1.

3 CHARGE OF GST

🔒🔒1 Examine whether the suppliers are eligible for composition scheme in
the following independent cases. Is there any other option available
for concessional tax payment with any of these suppliers, wherever
composition scheme cannot be availed?
(a) M/s. Devlok, a registered dealer, is dealing in intra-State
trading of electronic appliances in Jaipur (Rajasthan). It has
turnover of ` 130 lakh in the preceding financial year. In the
current financial year, it has also started providing repairing
services of electronic appliances.
(b) M/s. Narayan & Sons, a registered dealer, is running a
“KhanaKhazana” Restaurant near City Palace in Jaipur. It has
turnover of ` 140 lakh in the preceding financial year. In the
current financial year, it has also started dealing in intra-State
trading of beverages in Jaipur (Rajasthan).
(c) M/s. Indra & Bro, a registered dealer, is providing restaurant
services in Uttarakhand. It has turnover of ` 70 lakh in the
preceding financial year. It has started providing intra-State
interior designing services in the current financial year and
discontinued rendering restaurant services.
(d) M/s. Him Naresh, a registered dealer, is exclusively providing
intra-State architect services in Uttarakhand. It has turnover of
` 40 lakh in the preceding financial year.

🔑🔑 As per section 10 of the CGST Act, 2017, the following registered persons,
whose aggregate turnover in the preceding financial year did not exceed `
1.5 crore, may opt to pay tax under composition levy:
(a) Manufacturer,
(b) Persons engaged in making supplies referred to in clause (b) of
paragraph 6 of Schedule II (restaurant services), and

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 2 CHARGE OF GST

(c) Any other supplier eligible for composition levy.

Thus, essentially, the composition scheme can be availed in respect of
goods and only one service namely, restaurant service. However, the
scheme permits supply of other marginal services for a specified value
along with the supply of goods and restaurant service, as the case may be.
Such marginal services can be supplied for a value up to 10% of the
turnover in the preceding year or ` 5 lakh, whichever is higher.
Further, the registered person should not be engaged in making any inter-
State outward supplies of goods.
Furthermore, an option of availing benefit of concessional payment of tax
has been provided to a registered person whose aggregate turnover in the
preceding financial year is upto` 50 lakh and who is not eligible to pay tax
under composition scheme. Said person can pay tax @ 3% [Effective rate
6% (CGST+ SGST/UTGST)] on first supplies of goods and/or services up to
an aggregate turnover of ` 50 lakh made on/after 1st April in any financial
year (FY), subject to specified conditions vide Notification No. 2/2019 CT
(R) dated 07.03.2019 as amended. One of such condition is that the
registered person should not be engaged in making any inter-state
outward taxable supplies.
In view of the above-mentioned provisions, the answer to the given
independent cases is as under:-
(a) The turnover limit for composition scheme in case of Jaipur
(Rajasthan) is `1.5 crore. Thus, M/s. Devlok can opt for
composition scheme as its aggregate turnover is less than `1.5
crore and he is making intra-State supplies. Further, since the
registered person opting for composition scheme can also supply
services (other than restaurant services) for a value up to 10% of
the turnover in the preceding year or ` 5 lakh, whichever is higher.
Thus, M/s. Devlok can supply repair services up to a value of `13
lakh [10% of `130 lakh]in the current financial year.
(b) In the given case:-
(i) the turnover in the preceding year is less than the eligible
turnover limit, i.e. ` 1.5 crore.
(ii) the supplier is engaged in providing restaurant service
which is an eligible supply under composition scheme.

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 CHARGE OF GST 3

(iii) the supplier wants to engage in trading of goods which is

also an eligible supply under composition scheme.
Thus, M/s. Narayan & Sons is eligible for composition scheme.
(c) The turnover limit for composition scheme in case of Uttarakhand is
` 75 lakh. Further, a registered person who is exclusively engaged
in supplying services other than restaurant services are not eligible
for composition scheme. Thus, M/s. Indra& Bro cannot opt for
composition scheme.
Further, the benefit of concessional tax payment under Notification
No. 2/2019 CT (R) dated 07.03.2019 is available in case of a
registered person whose aggregate turnover in the preceding
financial year does not exceed ` 50 lakh.
Thus, in view of the above-mentioned provisions, M/s. Indra& Bro
cannot avail the benefit of concessional tax payment as its
aggregate turnover in the preceding financial year is more than
` 50 lakh.
(d) An service provider can opt for the composition scheme only if he
is engaged in supply of restaurant services. The composition
scheme permits supply of marginal services for a specified value,
but only when the same are supplied along with goods and/ or
restaurant service.
Since M/s. Him Naresh is exclusively engaged in supply of services
other than restaurant services, it is not eligible for composition
scheme even though its turnover in the preceding year is less than
` 75 lakh, the eligible turnover limit for Uttarakhand.
However, since M/s. Him Naresh is not eligible to opt for
composition scheme, its aggregate turnover in the preceding
financial year does not exceed ` 50 lakh and it is exclusively
engaged in supply of intra-State services other than restaurant
services, M/s. Him Naresh is entitled to avail benefit of concessional
payment of tax under Notification No. 2/2019 CT (R) dated
07.03.2019.

🔒🔒 2. B & D Company, a partnership firm, in Nagpur, Maharashtra is a

wholesaler of a taxable product ‘P’ and an exempt product ‘Q’. The
firm supplies these products only in the eastern part of Maharashtra.

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 4 CHARGE OF GST

All the procurements (both goods and services) of the firm are from
the suppliers registered under regular scheme in the State of
Maharashtra. The firm pays tax under composition scheme.
B & D Company has furnished the following details with respect to its
turnover (exclusive of taxes) and stock (exclusive of taxes):

Particulars Turnover for the Turnover for the quarter

quarter ended ended 30.09.20XX (`)
30.06.20XX (`)

‘P’ 60,00,000 50,00,000

‘Q’ 17,65,000 17,00,000

Particulars Stock as on Stock as on Stock as on

30.06.20XX 30.09.20XX 31.10.20XX (`)
(`) (`)

‘P’ 25,00,000 10,00,000 3,60,000

‘Q’ 10,00,000 2,00,000 1,20,000

The entire stock of the products ‘P’ and ‘Q’ available with the firm as
on 30.09.20XX is purchased during the said half year except a
consignment of product ‘P’ valuing ` 3,00,000, which was purchased
in the April month of the preceding financial year. In the current
financial year, in the month of October, no purchases were made, and
the products were sold with a profit margin of 20% on sales [exclusive
of taxes].
The extract of the only bill book maintained by the firm showed the
following details-

Bill Date Value of products (exclusive of taxes)

No.
‘P’ (`) ‘Q’ (`) Total (`)

2306 01.10.20XX 2,00,000 3,000 2,03,000

2307 01.10.20XX 1,36,000 2,250 1,38,250

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 CHARGE OF GST 5

2308 02.10.20XX 67000 39,250 1,06,250

2309 03.10.20XX 58,750 33,750 92,500

2310 05.10.20XX 1,00,000 - 1,00,000

2311 06.10.20XX 94,000 6,000 1,00,000

2312 06.10.20XX - 17,000 17,000

2313 08.10.20XX 50,000 6,000 56,000

2314 09.10.20XX 60,000 9,000 69,000

2315 …………….. …………….. …………….. ……………..

………. …………….. …………….. …………….. ……………..

The details of services availed by B & D Company is as follows:

S. Particulars (`)
No.

(i) Freight paid to Goods Transport Agency during the 1,40,000

period April 20XX to October 20XX. Assume equal
amount of freight is paid each month on the 10th day
of each month. Also, assume that the goods for
which the freight is paid on 10th day of the month are
transported between 11th to 20thday of the month.

(ii) Special packing charges paid to a Packing 3,00,000

Company, having expertise in such specialized
packing, during the period January 20XX to
October 20XX. The packing charges are paid for
the goods which are transported between 11th to
20thday of the month (as mentioned in point (i)
above). The goods are packed on 10th day and
then transported from 11th day onwards. Assume
equal amount of packing charges are paid each
month on the 9th day of each month.

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 6 CHARGE OF GST

All the above amounts are exclusive of taxes, wherever applicable.

Compute the net GST liability of B & D Company for the period April,
20XX to October, 20XX under composition scheme showing
calculations for each quarter separately.
Note: Make suitable assumptions wherever required. Rate of CGST
and SGST on service of transportation of goods by GTA is 2.5% each.
Stock is valued at cost price.

🔑🔑 As per section 10(3) of the CGST Act, 2017 read with Notification
No.14/2019 CT dated 07.03.2019 as amended, the option availed of by a
registered person to pay tax under composition scheme shall lapse with
effect from the day on which his aggregate turnover during a financial
year exceeds ` 1.5 crore [` 75 lakh in case of Special Category States
except Assam, Himachal Pradesh and Jammu and Kashmir].
As per section 2(6) of the CGST Act, 2017, aggregate turnover means the
aggregate value of all taxable supplies (excluding the value of inward
supplies on which tax is payable by a person on reverse charge basis),
exempt supplies, exports of goods or services or both and inter-State
supplies of persons having the same PAN, to be computed on all India
basis but excludes CGST, SGST/UTGST, IGST and GST Compensation Cess.
In the given case, the firm is registered under the composition scheme in
the State of Maharashtra. The aggregate turnover of the firm exceeds
` 1.5 crore on 03.10.20XX [aggregate of both taxable and exempt turnover
from 01.04.20XX to 03.10.20XX, i.e. ` 1,50,05,000 (` 1,44,65,000 +
` 2,03,000 + ` 1,38,250 + ` 1,06,250 + `92,500)]
The inward supplies of goods transportation services in respect of which
the firm has to pay tax under reverse charge have not been included in the
aggregate turnover in terms of section 2(6) of the CGST Act, 2017. The tax
is payable under reverse charge on such services as the applicable rate of
tax on such services is given as 5% and not 12%, in which case the GTA
would have been liable to pay tax under forward charge [Notification No.
13/2017 CT (R) dated 28.06.2017 as amended].
Thus, the firm will have to pay tax under regular scheme (Section 9 of the
CGST Act, 2017) from 03.10.20XX.

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 CHARGE OF GST 7

Output tax liability of B & D Company under composition scheme

During the period when the firm pays tax under composition scheme, i.e.
from 01.04.20XX to 02.10.20XX, tax will be payable on quarterly basis and
no ITC will be available [Section 10(4) read with sub-sections (2) and (7) of
section 39 of the CGST Act, 2017]. Further, since the firm is trading in
goods, tax will be payable @ ½% [Effective rate - 1% (½% CGST + ½%
SGST)] of the turnover of taxable supplies of goods and services (i.e. ‘P’) in
the State [Section 10(1) read with rule 7 of CGST Rues, 2017].
The tax liability for the quarters ended June, 20XX, September, 20XX and
December, 20XX under composition scheme will be computed as under-

Particulars Quarter Quarter Quarter ended

ended ended 31.12.20XX
30.06.20XX 30.09.20XX (`)
(`) (`)

Turnover of ‘P’ 60,00,000 50,00,000 4,03,000 [2,00,000

(Taxable supplies) + 1,36,000 +
67,000]

CGST @ 0.5% [A1] 30,000 25,000 2015

SGST @ 0.5% [B1] 30,000 25,000 2015

Inward supply on 60,000 60,000 Nil [Paid on 10th

which tax is [(1,40,000/7) x [(1,40,000/7) x day for goods
payable under 3] 3] transported
reverse charge between 11th to
[Service of goods 20th day of the
transportation month, so the
availed from a GTA same will be
@ 5%] assessed under
regular scheme]

CGST @ 2.5% [A2] 1,500 1,500 -

SGST @ 2.5% [B2] 1,500 1,500 -

Total CGST [A1 + 31,500 26,500 2015

A2]

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 8 CHARGE OF GST

Total SGST [B1 + 31,500 26,500 2015

B2]

Total CGST liability for the period 60,015 [31,500 + 26,500 + 2015]
from 01.04.20XX to 02.10.20XX

Total SGST liability for the period 60,015 [31,500 + 26,500 + 2015]
from 01.04.20XX to 02.10.20XX

🔒🔒3 XYZ Ltd., New Delhi, manufactures biscuits under the brand name
‘Tastypicks’. Biscuits are supplied to wholesalers and distributors
located across India on FOR basis from the warehouse of the company
located at New Delhi. The company uses multiple modes of transport
for supplying the biscuits to its customers spread across the country.
The transportation cost is shown as a line item in the invoice and is
billed to the customers with a mark-up of 2% on total amount of
freight paid (inclusive of taxes).
Flour used for the production process is procured from vendors
located in Madhya Pradesh on ex-factory basis. The company engages
goods transport agencies (GTA) to transport the flour from the
factories of the vendors to its factory located in New Delhi.
The company has provided the following data relating to
transportation of biscuits and flour in the month of April 20XX:
- For sales within the NCR region (` 20,00,000), the company
arranged a local mini-van belonging to an individual and paid
him ` 54,000.
- For sales to locations in distant States (` 1,78,00,000), the
company booked the goods by Indian Railways and paid rail
freight of ` 3,17,000.
- For sales to locations in neighbouring States (` 55,00,000), the
company booked the goods by road carriers (GTAs) and paid
road freight of ` 3,73,000. Out of the total sales to
neighbouring States, goods worth ` 10,00,000 were booked
through a GTA which paid tax @ 12%. Freight of ` 73,000 was
paid to such GTA.

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 CHARGE OF GST 9

- For purchase of flour from Madhya Pradesh (` 25,00,000), the

company booked the goods by a GTA and paid road freight of
` 55,000.
- For purchase of butter from Punjab (` 15,00,000), the company
booked the goods by a GTA and paid road freight of ` 35,000.
- For local purchase of baking powder, the company booked the
goods by a GTA in a single carriage and paid road freight of
` 1,500.
- For transferring the biscuits (open market value - ` 4,00,000) to
one of its sister concern in Rajasthan, the company booked the
goods by a GTA and paid road freight of ` 40,000.
(i) Based on the particulars given above, compute the GST payable
on the amount paid for transportation by XYZ Ltd. when it
avails the services of different transporters.
(ii) Compute the GST charged on transportation cost billed by the
company to its customers.
Note: - Assume the rate of GST on transportation of goods to be 5%
[except where any other rate is specified in the question] and GST on
supply of biscuits to be 12%.

🔑🔑 (i) Computation of GST payable on amount paid for

transportation by XYZ Ltd. when it avails the services of
different transporters

Particulars Freight GST

[`] payable
[`]

Transportation of biscuits in a local mini 54,000 Nil

van belonging to an individual
[Only the transportation of goods by
road by a GTA is liable to GST.
Therefore, transportation of goods by
road otherwise than by a GTA is exempt
from GST – Notification No. 12/2017 CT
(R) & 9/2017 IT (R) both dated

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 10 CHARGE OF GST

28.06.2017.]

Transportation of biscuits by Indian 3,17,000 15,850

Railways

Transportation of biscuits by GTA 3,00,000 15,000

[GST is payable by XYZ Ltd. under
reverse charge in terms of section 5(3)
of the IGST Act, 2017 read with
Notification No. 10/2017 IT (R) dated
28.06.2017.]

Transportation of biscuits by GTA @ 73,000 8,760

12%
[When the GTA pays tax @ 12%, tax is
payable by the GTA under forward
charge and not by the recipient under
reverse charge - Notification No.
10/2017 IT (R) dated 28.06.2017.]

Transportation of flour by GTA 55,000 Nil

[Services provided by GTA by way of
transport (in a goods carriage) of, inter
alia, flour are exempt from GST vide
Notification No. 9/2017 IT (R) dated
28.06.2017.]

Transportation of butter by GTA 35,000 1,750

[Though services provided by GTA by
way of transport (in a goods carriage)
of, inter alia, milk is exempt from GST
vide Notification No. 9/2017 IT (R) dated
28.06.2017, road transport of butter will
not be exempted as butter is milk
product and not milk.
GST is payable by XYZ Ltd. under
reverse charge in terms of section 5(3)
of the IGST Act, 2017 read with

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 CHARGE OF GST 11

Notification No. 10/2017 IT (R) dated

28.06.2017.]

Transportation of baking powder by 1,500 Nil

GTA
[Services provided by a GTA by way of
transport in a goods carriage of goods,
where consideration charged for the
transportation of goods on a
consignment transported in a single
carriage does not exceed ` 1,500, are
exempt from GST vide Notification No.
9/2017 IT (R) dated 28.06.2017.]

Transportation of biscuits by GTA to 40,000 2,000

sister concern
[GST is payable by XYZ Ltd. under
reverse charge in terms of section 5(3)
of the IGST Act, 2017 read with
Notification No. 10/2017 IT (R) dated
28.06.2017.]

Total tax payable by XYZ Ltd. on 43,360

availing services of different
transporters

(ii) Computation of GST charged on transportation cost billed by

XYZ Ltd. to its customers
Since XYZ Ltd. is supplying biscuits on FOR basis, the service of
transportation of biscuits gets bundled with the supply of biscuits.
Thus, the supply of biscuits and transportation service is a
composite supply, chargeable to tax at the rate applicable to the
principal supply (biscuits) i.e.,12% [Section 8(a) of the CGST Act,
2017 read with the definition of ‘composite supply’ under section
2(30) of the CGST Act, 2017 and ‘principal supply’ under section
2(90) of the CGST Act, 2017].

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 12 CHARGE OF GST

Particulars Freight GST Freight GST

paid [`] paid billed charged
[A] on (with @ 12%
freight mark-up [`]
[`] [B] @ 2% on
[A] +
[B]) [`]

Transportation of
biscuits in a local
minivan belonging to 54,000 - 55,080 6,610
an individual

Transportation of
biscuits by Indian 3,17,000 15,850 3,39,507 40,741
Railways

Transportation of
biscuits by GTA 3,00,000 15,000 3,21,300 38,556

Transportation of
biscuits by GTA @ 12% 73,000 8,760 83,395 10,007

Total tax charged by 95,914

XYZ Ltd. on
transportation cost
billed to the
customers*

*Note: It has been assumed that there is no mark-up on

transportation cost billed to sister concern (non-customer).

🔒🔒4 Shubhlaxmi Foods is engaged in supplying restaurant service in

Maharashtra. In the preceding financial year, it has a turnover of
` 140 lakh from the restaurant service. You are required to advise
Shubhlaxmi Foods whether it is eligible for composition scheme in the
current year assuming that in the current financial year, his turnover
is expected to be ` 130 lakh from supply of restaurant services and
` 10 lakh from the supply of farm labour in said State. Further, it also
expects to earn bank interest of ` 20 lakh from the fixed deposits.

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Also compute the estimated tax payable by Shubhlaxmi Foods in the

current FY.

🔑🔑 As per section 10(1) of the CGST Act, 2017 read with Notification No.
14/2019 CT dated 7.03.2019, a registered person, whose aggregate
turnover in the preceding financial year did not exceed ` 1.5 crore, may
opt to pay, in lieu of the tax payable by him, an amount calculated at the
specified rates if, inter alia, he is not engaged in the supply of services
other than restaurant services.
However, the scheme permits supply of other marginal services for a
specified value along with the supply of goods and restaurant service, as
the case may be. Such marginal services can be supplied for a value up to
10% of the turnover in the preceding year or ` 5 lakh, whichever is higher.
It is important to note that the exempt services are included in the
definition of aggregate turnover [Section 2(6) of the CGST Act, 2017].
However, Order No. 01/2019 CT dated 01.02.2019 has been issued to
clarify that the value of supply of exempt services by way of extending
deposits, loans or advances in so far as the consideration is represented by
way of interest or discount, shall not be taken into account –
(i) for determining the eligibility for composition scheme under
second proviso to section 10(1) i.e. supplying services of value not
exceeding 10% of the turnover in the preceding financial year in a
State or ` 5 lakh, whichever is higher;
(ii) in computing aggregate turnover in order to determine eligibility
for composition scheme.
Thus, exempt services shall also be considered for determining the
eligibility for composition scheme under second proviso to section 10(1)
and in computing aggregate turnover in order to determine eligibility for
composition scheme. The only exception is interest received from deposits,
loans etc.
In the given case, the aggregate turnover of Shubhlaxmi Foods from
restaurant services in the preceding FY is ` 140 lakh. Therefore, it is
eligible to opt for composition scheme in the current FY.
Further, apart from restaurant services, it can provide services upto ` 14
lakh [i.e. 10% of ` 140 lakh or ` 5 lakh, whichever is higher], in the current

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FY. As already seen, bank interest of ` 20 lakh from fixed deposits will not
be considered while determining this limit.
Further, Shubhlaxmi Foods is expected to provide the exempt services of
supply of farm labour worth ` 10 lakh in current financial year. Thus,
turnover of supply of farm labour [` 10 lakh] alongwith the turnover of
restaurant services [` 130 lakh] will be eligible for composition scheme, in
the current financial year.
Tax rate applicable for restaurant services under composition scheme is
5% [2.5% CGST and 2.5% SGST]. Estimated tax payable by Shubhlaxmi
Foods is as under:
= ` 140 lakh [` 130 lakh + ` 10 lakh] × 5%
= ` 7 lakh [CGST = ` 3.5 lakh and SGST = ` 3.5 lakh]

🔒🔒5 Bansal and Chandiok started a partnership firm of Chartered

Accountants in Jaipur (Rajasthan) on 1.04.20XX. The firm specializes
in providing audit services to banks, in Rajasthan. It provided the
following details of its turnover:

Quarter Amount (in `)

Apr-Jun 10 lakh

Jul-Sep 20 lakh

It crossed the threshold limit of ` 20 lakh on 1.08.20XX. Bansal and

Chandiok wishes to opt to pay tax at concessional rate under
Notification No. 2/2019 CT (R) dated 07.03.2019. Examine whether
the firm is eligible for this scheme? If yes, then determine the tax
payable by it in quarters (i) Apr-Jun & (ii) Jul-Sep?

🔑🔑 Notification No. 2/2019 CT (R) dated 07.03.2019 provides an option to a

registered person whose aggregate turnover in the preceding financial
year is upto ` 50 lakh and who is not eligible to pay tax under composition
scheme, to pay tax @ 6% [CGST @ 3% and SGST @ 3%] on first supplies of
goods and/or services upto an aggregate turnover of ` 50 lakh made on or
after 1st April in any financial year, subject to specified conditions.
Further, for the purposes of this notification, the expression “first supplies
of goods or services or both” shall, for the purposes of determining

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eligibility of a person to pay tax under this notification, include the

supplies from the first day of April of a financial year to the date from
which he becomes liable for registration under the said Act but for the
purpose of determination of tax payable under this notification shall not
include the supplies from the first day of April of a financial year to the
date from which he becomes liable for registration under the Act.
In the given case, Bansal and Chandiok Firm is eligible to opt for the
scheme to pay tax at concessional rate since his turnover in the preceding
financial year was nil and he is not eligible to opt for composition scheme
since he is dealing exclusively in services other than restaurant services.
Tax payable by the firm is as follows:
(i) Apr-Jun quarter: Tax payable by the firm in first quarter is nil since
the firm’s turnover [` 10 lakh] has not yet exceeded the threshold limit
of ` 50 lakh.
(ii) July-Sep quarter: While computing the tax payable by the firm in
second quarter, the turnover from 01.04.20XX to the date from which
he becomes liable for registration under the Act is to be excluded.
Tax payable will be computed as under-
Total Turnover ` 30,00,000/-
Less: Threshold Limit for registration ` 20,00,000/-
Taxable Turnover ` 10,00,000/-
Tax @ 6% ` 60,000/-*
*CGST = ` 30,000 and SGST = ` 30,000

🔒🔒6 Mr. Prem is running a restaurant in New Delhi. In the preceding

financial year, it has turnover of ` 120 lakh from the restaurant
services. In the current financial year, apart from restaurant service,
he also wants to provide food delivery services to other restaurants.
He estimated the turnover of such services upto Rs. 5 lakh.
Mr. Prem wishes to opt for composition scheme in the current
financial year. You are required to advise him for same. Further, also
advise the documents to be issued by him for billing the restaurant
services as well as food delivery services in case he opts for
composition scheme.

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🔑🔑 As per section 10(1) of the CGST Act, 2017 read with Notification
No.14/2019 CT dated 07.03.2019, a registered person, whose aggregate
turnover in the preceding financial year did not exceed ` 1.5 crore, may
opt to pay, in lieu of the tax payable by him, an amount calculated at the
specified rates if, inter alia, he is not engaged in the supply of services
other than restaurant services.
However, the scheme permits supply of other marginal services for a
specified value along with the supply of goods and restaurant service, as
the case may be. Such marginal services can be supplied for a value up to
10% of the turnover in the preceding year or ` 5 lakh, whichever is higher.
In the present case, since the turnover of Mr. Prem is ` 120 lakh in
preceding financial year, he is eligible for composition scheme in the
current financial year. Further, in the current financial year, he can also
supply services other than restaurant services for a value upto ` 12 lakh
(10% of ` 120 lakh) or ` 5 lakh, whichever is higher. Thus, till the time his
turnover from food delivery services does not exceed ` 12 lakh, he is
eligible for the scheme.
In terms of section 31(3)(c) of the CGST Act, 2017, Mr. Prem is required to
issue Bill of Supply in both the cases i.e. while providing restaurant
services and food delivery services. He shall also mention the words
“composition taxable person, not eligible to collect tax on supplies” at the
top of the bill of supply issued by him.

🔒🔒7 M/s Heeralal and Sons registered in Karnataka has opted to avail the
benefit of composition scheme. It has furnished the following details
for the tax period ended on 30-06-20XX.

S. No. Items `

(i) Taxable turnover of goods within the State 15,00,000

(ii) Exempted turnover of goods within the State 17,00,000

Total Turnover 32,00,000

Using the above information, calculate tax to be paid by the firm for
the tax period ended on 30.06.20XX in following independent
situations:

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 CHARGE OF GST 17

(i) M/s Heeralal and Sons is a manufacturer

(ii) M/s Heeralal and Sons is a trader

🔑🔑 Computation of amount payable under composition scheme

(i) If M/s Heeralal and Sons is a manufacturer:
Tax is to be paid @ 1% (CGST+ SGST) of the turnover in the State
as under:
1% of ` 32,00,000 [` 15,00,000 + 17,00,000]
= ` 32,000 [CGST = ` 16,000 and SGST = ` 16,000]
(ii) If M/s Heeralal and Sons is a trader:
Tax is to be paid @ 1% (CGST+ SGST) of the turnover of taxable
supplies of goods and services in the State as under:
= 1% of ` 15,00,000
= ` 15,000 [CGST = ` 7,500 and SGST = ` 7,500]

🔒🔒8 Mr. Sanjay of New Delhi made a request for a Motor cab to "Super
ride" for travelling from New Delhi to Gurgaon (Haryana). After Mr.
Sanjay pays the cab charges using his debit card, he gets details of the
driver Mr. Jorawar Singh and the cab's registration number.
"Super ride" is a mobile application owned and managed by D.T. Ltd.
located in India. The application "Super ride" facilitates a potential
customer to connect with the persons providing cab service under the
brand name of "Super ride".
D.T. Ltd. claims that cab service is provided by Mr. Jorawar Singh and
hence, he is liable to pay GST. With reference to the provisions of
IGST Act, 2017, determine who is liable to pay GST in this case?
Would your answer be different, if D.T. Ltd. is located in New York
(USA)? Also briefly state the statutory provisions involved.

🔑🔑 Section 5 of IGST Act, 2017 provides that tax on inter-State supplies of

specified services notified by Government shall be paid by the electronic
commerce operator (ECO) located in taxable territory if such services are
supplied through it. Services by way of transportation of passengers by a
motor cab supplied through ECO is one of the notified service.

© The Institute of Chartered Accountants of India

 18 CHARGE OF GST

Electronic commerce operator means any person who owns, operates

or manages digital or electronic facility or platform for supply of goods
or services or both, including digital products over digital or electronic
network.
Since DT Ltd. owns and manages a mobile application to facilitate supply
of passenger transportation service in motor cabs over a digital network, it
is an ECO. Thus, DT Ltd., an ECO located in India is liable to pay GST in the
given case.
However, where an ECO does not have a physical presence in the
taxable territory, person representing ECO is liable to pay tax. Further,
where ECO has neither the physical presence nor any representative in
the taxable territory, person appointed by the ECO for the purpose of
paying the tax is liable to pay tax.
Accordingly, if D.T. Ltd. is located in New York (USA), any person
representing DT Ltd. for any purpose in India is liable to pay tax.
Further, if D.T. Ltd. also does not have a representative in India, it shall
appoint a person in India for the purpose of paying tax and such person
shall be liable to pay tax.

🔒🔒9. MN Ltd. has two registered places of business in the State of Haryana.
Its aggregate turnover during the previous financial year for both the
places of business was ` 62 lakh. It wishes to opt for composition levy
for one of the place of business in the current year and wants to
continue with registration and pay taxes at the normal rate for the
other place of business. Can MN Ltd. do so? Explain with reason.

🔑🔑 As per proviso to section 10(2) of the CGST Act, 2017, where more than
one registered persons are having the same PAN issued under the
Income-tax Act, 1961, the registered person shall not be eligible to opt for
the composition scheme unless all such registered persons opt to pay tax
under composition scheme.
In the given case, since MN Ltd. has two places of business (they are not
separate entities under Income-tax Act, 1961), they would be registered
under the same PAN. Therefore, MN Ltd. cannot opt for composition levy
for only one of the places of business and pay tax under regular scheme
for other place of business.

© The Institute of Chartered Accountants of India

 CHARGE OF GST 19

🔒🔒10 M/s. Ranveer Industries, registered in Himachal Pradesh, is engaged

in making inter-State supplies of readymade garments. The
aggregate turnover of M/s. Ranveer Industries in the preceding
financial year is ` 90 lakh. It has opted for composition levy in the
current financial year and paid tax for the July-Sep quarter of current
year under composition levy.
The proper officer has levied penalty for wrongly availing the scheme
on M/s. Ranveer Industries in addition to the tax payable by it.
Examine the validity of the action taken by proper officer.

🔑🔑 As per section 10 of the CGST Act, 2017, a registered person, whose

aggregate turnover in the preceding financial year did not exceed ` 1.5
crore in a State/UT [` 75 lakh in case of Special Category States except
Assam, Himachal Pradesh and Jammu and Kashmir], may opt for
composition scheme.
However, he shall not be eligible to opt for composition scheme if, inter
alia, he is engaged in making any inter-State outward supplies of goods.
In the given case, since M/s Ranveer Industries is engaged in making
inter-State supplies of readymade garments, it is not eligible to opt for
composition scheme in current year irrespective of its turnover in the
preceding FY.
Further, if the proper officer has reasons to believe that a taxable person
has paid tax under composition scheme despite not being eligible, such
person shall, in addition to any tax payable, be liable to a penalty.
Thus, the action taken by the proper officer of levying the penalty for
wrongly availing the composition scheme is valid in law.

© The Institute of Chartered Accountants of India