PAPER – 5:

INDIRECT TAX LAWS

(1) All questions have been answered on the basis of position of (i) GST
law as amended by the Finance Act, 2023 including significant
notifications and circulars and other legislative amendments made,
up to 30th April, 2024 and (ii) customs law as amended by the
Finance Act, 2023 including significant notifications and circulars
and other legislative amendments made, up to 30th April, 2024.
(2) Unless otherwise specified, the section numbers and rules referred
in questions and answers relating to GST pertain to the Central
Goods and Services Tax Act, 2017 and the Central Goods and
Services Tax Rules, 2017 respectively.
(3) 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. The rates of customs
duty are also hypothetical and may not necessarily be the actual
rates. Further, GST compensation cess should be ignored in all the
questions, wherever applicable.

QUESTIONS

Case scenario - I
Shreyans Ltd. (hereinafter referred as “company”) is a conglomerate having
diversified businesses including hotels, FMCG (Fast-Moving Consumer Goods),
information technology etc. It has its corporate office in Delhi and operations
across multiple States in India. As an internal policy, the company has
obtained single GST registration in each State irrespective of the diversified
business operations being undertaken in the State. During the month of April,
the company undertook the following transactions:
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(a) The FMCG division of the company in Jaipur, Rajasthan agreed to use
the vacant godown within the premises of Hotel Division in Udaipur,
Rajasthan for storage of its goods. The value of such an arrangement
was agreed at ` 5 lakh per month. Said amount was agreed to be
adjusted by way of intra-division book adjustment on a monthly basis.
(b) The Hotel Division of the company in Maharashtra used the IT platform
owned and managed by the IT Division of the company in Delhi. The
value of such services was determined as ` 12 lakh per month. The IT
division treated the same as deemed supply liable to GST as per
Schedule I of the CGST Act, 2017 and charged GST on such deemed
supply in the invoice issued to Hotel Division on 25th April. The Hotel
Division availed the input tax credit of such deemed supplies from its
Maharashtra Office in April itself. However, no payment was made for
such services by the Hotel Division to the IT Division.
(c) The Executive Director, as part of his salary and perquisites under the
employment agreement, was eligible for a voucher worth ` 5 lakh,
redeemable at any hotel property of the company in India. The voucher
was used by the Executive Director for the stay of his family in a
company owned hotel in Udaipur, Rajasthan. The total amount charged
from the Executive Director was ` 25 lakh. The voucher value of ` 5 lakh
was deducted from such amount at the time of payment.
(d) The Hotel Division provided accommodation services to a US citizen and
resident for a wedding ceremony organized at its hotel in Udaipur,
Rajasthan. The total amount of ` 2 crores for such services was paid by
an Indian individual residing in Delhi on behalf of the US resident in
Indian currency. The amount was received by the Mumbai, Maharashtra
Office of Hotel Division.
(e) The company received long term lease of an industrial plot from
Maharashtra Industrial Development Corporation (MIDC) in auction
against payment of an upfront amount as lease premium of ` 20 crores
for a period of 50 years. The company paid location charges of ` 5
crores in addition to the said premium.
The rate of GST in case of intra-State supplies, unless otherwise provided shall
be 9% CGST and 9% SGST) and for inter-State supplies shall be 18% IGST. All

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the divisions of the Company are eligible for 100% input tax credit unless
otherwise specified.
Based on the facts of the case scenario given above, choose the most
appropriate answer to Q. Nos. 1 to 5 below:-
1. Which of the following statements is correct in respect of the services
related to usage of vacant godown?
(a) The Hotel Division shall charge CGST and SGST amounting to
` 45,000 each in the tax invoice issued to FMCG Division.
(b) No GST is chargeable on usage of vacant godown of Hotel
Division.
(c) The Hotel Division shall charge IGST amounting to ` 90,000 in the
tax invoice issued to FMCG Division.
(d) The Hotel Division, Rajasthan shall charge IGST amounting to
` 90,000 in the tax invoice issued to Corporate Office in Delhi.
2. Assuming that the payment for utilization of IT platform has not been
made by the Hotel Division to the IT Division till the end of October
month of the current financial year, the Hotel Division:
(a) should reverse the input tax credit so availed while filing Form
GSTR-3B of the October month.
(b) need not reverse the input tax credit so availed in Form GSTR-3B
of the October month.
(c) should have availed the input tax credit only after the end of the
current financial year and not in April.
(d) should not have availed the input tax credit in respect of said
transaction as the same is deemed supply under Schedule I of the
CGST Act, 2017.
3. In relation to the stay of Executive Director’s family in the company owned
hotel in Udaipur, Rajasthan, value of supply of accommodation services
provided by the Hotel Division is:
(a) ` 25 lakh
(b) ` 20 lakh

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(c) Supply of services by employer to employee is not a taxable supply

under GST.
(d) ` 5 lakh
4. For the accommodation services provided to the US resident and citizen,
the place of supply shall be:
(a) Udaipur
(b) Delhi
(c) Mumbai
(d) USA
5. In respect of the long-term lease of the industrial plot received from
Maharashtra Industrial Development Corporation (MIDC),
(a) upfront lease premium of ` 20 crores is exempt. However, the
location charges of ` 5 crore are liable to GST.
(b) GST is payable on the upfront lease premium of ` 20 crores. No
GST is payable on the location charges.
(c) GST is exempt on the entire premium of ` 25 crores including
location charges.
(d) GST is payable on the entire upfront premium of ` 25 crores
including location charges.
Vlook Smart Ltd. (hereinafter referred as “company”) is a leading retail chain
of India. It has retail stores in multiple States with its corporate office located
in Mumbai, Maharashtra. The company has GST registrations across all States
from where it operates its retail stores. The company undertook following
transactions during the month of April:
(a) Supplied goods worth ` 100 crores through its retail store in Jaipur,
Rajasthan and offered a cash discount of ` 2 crores to the customers in
the State of Rajasthan during the month.
(b) Ghanshyam Das, a retailer in Gujarat, purchased goods worth ` 5 lakh in
the month of January of the preceding financial year. Subsequently, the
company offered an incentive on such purchases to Ghanshyam Das by
issuing a commercial credit note of ` 50,000 in the month of April.

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(c) The company also charges slotting fee from the manufacturers of goods
to keep their products on the shelf for sale. The company received ` 5
crores from a manufacturer located in West Bengal for keeping its
products on shelf of its store for sale in the State of Haryana. The
payment for the same was received at Mumbai Head Office of the
company. The invoice for the same was issued by the Haryana
registration of the company.
(d) The company received an amount of ` 2 crores in April as penalty for
delayed receipt of consideration from its customers for sale of goods
made in the month of January of the preceding financial year in the
retail store of Jaipur, Rajasthan.
(e) The company entered into a rental agreement with a registered person
for an upcoming retail store (a commercial property) in Ahmedabad,
Gujarat. The said store location is outside the municipal limits of
Ahmedabad. The rental per month payable from April is ` 50 lakh which
is paid to the owner registered in Ahmedabad, Gujarat, by the Mumbai
Head Office of the company as the company follows a centralized rental
agreement policy for all stores. The invoice for the same is issued to the
respective registered office in Gujarat.
(f) The company incurred an expense of ` 50 lakh in transportation of
empty cargo containers to its centralized warehouse in Mumbai from all
the States through a Goods Transport Agency.
The rates of GST, unless otherwise specified, shall be 9% CGST, 9% SGST and
18% IGST. All the divisions of the company are eligible for 100% input tax
credit unless otherwise specified.
Based on the facts of the case scenario given above, choose the most
appropriate answer to Q. Nos. 6 to 11 below:-
6. The value of supply on which GST is payable for the month of April for
the Rajasthan State is:
(a) ` 96 crores
(b) ` 100 crores
(c) ` 98 crores
(d) ` 102 crores

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7. In relation to the incentive paid to Ghanshyam Das in Gujarat,

(a) the company shall reverse proportionate input tax credit.
(b) there is no GST implication on the company and Ghanshyam Das.
(c) Ghanshyam Das shall reverse the input tax credit availed on the
purchase.
(d) the company shall reduce the tax liability and Ghanshyam Das shall
increase the tax liability for the month of April.
8. In relation to the slotting fee charged,
(a) tax is payable by the company in Haryana.
(b) tax is payable by the manufacturer in West Bengal.
(c) tax is payable by the company in Maharashtra.
(d) slotting fee is exempted from GST.
9. The tax on penalty received on account of delayed payment of
consideration is payable at the time of filing return of ___________.
(a) April
(b) January
(c) Either April or January at the option of the company
(d) No tax is payable on the penalty received on account of delayed
payment of consideration.
10. The GST on rental amount of upcoming store near Ahmedabad shall be:
(a) ` 4.5 lakh CGST and ` 4.5 lakh SGST, payable by owner in Gujarat.
(b) ` 9 lakh IGST, payable by owner in Gujarat.
(c) nil since store is located outside the municipal limits.
(d) ` 9 lakh IGST, payable under reverse charge mechanism by
Mumbai Head Office, Maharashtra.
11. For the empty cargo containers transported to Mumbai warehouse,:
(a) e-way bill shall be issued by respective dispatch locations of the
company.

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(b) e-way bill shall be issued by the warehouse location in Mumbai.

(c) no e-way bill is required to be issued.
(d) e-way bill shall be issued by the Goods Transport Agency.
12. Mr. Mota Lal is engaged in the wholesale business of dry fruits. He
imported 5,150 kg of almonds from California. Post importation, he did
not clear them for home consumption but kept the imported almonds in
a customs warehouse due to the renovation work going on in his retail
store. Mr. Bansi Lal, the warehouse keeper, is of the view that titular
rights of the almonds vest with him and Mr. Mota Lal has no access to
them. However, Mr. Mota Lal wishes to inspect the goods and ensure
that goods do not deteriorate during storage in the warehouse and
thereafter, show them for sale to Mr. Manohar Lal.
Which of the following statement(s) is correct in the given case as per
the provisions of the Customs Act, 1962?
(a) The view taken by Mr. Bansi Lal is correct.
(b) The view taken by Mr. Bansi Lal is incorrect. However, Mr. Mota Lal
can only inspect the goods.
(c) The view taken by Mr. Bansi Lal is incorrect. However, Mr. Mota Lal
can only inspect the goods and ensure that goods do not
deteriorate during storage in the warehouse but thereafter he
cannot show them in warehouse for sale to Mr. Manohar Lal.
(d) The view taken by Mr. Bansi Lal is incorrect. Further, Mr. Mota Lal
can inspect the goods and ensure that goods do not deteriorate
during storage in the warehouse and also thereafter, he can show
them in warehouse for sale to Mr. Manohar Lal.
13. Mr. Dinkar is the owner of Dinkar Associates which is registered in
Ahmedabad, Gujarat. He is engaged in supply of various goods and
services in the domestic market and exporting the same outside India.
During the month of February, he has undertaken the following
transactions:

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Outward Supplies
(i) Transferred the tenancy rights of a commercial complex (taken on
rent) located in Vadodra for a tenancy premium of ` 8,00,000 to
DB Morgan Ltd. of Ahmedabad, Gujarat. Stamp duty and
registration fee have already been paid on the tenancy premium.
(ii) Hired out excavators and dumpers alongwith operators to mining
lease holders of Kuchchh, Gujarat for extracting and transporting
minerals within the mining area for a period of 5 years. The
excavators/dumpers are invariably hired out along with operators.
Similarly, operators are supplied only when the
excavators/dumpers are hired out. Hire charges for excavators and
dumpers are ` 10,00,000 and service charges for supply of
manpower for operation of the excavators/dumpers - ` 2,00,000.
(iii) Supplied goods of value of ` 35,00,000 to Choksi Ltd. Jamnagar,
Gujarat (including goods worth `·10,00,000 supplied to SEZ unit of
Choksi Ltd. in Gujarat).
(iv) Agreed to provide consultancy services to Mr. Krishna of Surat,
Gujarat who is an unregistered person in connection with his newly
commenced business for a consideration of ` 6,80,000. An
advance of ` 1,50,000 has been received for the same on 10th
February.
(v) Exported the goods to George Inc. of the USA. FOB value of the
goods is ` 8,40,000.
(vi) Sold a heavy printing machinery purchased from Japan for `
5,10,000 in high sea to Dhoomketu Printers, Mumbai, Maharashtra
on 10th February.
(vii) Supplied goods to Timahi Corporation, China for ` 12,00,0000 on
15th February. These goods were purchased for ` 10,00,000 from
Jamsam Corporation, Japan on 5th February and were supplied in
China without bringing them to India.

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Inward Supplies
(i) The goods exported to George Inc., USA, were purchased by Mr.
Dinkar as a merchant exporter for ` 7,00,000 from Shravan Ltd., a
manufacturer registered in Bengaluru, Karnataka.
(ii) The heavy printing machinery sold in high sea to Dhoomketu
Printers was originally imported by Mr. Dinkar from Japan on 2nd
February, with CIF value of ` 5,00,000 and FOB value of ` 4,50,000.
(iii) Mr. Dinkar paid a sales commission of ` 5,00,000 to Mr. Kenzo of
Japan, his agent in connection with all the imports from Japan.
(iv) Imported raw materials from Italy under a CIF contract. CIF value
of the goods for the purpose of customs included ` 2,00,000 as
ocean freight paid by the exporter on transport of goods through
vessel from port of shipment to port of import. The value for the
purpose of levy of IGST worked out by the customs was ` 9,00,000.
(v) Purchased raw cotton for manufacture of garments for ` 12,00,000
from Mr. Poonawala, an agriculturist of Kuchch, Gujarat.
(vi) Monthly rent of ` 35,00,000 payable to Dharam Ltd., Gujarat, for
the retail outlet (a commercial property) in Ahmedabad, Gujarat
(one third of total space available is used by Mr. Dinkar for
personal residential purposes).
Compute the net GST payable in cash [CGST and SGST or IGST, as the
case may be], by Mr. Dinkar for February.
Notes:
A. Rates of CGST, SGST and IGST for hiring out of excavators and
dumpers are 6%, 6% and 12%. As regards the supply received as a
merchant exporter, Mr. Dinkar paid GST at the concessional rates by
fulfilling all requisite conditions thereof. Rates of CGST, SGST and
IGST for all the other supplies of goods and services including supply
of manpower services are 9%, 9% and 18%. Ignore GST compensation
cess.
B. Mr. Dinkar had an opening balance of ITC of CGST of ` 35,000 and
SGST of ` 35,000 for the relevant period. In respect of all the
inward supplies, suppliers have uploaded their invoices in

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respective Form GSTR-1 and the supplies are reflected in Form

GSTR 2B.
C. All the figures given above are exclusive of GST, wherever
applicable. The amounts given in respect of import and export
transactions in rupees have been arrived after conversion thereof,
though transactions were undertaken in convertible foreign
currency.
D. Mr. Dinkar always makes zero-rated supplies under a bond or
letter of undertaking (LUT).
Provide supporting explanatory notes for your conclusion wherever
required.
14. Mr. Jignesh of Delhi books accommodation, though an e-commerce
operator - Plan My Trip Ltd. (PMTL), registered under GST in
Uttarakhand, in a newly established budget hotel – Paras Resorts Ltd.
(PRL) located in Nainital, Uttarakhand. The turnover of PRL in the
current financial year is ` 18 lakh.
PRL raises an invoice for ` 1,00,000 to Mr. Jignesh. PMTL collects the
payment from Mr. Jignesh and after deducting its fees and other
charges from the same, remits the balance amount to PRL.
Advise PRL as to whether it is required to obtain GST registration. Also,
whether tax is required to be collected at source by PMTL under section 52
on the services provided by PRL to Mr. Jignesh through electronic
commerce operator – PMTL. If yes, determine the amount of tax to be
collected at source.
Suppose in the above case, other facts remaining same, if PRL, supplying
accommodation services, is also an e-commerce operator (registered in
Uttarakhand as TCS collector as well as a regular tax payer since its
aggregate turnover exceeds the threshold limit) and PMTL has an
agreement with PRL for booking the accommodation at the time when
Mr. Jignesh booked the accommodation, ascertain whether tax is required
to be collected at source under section 52 on the services provided by PRL
to Mr. Jignesh through electronic commerce operator – PMTL. If yes,
determine the amount of tax to be collected at source and since two e-

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commerce operators are involved in the said transaction, who is

required to collect the tax at source under section 52?
Note – Amounts given above are exclusive of GST. Assume applicable
rate of CGST and SGST to be 9% each and IGST to be 18%.
15. A notice for audit under section 65 is served by the proper officer on the
basis of risk assessment to Ghoomghoom Pvt. Ltd. on 02.12.2023 for
audit of financial years 2021-22 and 2022-23. The tax authorities visited
its place of business on 20.12.2023 and requested for certain records,
documents and books of accounts, from the company. The required
records, documents and books of accounts are provided by
Ghoomghoom Pvt. Ltd. on 30.12.2023. After in-depth checking of
records, documents and books made available by Ghoomghoom Pvt.
Ltd. during audit, the audit was completed on 25.03.2024 and audit
findings were communicated to the taxpayer in prescribed form by said
date. However, the accountant of Ghoomghoom Pvt. Ltd. is of the view
that-
(i) the tax authorities have completed the audit of Ghoomghoom Pvt.
Ltd. after the lapse of the maximum time-period permitted by the
GST law and
(ii) the tax authorities cannot conduct the audit of two financial years
at a time.
Ghoomghoom Pvt. Ltd. has approached you to advise you on the said
issues. You are required to determine the technical veracity of the
above views of the accountant of Ghoomghoom Private Ltd. on the
same with reference to the relevant provisions of the GST law.
16. Agora Ltd. exported certain goods to its customer located in Germany
against which a refund of IGST amounting to ` 50 lakh was claimed and
received by Agora Ltd. The sale proceeds covering 50% of the value of
exports were immediately received by Agora Ltd. However, due to
financial constraints, the customer failed to pay the balance amount of
sale proceeds within the permissible time limits under regulatory
provisions prevailing in India.
In view of the aforesaid scenario:

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(a) Determine the amount of refund, if any, which Agora Ltd. is

required to deposit back. Also, discuss the time limit which is
permissible under law within which the sale proceeds in respect of
exported goods should have been realized by Agora Ltd.
(b) Will your answer to sub-part (a) differ if the Reserve Bank of India
writes off the requirement of realisation of sale proceeds on
merits?
(c) Whether Agora Ltd. can claim the refund back in case sale
proceeds are realised at a later date?
17. Discuss the cases where a registered person is not allowed to furnish the
details of outward supplies under section 37 in Form GSTR-1 or using
invoice furnishing facility, as enumerated in rule 59.
18. Paramjit Ltd. imported a machine from Oliver Equipments, UK. The FOB
price of the machine was settled at 6,000 UK Pound. The machine was
shipped on 01.10.2023. Meanwhile, Paramjit Ltd. re-negotiated the price
of the machine with Oliver Equipments which agrees on the reduced
price of 5000 UK pound on 10.10.2023. The machine arrived in India on
18.10.2023. Other details pertaining to machine are as under:
(i) License fee that the buyer was required to pay in UK as a condition
of sale was 500 UK Pound
(ii) Buying commission paid in India was ` 20,000
(iii) Cost of transport from UK port to Indian port is ` 40,000. Apart
from this, due to deep draught at the port, machine was not taken
to the jetty in the port but was unloaded at the outer anchorage.
The additional charges incurred for such unloading and transport
of machine from outer anchorage to the jetty in barges (small
boats) were ` 10,000.
(iv) Date of presentation of bill of entry was 15.10.2023 and the rate of
exchange notified by CBIC on this date was ` 100 per pound. Rate
of basic customs duty was 10%.
(v) Date of entry inwards was 18.10.2023 and the rate of exchange
notified by CBIC on this date was ` 105 per pound. Rate of basic
customs duty was 15%.

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(vi) Insurance premium details were not ascertainable.

Compute the assessable value and basic customs duty payable (rounded
off to nearest one rupee) by Paramjit Ltd.
19. Aayaat Enterprises imported goods vide a bill of entry presented before
the proper officer on 15th April. The proper officer decided that the
goods should be subject to a chemical test and therefore, the same were
to be provisionally assessed. You are required to advise Aayaat
Enterprises regarding the conditions which are to be complied with
before payment of duty is made for the purpose of provisional
assessment.
Subsequently, the goods imported by Aayaat Enterprises were
provisionally assessed at a value of ` 24,00,000 on 16th April and Aayaat
Enterprises paid the provisional duty of ` 2,40,000 on the same date
after fulfilling the requirements for provisional assessment. Further, the
chemical test report was received on 5th May. Advise Aayaat Enterprises
regarding the maximum time limit upto which its provisional assessment
should be finalized.
Determine the amount of interest payable, if any, under section 18 of
the Customs Act, 1962 (considering a year of 365 days) assuming that
the provisional assessment was finalized on 30th June finally assessing
the customs duty at ` 2,80,000 and the differential duty was paid on the
same day.
20. With reference to the Foreign Trade Policy 2023, explain in brief the
objectives and salient features of Remission of Duties and Taxes on
Exported Products (RoDTEP) scheme.

SUGGESTED ANSWERS

Question Answer
No.
1 (b) No GST is chargeable on usage of vacant godown of Hotel
Division
2 (b) need not reverse the input tax credit so availed in GSTR-3B

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of the October month.

3 (a) ` 25 lakh
4 (a) Udaipur
5 (c) GST is exempt on the entire premium of ` 25 crores
including location charges.
6 (b) ` 100 crores
7 (b) there is no GST implication on the company and Ghanshyam
Das.
8 (a) tax is payable by the company in Haryana.
9 (a) April
10 (a) ` 4.5 lakh CGST and ` 4.5 lakh SGST, payable by owner in
Gujarat
11 (c) no e-way bill is required to be issued.
12 (d) The view taken by Mr. Bansi Lal is incorrect. Further, Mr.
Mota Lal can inspect the goods and ensure that goods do
not deteriorate during storage in the warehouse and also
thereafter, he can show them for sale to Mr. Manohar Lal.

13. Computation of net GST payable in cash, by Mr. Dinkar

Particulars Value (`) CGST (`) SGST (`) IGST (`)

GST payable on outward supplies
Transfer of tenancy 8,00,000 72,000 72,000
rights (8,00,000 (8,00,000
[Transfer of tenancy x 9%) x 9%)
rights to a new tenant
against consideration in
the form of tenancy
premium is taxable even
though stamp duty and
registration fee have
been paid on the same
(Circular No. 44/2018 CT
dated 02.05.2018). It is

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an intra-State supply
since place of supply is
location of immovable
property being
Ahmedabad, Gujarat.]
Hiring out excavators 12,00,000 72,000 72,000
and dumpers including [10,00,000 (12,00,000 (12,00,000
operators + x 6%) x 6%)
[Taxable since renting 2,00,000]
of trucks and other
freight vehicles with
driver for a period of
time is a service of
renting of transport
vehicles (with operator)
and not service of
transportation of goods
by road. Further, since
the excavators and
dumpers are invariably
hired out along with
operators and the
operators are supplied
only when the
excavators/ dumpers
are hired out, it is a case
of composite supply
under section 2(30)
wherein the principal
supply is the hiring out
of the excavators and
dumpers.
As per section 8(a), the
composite supply is
treated as the supply of
the principal supply.

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Therefore, the supply of

manpower for operation
of the excavators/
dumpers will also be
taxed at the rate
applicable for hiring out
of the excavator and
dumpers (principal
supply).
Further, it is a taxable
intra-State supply since
place of supply is
location of recipient
being Kuchchh, Gujarat.]
Goods supplied to SEZ 10,00,000 Nil
unit of Choksi Ltd.
[Supply to SEZ unit is a
zero-rated supply in
terms of section
16(1)(b) of the IGST Act,
2017. No IGST is
payable since Mr.
Dinkar makes all zero-
rated supplies under
LUT/bond.]
Supply of goods to 25,00,000 2,25,000 2,25,000
Choksi Ltd., Gujarat [35,00,000 [25,00,000 [25,00,000
[It is a taxable intra- - × 9%] × 9%]
State supply since place 10,00,000]
of supply is location of
goods when movement
of such goods
terminates, viz.,
Jamnagar, Gujarat.
Advance received for 1,50,000 13,500 13,500

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the consultancy services [1,50,000 [1,50,000

to be provided to × 9%] × 9%]
Mr. Krishna
[Tax on the services to
be provided is payable
at the time of receipt of
advance. Since the
place of supply is
location of recipient, i.e.
Gujarat, it is an intra-
State supply.]
Export of goods to USA 8,40,000 Nil
under LUT/bond
[Export of goods
outside India is a zero-
rated supply in terms of
section 16(1)(b) of the
IGST Act, 2017. No IGST
is payable since Mr.
Dinkar makes all zero-
rated supplies under
LUT/bond.]
High sea sales of heavy Nil -- -- --
printing machinery
imported from Japan
[High sea sales is
neither treated as
supply of goods nor as
supply of services in
terms of para 8(b) of
Schedule III of the CGST
Act, 2017.]
Goods purchased from Nil -- -- --
Japan sold in China
without bringing them

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into India
[Third country shipments
or triangular trade is
neither treated as
supply for goods nor as
supply of services in
terms of para 7 of
Schedule III of the CGST
Act, 2017.]
Total output tax 3,82,500 3,82,500 Nil
Less: ITC [Refer working 81,350 81,350
note below] (IGST) (IGST)
[IGST credit has been 3,01,150
utilized for payment of
(CGST)
CGST and SGST liability
in equal proportion. 3,01,150
Thereafter, CGST credit (SGST)
and SGST credit have
been utilized to pay the
CGST liability and SGST
liability respectively.]
Net GST payable Nil Nil Nil
Add: GST payable on inward supplies
Imported raw material 9,00,000 1,62,000
from Italy [9,00,000
× 18%]
Raw material purchased 12,00,000 1,08,000 1,08,000
from Mr. Poonawala, [12,00,000 [12,00,000
Gujarat × 9%] × 9%]
[Tax on the raw cotton
purchased by any
registered person from
an agriculturist is
payable under reverse

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charge vide Notification

No. 4/2017 IT (R) dated
28.06.2017.]

Total net GST payable 1,08,000 1,08,000 1,62,000

in cash
(CGST and SGST of
` 1,08,000 each will be
paid in cash through
GSTN portal and IGST of
` 1,62,000 will be paid
in cash through
ICEGATE portal while
making customs
clearance.)

Working Note - Computation of admissible ITC for February

Particulars Value CGST SGST IGST

(`) (`) (`) (`)
Opening balance 35,000 35,000
Goods purchased as 7,00,000 -- -- 700
merchant exporter
[It is an inter-State
supply since the place of
supply is Gujarat, i.e.
location where the
movement of goods
terminates. Shravan Ltd.
would have supplied the
goods to merchant
exporter – Mr. Dinkar - at
concessional rate of IGST
of 0.1% prescribed under
Notification Nos. 41/2017
IT(R) dated 23.10.2017.
Further, the merchant

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exporter is eligible to
take ITC of concessional
IGST so paid 1.]
Heavy printing machinery Nil -- -- --
imported from Japan
[No ITC is available since
tax is not payable by Mr.
Dinkar on the same since
in case of high sea sales,
IGST is paid by the last
high sea sales buyer who
clears the goods for home
consumption by filing the
bill of entry.]
Goods purchased from Nil -- -- --
Jamsam Corporation,
Japan
[No ITC is available since
tax is not payable by Mr.
Dinkar on the same as
goods do not become
part of the landmass of
the country.]
Sales commission paid to 5,00,000 -- -- --
agent - Mr. Kenzo
[Since service provider -
Mr. Kenzo - is an
intermediary in the given
transaction, place of
supply is location of
supplier - Mr. Kenzo, i.e.
outside India (Japan), in
terms of section 13(8)(b)

1
Circular No. 125/44/2019 GST dated 18.11.2019

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of the IGST Act, 2017.

Since location of supplier
and place of supply are
outside India, tax is not
payable on said
transaction under reverse
charge on said services.]
Imported raw material 9,00,000 1,62,000
from Italy [9,00,000
[Input tax, inter alia, × 18%]
includes IGST charged
on import of goods, in
terms of section 2(62).
No separate levy of IGST
will be there on the
component of ocean
freight paid by the
foreign exporter to the
foreign shipping line in
the CIF contract by
virtue of Union of India
vs. Mohit Minerals Pvt.
Ltd. 2022 (61) G.S.T.L.
257 (SC) since the Indian
importer is liable to pay
IGST on the ‘composite
supply’, comprising of
supply of goods and
supply of services of
transportation,
insurance, etc. in a CIF
contract.
Raw cotton purchased 12,00,000 1,08,000 1,08,000
from Mr. Poonawala, [12,00,000 [12,00,000
Gujarat × 9%] × 9%]
[It is an intra-State

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supply since the place of

supply is location where
movement of goods
terminates, i.e. Gujarat,
in terms of section
10(1)(a) of the IGST Act,
2017. ITC on goods
used in course or
furtherance of business
is allowed in terms of
section 16.]
GST paid on monthly rent 35,00,000 2,10,000 2,10,000 --
[In case of services used [35,00,000 [35,00,000
partly for the business × ×
purpose and partly for 9%×2/3] 9%×2/3]
other purposes, ITC is
restricted to so much of
ITC as is attributable to
the purposes of
business. Thus, ITC for
GST paid on only 2/3rd of
monthly rent is available
since GST paid on
monthly rent
attributable to personal
purposes (one-third) is
not allowed. Further, it
is an intra-State supply
since the place of supply
of services provided in
relation to an immovable
property is location of
immovable property, i.e.
Gujarat in terms of
section 12(3) of the IGST
Act, 2017.]

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Total ITC available 3,53,000 3,53,000 1,62,700

Note – Since as per section 49(5) read with rule 88A, ITC of IGST can be
utilised towards payment of CGST and SGST in any proportion and in any
order, the ITC of IGST of ` 1,62,700 can be set off against the CGST and
SGST liability in any proportion and in any order. In above answer, ITC of
IGST has been set off in equal proportion against the payment of CGST
and SGST liability. However, multiple answers are possible to given
question owing to multiple ways of utilizing the ITC of IGST for payment
of CGST and SGST liability.
14. As per section 22, every supplier of goods or services or both is required
to obtain registration in the State/ Union territory from where he makes
the taxable supply if his aggregate turnover exceeds threshold limit in a
financial year. However, section 24, inter alia, provides that persons who
supply goods or services or both through an electronic commerce
operator (hereinafter referred as ECO), who is required to collect tax at
source under section 52, are required to obtain registration mandatorily.
However, said mandatory registration is not applicable, inter alia, to the
suppliers of the services which are notified under section 9(5) or section
5(5) of the IGST Act, 2017; such suppliers are entitled for threshold
exemption.
In case where services are notified under section 5(5) of the IGST Act,
2017, the ECO is liable to pay the entire tax on behalf of the suppliers of
services. Notification No. 14/2017 IT (R) dated 28.06.2017 issued under
said section notifies services by way of providing accommodation in
hotels, provided the person supplying such service through ECO is not
liable for registration under section 22(1), as one such service where the
ECO is liable to pay tax on behalf of the suppliers.
In the given case, PRL provides services by way of providing
accommodation in hotel through an ECO. Services by way of providing
accommodation in hotels provided by a supplier - PRL - which is not
liable for registration under section 22(1) as its turnover is less than the
threshold limit for registration, [viz. ` 20 lakh], is a service notified under
section 5(5). Thus, PRL will be entitled for threshold exemption for

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registration and will not be required to obtain registration even though

it supplies services through ECO.
As per section 52, ECO is not required to collect tax at source (TCS) in
cases where the service is notified under section 9(5) of the CGST Act,
2017/section 5(5) of the IGST Act, 2017. The applicable tax on such
services is to be paid by the ECO as if he is the supplier liable to pay tax
on the supply of such services.
Thus, in the given case, no tax is required to be collected at source
under section 52. Further, the supply of accommodation services by PRL
to Mr. Jignesh is an intra-State supply liable to CGST and SGST since the
place of supply of services by way of lodging accommodation by a hotel
is the location at which the immovable property is located in terms of
section 12(3) of the IGST Act, 2017. Accordingly, in the given case, place
of supply is Uttarakhand and location of supplier – PRL - is also
Uttarakhand.
As discussed above, entire tax of ` 9,000 (each under CGST and SGST)
on ` 1,00,000 will be paid by the ECO – PMTL.
In case where PRL is registered under GST, service by way of providing
accommodation in hotels provided by it through ECO will no longer be a
service notified under section 5(5). The reason for the same is that
services by way of providing accommodation in hotels are notified
under section 5(5) only where the person supplying such service through
ECO is not liable for registration under section 22(1). Consequently, said
services shall be subject to the TCS provisions under section 52.
Further, in a situation where multiple ECOs are involved in a single
transaction of supply of goods or services or both through ECO platform
and the supplier-side ECO is himself the supplier of the said supply,
Circular No. 194/06/2023 GST dated 17.07.2023 clarifies that the buyer-
side ECO will be required to collect TCS, as applicable, pay the same to
the Government in accordance with section 52 and also make other
compliances under said section.
As discussed above, the supply of accommodation services by PRL to
Mr. Jignesh is an intra-State supply liable to CGST and SGST.

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Accordingly, in the given case, buyer side ECO – PMTL - is required to

collect TCS on ` 1,00,000 @ 0.5% each under CGST and SGST as follows:
= ` 1,00,000 × 0.5%
=` 500 each under CGST and SGST
15. As per section 65, audit of any registered person may be undertaken by:
 the Commissioner; or
 any officer authorized by him, by way of a general or a specific order.
The audit shall be completed within a period of 3 months from the date
of commencement of the audit. However, where the Commissioner is
satisfied that audit in respect of such registered person cannot be
completed within 3 months, he may, for the reasons to be recorded in
writing, extend the period by a further period not exceeding six months.
For the purposes of this sub-section, the expression "commencement of
audit" shall mean:
(a) the date on which the records and other documents, called for by
the tax authorities, are made available by the registered person
or
(b) the actual institution of audit at the place of business,
whichever is later.
In the given case, the date of commencement of audit shall be
determined as follows:
(a) The date on which requisite information is made available by
Ghoomghoom Private Ltd., i.e., on 30.12.2023.
(b) The date of the actual institution of audit at the place of business,
i.e., on 20.12.2023
whichever is later.
Therefore, the date of commencement of the audit shall be 30.12.2023
Accordingly, the audit has to be completed within 3 months from the
date of commencement of the audit, i.e., by 30.03.2024.

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Thus, in the given case, the audit was completed by the tax authorities
within 3 months from the date of commencement of the audit, i.e.,
before 30.03.2024. Resultantly, the view of the accountant of
Ghoomghoom Pvt. Ltd. that the audit by the tax authorities was
completed after the maximum time period prescribed by law for the
same, is not correct.
Further, as per section 65 read with rule 101(1), the period of audit to be
conducted under said section shall be a financial year or part thereof or
multiples thereof. Thus, the view of the accountant that audit cannot be
conducted for two financial years is also not correct.
16. (a) As per proviso to section 16(3) of the IGST Act, 2017 read with rule
96B(1) of the CGST Rules, 2017, in the given case, Agora Ltd. shall
deposit the amount of refund proportionate to the sale proceeds
not realized i.e. 50% of the value of exports. The amount of such
refund is ` 25 lakh alongwith applicable interest under section 50.
Further, such amount is required to be deposited by Agora Ltd.
within 30 days of the expiry of the time period allowed under
Foreign Exchange Management Act, 1999, including any extension
of such time period permitted.
(b) As per proviso to rule 96B, where sale proceeds, or any part
thereof, in respect of such export goods are not realised by the
applicant within the time period allowed under the Foreign
Exchange Management Act, 1999, but the Reserve Bank of India
writes off the requirement of realisation of sale proceeds on
merits, the refund paid to the applicant shall not be recovered.
Thus, if the RBI writes off the requirement of realisation of sale
proceeds by Agora Ltd., the refund amount received by Agora Ltd.
is not liable to be recovered.
(c) As per rule 96B(2), where the sale proceeds are realised by the
applicant, in full or part, after the amount of refund has been
recovered from him under rule 96B(1) and the applicant produces
evidence about such realisation within a period of 3 months from
the date of realisation of sale proceeds, the amount so recovered
shall be refunded by the proper officer, to the applicant to the
extent of realisation of sale proceeds, provided the sale proceeds

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have been realised within such extended period as permitted by

the Reserve Bank of India.
In case the refund amount is deposited by Agora Ltd. alongwith
interest as per rule 96B(1) on account of non-realization of sale
proceeds from the customer, which is realized on a later date,
Agora Ltd. can claim the refund within 3 months from the date of
realization of sale proceeds in proportion of the sale proceeds
recovered. However, in order to claim such refund, the sale
proceeds should have been realized within such extended period
as may be permitted by the RBI.
17. Rule 59(6) provides that:
(i) a registered person shall not be allowed to furnish the details of
outward supplies in Form GSTR-1, if he has not furnished the
return in Form GSTR-3B for the preceding month.
(ii) a registered person, opting for QRMP scheme, shall not be allowed
to furnish the details of outward supplies in Form GSTR-1 or using
Invoice Furnishing Facility (IFF), if he has not furnished the return
in Form GSTR-3B for preceding tax period.
(iii) a registered person, to whom an intimation has been issued on the
common portal under the provisions of rule 88C(1) in respect of a
tax period, shall not be allowed to furnish the details of outward
supplies in Form GSTR-1 or using IFF for a subsequent tax period,
unless he has either deposited the amount specified in the said
intimation or has furnished a reply explaining the reasons for any
amount remaining unpaid, as required under the provisions of rule
88C(2).
(iv) a registered person, to whom an intimation has been issued on the
common portal under the provisions of rule 88D(1) in respect of a
tax period/periods, shall not be allowed to furnish Form GSTR-
1/IFF for a subsequent tax period, unless he has either paid the
amount equal to the excess ITC as specified in the said intimation
or has furnished a reply explaining the reasons in respect of the
amount of excess ITC that still remains to be paid, as required
under the provisions of rule 88D(2);

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(v) a registered person shall not be allowed to furnish Form GSTR-

1/IFF, if he has not furnished the details of the bank account as per
the provisions of rule 10A.
18. As per section 14 of the Customs Act, 1962, the value of the imported
goods is the transaction value, which means the price actually paid or
payable for the goods at the time and place of importation. Further, the
Supreme Court in case of Garden Silk Mills v. UOI 1999 (113) E.L.T. 358
held that importation gets complete only when the goods become part
of mass of goods within the country.
Since in the instant case, the price of the goods was reduced when the
goods were in transit, i.e. before the goods arrived in India, the goods
should be valued as per the revised reduced price of 5,000 UK pound,
which was the price payable at the time of importation.
Computation of assessable value and basic customs duty
payable by Paramjit Ltd
Particulars Amount
FOB value of machine 5,000 UK Pound
Add: License fee required to pay in UK 500 UK Pound
(Licence fee relating to imported goods payable by
the buyer as a condition of sale is includible in the
assessable value)
Customs FOB 5,500 UK Pound
Amount (`)
Value in rupees (5500 x ` 100) 5,50,000
Rate of exchange as notified by CBIC on the date on
which bill of entry is presented under section 46 of
the Customs Act, 1962 is to be considered
[Explanation to section 14 of the Customs Act, 1962].
Add: Buying commission Nil
(Buying commission is not included in the assessable
value)
Add: Cost of transport including barge charges 50,000
(In case where the big mother vessels cannot enter

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the harbour for any reason and goods are brought to

the docks by smaller vessels like barges, small boats,
etc., the cost incurred by the importer for bringing
the goods to the landmass, such as lighterage
charges, barge charges will be included in the cost of
transportation. In other words, the cost of transport
of the imported goods includes ship demurrage
charges on chartered vessels, lighterage charges or
barge charges.)
Add: Insurance 6187.50
[If insurance cost is not ascertainable, the same
shall be added @ 1.125% of FOB value of the
goods.]
CIF value / Assessable value 6,06,187.50
Basic customs duty @ 15% (` 6,06,187.50X 15%) 90,928
(Rounded off)
[Section 15 of the Customs Act, 1962 provides that
rate of duty shall be the rate in force on the date of
presentation of bill of entry or on the date of entry
inwards, whichever is later.]

19. As per section 18 of the Customs Act, 1962 read alongwith Circular No.
38/2016 Cus. dated 22.08.2016, wherever, duty is to be assessed
provisionally, the importer shall:
(a) execute a bond in the prescribed form, for the purposes of
undertaking to pay on demand the deficiency, if any, between the
duty as may be finally assessed and the duty provisionally
assessed; and
(b) furnish prescribed amount of security for the payment of the duty
deficiency. The security to be obtained shall be in the form of a
bank guarantee or a cash deposit, as convenient to the importer.
As per the Customs (Finalisation of Provisional Assessment) Regulations,
2018, the proper officer has to finalise the provisional assessment within
2 months of receipt of a chemical or other test report, where the
provisional assessment was ordered for that reason.

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The proper officer can finalize the provisional assessment within 2

months of receipt of a chemical or other test report, where the
provisional assessment is ordered for that reason. The Commissioner of
Customs may allow a further time period of 3 months in case the proper
officer is not able to finalize the provisional assessment within the
period of 2 months.
Thus, in the given case, provisional assessment will be finalized by 5th
July [within 2 months of receipt of test report (5th May)]. However, if the
proper officer is not able to finalize the provisional assessment by 5th
July, the Commissioner may allow a further period of 3 months, i.e., till
5th October to the proper officer to finalize the provisional assessment.
Had provisional assessment been finalized on 30th June and differential
duty been paid on same day, as per section 18(3) of the Customs Act,
1962, the importer would have been liable to pay interest, on any
amount payable consequent to the final assessment order @ 15% p.a.
from the first day of the month in which the duty is provisionally
assessed till the date of payment thereof.
Accordingly, amount of interest payable will be:
= ` 40,000 x 15% x 91/365
= ` 1,496 (rounded off)
20. Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is
based on the globally accepted principle that taxes and duties should
not be exported, and taxes and levies borne on the exported products
should be either exempted or remitted to exporters. RoDTEP scheme
aims to refund such duties and taxes on exported products, as are
otherwise not being refunded under other provisions of law. The rebate
under the Scheme shall not be available in respect of duties and taxes
already exempted or remitted or credited.
The objective of the scheme is to refund, currently unrefunded:-
(i) Duties/taxes/levies, at the Central, State & local level, borne on the
exported product, including prior stage cumulative indirect taxes
on goods & services used in production of the exported product,
and

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(ii) Such indirect duties/taxes/levies in respect of distribution of

exported products.
Salient features of the scheme: -
(i) Rebate amount is issued in the form of a transferable duty
credit/electronic scrip (e-scrip), which will be maintained in an
electronic ledger by the CBIC.
(ii) Such duty credit shall be used only to pay basic customs duty on
imported goods.
(iii) The duty credit scrips are freely transferable, i.e. credits can be
transferred to other importers.
(iv) The rebate under the scheme shall not be available in respect of
duties and taxes already exempted or remitted or credited.

31 NOVEMBER 2024 EXAMINATION