheranceof business(Section17oftheCGSTAct,2017).]
5.GoodspurchasedfromPoojaLtd.[Note1]. However,theclaimwillgetconfirmedonlywhenthetaxchargedinrespect ofsuchsupplyhasbeenactuallypaidtotheGovernment.]
6.Truckspurchasedfordeliveryofoutputgoods[ITConmotorvehiclesusedfor transportationofgoodsisnotblocked(Section17(5)oftheCGSTAct,2017).]
Nil
Nil
80,000 Total ITC available with Siddhi Ltd.80,000
TAXMANN ® CH.8:INPUTTAXCREDIT 8.7
Sl. No.
`
Particulars Input tax (
)
15,000
20,000
30,000
50,000
10,000
Sl. No. ParticularsInput tax (` )
Nil
Nil
Nil
NOTE-1 In this case, the provisions of Rule 36(4) are applicable:
Step-1 Segregation of ITC on the basis of uploading of corresponding GSTR 1 by supplier. Eligible ITC regarding invoices by supplierGST (`) (
Step-2Eligible ITC regarding NOT furnished invoices: AsperRule36(4),theITCinrespectofwhichdetailshavenotbeenuploadedby suppliersinGSTR-1RegisteredPerson(SiddhiLtd.)cannotclaimITC.
Q. 7.Pari Ltd. of Jodhpur (Rajasthan) is a registered manufacturer of cosmetic products. Pari Ltd. has furnished following details for the month of April, 2022:
paid on life insurance policies taken for specified employees. Life insurance policies for specified employees have been taken by Pari Ltd. to fulfil a statutory obligation in this regard. The Government has notified such life insurance service under section 17(5)(b)(iii)(A). The life insurance service provider is registered in Rajasthan.
All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the applicable taxes have also been paid by Pari Ltd.
The balance of Input Tax Credit (ITC) with Pari Ltd. as on 1st April, 2022 is
CGST ` 20,000
SGST ` 15,000
IGST ` 15,000
TAXMANN ® 8.8 PARTI:GOODS&SERVICESTAX
a) Furnished 80,000
b) Not furnished 10,000
(
Sl. No. Particulars ` (A)Receipts (Details of Sales) (i) Sales in Rajasthan 8,75,000 (ii) Sales in States other than Rajasthan 3,75,000 (iii) Export under bond6,25,000 (B)Payments (1)Raw materials (i) Purchased from registered suppliers located in Rajasthan 1,06,250 (ii) Purchased from unregistered suppliers located in Rajasthan 37,500 (iii) Purchased from Punjab from registered supplier 1,00,000 (iv) Integrated tax paid on Import from USA22,732 (2)Consumables purchased from
Rajasthan
31,250 for
1,56,250 (3)Monthly
1,00,000 (4)Salary
to
(5)Premium
2,00,000
registered suppliers located in
including high speed diesel (Excise and VAT paid) worth `
running the machinery in the factory
rent for the factory building to the owner in Rajasthan
paid
employees on rolls6,25,000
Assume CGST, SGST and IGST rates to be 9%, 9% and 18% respectively, wherever applicable. Assume that all the other necessary conditions to avail the eligible input tax credit have been complied with by Pari Ltd., wherever applicable.
Compute eligible input tax credit and net GST payable (CGST and SGST or IGST as the case may be) by Pari Ltd. for the month of April, 2022. [Nov. 2018, 10 Marks]
Ans.Computation of eligible input tax credit available with Pari Ltd. in the month of April, 2020
1.Raw
1.(i) As per section 16 of the CGST Act :- CreditofGSTpaidonrawmaterialsusedinthe courseorfurtheranceofbusinessisavailable.
(ii)Allintra-Stateprocurementsmadebyaregisteredpersonfromanunregisteredsupplier havebeenexemptedfromGST. Therefore,sincenoGSTispaidonsuchrawmaterial purchased,theredoesnotariseanyquestionofinputtaxcredit(ITC)onsuchrawmaterial.
(iii) As per section 16 of the CGST Act: - IGSTpaidonimportedgoodsqualifiesasinput taxintermsofsection2(62)ofCGSTAct,2017.Therefore,creditofIGSTpaidonimported rawmaterialsusedinthecourseorfurtheranceofbusinessisavailable.
TAXMANN ® CH.8:INPUTTAXCREDIT 8.9
Sl. No. ParticularsEligible input tax credit CGST ` SGST ` IGST `
Material: Purchasedfromlocalregisteredsuppliers[Note1(
1,06,250x9%) 9,562.509,562.50 Purchasedfromlocalunregisteredsuppliers[Note 1(ii)] NilNil PurchasedfromPunjabfromregisteredsupplier [Note1(i)](
1,00,000x18%) 18,000 RawmaterialimportedfromUSA[Note1(iii)]22,732
Consumables[Note2][(1,56,250-31,250)x9%]11,25011,250
Monthlyrentforthefactorybuildingtotheowner inRajasthan[Note3] 9,0009,000
Salarypaidtoemployeesonrolls[Note4]NilNilNil 5. Premiumpaidonlifeinsurancepoliciestakenfor specifiedemployees[Note5](` 2,00,000×9%) 18,00018,000Total47,812.5047,812.5040,732 Add: OpeningbalanceofITCon01-4-202020,00015,00015,000 Eligible ITC [Note 7]67,812.5062,812.5055,732 Computation of net GST payable for the month of April, 2020 ParticularsCGST ` SGST ` IGST ` Intra-Statesales78,75078,750 Inter-Statesales67,500 Exportsunderbond[Note6]NilNilNil Totaloutputtaxliability78,75078,75067,500 Less: EligibleITC67,812.5062,812.5055,732 Net GST payable10,937.5015,937.5011,768
i)] (`
`
2.
3.
4.
Notes:
2.ITConconsumables,beinginputsusedinthecourseorfurtheranceofbusiness,isavailable. However,sincelevyofGSTonhighspeeddieselhasbeendeferredtilladatetobenotified byGovernment,therecannotbeanyITCofthesame.
3.ITConmonthlyrentisavailableasthesaidserviceisusedinthecourseorfurtheranceof business.
4. As per section 7 read with Schedule III to the CGST Act :- Servicesbyemployeesto employerinthecourseoforinrelationtohisemploymentisnotasupply.Therefore,since noGSTispaidonsuchservices,therecannotbeanyITConsuchservices.
5. As per section 17(5) of the CGST Act, 2017 :- ITConlifeinsuranceserviceisavailable onlywhenthesameisnotifiedbytheGovernmentasbeingobligatoryforanemployerto providetoitsemployeesunderanylawforthetimebeinginforce.
6. As per section 16 of the IGST Act :- Exportofgoodsisazeroratedsupply.Azerorated supplyunderbondismadewithoutpaymentofIGST,suppliesincludeszeroratedsupply.
7.Sinceexportofgoodsisazeroratedsupply,therewillbenoapportionmentofITCandfull creditwillbeavailable.
Q. 8.State whether input tax credit is available in the following cases :
(i) Motor car purchased by driving school for imparting training to the customers. Whether your answer would be different if the motor car is purchased by a manufacturing company to be used by its Managing Director for official purposes (sitting capacity is 5 persons)?
(ii) Amount spent for construction of factory building.
(iii) Gift articles purchased on the occasion of Diwali to be distributed among the employees.
Ans. (i) As per Section 17(5) of CGST Act, 2017 :- Motorcarpurchasedbydrivingschoolfor impartingtrainingtothecustomersisanexceptiontotheblockedcredititem.Hence, ITC is available
Yes,motorcarpurchasedbyamanufacturingcompanytobeusedbyitsmanagingdirector isablockedcredititemasperSection17(5)(a)ofCGSTAct,2017.Hence, ITC is not available.
(ii) As per Section 17(5) of CGST Act, 2017 :- Amountspentforconstructionoffactory buildingisanitemforwhichinputtaxcreditisnotavailable.
(iii) As per Section 17(5) of CGST Act, 2017 :- Inputtaxcreditshall not be available forgoods disposedofbywayofgiftorfreesamples.
Q. 9.V-Supply Pvt. Ltd. is a registered manufacturer of auto parts in Kolkata, West Bengal. The company has a manufacturing facility registered under Factories Act, 1948 in Kolkata. It procures its inputs indigenously from both registered and unregistered suppliers located within as well as outside West Bengal as also imports some raw material from China. The company reports the following details for the month of November, 20XX:
TAXMANN ® 8.10 PARTI:GOODS&SERVICESTAX
Payments ` (in lakh)Receipts
(in
Raw material3.5Sales15 Consumables1.25 Transportation charges for bringing the raw material to factory 0.70 Salary paid to employees on rolls5.0 Premium paid on life insurance policies taken for specified employees 1.60 Audit fee0.50 Telephone expenses0.30 Bank charges0.10
`
lakh)
All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the applicable taxes have also been paid by the company.
Further, following additional details are furnished by the company in respect of the payments and receipts reported by it:
(i) Raw material amounting to ` 0.80 lakh is procured from Bihar and ` 1.5 lakh is imported from China. Basic customs duty of ` 0.15 lakh and integrated tax of ` 0.29781 lakh are paid on the imported raw material. Remaining raw material is procured from suppliers located in West Bengal. Out of such raw material, raw material worth ` 0.30 lakh is procured from unregistered suppliers; the remaining raw material is procured from registered suppliers. Further, raw material worth ` 0.05 lakh purchased from registered supplier located in West Bengal has been destroyed due to see page problem in the factory and thus, could not be used in the manufacturing process.
(ii) Consumables are procured from registered suppliers located in Kolkata and include diesel worth ` 0.25 lakh for running the generator in the factory.
(iii) Transportation charges comprise of ` 0.60 lakh paid to Goods Transport Agency (GTA) in Kolkata and ` 0.10 lakh paid to horse pulled carts. GST applicable on the services of GTA is 5%.
(iv) Life insurance policies for specified employees have been taken by the company to fulfil a statutory obligation in this regard. The Government has notified such life insurance service under section 17(5)(b)(iii)(A). The life insurance service provider is registered in West Bengal.
(v) Audit fee is paid to M/s Goyal & Co., a firm of Chartered Accountants registered in West Bengal, for the statutory audit of the preceding financial year.
(vi) Telephone expenses pertain to bills for landline phone installed at the factory and mobile phones given to employees for official use. The telecom service provider is registered in West Bengal.
(vii) Bank charges are towards company’s current account maintained with a Private Sector Bank registered in West Bengal.
(viii) The break up of sales is as under:
Sales in West Bengal - ` 7 lakh
Sales in States other than West Bengal - ` 3 lakh Export under bond - ` 5 lakh
The balance of input tax credit with the company as on 1.11.20XX is:
CGST - ` 0.15 lakh
SGST - ` 0.08 lakh
IGST - ` 0.10 lakh
Compute eligible input tax credit and net GST payable [CGST, SGST or IGST, as the case may be] by V-Supply Pvt. Ltd. for the month of November 20XX.
Note—
(i) CGST, SGST & IGST rates to be 9%, 9% and 18% respectively, wherever applicable.
(ii) The necessary conditions for availing input tax credit have been complied with by V-Supply Pvt. Ltd., wherever applicable.
You are required to make suitable assumptions, wherever necessary.
[MTP, May 2018, 10 Marks]
TAXMANN ® CH.8:INPUTTAXCREDIT 8.11
Ans.Computation of input tax credit available with V-Supply Pvt. Ltd. in the month of November 20XX
TAXMANN ® 8.12 PARTI:GOODS&SERVICESTAX
Sl. No. ParticularsEligible input tax credit CGST ` SGST ` IGST ` Total ` 1.RawMaterial RawmaterialpurchasedfromBihar[ReferNote 1(i)] 14,40014,400 RawmaterialimportedfromChina[ReferNote 1(ii)] 29,78129,781 RawmaterialpurchasedfromunregisteredsupplierswithinWestBengal[ReferNote1(iii)] NilNilNil Rawmaterialdestroyedduetoseepage[Refer Note1(iv)] NilNilNil RemainingrawmaterialpurchasedfromWest Bengal[ReferNote1(i)] 7,6507,65015,300 Total7,6507,65044,18159,481 2.Consumables[ReferNote2]9,0009,00018,000 3.Transportationchargesforbringingtherawmaterialtofactory[ReferNote3] 1,5001,5003,000 4.Salarypaidtoemployeesonrolls[ReferNote4]NilNilNilNil 5.Premiumpaidonlifeinsurancepoliciestakenfor specifiedemployees[ReferNote5] 14,40014,400-28,800 6.Auditfee[ReferNote6]4,5004,500-9,000 7.Telephoneexpenses[ReferNote6]2,7002,7005,400 8.Bankcharges[ReferNote6]9009001,800 40,65040,65044,1811,25,481 Computation of net GST payable ParticularsCGST ` SGST ` IGST ` Total ` OnIntra-StatesalesinWestBengal63,00063,0001,26,000 OnInter-StatesalesotherthanWestBengal54,00054,000 Onexportsunderbond[Note7]NilNilNilNil OninwardsupplyofGTAservicesunderreverse charge[Note3] 1,5001,5003,000 Totaloutputtaxliability64,50064,50054,0001,83,000 Less:Cashpaidtowardstaxpayableunderreverse charge[Note10] (1,500)(1,500)(3,000) Less:Inputtaxcredit[Note8] Openingbalanceofinputtaxcrediton01.11.20XX(15,000)(8,000)(10,000)(33,000) Inputtaxcreditavailedduringthemonth(40,650)(40,650)(44,181)(1,25,481) IGSTUtilizedforpaymentofCGST181 (IGST) Net GST payable under FCM7,16914,350Nil21,519 TaxPayableunderRCM1,5001,500—3,000 NetGSTPayable8,66915,850—24,519
