TEST PAPER 1

GOODS AND SERVICES TAX (50 MARKS)

QUESTIONS
1. Working Notes should form part of the answers. However, in answers to Questions in
Division A, working notes are not required.
2. Wherever necessary, suitable assumptions may be made by the candidates and
disclosed by way of notes.
3. All questions should be answered on the basis of the provisions of the CGST Act,
2017 and the IGST Act, 2017 as amended by the Finance (No. 2) Act, 2024 including
significant notifications and circulars issued and other legislative amendments made,
which have become effective up to 31.10.2024.

Topics Covered: Introduction, Supply, RCM, Composition, VOS, TOS, POS

Division A - Multiple Choice Questions (MCQs)

Write the most appropriate answer to each of the following multiple-choice questions
by choosing one of the four options given. All questions are compulsory.
Total Marks: 15 Marks

Case Scenario 1:
M/s. Maahi & Co., a LLP registered dealer under GST, is engaged in various types of
business activities.
It provided GTA services to Government Department, registered under GST for providing
various services. Maahi & Co. did not exercise the option to pay GST.
The firm provided services of Direct Selling Agency (DSA Services) to a Banking Company
located in Mumbai.
The firm provided free gift to each of its employees valuing ₹ 50,000 once in a financial
year.
M/s Maahi & Co let out its warehouse to Mr. Shankar, who in turn let out to an agriculturist
for warehousing of agricultural produce. The firm also undertakes catering service to
“Vishwas” Anganwadi. The said Anganwadi has received fundings from Government.
The firm purchased following goods during the month of July:-
a) Capital goods amounting to ₹ 45,000 purchased on which depreciation has been taken
on full value including GST paid thereon.
 b) Raw materials purchased amounting to ₹ 55,000 for which invoice is missing but
delivery challan is available.
Further, for the month of July, the GST liability of the firm was ₹ 20,000 IGST; ₹ 10,000
CGST; ₹ 10,000 SGST. The following credits were available in the said month-
IGST: ₹ 8,000
CGST: ₹ 12,000
SGST: ₹ 5,000
All the amounts given above are exclusive of taxes, wherever applicable. All the supply
referred above is intra-State unless specified otherwise. Conditions for availing ITC are
fulfilled subject to the information given above.
Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos. 1 to 3 below:-
1. Choose the correct statement(s).
(i) For GTA services, Government is liable to pay GST under reverse charge
(ii) For DSA services, Banking Company is liable to pay GST under reverse charge
(iii) For GTA services, Maahi & Co is liable to pay GST under forward charge
(iv) For DSA services, Maahi & Co is liable to pay GST under forward charge
a) i & ii
b) iii & iv
c) i & iv
d) ii & iii

2. Which of the following options is correct in respect of GTA services provided to

Government Department?
a) GTA service is taxable @ 12% without restriction of availing input tax credit.
b) GTA service is taxable @ 12%, but input tax credit cannot be availed for the same.
c) GTA service is taxable @ 5% without restriction of availing input tax credit.
d) GTA service is taxable @ 5%, but input tax credit cannot be availed for the same.

3. Gift of ₹ 50,000 in value provided by Maahi & Co to each of its employee will be:
a) Supply of goods
b) Supply of services
c) Exempt supply
d) Not a supply (3 x 2 = 6 Marks)

Case Scenario 2:
ABC Ltd. has its manufacturing unit in the State of Rajasthan. Further, it has ancillary units
in the State of Madhya Pradesh and Gujarat and is registered in each of these States.
Moreover, ABC Ltd. owns and operates a hotel in Udaipur, Rajasthan.
In addition to the aforesaid, ABC Ltd. owns a commercial space which is rented out to a
registered person at the monthly rent of ₹ 50,000. The maintenance of the premises is the
responsibility of ABC Ltd. In pursuance of the same, during the month of April, ABC Ltd.
incurred certain expenses on the purchase of maintenance related materials. The said
expenses are recoverable from the tenant along with the invoice issued for rent. The rate of
tax applicable on the material used for maintenance was 5%.
During the year, ABC Ltd. agreed to provide the hotel to Mr. X for a business conference to
be held at Udaipur. Mr. X is an unregistered person residing in Maharashtra.
ABC Ltd. made a supply of machinery in the month of June, details of which are as follows-
➢ Basic price of the machinery before TCS under Income Tax Act, 1961 – ₹ 45,000
➢ Tax collected at source under Income-tax Act, 1961 – ₹ 2,500
➢ It received a subsidy of ₹ 3,500 from Green Foundation Pvt. Ltd. for usage of green
energy and the subsidy was linked to the units of energy saved and not aforesaid
machinery.
All above amounts are exclusive of GST, wherever applicable. The rate of GST on all inward
and outward supplies is 18%, unless otherwise mentioned.
Assume that there is no other outward or inward transaction apart from aforesaid
transactions. Based on the facts of the case scenario given above, choose the most
appropriate answer to Q. Nos. 4 to 6 below:-

4. For the transaction related to renting of commercial space, what should be the rate of tax
charged by ABC Ltd.?
a) The rate of GST on rent and maintenance material related recovery shall be 18%.
b) The rate of GST on rent shall be 18% and, on the material, shall be 5%.
c) No GST shall be charged on the recovery related to material used in maintenance.
Rate of GST on rent shall be 18%.
d) The rate of GST on rent and maintenance material related recovery shall be 5%.

5. Compute the value of supply under section 15 of the CGST Act, 2017 made by ABC Ltd.
in the month of June?
a) ₹ 45,000
b) ₹ 47,500
c) ₹ 48,500
d) ₹ 51,000
6. With respect to the hotel accommodation service provided to Mr. X, GST payable by ABC
Ltd. is ...........
a) nil, GST on accommodation service is payable by the recipient, Mr. X, under reverse
charge
b) nil, GST on accommodation services provided to an unregistered person is exempt
from GST
c) in the nature of CGST and SGST
d) in the nature of CGST. (3 X 2 = 6 Marks)

7. ABC Insurance Ltd. received a proposal for pandemic insurance for cricket tournament
organised by Lion’s Club. Sum assured for said insurance was ₹ 20 Crores with a premium
of ₹ 5 lakh. The company issued the said policy on 1st July. The invoice for the same was
issued on 5th August. Premium was received on 14th August.
Determine the time of supply of service provided to Lion’s Club?
a) 1st July
b) 16th August
c) 05th August
d) 14th August (2 Marks)

8. Smita Limited made an outward supply of garments at an agreed price of ₹ 5,00,000. The
company charged ‘Go Green Cess’ levied by Local municipal corporation amounting to ₹
10,000 for this supply. As the customer made payment within 3 days from the date of
delivery, Smita Limited provide a discount of ₹ 5,000 separately as a customer friendly
measure, even though no prior agreement was made on discount. Value of Supply made by
Smita Limited u/s 15 is ______________
a) 5,05,000
b) 5,10,000
c) 5,00,000
d) 5,15,000 (1 mark)
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks: 35 Marks

Q1. (a) M/s Cute & Co., a partnership firm, registered supplier under GST in Bengaluru
(Karnataka State), has provided the following information for the month of October, 20XX
S.no Particulars Amount
(₹)
(i) Intra-State taxable supply of Direct Selling Agent (DSA) service to 2,50,000
public sector Bank.
(ii) Services provided to a Governmental authority by way of sanitation 99,900
conservancy.
(iii) Rent paid to a residential dwelling taken for running an office for 25,000
providing DSA services, Owner of the residential property was not
registered under GST; This is an intra-State supply availed.
(iv) Purchased a car for the official use of managing partners of the Firm for 9,00,000
business use (Inter-State purchase).
(v) Availed Information Technology services for their business from Nil
Partner’s friend Mr Allan Waugh from Melbourne, Australia.
Mr. Waugh refused to take any consideration. Open Market value of
said service was ₹ 1,25,000. (Inter-State transactions).
(vi) Provided training and performance appraisal services in Bengaluru to
following persons:
a) ABC Private Limited, a registered supplier in the State of Kerala 3,00,000
b) Babu Cones, a proprietorship concern of Rajasthan, which was 1,00,000
not registered under GST
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) All the amounts given above are exclusive of taxes.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
(iv) There was no opening balance of any input tax credit.
(v) The turnover of M/s Cute & Co was ₹ 2 crore in the previous financial year.
Compute the net GST payable in cash, by M/s Cute & Co. for the month of October, 20XX.
Correct legal provisions should form part of your answer. (10 Marks)

(b) Vishwanath Ltd., a registered supplier in Karnataka has provided the following details
for supply of one machine·:
S.no Particulars Amount (₹)
(1) List price of machine supplied [exclusive of items given below from 80,000
(2) to (4)]
 (2) Tax levied by Local Authority on sale of such machine 6,000
(3) Discount of 2% on the list price of machine was provided (recorded
in the invoice of machine)
(4) Packing expenses for safe transportation charged separately in the 4,000
invoice
Vishwanath Ltd. received ₹ 5,000 as price linked subsidy from a NGO on sale of each such
machine, The Price of ₹ 80,000 of the machine is after considering such subsidy.
During the month of February, Vishwanath Ltd. supplied three machines to Intra-State
customers and one machine to Inter-State customer. Determine total Output tax. (5 Marks)

Q2. (a) “Little Smiles”, a photography firm, has commenced providing photoshoot services
in Delhi from the beginning of current financial year 2024-25. It has provided the following
details of turnover for the various quarters till December 2024 :-
S.no Quarter Amount (₹
in Lakh)
(1) April 2024 – June 2024 20
(2) July 2024 – September 2024 30
(3) October 2024 – December 2024 40
You may assume the applicable tax rate as 18%. Little Smiles wishes to pay tax at a lower
rate and opts for the composition scheme. You are required to advise whether it can do so
and calculate the amount of tax payable for each quarter? (6 Marks)

(b) Champak Ltd. avails legal services from a firm of advocates. The firm issues invoice for
the services to Champak Ltd. on 17th Feb. However, Champak Ltd. was not happy with the
services provided by the firm as its legal case was not handled by the firm in a professional
manner and it resulted in the company losing the case. The company delayed the payment to
the firm and finally made the payment on 3rd November.
Determine the time of supply of the legal services provided by the firm of advocates to
Champak Ltd. (4 Marks)

Q3. (a) Determine the place of supply in the following independent cases:-
1. Harpreet (New Delhi) boards the New Delhi-Kota train at New Delhi. He sells the
goods taken on board by him (at New Delhi), in the train, at Jaipur during the journey.

2. Aakar Advertisement Agency, a registered person in Nagpur, Maharashtra, wants to

display the products of its clients at most prominent places in different States. It took
on rights to use the space on hoardings mounted on fixed surface attached to earth,
situated in Udaipur, Rajasthan and in Gwalior, Madhya Pradesh from G.N. Enterprise
registered in State of Chhattisgarh. Aakar Advertisement Agency has an exclusive
right to use the space and also to manage the advertisements on the hoardings.
(5 Marks)
(b) Examine whether the following activities would amount to supply under section 7 read
with Schedule I:
1. Rimjhim Manufacturers have a factory in Delhi and a depot in Mumbai. Both these
establishments are registered in respective States. Finished goods are sent from factory
in Delhi to the Mumbai depot without consideration so that the same can be sold from
the depot.
2. Mohan is an architect in Chennai. His brother who is settled in London is a well-
known lawyer. Mohan has taken legal advice from him free of cost with regard to his
family dispute.
(5 Marks)

Q4. (a) Determine the time of supply from the given information in each of the following
independent cases:
(i)
Particulars Date
Supplier invoices goods taxable on reverse charge basis to Saroj & Co. (30 days May 4
from the date of issuance of invoice elapse on June 3)
Saroj & Co receives the goods May 12
Saroj & Co makes the payment May 30

(ii)
Particulars Date
Supplier invoices goods taxable on reverse charge basis to Durable & Co. (30 May 4
days from the date of issuance of invoice elapse on June 3)
Durable & Co receives the goods, which were held up in transit June 12
Payment made for the goods July 30
(5 Marks)

(b) (i) No act or proceedings of the Goods and Services Tax Council shall be invalid merely
by certain reasons. What are they? (3 Marks)

(ii) Sapna Builders, registered in Haryana, rented out 20 residential units owned by it in Jain
Society to Anant Technologies, an IT based company registered in the State of Haryana, for
accommodation of its employees. State the person liable to pay GST. (2 Marks)
OR

(b) Under the GST law, taxes on taxable services supplied by the Central Government or the
State Government to a business entity in India are payable by recipient of services".
State the exceptions of the above statement. (5 Marks)