Charge of GST – CA Inter Tax Study Material

Charge of GST – CA Inter Tax Study Material is designed strictly as per the latest syllabus and exam pattern.

Charge of GST – CA Inter Taxation Study Material

Question 1.
Define ‘intra-State supply’ and ‘inter-State supply’ under GST law. Is it correct to say that inter-State supply attracts both CGST and SGST?
Answer:
INTER-STATE SUPPLY [Section 7 of IGST Act, 2017]:
The supply shall be treated as a supply of goods/services in the course of inter-State in the following cases:

  1. When location of the supplier and the place of supply are in
    • Two different States
    • Two different Union Territory’s
    • A state and a Union Territory
  2. Supply of goods/services imported into the territory of India
  3. Supply to/by an SEZ developer or SEZ unit; or

INTRA STATE SUPPLY [Section 8 of IGST Act, 2017]
The supply of goods/services shall be treated as intra-State supply, where the location of the supplier and the place of supply are in

  • Same State
  • Same Union Territory

GST on inter-State supply
It is not correct to say that inter-State Supply attracts both CGST and SGST as inter-State Supply attracts IGST. However, IGST is the sum total 1 of CGST and SGST/UTGST.

Charge of GST – CA Inter Tax Study Material

Question 2.
What do you understand by the term “Reverse Charge Mechanism”?
Answer:

  • In some cases, GST is payable by person who is recipient of the goods or services or both. The collection mechanism when recipient of supply is made liable to pay tax is called as Reverse Charge Mechanism (RCM).
  • As per section 2(98) of CGST Act, “The Reverse charge means the liability to pay tax by the recipient of supply of goods/services/both instead of supplier of such goods/services/both under section 9(3) & 9(4) of the Act or under section 5(3) & 5(4) of IGST Act.”

Question 3.
Kapil and Jaithmalani are partners in a firm of advocates. The firm has provided legal professional services to the following:
(1) An advocate of Delhi High Court.
(2) A firm of five advocates.
(3) ABC Limited, a business entity whose turnover of the preceding year is more than ₹ 20 Lakhs.
(4) PQR. Limited, a business entity whose turnover of the preceding year is ₹ 20 Lakhs or less.
(5) Rakesh Kumar, an individual.
Answer:

Case Whether covered under Exemption Applicability of RCM
(1) An advocate of Delhi High Court. Exempt Since exempted, no GST Liability.
(2) A firm of five advocates. Exempt
(3) ABC Limited, a business entity whose turnover of the preceding year is more than ₹ 20 Lakhs. Not covered by ex­emption notifications. RCM is applicable
(4) PQR Limited, a business entity whose turnover of the preceding year is ₹ 20 Lakhs or less. Exempt Since exempted, no GST Liability arises
(5) Rakesh Kumar, an individual. Exempt

Charge of GST – CA Inter Tax Study Material

Question 4.
State person liable to pay GST in the following independent cases provided recipient is located in the taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to an unregistered business entity
Answer:
(a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity located in the taxable territory is payable under reverse charge, in the given case, GST is payable by the recipient- business entity.

(b) GST on sponsorship services provided by any person to any body corporate or partnership firm located in the taxable territory is payable | under reverse charge. Since in the given case, services have been provided to an individual, reverse charge provisions will not be attracted, GST is payable under forward charge by the supplier in company.

(c) GST on services provided or agreed to be provided by the Central Government, State Government, Union Territory, or local authority to any business entity located in the taxable territory is payable under reverse charge. However, renting of immovable property service provided to unregistered person is an exception to it. Therefore, in the given case, reverse charge provisions will not be attracted. GST is payable under forward charge by the supplier – Central Government.

Charge of GST – CA Inter Tax Study Material

Question 5.
State the person liable to pay GST in the following independent cases.
The recipient is located in taxable territory in all the cases:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Renting of immovable property service provided by Central Government to a Business entity.
(c) Sponsorship services provided by a Company to an individual.
(d) Sponsorship services provided to a body corporate by a body corporate.
Answer:
(a) Reverse charge is applicable. Thus, GST in service transaction shall be payable by the recipient i.e. Business entity.

(b) Reverse charge is not applicable. Generally, GST on services provided by Govt, to business entity is payable under reverse charge. However, renting of immovable property is an exception to it. Therefore, GST is payable by supplier i.e. Government.

(c) Reverse charge is not applicable. Because the sponsorship services have been provided to an individual. Thus, GST is payable under forward charge by the supplier (i.e. company).

(d) Reverse charge is applicable, as the sponsorship services are provided to a body corporate. Hence, the recipient shall be liable to pay GST.

Charge of GST – CA Inter Tax Study Material

Question 6.
Taxmann Publications Private Limited has come out with a book on “GST and Customs Law” as per the latest CBCS curriculum of B.Com. Hons. The terms of agreement with the author “Dr. K. M. Bansal” provides that royalty shall be paid @ 8% of value of books sold. The publisher has paid ₹ 4,75,000 as royalty to the author. Mr. Bansal has not opted for forward change as per Notification No. 22/2019 – Central Tax (Rate), dated 30th September, 2019.

You are required to answer the following:
(a) Do you think the supply by the author should be treated as supply of goods under GST laws?
(b) Who is liable to pay GST on royalty?
(c) Is there any tax concession available to the author under Income-tax Act, 1961?
Answer:
(a) It is supply of services where the publisher “Taxmann Publications” is recipient and the author “Dr. K. M. Bansal” is the supplier of service.

(b) Since supply of services by an author comes under RCM, the recipient j (i.e. Taxmann Publications) is liable to pay GST.

(c) Yes, subject to fulfilment of conditions given under section 80QQB of Income-tax Act, the amount of deduction from Gross Taxable Income j in respect of royalty is the lower of the following:

  1. ₹ 3,00,000 or
  2. Income from Royalty

In the given case, a deduction of ₹ 3,00,000 is admissible.

Charge of GST – CA Inter Tax Study Material

Question 7.
State person liable to pay GST in the following independent cases provided recipient is located in the taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to an unregistered business entity.
Answer:
(a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity located in the taxable territory is payable under reverse charge, in the given case, GST is payable by the recipient- business entity.

(b) GST on sponsorship services provided by any person to any body corporate or partnership firm located in the taxable territory is payable under reverse charge. Since in the given case, services have been provided to an individual, reverse charge provisions will not be attracted. GST is payable under forward charge by the supplier in company.

(c) GST on services provided or agreed to be provided by the Central Government, State Government, Union Territory, or local authority to any business entity located in the taxable territory is payable under reverse charge. However, renting of immovable property services provided to unregistered person is an exception to it. Therefore, in the given case, reverse charge provisions will not be attracted. GST is I payable under forward charge by the supplier – Central Government.

Charge of GST – CA Inter Tax Study Material

Question 8.
Who is Economic Commerce Operator?
Answer:
Economic Commerce Operator means any person who owns, operates [ or manages digital or electronic facility or platform for electronic commerce. The electronic commerce means the supply of goods or services or both, including digital products over digital or electronic network.

Question 9.
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” facilities a potential cus-tomer 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 under the provisions of GST laws.

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.
Answer:
I. Tax payable by e-commerce operator on notified services [sec. 9(5)]
Electronic Commerce Operators (ECO) display products as well as services which are actually supplied by some other person to the consumer, on their electronic portal.

  • Tax liability on some specified services notified by Govt, shall be paid by ECO like services by way of transportation of passengers by a radio-taxi, motorcab (not more than 6 passengers), maxicab (Capacity > 6 passengers but less than 12 excluding driver) and motor cycle;

Conclusion
“Super Ride” will be liable for Payment of Tax

II. If ECO is located in New York.
Charge of GST – CA Inter Tax Study Material 1
Conclusion
If D.T. Ltd. is located in New York (USA), any person representing D.T. Ltd. j 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 j shall be liable to pay tax.

Charge of GST – CA Inter Tax Study Material

Question 10.
Mr. Z afar of Assam provides the following information for the preceding financial year 2019-20. You are required to find out the aggregate turnover for the purpose of eligibility of composition levy scheme and determine whether he is eligible for composition levy scheme or not, for the EY. 2020-21. [Nov. 2019, 6 Marks]

Particulars Amount (₹ in Lakhs)
Value of taxable outward supplies (out of above ₹ 10 lakhs was in course of Inter-State transactions). 50.00
Value of exempt supplies (which include ₹ 30 lakhs was received as a interest on loans & advances). 70.00
Value of inward supplies on which he is liable to pay tax under reverse charge 5.00
Value of exports 5.00
All the amounts are exclusive of GST.

Answer:
Computation of aggregate turnover of Mr. Zafar for FY 2019-20 (for the purpose of eligibility of composition levy scheme)

Particulars Note ₹ in lakh
Value of taxable outward supplies (1) 50
Value of exempt supplies (2) 40
Value of inward supplies on which Mr. Zafar is liable to pay tax under reverse charge (3) Nil
Value of exports (4) 5
Aggregate turnover for determining eligibility for compo­sition scheme 95

A registered person of Assam is eligible to opt for composition levy if his ! aggregate turnover does not exceed ₹ 1.5 crore in the preceding financial year provided he is not engaged in inter-State outward supplies of goods, Therefore, in the given case, assuming that he is not engaged in making any inter-State outward supply of goods in FY 2020-21, Mr. Zafar is eligible to opt for composition levy for FY 2020-21 since his aggregate turnover does not exceed ₹ 1.5 crore in FY 2019-20.

Notes:

  1. Value of all taxable supplies including inter-State supplies are includible in aggregate turnover
  2. Value of exempt supplies is includible in aggregate turnover. However, 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, though exempt, is not includible in aggregate j turnover for determining eligibility for composition scheme.
  3. Excludible from aggregate turnover.
  4. Includible in aggregate turnover.

Charge of GST – CA Inter Tax Study Material

Question 11.
Enumerate the persons who are not eligible to opt for Composition Scheme under section 10(2) of the CGST Act, 2017. [May 2019, 5 Marks]
Answer:
As per section 10(2), a registered person shall not be eligible to opt for composition scheme if:

  1. he is engaged in supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II beyond the limit specified in second proviso to section 10(1).
  2. he is engaged in supply of goods not leviable to tax.
  3. he is engaged in inter-State outward supplies of goods.
  4. he is engaged in supply of goods through an electronic commerce operator who is required to collect tax at source under section 52.
  5. he is a manufacturer of notified goods, namely, manufacturer of ice cream, pan masala, tobacco and aerated water.
  6. He is Casual Taxable Person or Non-Resident Taxable Person.

Question 12.
Examine in relation to composition levy scheme under the CGST Act, 2017 and the rules made thereunder in the following individual cases:
(1) Ketu is a manufacturer of Ice-cream and pan masala in State of Maharashtra. His turnover for the preceding year 2019-20 does not exceed ₹ 1.5 Crore. He wants to register for composition levy scheme for 2020-21. Is he eligible for it?

(2) Jadhu of Gujarat opts for composition scheme during a financial year 2020-21. But on 10-02-2021 his turnover crosses ₹ 1.5 Crore. Can he continue under composition levy scheme?

(3) X Ltd. has 2 branches K & L in Delhi, having same PAN. Branch K opts for normal scheme. X Ltd. want to continue composition levy in case of its branch L. Can X Ltd. continue composition levy only for branch L? Can X Ltd. Continue composition levy only for branch L? [May 2019 Old Course Modified, 1+2+2 Marks]
Answer:

Answer Statutory Provision
(1) Ketu
  • Not eligible
  • as he is a manufac­turer of Ice-cream and pan masala
A registered person who is engaged in manufacture of, inter alia, ice cream and pan masala, is not eligible to opt for composition levy even if his aggregate turnover does not exceed ? 1.5 crores.
(2) Jadhu
  • He cannot continue under composition scheme
  • from 10-2-2021, when the turnover crosses ? 1.5 crores.
The option to pay tax under composition levy availed of by a registered person lapses with effect from the day on which his aggregate turnover during a financial year exceeds the threshold limit of ? 1.5 crores. He needs to pay tax under normal scheme from that day.
(3) X Ltd. X Ltd. cannot continue with composition scheme only for branch L. Where person having the same Permanent Account Number, has more than one registration, the registered person shall not be eligible to opt for composition scheme unless all such registered persons opt to pay tax under composition scheme. In other words, all the registrations under the same PAN have to opt for composition scheme.

Charge of GST – CA Inter Tax Study Material

Question 13.
M/s Sai Trading Company, an eligible registered dealer in goods making intra-State supplies within the state of Andhra Pradesh, has reported an aggregate turnover of ₹ 125 Lakhs in the preceding financial year 2019-2020.

  1. Determine whether Sai Trading Company will be eligible for composition levy in 2020-21.
  2. Will your answer be different, if in the above scenario, M/s Sai Trading Company is making intra-State supply within the

(a) Union Territory of Jammu and Kashmir
(b) State of Assam
(c) State of Arunachal Pradesh [May 2018 Modified, 3 Marks]
Answer:
Statutory provision:
Section 10 of CGST Act, 2017 provides that a registered person, whose aggregate turnover in the preceding financial year did not exceed ₹ 1.5 crore may opt for composition scheme. The turnover limit is ₹ 75 lakh in case of Special Category States. However, for Assam and Himachal Pradesh, the turnover limit is ₹ 1.5 crore.
In the given cases:

Intra-State supplies in Applicable Turnover Limit Eligibility for Composition Levy in 2020-21
(i) Andhra Pradesh ₹ 1.5 crore Eligible as the turnover does not exceed pre­scribed limit.
(ii)(a) Jamm u and Kashmir ₹ 1.5 crore Eligible
(ii)(b) Assam ₹ 1.5 crore Eligible
(ii)(c) Arunachal Pradesh ₹ 75 Lakhs Not Eligible as turnover (₹ 25 Lakhs) is in excess of prescribed limit

Charge of GST – CA Inter Tax Study Material

Question 14.
M Ltd. a manufacturing concern in Mumbai has opted for composition scheme furnishes you with the following information for Financial Year 2019-20. It requires you to determine its composition tax liability and total tax liability. In Financial Year 2019-20 total value of supplies including inward supplies taxed under reverse charge basis are ₹ 1,30,00,000. The break up of supplies are as follows –

Particulars
(1) Intra-State Supplies of Goods X chargeable @ 5% GST 66,00,000
(2) Intra-State Supplies made which are chargeable to GST at Nil rate 18,00,000
(3) Intra-State supplies which are wholly exempt under section 11 of CGST Act, 2017 12,00,000
(4) Value of inward supplies on which tax payable under RCM (GST Rate 5%) 25,00,000
(5) Intra-State Supplies of Goods Y chargeable @ 18% GST 9,00,000

Answer:
The composite tax liability of M Ltd. shall be as under:
Charge of GST – CA Inter Tax Study Material 2

(2) Tax payable under reverse charge basis:

Particulars Amount (₹)
Value of inward supplies on which tax payable under RCM 25,00,000
Rate of GST 5%
Tax payable under RCM 1,25,000

Total Tax Payable = ₹ 1,05,000 + ₹ 1,25,000 = ₹ 2,30,000

Charge of GST – CA Inter Tax Study Material

Question 15.
Discuss with reasons whether the following persons are eligible to opt for Composition levy if all the cases are independent.

  1. Mr. Anjaan wants to sell taxable goods in an exhibition organized for a week in Delhi. He does not have fixed place of business in Delhi and is participating in the exhibition for the first time only.
  2. Mr. Banarsi Dass is in the business of tobacco products.
  3. Mr. Bean wants to opt for Composition scheme with effect from 8th July, 2018. The stock held on this date consists of goods purchased in the course of intra-State trade
  4. Mr. Vishal runs a restaurant which supplies food articles at second floor under the brand “Raffles” in Karol Bagh, Delhi. He also deals in garment in a shop in the same building on ground floor.

Answer:

  1. Mr. Anjaan is a casual taxable person. Hence, he cannot exercise the option to pay tax under the Composition scheme.
  2. As per the Government notification, manufacturer of “Ice-cream, Pan Masala & Tobacco products” are not eligible to opt composition scheme. Therefore, Mr. Banarsi Dass cannot opt for composition scheme.
  3. Mr. Bean can opt for composition scheme as the stock does not include inter-State purchases.
  4. Mr. Vishal is eligible for composition levy as supplier of food articles is allowed to opt for composition scheme.

Charge of GST – CA Inter Tax Study Material

Question 16.
Examine the following cases, keeping in view the latest provisions of GST law regulating Composition Scheme-
(a) Mr. X is a manufacturer of ice-cream and Pan Masala in State of Maharashtra. His turnover for the year does not exceed ₹ 1.5 crore. He wants to register for Composition Scheme. Is he eligible for it?
(b) Mr. Y of Gujarat opts for Composition Scheme during a financial year 2020-21. But on October 10, 2020 his turnover crosses ₹ 1.5 Crore. Can he continue under Composition Scheme?
(c) Z Limited has 2 branches-branch K and branch L in Delhi (having same PAN). Branch K opts for normal scheme. Z Limited wants to opt for Composition Scheme in case of branch L. Is it possible?
Answer:
(a) Rule 5 of CGST Rules provides conditions and restrictions to be complied with by the person opting for composition scheme. One of the condition is that the taxpayer is not engaged in the manufacture of goods as notified under section 10(2)(e) ie. Ice-cream and other edible ice (whether or not containing cocoa), Pan Masala and Tobacco and manufactured tobacco substitutes. Since, Mr. X is manufacturer of ice-cream and pan masala, he is NOT ELIGIBLE for Composition Scheme.

(b) As per section 10(3) of CGST Act, 2017 the composition scheme availed | by a registered person shall lapse with effect from the day on which aggregate turnover during a financial year exceeds the specified limit. In the given case, the turnover has crossed ₹ 1.5 crore on October 10, 2020. He is required to file intimation for withdrawal from the com-position scheme in Form GST CMP-04 within 7 days from October 10, 2020.

(c) The first proviso to section 10(2) of CGST Act, 2017 provides that where more than one registered persons are having the same PAN, 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. Accordingly, in the given case, it is not possible to opt for composition scheme for Branch L only. If the company wants to pay tax under composition scheme, it will have to opt the same for all branches i.e. for Branch K also.

Charge of GST – CA Inter Tax Study Material

Question 17.
Mr. X is running a consulting firm and also a readymade garment showroom in Kolkata registered in same PAN. Turnover of the showroom is ₹ 90 lakhs and receipt of consultancy firm is ₹ 15 lakhs in the preceding financial year 2019-20. You are required to answer the following:
(1) Is Mr. X eligible for composition scheme in 2020-21?
(2) If yes, up to what amount, the supply of consultancy service can be provided?
(3) Is it possible for Mr. X to opt for composition scheme only for show-room? [Nov. 2018 Old Course Modified, 2 Marks]
Answer:

Statutory Provisions Eligibility for Composition Levy
(1)
  •  The registered persons, whose ag­gregate turnover in the preceding financial year did not exceed ₹ 1.5 crore, may opt to pay tax under composition levy.
  • The scheme can be availed by an intra-State supplier of goods and supplier of restaurant service.
  • However, the composition scheme permits supply of mar­ginal services (other than restau­rant services) for a specified value along with the supply of goods and restaurant service, as the case may be.
Mr. X can opt for composition scheme for the financial year 2020-21 as its aggregate turn­over is less than ₹ 1.5 crore in the preceding financial year 2019-20 and it is not engaged in inter-State outward supplies.
(2) As per second Proviso to section 10(1), 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, in the current financial year. Mr. X can supply consultancy services up to a value of ₹ 10.5 lakh [10% of ₹ 105 lakh or ₹ 5 lakh, whichever is higher] in the current financial year 2020-21.
(3) As per Proviso to section 10(2), where more than one registered persons are having the same PAN, the registered person shall not be eligible to opt for the composition scheme unless all such registered persons opt the scheme. No, it is not possible for Mr. X to opt for composition scheme only for showroom as all the registrations under the same PAN have to opt for composition scheme

Charge of GST – CA Inter Tax Study Material

Question 18.
M/s United Electronics, a registered dealer, is supplying all types of Electronic Appliances in the State of Karnataka. Their aggregate turnover in the Financial Year 2019-20 by way of supply of appliances was ₹ 120 Lakhs. The firm also expects to provide repair and maintenance service 2 of such Appliances from the financial year 2020-21.
With reference to the latest amendments made in CGST Act, 2017, you 1 are required to examine:
(i) Whether the firm can opt for the composition scheme for the financial year 2020-21, as the turnover may include supply of both goods and services?
(ii) If yes, up to what amount, the supply of service can be provided? [Nov. 2019 Old Course, 5 Marks]
Answer:

Statutory Provisions Eligibility for Composition Levy in 2020-21
(1)
  • The registered persons, whose aggregate turnover in the pre­ceding financial year did not exceed ₹ 1.5 crore, may opt to pay tax under composition levy.
  • The scheme can be availed by an intra-State supplier of goods and supplier of restaurant ser­vice.
  • However, the composition scheme permits supply of marginal services (other than restaurant services) for a speci­fied value along with the supply of goods and restaurant service, as the case may be.
M/s United Electronics can opt for composition scheme for the financial year 2020-21 as its aggregate turnover is less than ₹ 1.5 crore in the preceding financial year 2019-20 and it is not engaged in inter-State outward supplies.
(2) As per second Proviso to section 10(1), 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, in the current financial year. M/s United Electronics can supply consultancy services up to a value of ₹ 12 lakh [10% of ₹ 120 lakh or ₹ 5 lakh, whichever is higher] in the current financial year 2020-21.

Charge of GST – CA Inter Tax Study Material

Question 19.
M/s Ginny and John Company is a partnership firm of interior decorators and also running a readymade garment showroom. Turnover of the showroom was ₹ 130 Lakh and Receipts of the interior decorators service was ₹ 22 Lakh in the preceding financial year i.e. 2019-20.

  1. With reference to the provisions of the CGST Act, 2017, examine whether the firm can opt for the composition scheme in 2020-21?
  2. Will your answer change, if the turnover of the showroom was ₹ 120 lakh and Receipts of the interior decorators service was ₹ 22 Lakh in the preceding financial year i.e. 2019-20?
  3. If yes, up to what amount, the supply of interior decorators service can be provided?
  4. Also discuss whether it is possible for M/s Ginny and John Company to opt for composition scheme only for Showroom? [May 2018 Old Course Modified, 5 Marks]

Answer:

Eligibility for Composition Levy in 2020-21
(1) The aggregate turnover of the firm is X 152 Lakhs during the preceding financial year 2019-20. Since, it is more than X 1.5 crore, the firm CANNOT OPT for composition scheme for the financial year 2020-21.
(2) M/s Ginny and John Company CAN OPT for composition scheme for the financial year 2020-21 as its aggregate turnover is less than X 1.5 crore in the preceding financial year 2019-20.
(3) The firm can also supply interior decorator service up to a value of ₹ 14.2 lakh [10% of ₹ 142 lakh or ₹ 5 lakh, whichever is higher] in the current financial year 2020-21
(4) No, it is not possible for M/s Ginny and John Company to opt for composition scheme only for showroom as all the registrations under the same PAN have to opt for composition scheme.

Charge of GST – CA Inter Tax Study Material

Question 20.
Explain in brief the conditions to be fulfilled by a registered person under GST law for availing the option to pay concessional tax @ 3% (effective rate 6%) under GST as per the provisions of notification number 2/2019-CT(R), dt. 7-3-2019 as amended, with effect from 1st April, 2019. [Nov. 2019, 5 Marks]
Answer:
The registered person desirous of availing the option to pay concessional tax @ 396 (effective rate 6°6) under Notification No. 2/2019-CT(R), dated 7-3-2019 should –

  1. not be engaged in making any supply which is not leviable to tax.
  2. not be engaged in making any inter-State outward supply of goods and/or services.
  3. neither be a casual taxable person nor a non-resident taxable person.
  4. not be engaged in making any supply through an electronic commerce operator who is required to collect tax at source.
  5. not be engaged in making supplies of notified goods.
  6. neither collect any tax from the recipient nor be entitled to any input tax credit.
  7. issue a bill of supply instead of tax invoice.
  8. not have the aggregate turnover in the preceding financial year exceeding ₹ 50 lakh
  9. not be eligible for composition scheme.

Note: Any five conditions may be mentioned out of the above mentioned nine conditions.

Charge of GST – CA Inter Tax Study Material

Question 21.
State with reason, person liable to pay GST in each of following independent cases. Assume recipient is located in taxable territory.

  1. Rental income received by Tamil Nadu State Government from renting an immovable property to Mannappa Pvt. Ltd. (Turnover of the company was ₹ 22 lakhs in the preceding F.Y.)
  2. Legal Fees received by Mr. Sushrut, a senior advocate, from M/s Tatva Trading Company having turnover of ₹ 50 lakhs in preceding Financial Year. [May 2018 Old Course, 3 Marks]

Answer:

Statutory Provisions In the given case
(1) GST is payable on reverse charge basis on services sup­plied by the State Government to a business entity located in taxable territory. However, re­verse charge is not applicable on supply of renting of immovable property service by the State Government. The person liable to pay GST is the supplier of services, i.e., Tamil Nadu State Government
(2) GST on legal services supplied by a senior advocate to any business entity located in the taxable territory is payable on reverse charge basis.
  •  Mr. Sushrut is a senior advocate
  • M/s. Tatva Trading Company is a business entity
    The person liable to pay GST is the recipient of services, Le., M/s. Tatva Trading Company

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