TOP 50 QUESTIONS INDIRECT TAX LAWS
CA FINAL - INDIRECT TAX TOP 50 QUESTIONS
Question No 1:
Answer the following questions:
1) Sudama Associates, a registered supplier, disposes the computers owned by the
business without consideration and it has not claimed input tax credit on such
computers.
Examine whether the disposal of computers by Sudama Associates qualifies as
deemed supply under Schedule I of the CGST Act.?
2) Prithvi Enterprises appoints Champak to procure certain goods from the market.
Champak identifies various suppliers who can provide the goods as desired by
Prithvi Enterprises, and asks a supplier – Satya Manufacturers to send the goods
and issue the invoice directly to Prithvi Enterprises. Determine whether Champak
can be considered as an agent of Prithvi Enterprises in terms of Schedule I of the
CGST Act.?
3) Mokshabhumi Industries has its manufacturing unit in the State of Maharashtra. It
stores the finished goods manufactured by it at a depot located in the State of
Gujarat. The depot is owned by Punyabhumi Ltd. – a related person of Mokshabhumi
Industries. Punyabhumi Ltd. has not charged any consideration from Mokshabhumi
Industries for usage of depot for storage purpose. Whether the storage of goods
permitted by Punyabhumi Ltd. to Mokshabhumi Industries qualifies as supply under
GST?
4) i) Miss Shriniti Kaushik received vaastu consultancy services for her residence
located at Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid
for the said service is `5,000 Australian dollar. Examine whether this activity would
amount to Supply under Section 7 of CGST ACT,2017?
ii) Miss Shriniti Kaushik received vaastu consultancy services for her residence
located at Bandra, Mumbai from her brother, Mr. Varun residing in Sydney
(Australia). Further, Miss Shriniti did not pay any consideration for the said
service. Examine whether this activity would amount to Supply under Section 7 of
CGST ACT,2017?
iii) Miss Shriniti Kaushik received vaastu consultancy services for her
business premises located at Bandra, Mumbai from her brother, Mr. Varun
residing in Sydney (Australia). Further, Miss Shriniti did not pay any
consideration for the said service. Examine whether this activity would
amount to Supply under Section 7 of CGST ACT,2017?
Answer:
1) As per section 7(1)(c) read with Schedule I of the CGST Act, permanent
transfer or disposal of business assets is treated as supply even though the
same is made without consideration. However, this provision would apply only
if input tax credit has been availed on such assets. Therefore, the disposal of
computers by Sudama Associates is not a supply as the input tax credit has not
been availed on the same.
2) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods by an
agent to his principal where the agent undertakes to receive such goods on behalf
of the principal qualifies as supply even if the same is made without consideration.
Further, Circular No. 57/31/2018 clarifies that principal-agent relationship falls
@Tharun Raj WWW. THARUNRAJ.COM 1|Page
, TOP 50 QUESTIONS INDIRECT TAX LAWS
within the ambit of the Schedule I only where the goods being procured by the
agent on behalf of the principal are invoiced in the name of the agent. In that
case, further provision of the said goods by the agent to the principal without
consideration, would be covered in Schedule I and thus would qualify as supply. In
the given case, Champak is only acting as the procurement agent, and has in no
way involved himself in the supply or receipt of the goods. The invoice is being
issued in the name of Prithvi Enterprises and not Champak. Hence, Champak is not
an agent of Prithvi Enterprises for the supply of goods in terms of Schedule I of
the CGST Act
3) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods or
services or both between related persons without consideration when made in the
course or furtherance of business qualifies as supply. Thus, the storage services
provided by Punyabhumi Ltd. to Mokshabhumi Industries in course or furtherance
of business qualifies as supply under GST even though no consideration has been
charged for the same.
4) i. Import of service for Consideration not in course/furtherance of business:
Would amount to supply as per Sec 7(1)(b) of CGST Act
ii. Import of service without Consideration and not in the course/furtherance
of business–Would not amount to supply as per Sec 7(1)(c) of CGST Act read
with Schedule I, as the same is not in the course or furtherance of business.
iii. Import of service without Consideration in course/furtherance of business
but not from related person or from own establishment outside India– Would
not amount supply as per Sec 7(1)(c) of CGST Act read with Schedule I [Mr
Varun, brother of Miss Shriniti, is not considered as ‘related person’ under
GST law unless he is wholly or substantially dependent upon Miss Shriniti.]
Note:
In absence of any specific information in the question, it has been assumed that Mr
Varun is not dependent upon Miss Shriniti
Question No 2:
Mrs. Kajal, a registered supplier of Jaipur (Rajasthan), has made the following supplies in
the month of January, 20XX:
I. Supply of a laptop bag along with the laptop to a customer of Mumbai for ` 55,000
(exclusive of GST).
II. Supply of 10,000 kits (at ` 50 each) amounting to ` 5,00,000 (exclusive of GST) to
Ram Fancy Store in Kota (Rajasthan). Each kit consists of 1 hair oil, 1 beauty soap
and 1 hair comb.
III. 100 kits are given as free gift to Jaipur customers on the occasion of Mrs. Kajal's
birthday. Each kit consists of 1 hair oil and 1 beauty soap. Cost of each kit is ` 35,
but the open market value of such kit of goods and of goods of like kind and quality
is not available. Input tax credit has not been taken on the goods contained in the
kit.
IV. Event management services provided free of cost to her brother for his son‘s
marriage function in Indore (Madhya Pradesh).
@Tharun Raj WWW. THARUNRAJ.COM 2|Page
, TOP 50 QUESTIONS INDIRECT TAX LAWS
Cost of providing said services is ` 80,000, but the open market value of such
services and of services of like kind and quality is not available.
V. 1,400 chairs and 100 coolers hired out to Function Garden, Ajmer (Rajasthan) for `
3,30,000 (exclusive of GST) including cost of transporting the chairs and coolers
from Mrs. Kajal's godown at Jaipur to the Function Garden, Ajmer.
Mrs. Kajal has paid the cost of transportation of chairs and coolers to an unregistered Goods
Transport Agency (GTA) [located in the State of Rajasthan] @ ` 20 (exclusive of GST) for
each chair and each cooler and in turn, has charged ` 20 only for each chair and each cooler
from Function Garden for Transportation of the same. Interest of ` 6,400 (inclusive of GST)
was collected by Mrs. Kajal in January from Ram Fancy Store, Kota for the payment
received with a delay of 30 days.
Assume rates of GST to be as under: -
Rate of Rate of SGST Rate of IGST
S.No. Particulars
CGST (%) (%) (%)
1. Laptop 9 9 18
2. Laptop bag 14 14 28
3. Hair oil 9 9 18
4. Beauty soap 14 14 28
5. Hair comb 6 6 12
6. Event management service 2.5 2.5 5
7. Service of renting of chairs and coolers 6 6 12
8. Transportation service 2.5 2.5 5
From the above information, compute the GST liability (CGST and SGST and/ or IGST, as the
case may be) of Mrs. Kajal for the month of January, 20XX.
Answer:
Computation of GST liability of Mrs. Kajal for the month of January, 20XX :
S.No. Particulars Amount CGST SGST IGST
Supply of laptop bag along with laptop to
Mumbai customer [Being naturally bundled,
(i) supply of laptop bag along with the laptop is a
“composite supply” which is treated as the
55,000 9,900
supply of the principal supply [i.e. laptop] in
terms of section 8(a) of the CGST Act, 2017
and is an inter State supply. Accordingly, IGST
@ 18% will be charged]
Supply of kits to Ram Fancy Store [It is a
“mixed supply” and is treated as supply of
that particular supply which attracts highest
tax rate [viz. beauty soap] in terms of section
(ii) 8(b) of the CGST Act, 2017. Also, it’s an intra-
State supply. Accordingly, CGST and SGST @
14% each will be charged.] Further, interest of 5,05,000 70,700 70,700
`6,400 charged for delayed payment as
collected from Ram Fancy Store will be
included in the value of supply in terms of
section 15(2) of the CGST Act, 2017. Therefore,
total value of supply = `5,05,000
[₹5,00,000 + (₹6,400 x 100/128)]
Free gifts to customers [Cannot be considered
Nil Nil Nil
(iii) as supply under section 7 read with Schedule I
@Tharun Raj WWW. THARUNRAJ.COM 3|Page
, TOP 50 QUESTIONS INDIRECT TAX LAWS
of the CGST Act, 2017 as the gifts are given to
unrelated customers without consideration]
Event management services provided free of
(iv) cost to brother for his son‘s marriage [Cannot
be considered as supply under section 7 read
Nil Nil Nil
with Schedule I of the CGST Act, 2017 as the
service is provided to unrelated person
without consideration.] [Note-1]
Chairs and coolers hired out to Function
Garden [Since Mrs. Kajal is not a GTA,
transportation services provided by her are
exempt [Notification No. 12/2017 CT(R) dated
(v) 28.06.2017]. However, since chairs and coolers
are hired out along with their transportation,
it is a case of “composite supply”, wherein the 3,30,000 19,800 19,800
principal supply is hiring out of chairs and
coolers. Also, it‘s an intra-State supply.
Accordingly, transportation service will also
be taxed at the rate applicable for renting of
chairs and coolers, viz. CGST and and SGST @
6% each.] [Note-2]
Transportation of chairs and coolers by GTA
(vi) [GST on GTA services availed is payable under
30,000
reverse charge mechanism since GST is
(₹20 750 750
payable @ 5%. Being an intra-State supply,
x1,500)
CGST and SGST will be chargeable @ 2.5%
each.]
Total GST liability 91,250 91,250 91,250 9,900
Note: As per section 2(30) of the CGST Act, 2017, composite supply means a supply made by
a taxable person to a recipient consisting of two or more taxable supplies. Since in point (v),
service of hiring out of chairs & coolers is taxable while transportation service is exempt
(being provided by a person other than a GTA), it is possible to take a view that this is not
a case of composite supply. In that case, the two services will be treated as independent
services and taxed accordingly.
Question No 3:
Manihar Enterprises, registered in Delhi, is engaged in supply of various goods and services
exclusively to Government departments, agencies etc. and persons notified under section 51
of the CGST Act, 2017. It has provided the information relating to the supplies made, their
contract values and the payment due against each of them in the month of October, 2021as
under:
Particulars Total Payment due
contract in October,
value 2021 (`)
(inclusive of
GST) (`)
(i) Supply of stationery to Fisheries Department, 2,60,000 15,000
Kolkata, (SG)
(ii) Supply of car rental services to Municipal 2,95,000 20,000
Corporation of Delhi (ie. Local Authority)
@Tharun Raj WWW. THARUNRAJ.COM 4|Page
CA FINAL - INDIRECT TAX TOP 50 QUESTIONS
Question No 1:
Answer the following questions:
1) Sudama Associates, a registered supplier, disposes the computers owned by the
business without consideration and it has not claimed input tax credit on such
computers.
Examine whether the disposal of computers by Sudama Associates qualifies as
deemed supply under Schedule I of the CGST Act.?
2) Prithvi Enterprises appoints Champak to procure certain goods from the market.
Champak identifies various suppliers who can provide the goods as desired by
Prithvi Enterprises, and asks a supplier – Satya Manufacturers to send the goods
and issue the invoice directly to Prithvi Enterprises. Determine whether Champak
can be considered as an agent of Prithvi Enterprises in terms of Schedule I of the
CGST Act.?
3) Mokshabhumi Industries has its manufacturing unit in the State of Maharashtra. It
stores the finished goods manufactured by it at a depot located in the State of
Gujarat. The depot is owned by Punyabhumi Ltd. – a related person of Mokshabhumi
Industries. Punyabhumi Ltd. has not charged any consideration from Mokshabhumi
Industries for usage of depot for storage purpose. Whether the storage of goods
permitted by Punyabhumi Ltd. to Mokshabhumi Industries qualifies as supply under
GST?
4) i) Miss Shriniti Kaushik received vaastu consultancy services for her residence
located at Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid
for the said service is `5,000 Australian dollar. Examine whether this activity would
amount to Supply under Section 7 of CGST ACT,2017?
ii) Miss Shriniti Kaushik received vaastu consultancy services for her residence
located at Bandra, Mumbai from her brother, Mr. Varun residing in Sydney
(Australia). Further, Miss Shriniti did not pay any consideration for the said
service. Examine whether this activity would amount to Supply under Section 7 of
CGST ACT,2017?
iii) Miss Shriniti Kaushik received vaastu consultancy services for her
business premises located at Bandra, Mumbai from her brother, Mr. Varun
residing in Sydney (Australia). Further, Miss Shriniti did not pay any
consideration for the said service. Examine whether this activity would
amount to Supply under Section 7 of CGST ACT,2017?
Answer:
1) As per section 7(1)(c) read with Schedule I of the CGST Act, permanent
transfer or disposal of business assets is treated as supply even though the
same is made without consideration. However, this provision would apply only
if input tax credit has been availed on such assets. Therefore, the disposal of
computers by Sudama Associates is not a supply as the input tax credit has not
been availed on the same.
2) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods by an
agent to his principal where the agent undertakes to receive such goods on behalf
of the principal qualifies as supply even if the same is made without consideration.
Further, Circular No. 57/31/2018 clarifies that principal-agent relationship falls
@Tharun Raj WWW. THARUNRAJ.COM 1|Page
, TOP 50 QUESTIONS INDIRECT TAX LAWS
within the ambit of the Schedule I only where the goods being procured by the
agent on behalf of the principal are invoiced in the name of the agent. In that
case, further provision of the said goods by the agent to the principal without
consideration, would be covered in Schedule I and thus would qualify as supply. In
the given case, Champak is only acting as the procurement agent, and has in no
way involved himself in the supply or receipt of the goods. The invoice is being
issued in the name of Prithvi Enterprises and not Champak. Hence, Champak is not
an agent of Prithvi Enterprises for the supply of goods in terms of Schedule I of
the CGST Act
3) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods or
services or both between related persons without consideration when made in the
course or furtherance of business qualifies as supply. Thus, the storage services
provided by Punyabhumi Ltd. to Mokshabhumi Industries in course or furtherance
of business qualifies as supply under GST even though no consideration has been
charged for the same.
4) i. Import of service for Consideration not in course/furtherance of business:
Would amount to supply as per Sec 7(1)(b) of CGST Act
ii. Import of service without Consideration and not in the course/furtherance
of business–Would not amount to supply as per Sec 7(1)(c) of CGST Act read
with Schedule I, as the same is not in the course or furtherance of business.
iii. Import of service without Consideration in course/furtherance of business
but not from related person or from own establishment outside India– Would
not amount supply as per Sec 7(1)(c) of CGST Act read with Schedule I [Mr
Varun, brother of Miss Shriniti, is not considered as ‘related person’ under
GST law unless he is wholly or substantially dependent upon Miss Shriniti.]
Note:
In absence of any specific information in the question, it has been assumed that Mr
Varun is not dependent upon Miss Shriniti
Question No 2:
Mrs. Kajal, a registered supplier of Jaipur (Rajasthan), has made the following supplies in
the month of January, 20XX:
I. Supply of a laptop bag along with the laptop to a customer of Mumbai for ` 55,000
(exclusive of GST).
II. Supply of 10,000 kits (at ` 50 each) amounting to ` 5,00,000 (exclusive of GST) to
Ram Fancy Store in Kota (Rajasthan). Each kit consists of 1 hair oil, 1 beauty soap
and 1 hair comb.
III. 100 kits are given as free gift to Jaipur customers on the occasion of Mrs. Kajal's
birthday. Each kit consists of 1 hair oil and 1 beauty soap. Cost of each kit is ` 35,
but the open market value of such kit of goods and of goods of like kind and quality
is not available. Input tax credit has not been taken on the goods contained in the
kit.
IV. Event management services provided free of cost to her brother for his son‘s
marriage function in Indore (Madhya Pradesh).
@Tharun Raj WWW. THARUNRAJ.COM 2|Page
, TOP 50 QUESTIONS INDIRECT TAX LAWS
Cost of providing said services is ` 80,000, but the open market value of such
services and of services of like kind and quality is not available.
V. 1,400 chairs and 100 coolers hired out to Function Garden, Ajmer (Rajasthan) for `
3,30,000 (exclusive of GST) including cost of transporting the chairs and coolers
from Mrs. Kajal's godown at Jaipur to the Function Garden, Ajmer.
Mrs. Kajal has paid the cost of transportation of chairs and coolers to an unregistered Goods
Transport Agency (GTA) [located in the State of Rajasthan] @ ` 20 (exclusive of GST) for
each chair and each cooler and in turn, has charged ` 20 only for each chair and each cooler
from Function Garden for Transportation of the same. Interest of ` 6,400 (inclusive of GST)
was collected by Mrs. Kajal in January from Ram Fancy Store, Kota for the payment
received with a delay of 30 days.
Assume rates of GST to be as under: -
Rate of Rate of SGST Rate of IGST
S.No. Particulars
CGST (%) (%) (%)
1. Laptop 9 9 18
2. Laptop bag 14 14 28
3. Hair oil 9 9 18
4. Beauty soap 14 14 28
5. Hair comb 6 6 12
6. Event management service 2.5 2.5 5
7. Service of renting of chairs and coolers 6 6 12
8. Transportation service 2.5 2.5 5
From the above information, compute the GST liability (CGST and SGST and/ or IGST, as the
case may be) of Mrs. Kajal for the month of January, 20XX.
Answer:
Computation of GST liability of Mrs. Kajal for the month of January, 20XX :
S.No. Particulars Amount CGST SGST IGST
Supply of laptop bag along with laptop to
Mumbai customer [Being naturally bundled,
(i) supply of laptop bag along with the laptop is a
“composite supply” which is treated as the
55,000 9,900
supply of the principal supply [i.e. laptop] in
terms of section 8(a) of the CGST Act, 2017
and is an inter State supply. Accordingly, IGST
@ 18% will be charged]
Supply of kits to Ram Fancy Store [It is a
“mixed supply” and is treated as supply of
that particular supply which attracts highest
tax rate [viz. beauty soap] in terms of section
(ii) 8(b) of the CGST Act, 2017. Also, it’s an intra-
State supply. Accordingly, CGST and SGST @
14% each will be charged.] Further, interest of 5,05,000 70,700 70,700
`6,400 charged for delayed payment as
collected from Ram Fancy Store will be
included in the value of supply in terms of
section 15(2) of the CGST Act, 2017. Therefore,
total value of supply = `5,05,000
[₹5,00,000 + (₹6,400 x 100/128)]
Free gifts to customers [Cannot be considered
Nil Nil Nil
(iii) as supply under section 7 read with Schedule I
@Tharun Raj WWW. THARUNRAJ.COM 3|Page
, TOP 50 QUESTIONS INDIRECT TAX LAWS
of the CGST Act, 2017 as the gifts are given to
unrelated customers without consideration]
Event management services provided free of
(iv) cost to brother for his son‘s marriage [Cannot
be considered as supply under section 7 read
Nil Nil Nil
with Schedule I of the CGST Act, 2017 as the
service is provided to unrelated person
without consideration.] [Note-1]
Chairs and coolers hired out to Function
Garden [Since Mrs. Kajal is not a GTA,
transportation services provided by her are
exempt [Notification No. 12/2017 CT(R) dated
(v) 28.06.2017]. However, since chairs and coolers
are hired out along with their transportation,
it is a case of “composite supply”, wherein the 3,30,000 19,800 19,800
principal supply is hiring out of chairs and
coolers. Also, it‘s an intra-State supply.
Accordingly, transportation service will also
be taxed at the rate applicable for renting of
chairs and coolers, viz. CGST and and SGST @
6% each.] [Note-2]
Transportation of chairs and coolers by GTA
(vi) [GST on GTA services availed is payable under
30,000
reverse charge mechanism since GST is
(₹20 750 750
payable @ 5%. Being an intra-State supply,
x1,500)
CGST and SGST will be chargeable @ 2.5%
each.]
Total GST liability 91,250 91,250 91,250 9,900
Note: As per section 2(30) of the CGST Act, 2017, composite supply means a supply made by
a taxable person to a recipient consisting of two or more taxable supplies. Since in point (v),
service of hiring out of chairs & coolers is taxable while transportation service is exempt
(being provided by a person other than a GTA), it is possible to take a view that this is not
a case of composite supply. In that case, the two services will be treated as independent
services and taxed accordingly.
Question No 3:
Manihar Enterprises, registered in Delhi, is engaged in supply of various goods and services
exclusively to Government departments, agencies etc. and persons notified under section 51
of the CGST Act, 2017. It has provided the information relating to the supplies made, their
contract values and the payment due against each of them in the month of October, 2021as
under:
Particulars Total Payment due
contract in October,
value 2021 (`)
(inclusive of
GST) (`)
(i) Supply of stationery to Fisheries Department, 2,60,000 15,000
Kolkata, (SG)
(ii) Supply of car rental services to Municipal 2,95,000 20,000
Corporation of Delhi (ie. Local Authority)
@Tharun Raj WWW. THARUNRAJ.COM 4|Page
