Procedure and Levy Under GST Short Answer Type Questions

Question 1.
What is the registration process for GST in India?
Answer:
GST registration process will be online through a portal maintained by Central Government of India. Govt, will also appoint GSPs (GST Suvidha Providers) to help businesses with the registration process.

Based on the information provided by GSTN, registration process looks like this:
The applicant, will need to submit his PAN, mobile number and email address in Part A of Form GST REG-01 on the GSTN portal or through Facilitation center (notified by board or commissioner).

The PAN is verified on the GST Portal. Mobile number and E-mail address are verified with a one-time password (OTP). Once the verification is complete, applicant will receive an application reference number on the registered mobile number and via E-mail. An acknowledgement should be issued to the applicant in FORM GST REG-02 electronically.

Applicant needs to fill Part- B of Form GST REG-01 and specify the application reference number. Then the form can be submitted after attaching required documents. If additional information is required, Form GST REG-03 will be issued. Applicant needs to respond in Form GST REG-04 with required information within 7 working days from the date of receipt of Form GST REG-03.

If you have provided all required information via Form GST REG-01 or Form GST REG-04, the registration certificate in Form GST REG -06 for the principal place of business as well as for every additional place of business will be issued to the applicant. If the person has multiple business verticals within a state he can file a separate application for the registration in Form GST REG- 01 for each business verticals.

If the details submitted are not satisfactory, the registration application is rejected using Form GST REG-05.The applicant who is required to deduct TDS or collect TCS shall submit an application in Form GST REG – 07 for registration. If he is no longer liable to deduct or collect tax at source then the officer may cancel and communicate the cancel of registration.

Question 2.
What are the Documents required for GST registration?
Answer:
The various documents includes:

PAN card of the Company
Proof of constitution like partnership deed, Memorandum of Association (MOA) /Articles of Association (AOA), certificate of incorporation.
Details and proof of place of business like rent agreement or electricity bill
Cancelled cheque of your bank account showing name of account holder, MICR code, IFSC code and bank branch details.
Authorized signatory like List of partners with their identity and address proof in case of partnership firm or List of directors with their identity and address proof in case of company.

Question 3.
Which are the cases in which registration is compulsory?
Answer:
As per paragraph 5 in Schedule III, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit:

persons making any inter-State taxable supply
casual taxable persons
persons who are required to pay tax under reverse charge
non-resident taxable persons
persons who are required to deduct tax under section 37
persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise
input service distributor
persons who supply goods and/or services other than branded services, through electronic commerce operator
every electronic commerce operator
an aggregator who supplies services under his brand name or his trade name
such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.

Question 4.
Explain the procedure related to levy and collection in GST.
Answer:
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:

Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point i when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.

(2) The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.

(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

(4) The integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be . paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

(5) The Government may, on the recommendations of the Council, by notification, specify categories of-services, the tax on inter-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:

Question 5.
Write short notes on scope of supply.
Answer:
Supply Includes:
(a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, [Section 7(1)(a)].

(b) import of services, for a consideration whether or not in the course or furtherance of business, and [Section 7(1)(b)]c) activities specified in Schedule I, made or agreed to be made without a consideration. Section 7(1).

Question 6.
Explain the fax liability on Composite Supply and Mixed Supply.
Answer:
(a) A composite supply means supply made by taxable person to a recipient comprising two or more supplies, of goods or services or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business one of which is a principal supply (supplies naturally bundled).

(b) A mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax. (Supplies not naturally bundled).

Example on Composite Supply and Mixed Supply:
Composite Supply:
Example 1:
Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply.
The entire supply will be treated as supply of principal and the rate of tax of principal will apply for other items.

Example 2:
In case of purchase of ticket in Rajdhani Train where the cost of ticket includes the services for Transportation of passengers, cost of foods and supply of bed rolls. All these services are bundled together and here the principal supply will be transportation of passengers.

Example 3:
A luxury Hotel In Delhi provides a 3 Nights package with the breakfast and one day Delhi sightseeing. The inclusion of Delhi sightseeing in this package is not a natural requisite to accommodation in the hotel. Hence, this does not amount to composite supply. This is a mixed supply

Mixed Supply:
Example 4:
Let us suppose a supply of package consisting of canned foods, sweets, chocolates, cakes, dry fruits, and fruit juice when supplied for a single price. Here it is further assumed that canned food is taxable @ 12%, sweets at zero rate, chocolates @ 18%, cakes 12%, dry fruits 18%, and fruit juice @ 12%. Here the Highest rate will be charged @ 18 % on entire value of supply. If these items are supplied separately then it will not be a mixed supply.

Example-5:
Let us take another example:
A combo pack for ₹ 10,000 is supplied which consist of a Tie, Pen, Calculator, Wallet, Watch.
Assume the Tie is taxable say @ 18%, Pen @ 5%, Caculator 5%, Wallet 18% and Watch @ 18%.
Here the combo pack will be considered as Mixed supply and will be taxable at highest rate which is 18%.

Question 7.
Discuss the eligibility and conditions for taking input tax credit.
Answer:
(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless – (a) Possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed.

(b) The goods or services or both Explanation- For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise.

(c) Subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply.

(d) he has furnished the return under section 39: PROVIDED that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income Tax Act, 1961, the input tax credit on the said tax component shall not be allowed.

A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Question 8.
Explain the ITC Rules for Capital Goods under GST.
Answer:
The high level rules for determination of Input Tax Credit (ITC) w.r.t. Capital Goods and reversal if any:
1. Credit of Input Tax will not be available on the following:

Capital Goods used exclusively for effecting exempt supplies.
Capital Goods used exclusively far non-business (personal) activity

2. Credit of Input Tax will be available in totality where Capital Goods have been used for effecting taxable supplies and business activity without any restrictions.

3. Amount of input tax referred in above points A and B must be indicated in Form GSTR-2 and however only point B will be credited to electronic credit ledger.

4. Where Capital Goods is used commonly for exempt and taxable supplies and/or business and non-business activity the credit of input tax shall be calculated in the following manner:

Such amount shall be credited to Electronic Credit Ledger
Useful life of such capital good shall be taken to be 5 years from the date of purchase
Now the total amount of input tax credited to Electronic Credit Ledger, whole useful life such common capital good shall be distributed over the useful life to determine the amount of credit eligible for the month out of input tax.

Question 9.
Write short note on time limit to avail the input tax credit.
Answer:
A registered person is not entitled to take input tax credit on invoice/ debit notes after due date of furnishing of the return under section 39 for the month of September of the subsequent financial year or furnishing of the relevant annual return, whichever is earlier.

Therefore, input tax credit shall be available to a registered person only if invoice/challan is in his possession for the goods or services or both are received and the payment of such tax has been made by the supplier and a return u/ s 39 has been filed. Receipt of goods shall include delivery to any other person as directed by the registered person.

Question 10.
Explain the provision of Distribution of Credit by Input Service Distributor.
Answer:
(1) The Input Service Distributor shall distribute the credit of central tax as central tax or integrated tax and integrated tax as integrated tax or central, by way of issue of a document containing, the amount of input tax credit being distributed in such manner as may be prescribed.

(2) The Input Service Distributor may distribute the credit subject to the following conditions, namely:
→ The credit can be distributed to recipients of credit against a document containing such details as may be prescribed;

→ The amount of the credit distributed shall not exceed the amount of credit available for distribution;

→ The credit of tax paid on input services attributable to recipient of credit shall be distributed only to that recipient;

→ The credit of tax paid on input services attributable to more than one recipient of credit shall be distributed amongst such recipient(s) to whom the input service is attributable and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union Territory of such recipient, during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period.

→ The credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union Territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period.

Practical Problems

Problems on GST:

Problem 1.
XYZ Limited has the following details for the year 2017-18:
1. Intra-state supplies – ₹ 2,00,000
2. Inter-state supplies – ₹ 3,00,000
3. Non-taxable supplies – ₹ 15000
(included in exempt supplies)
4. Value of exports – ₹ 50000
5. Exempt supplies – ₹ 40000
6. IGST/CGST/SGST paid – ₹ 12000
Solution:
Calculation of aggregate turnover

	₹
1. Intra-state supplies	2,00,000
2. Inter-state supplies	3,00,000
3. Value of exports	50,000
4. Exempt supplies	40,000
Aggregate turnover	5,90,000

Note: As per GST law, IGST/CGST/SGST paid shall not be considered while calculating aggregate turnover as it is not provided in definition of aggregate turnover.

Problem 2.
Mr. Amit supplies goods worth ₹ 24, 300 to Mr. Rahul and issues invoice dated 25.7.2017 for ₹ 24,300 and Mr. Rahul pays ₹ 25,000 on 30.7.2017 against such supply of goods. The excess ₹ 700 is adjusted in the next invoice for supply of goods issued on 5.8.2017. Identify the time of supply and value of supply.
Solution:
If excess amount received is less than ₹ 1,000 the time of supply shall the date of issue of first invoice i.e 25.7.2017 and value of supply shall be ₹ 25,000.

Problem: 3
Mr. Ganesha supplies goods worth ₹ 24, 300 to Mr. Bipul and issues invoice dated 22.7.2017 for ₹ 24,300 and Mr. Bipul pays ₹ 26,000 on 27.7.2017 against such supply of goods. The excess ₹ 1,700 is adjusted in the next invoice for supply of goods issued on 5.8.2017. Date on which payment is entered in the books of accounts of supplier is 30.8.2017 and date on which payment is credited to the bank account is 28.8.2017. Identify the time of supply.
Solution:
If excess amount received is more than ₹ 1,000, the time of supply shall the date on which payment is entered in books of accounts of the supplier or date on which payment is credited to the bank, whichever is earlier. Therefore, the date of supply in this case shall be 28.8.2017 i.e (30.8.2017 or 28.8.2017, whichever is earlier)

Problem 4.
Ganesh purchased goods and made payment of ₹ 50,000 (inclusive of GST) to Veeresh. Rate of SGST @ 9%, CGST @ 9%, then what will be assessable value.

Problem 5.
Calculate sale value under GST from the following particulars: Purchase of raw materials within the state ₹ 2,10,000 (inclusive of GST @ 5%), profit margin ₹ 20,000, manufacturing expenses ₹ 5,000, wages, 2500, storage cost 3,500, consultation fees 1500.

Problem 6.
Determine the time of supply in each of following independent cases in accordance with provisions of section 12 of the CGST Act , 2017 in case supply involves movement of goods.

Problem 7.
Determine the time of supply in each of following independent cases in accordance with provisions of section 12 of the CGST Act 2017 in case supply does not involve movement of goods.

Problem 8.
Determination of time of supply: determine the time of supply in each of following independent cases in accordance with provisions of CGST Act, 2017:

Problem 9.
Mr. Raman supplies goods within the state and its value is ₹ 600000. The value of goods exported ₹ 600000. The value of receipt of goods from other state is 710,00,000. If IGST rate is 18%, SGST & CGST rate is 9% each, calculate net GST payable.

Problem 10.
Mr. Amar Gupta supplies goods from Bihar to Nagpur and its value is ₹ 10,000. The value of goods supplied by him within the state is ₹ 1,10,000. The value of receipt of goods within the state is ₹ 10000 and the value of goods received from Nagpur is ₹ 90,000. If IGST rate is 18%, SGST & CGST rate is 9% each, calculate net GST payable.

Problem 11.
A manufacture has prepared the invoice as under:
Price of goods – ₹
(excluding CGST at 14% and SGST at 14%) – 5,00,000
The following items not included in the above price Advertising charges – 60,000
Publicity charges – 30,000
Selling expenses – 20,000
Loading & handling charges – 5,000
Servicing charges – 5,000
Outward freight & insurance on buyer request – 32,000
Allowed discount at 10% on the price of the goods and shown in invoice. Compute the amount of GST payable.

Problem 12.
Compute the Transaction value of goods from the following information and GST payable by a dealer registered in Karnataka.
₹
Selling price (including IGST of ₹ 2,000) – 43,000
Following transactions are not included in the above price:
Freight charges paid by supplier charged separately – 1,000
Normal secondary packing cost – 1,500
Cost of durable and returnable packing – 1,500
Insurance on freight paid-by supplier charged separately – 500
Trade discount (normal practice) – 1,000
Rate of GST – 18%
Nov 2017

Problem 13.
Determine the total amount of GST payable on a machine using the details given bellow:
₹
Selling price of the machine (inclusive of CGST at 9% and SGST at 9%) – 2,95,000
Cost of durable & returnable packing included in the sale price given above – 10,000
Design & development charges paid by buyer on behalf of seller to a third party – 12,000
Warranty charges charged separately by the seller Rate of GST 18% – 4,000
Calculations should be supported by notes where ever required.

Problem 14.
From The Following particulars determine net GST payable:
1. FOB cot of equipment 2,00,000 Yens
2. Freight charges 20,000 Yens
3. Insurance charges paid in India for transportation from Japan ₹ 15,000
4. Commission payable to agent in India ₹ 25,000
5. Exchange rate is 1 yen = 60
6. Landing charges = 1% of CIF cost
7. These goods are sold for ₹ 3,00,000 in India
8. Basic custom duty = 10%
9. IGST rate = 12%

Problem 15.
The Ashoka hotel group of companies provided the following services within the State of Kerala from its various establishments. Compute the amount of GST payable for the month November 2017.
₹
1) Supply of good or drink in restaurant not having facilities in air conditioning at 12% GST – 30,000
2) Supply of food or drink in restaurant having licence to serve liquor at 18% GST – 90,000
3) Supply of good or drink in outdoor catering at 18% GST – 1,50,000
4) Renting of hotels rooms at 18% GST – 2,25,000
5) Supply of food or drink in air condition restaurant in 5 star or above rated hotel at 28% GST – 1,50,000
Nov 2017

Problem 16.
Miss Sanjana (Registered Dealer) is a trader in Mumbai and she has purchased certain goods from Karnataka for ₹ 2,00,000 and has paid IGST at 12%. After manufacturing she has sold half of the goods in the state of Maharastra for ₹ 4,00,000 plus GST at 12% and the rest of the products to a unit situated in SEZ in Mumbai for ₹ 3,00,000. Compute the net output tax payable.
Nov 2017

Problem 17.
From the following information compute the amount of output tax to be uploaded by the dealer who has registered in Karnataka for the month of October and which is the last date to upload it in credit ledger.
₹
1) Product P sold to a dealer in Bangalore, rate of GST notified to this product is 18% – 20,00,000
2) Product Q sold to a dealer in Mysore, rate of GST applicable at 12% – 70,000
3) Product R at Nil rate of GSt sold to a dealer in Pondicherry – 2,50,000
4) Product S at 5% GSt sold to a dealer in Jammu an Kashmir – 2,80,000
5) Product T at 28% GSt sold to a unregistered dealer within the state – 1,20,000
6) Product U rate of GSt notified is 12% sold to a SEZ developer in Bangalore – 4,00,000
7) Product V sold to a dealer in union territory, rate of GST notified is 18% – 3,00,000
8) Product W which is exempted from GSt is sold to a register dealer of Pune – 5,00,000
9) Product X exported to China, the GST rate notified by GSt Council for this product is 28% if it is sold in India – 2,00,000
10) Product Y sold to a unit of SEZ in Mysore the rate of GST notified to this product is 12% – 6,00,000
11) Product Z sold to a registered dealer with in the State, the rate of GST notified is 18% – 4,50,000
12) Product A sold to a dealer in Belagavi who has registered under composition scheme at 28% GST – 1,00,000

Problem 18.
Miss. Swagatha a registered dealer submits the following information for the month of October 2017.