Exemptions from GST – CA Final IDT Study Material is designed strictly as per the latest syllabus and exam pattern.
Exemptions from GST – CA Final IDT Study Material
Question 1.
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.
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.
Based on the particulars given above, compute the GST payable on the amount paid for trans-portation by XYZ Ltd. when it avails the services of different transporters. [MTP, May 19,9 Marks]
Answer:
Computation of GST payable on amount paid for transportation by XYZ Ltd. (When it avails the services of different transporters)
| Particulars | WN | Freight [₹] | GST payable [₹] |
| Transportation of biscuits in a local mini-van belonging to an individual | 1 | 54,000 | Nil |
| Transportation of biscuits by Indian Railways | 3,17,000 | 15,850 | |
| Transportation of biscuits by GTA | 2 | 3,00,000 | 15,000 |
| Transportation of biscuits by GTA @12% | 3 | 73,000 | 8,760 |
| Transportation of flour by GTA | 4 | 55,000 | Nil |
| Transportation of butter by GTA | 5 | 35,000 | 1,750 |
| Transportation of baking powder by GTA | 6 | 1,500 | Nil |
| Transportation of biscuits by GTA to sister concern | 7 | 40,000 | 2,000 |
| Total tax payable by XYZ Ltd. on availing services of different transporters | 43,360 |
Working Notes:
1. 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 – As per Entry 21 of Exemptions of CGST Act.
2. GST is payable by XYZ Ltd. under reverse charge in terms of section 5(3) of the IGST Act, 2017.
3. When the GTA pays tax @ 12%, tax is payable by the GTA under forward charge and not by the recipient under reverse charge.
4. Services provided by GTA by way of transport (in a goods carriage) of, inter alia, flour are exempt from GST as per Entry 21 of Exemptions of CGST Act.
5. Though services provided by GTA by way of transport (in a goods carriage) of, inter alia, milk is exempt from GST, 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.
6. 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 As per Entry 21 of Exemptions of CGST Act.
7. GST is payable by XYZ Ltd. under reverse charge in terms of section 5(3) of the IGST Act, 2017
Question 2.
Discuss whether GST is payable in respect of transportation services provided by Raghav Goods Transport Agency in each of the following independent cases:
| Customer | Nature of services provided | Amount charged |
| A | Transportation of milk | ₹ 20,000 |
| B | Transportation of books on a consignment transported in a single goods carriage | ₹ 3,000 |
| C | Transportation of chairs for a single consignee in the goods carriage | ₹ 600 |
Transportation of milk
Statutory Provision:
As per Entry No. 21, following services provided by goods transport agency are exempt. Services provided by a goods transport agency, by way of transport in a goods carriage of
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed ₹ 1,500;
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed ₹ 750;
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipments.
| Customer | Nature of services provided | WN | Amount Charged (₹) | GST Taxability |
| A | Transportation of milk | 1 | 20,000 | Exempt |
| B | Transportation of books on a consignment transported in a single goods carriage | 2 | 3,000 | Payable |
| C | Transportation of chairs for a single consignee in the goods carriage | 3 | 600 | Exempt |
Working Notes:
- Transportation of milk by goods transport agency is exempt as per entry no. 21 of exemption notification of the CGST Act, 2017.
- Exemption is available for transportation of goods only where the consideration for transportation of goods on a consignment transported in a single goods carriage does not exceed ₹ 1,500.
- Transportation of goods where consideration for transportation of all goods for a single consignee does not exceed ₹ 750 is exempt.
Question 3.
‘Sarvshiksha Trust’ is a charitable trust registered under section 12AA of the Income-tax Act, 1961. The trust is registered under GST in the State of Uttar Pradesh. The trust runs the following educational institutions:
(i) ‘Kaypee Institute of Technology’ (KIT), a private engineering college in Ghaziabad. KIT also runs distance learning post graduate engineering programmes. Exams for such programmes are conducted in select cities at centres appointed by the KIT. All the engineering courses including the distance learning post-graduate engineering programme run by KIT are approved by The All India Council for Technical Education (AICTE).
(ii) ‘Nanhi Mutthi’, a pre-school in Lucknow.
(iii) ‘Bright Minds’, a coaching institute in Kanpur. The Institute provides coaching for Institute of Banking Personnel Selection (IBPS) Probationary Officers Exam.
(iv) ‘Gyan Vaibhav’ a higher secondary school affiliated to CBSE Board.
The trust provides the following details relating to the goods and services received by the various institutions run by it during the period April 20XX to September 20XX:
Table 1
| Particulars | KIT | Nanhi Mutthi | Bright Minds | Gyan Vaibhav |
| (₹) | (₹) | (₹) | (₹) | |
| (i) Printing services for printing the question papers (paper and content are provided by the Institutions) | 2,50,000 | 1,50,000 | 2,00,000 | |
| (ii) Paper procured for printing the question papers | 4,30,000 | 2,58,000 | 3,44,000 | |
| (iii) Courier services for sending the admit cards for the examination, to the students | 50,000 | |||
| (iv) Honorarium to paper setters and examiners (not on the rolls of the Institution) | 5,00,000 | |||
| (v) Rent for exam centers taken on rent like schools etc., for conducting examination | 8,00,000 | 1,00,000 | ||
| (vi) Subscription for online educational journals [Nanhi Mutthi has taken the subscription for online periodicals on child development and experiential learning] | 4,00,000 | 80 000 | 2,20,000 | 2,40,000 |
| (vii) Hire charges for buses used to transport students and faculty from their residence to college and back | 4,80,000 | 5,50,000 | 1,30,000 | 7,50,000 |
| (viii) Catering services for running a canteen in the campus for students (Catering services for KIT include a sum of ₹ 60,000 lor catering at a student event organised in a banquet hall outside the campus) | 3,20,000 | 2,60,000 | 1,80,000 | 5,00,000 |
| (ix) Security and housekeeping services for the institution(s) (Security and housekeeping services for Gyan Vaibhav include a sum of ₹ 80,000 payable for security and housekeeping at the student event organised in a banquet hall outside the campus) | 6,00,000 | 4,00,000 | 3,75,000 | 4,65,000 |
The trust further provides the following details relating to the output services provided to the students by the various Institutions run by ¡t during the period April 20XX to September 20XX:
Table 2
| Particulars | KIT | Nanhi Mutthi | Bright Minds | Gyan Vaibhav |
| (₹) | (₹) | (₹) | (₹) | |
| (i) Tuition fee | 35,00,000 | 15,00,000 | 20,00,000 | 25,00,000 |
| (ii) Transport fee charged from students | 5,00,000 | 6,00,000 | 1,30,000 | 8,50,000 |
| (iii) Charges for food supplied in canteen (located in the premises of the Institutions). The canteen facility being provided by Bright Minds is not compulsory and is open to general public as well. However, canteen facility being provided by KIT and Gyan Vaibhav is only for students and staff of such educational institutions. | 4,60,000 | 2,40,000 | 6,10,000 |
With the help of the above details –
(i) determine the amount of GST payable, if any, on goods and services received during April 20XX- September 20XX by the various educational institutions run by the ‘Sarvshiksha Trust’;
(ii) compute net GST liability of the ‘Sarvshiksha Trust’ payable from the Electronic Cash Ledger, for the period April 20XX to September 20XX.
All the amounts given above are exclusive of taxes, wherever applicable.
Notes:
(i) Rate of GST on catering service is 5%. No ITC has been availed on inputs and input services used in the supply of catering service. Assume that while providing the catering service in the canteen, the educational institutions have not used any inputs and input services except the catering service (mentioned at SI. No. VIII of Table 1) availed from third parties.
(ii) Rate of GST on goods is 12%. Rate of GST on printing services is 12% and on other services is 18%.
(iii) Except catering service, wherever relevant, all the conditions necessary for availing the ITC have been complied with. [MTP, May 19, 10 Marks]
Answer:
Statutory Provision:
As per Notification No. 12/2017
| The select services which are exempt when provided to an educational institution are-
(i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or housekeeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; (v) supply of online educational journals or periodicals |
Condition for (i), (ii) & (iii) The services mentioned in points (i), (ii) and (iii) are exempt only when the same are pro-vided to an educational institution providing services by way of pre-school education and education up to higher secondary school or equivalent. Condition for (v) The supply of online educational journals or periodicals are not exempt from GST when provided to-(i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course. |
Note : Meaning of Educational Institution the “educational institution” means an institution providing services by way of,-
- pre-school education and education up to higher secondary school or equivalent;
- education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
- education as a part of an approved vocational education course;
| Particulars | KIT (Educational Institution) | Nanhi Mutthi (Pre-Schools) | Bright Minds (Coaching Classes, Not a Educational Institution) | Gyan Vaibhav (Educational Institution up to High Secondary School) |
| (₹) | (₹) | (₹) | (₹) | |
| Printing services for printing the question papers (paper and content are provided by the Institutions) | Exempt | 18,000 [1,50,000 × 12%] |
Exempt | |
| Paper procured for printing the question papers – [Supply of select services to educational institution is exempt and not supply of goods to such educational institutions] | 51,600 [4,30,000 × 12%] |
30,960 [2,58,000 × 12%] |
41,280
[3,44,000 × 12%] |
|
| Courier services for sending the admit cards for the examination, to the students | Exempt | |||
| Honorarium to paper setters and examiners (not on the rolls of the educational institution) | Exempt | |||
| Rent for exam centers taken on rent like schools etc., for conducting examination | Exempt | 18,000 [1,00,000 × 18%] |
||
| Subscription for online educational journals [Nanhi Mutthi has taken the subscription for online periodicals on child development and experiential learning] | Exempt | 14,400 [80,000 × 18%] | 39,600 [2,20,000 × 1896] |
4,320 [2,40,000 × 18%] |
| Hire charges for buses used to transport students and faculty from their residence to college and back | 86,400 [4,80,000 × 18%] |
Exempt | 23,400 [1,30,000 × 18%] |
Exempt |
| Catering services for running a canteen in the campus for students Catering service provided to preschool and the higher secondary school is exempt irrespective of whether the same is provided within or outside the premises of the preschool and the higher secondary school | 16,000 [3,20,000 × 5%] |
Exempt | 9,000 [1,80,000 × 5%] | Exempt |
| Security and housekeeping services for the institution(s) Security and housekeeping service provided to pre-school and the Higher secondary school for the Student event organised in a banquet hall will be taxable as only the security and housekeeping service provided within the premises of the preschool and the higher secondary school are exempt. | 1,08,000
[6,00,000 × 18%] |
Exempt | 67,500 [3,75,000 × 18%] |
14,400 [80,000 × 18%] |
| Total GST payable on goods and services received by the educational institutions | 2,62,000 | 14,400 | 2,06,460 | 60,000 |
(ii) Statutory Provision:
(1) SI. No. 1 of Notification No. 12/2017 : Exempts services provided by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable activities advancement of educational programmes or skill development relating to,-
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area is covered under the charitable activities.
In the given case, though Sarvshiksha Trust is registered under section 12AA of the Income-tax Act, 1961. In the given case, education is not provided to any specific group or category of persons as specified above, but to all the categories of children/candidates approaching the college/pre-school/coaching institute/higher secondary school. Therefore, the education services provided by the Sarvshiksha Trust is not exempt under SI. No. 1 of
the exemption notification.
(2) SI. No. 66 of Notification No. 12/2017 : Services provided by an educational institution to its students, faculty and staff is exempt. All the educational institutions run by the Sarvshiksha Trust except Bright Minds are educational institutions. Therefore, the education services, transport services and catering services provided by KIT, Nanhi Mutthi, and Gyan Vaibhav to its students will all be exempt from GST under SI. No. 66 of the exemption notification. Thus, only the educational services provided by Bright Minds will be liable to GST @ 18%. The catering services provided by Bright Minds will be liable to GST @ 5%.
(3) No input tax credit (ITC) will be availed on inputs and input services used in providing exempt education services, i.e. education services by KIT, Nanhi Mutthi, and Gyan Vaibhav. Only Bright Minds will be entitled to avail ITC on inputs and input services used in providing taxable education services. However, as per the information given in the question, while providing the catering service, Bright Minds has not availed any ITC of catering service received by it from third parties.
(4) Since there are no common inputs and input services being used for providing taxable and exempt services, the need for reversal of ITC attributable to exempt supplies will not arise.
The net GST liability of Sarvshiksha Trust, which will comprise of only the tax liability of Bright Minds, is computed as under:
| Particulars | Bright Minds [₹] |
| Tuition fee | 20,00,000 |
| Transport fee charged from students | 1,30,000 |
| Value of output supply taxable @ 18% | 21,30,000 |
| GST liability @18% [A] | 3,83,400 |
| Value of output supply taxable @ 5% [Charges for food] | 2,40,000 |
| GST liability @ 5% [B] | 12,000 |
| Total GST liability [A] + [B] | 3,95,400 |
| Less: ITC [Total tax payable by Bright Minds on the service received by it as computed in point (i) above less the tax payable on catering charges (₹ 2,06,460 – ₹ 9,000)] | 1,97,460 |
| Net GST payable from Electronic Cash Ledger | 1,97,940 |
Question 4.
Determine whether GST is payable in case of each of the following independent services provided by the registered persons:
(1) Fees charged from office staff for in-house personality development course conducted by Markanday College – ₹ 80,000. Markanday College provides education as a part of a curriculum for obtaining an engineering degree recognised by law.
(2) Bus fees collected from students by Starward College – ₹ 3,500 per month. Starward College provides education as a part of a curriculum for obtaining an engineering degree recognised by law.
(3) Housekeeping service provided in the Smart Kids school, a play school by M/s. Spick & Span – ₹ 25,000 per month.
(4) Global link supplied “Tracing Alphabets”, an online educational journal, to Kidzee School – ₹ 4,000. The Kidzee School used the same for its students of UKG class. [MTP, Nov. 19, 5 Marks]
Answer:
| Statutory Provision | Answer |
| (1) As per Entry 66(a) of Exemption Notification No. 12/2017 of CGST Act: Services provided by an educational institution to its students, faculty and staff are exempt from GST. | Since Markanday College provides education as a part of a curriculum for obtaining an engineering degree recognised by law, Markanday College covered under the definition of educational institution, hence the services provided by it to its staff by way of conducting personality development course would be exempt from GST. |
| (2) As above | As Starward College is an educational institution, the transport services provided by it to its students would be exempt from GST. |
| (3) As per Entry 66(b) of Exemption Notification No. 12/2017 of CGST Act: Services provided to an educational institution, by way of, inter alia, house-keeping services performed in such educational institution are exempt from GST. However, such an exemption is available only when the said services are provided to a pre-school education and a higher secondary school or equivalent. | The house-keeping services provided to Smart Kids Play School would be exempt from GST. |
| (4) As per Entry 66(b) of Exemption Notification 12/2017 of CGST Act: Services provided to an educational institution by way of supply of online educational journals or periodicals is exempt from GST. However, such an exemption is available only when the said services are provided to an educational institution providing education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. | The GST is payable in case of supply of online journal to students of UKG class of Kidzee School. Hence the taxable value is ₹ 4,000. |
Question 5.
ABC Ltd. is engage in providing various service to educational institutional and furnishes you with the following information for the month of April 2018. You are required to determine the value of taxable supply and GST payable thereon if all charges are exclusive of GST. The rate of GST is 18%.
(1) Renting of immovable property to higher secondary school: ₹ 12,00,000
(2) Renting of immovable property to commercial coaching centre: ₹ 2,00,000
(3) Transportation service provided to students of higher secondary school: ₹ 5,00,000
(4) Outdoor catering service provided to educational institutions running approved vocational courses: ₹ 5,00,000
(5) Security services provided to pre-nursery school: ₹ 1,25,000
(6) House keeping and cleaning service in college providing recognized graduation degree: ₹ 5,12,500
(7) Conduct of examination of ICSI: ₹ 10,00,000
(8) Placement service provided to ICAI: ₹ 12,00,000
(9) Development of course contain of ICMA institute: ₹ 2,00,000
(10) Training of staff of Higher Secondary School: ₹ 1,50,000
Answer:
Computation of Value of taxable supply and GST liability-
| Particulars | WN | Amount |
| (1) Renting of immovable property to higher secondary school | 2 | 12,00,000 |
| (2) Renting of immovable property to Commercial coaching centre | 2 | 2,00,000 |
| (3) Transportation services provided to students of higher secondary school | 1 | Exempt |
| (4) Outdoor catering service provided to Educational running approved vocational courses | 2 | 5,00,000 |
| (5) Security service provided to pre-nursery school | 1 | Exempt |
| (6) Housekeeping and cleaning service in college providing recognized graduation degree | 2 | 5,12,500 |
| (7) Conduct of examination of ICSI | 1 | Exempt |
| (8) Placement service provided to ICAI | 2 | 12,00,000 |
| (9) Development of course contain of ICMA institute | 2 | 2,00,000 |
| (10) Training of staff of higher secondary School | 2 | 1,50,000 |
| Total Taxable Value of Supply | 39,62,500 |
GST payable @ 18% of Rs. 39,62,500 7,13,250
Working Notes:
- Exempt vide Entry No. 66(b) of Exemption Notification No. 12/2017
- Not covered under Entry 66(b) of Notification No. 12/2017, hence Liable to GST
Note: The statutory provisions may be referred in Q.6
Question 6.
BODMAS Ltd., providing educational services, furnishes you with the following information for the various service provided by it for the month of March, 2019.
| Particulars | Amount |
| Receipts from running a Boarding School (including receipts for providing residential dwelling service ₹ 14,00,000) | 30,00,000 |
| Receipts of ‘Gyan Uday’ an Industrial Training Institute (ITI) affiliated to the National Council for Vocational Training (NCVT) | 2,00,000 |
| Receipts of ‘Lakshya’, an institute, registered with Directorate General of Employment and Training (DGET), Union Ministry of Labour and Employment, running a Modular Employable Skill Course (MESC) approved by the National Council for Vocational Training (NCVT) | 1,00,000 |
| Receipts of “Wizard” a Commercial Coaching Institute providing commercial coaching in the field of arts and science (no certificate was issued on completion of the training) | 80,000 |
| Fees from prospective employers for campus interview | 4,00,000 |
| Renting of furnished flats for temporary stay to different persons | 5,00,000 |
| Receipts of ‘Concepts’, a Commercial coaching institute providing coaching in the field of commerce (a certificate was awarded to each trainee after completion of the training)
Receipts of Gurukul School providing education up to higher secondary |
1,40,000
5,00,000 |
Compute the value of taxable supply assuming that all the above receipts are exclusive GST. [Nov 2019, 9 Marks]
Answer:
Computation of Value of Taxable supply
| Particulars | WN | Amount |
| Receipts from running a Boarding School (including receipts for providing residential dwelling service) | 1 | Exempt |
| Receipts of ‘Gyan Uday’ an Industrial Training Institute (ITI) affiliated to the National Council for Vocational Training (NCVT) | 2 | Exempt |
| Receipts of ‘Lakshya’, an institute, registered with Directorate General of Employment and Training (DGET), Union Ministry of Labour and Employment, running a Modular Employable Skill Course (MESC) approved by the National Council for Vocational Training (NCVT) | 2 | Exempt |
| Receipts of “Wizard” a Commercial Coaching Institute providing commercial coaching in the field of arts and science | 3 | 80,000 |
| Fees from prospective employers for campus interview | 4 | 4,00,000 |
| Renting of furnished flats for temporary stay to different persons | 5 | 5,00,000 |
| Receipts of ‘Concepts’, a Commercial coaching institute | 6 | 1,40,000 |
| Receipts of Gurukul School providing education up to higher secondary | 7 | Exempt |
Working Notes:
1. Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of composite supply. Composite supply is treated as consisting entirely of principal supply being education. Since principal supply is education and renting for residence (which are not taxable). Hence, entire bundle would be exempt.
2. Exempt as per entry No. 66(a) of exemption notification of CGST Act, 2017
3. As per entry No. 80 coaching of arts and culture is exempted but in this case it is a coaching of arts and science, so it will taxable
4. It is not covered under entry No. 66 of exemption notification of CGST Act, 2017 and thus taxable.
5. It is not exempted as per entry No. 12 of exemption notification of CGST Act, 2017
6. It is not an approved educational institution as per entry No. 66 of exemption notification of CGST Act, 2017. Thus taxable.
7. Exempt as per entry No. 66(a) of exemption notification of CGST Act, 2017
Question 7.
Niwas Sadan Charitable Trust is registered under section 12AA of the Income Tax Act, 1961. It owns and manages a temple located at Mathura meant for general public. The temple compound has residential dwellings, rooms, Kalyana Mandapam, Halls and shops. It provides the following information relating to supply of its services for the month of August 2017. You are required to compute the total taxable value of supply for the month of August 2017 assuming that the given amounts are exclusive of GST:
| ₹ | |
| Renting of residential dwellings for use as a residence | 18,00,000 |
| Renting of rooms for pilgrims (Charges per day ₹ 1,200) | 8,00,000 |
| Renting of rooms for devotees (Charges per day ₹ 750) | 6,00,000 |
| Renting of kalyanamandapam (Charges per day ₹ 15,000) | 12,00,000 |
| Renting of halls (Charges per day ₹ 7,500) | 10,75,000 |
| Renting of shops for business (Charges per month ₹ 9,500) | 4,75,000 |
| Renting of shops for business (Charges per month ₹ 12,000) | 7,50,000 |
Answer:
Computation of value of supply of Niwas Sadan Charitable Trust for August, 2017
| Particulars | WN | Amount (₹) |
| Renting of residential dwellings for use as residence | 1 | Nil |
| Renting of rooms for pilgrims | 2 | 8,00,000 |
| Renting of rooms for devotees | 3 | Nil |
| Renting of Kalyana Mandapam | 4 | 12,00,000 |
| Renting of halls | 5 | Nil |
| Renting of shops for business | 6 | Nil |
| Renting of shops for business | 7 | 7,50,000 |
| Value of taxable supply | 27,50,000 |
Note : It has been assumed that the immovable properties are situated inside the precincts of the religious place meant for general public.
Working Notes:
- It is Exempt as per entry No. 12 of exemption notification of CGST Act, 2017
- Charges per day are not below ₹ 1,000, hence it is taxable
- Charges per day are below ₹ 1,000, it is exempt as per notification No. 12/2017
- Charges per day are not below ₹ 10,000, hence it is taxable
- Charges per day are below ₹ 10,000, it is exempt as per notification No. 12/2017
- Charges per month are below ₹ 10,000, it is exempt as per notification No. 12/2017
- Charges per month are not below ₹ 10,000, hence it is taxable
The readers may refer the following statutory provisions for conceptual understanding:
As per Notification No. 12/2017 (Entry 13 of Exemption Notification of CGST Act) Renting of precincts of a religious place meant for general public, owned/managed by, inter alia, an entity registered as a charitable trust under section 12AA of the Income-tax Act are exempt. However, exemption is not available if:
- charges for rented rooms are ₹ 1,000 per day or more;
- charges for rented community halls, Kalyanamandapam, open area are ₹ 10,000 per day or more;
- charges for rented shops are ₹ 10,000 per month or more.
Question 8.
Alisha Hotel Ltd. is a hotel provider of rooms. Rent charged per day per room is as follows:
| Particulars | Amount |
| Room Rent | 750 |
| Furniture Rent | 400 |
| Air-conditioner Rent | 150 |
| Refrigerator Rent | 50 |
| Less: Discount | (250) |
| Net Amount Charged | 1,100 |
During the month of Oct. 2018, 20 rooms are let out throughout the month and balance 35 rooms are let out only for 15 days. The Input Tax Credit available is 7,500.
The following GST rates are applicable for the hotel industry: 12%, 18% and 28%
Find the GST liability if any for the month of Oct. 2018.
Answer:
Computation of Value of Supply for Alisha
| Particulars | Amount |
| (1) 20 rooms × 31 days × ₹ 1100 (Actual Tariff) | 6,82,000 |
| (2) 35 rooms × 15 days × ₹ 1100 (Actual Tariff) | 5,77,500 |
| Total value of taxable services | 12,59,500 |
Computation of GST Liability of Alisha Hotel Ltd.
The principle supply is renting hotel room service. The other services are incidental and naturally bundled. Hence, GST rate, applicable to renting of hotel room services, of 12% is applicable.
| Particular | CGST @ 6% | SGST@ 6% |
| Value of service (Assessable Value ₹ 12,59,500) | 75,570 | 75,570 |
| Less: Input Tax Credit | 3,750 | 3,750 |
| Net Tax Liability | 71,820 | 71,820 |
Question 9.
Rahul Agri Millers Ltd., located in Haryana, is engaged in customs milling of paddy into rice. It does not pay GST on the same as it is of the view that the process of milling of paddy into rice is exempt under GST since is an intermediate production process in relation to cultivation of plants. However, Department demands tax on said activity contending that it is not eligible for said exemption. You are required to determine the veracity of the Department’s contention. [MTP, May 19, 4 Marks]
Answer:
Facts of the given Case Study
- Rahul Agri Millers Ltd. is engaged in customs milling of paddy into rice.
- It does not pay GST considering the milling as an intermediate production process in relation to cultivation of plants.
- Department demands tax contending that it is not eligible for exemption.
Related Provisions
As per Notification No. 12/2017 carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce is exempt under GST.
Decision
Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process carried out after the process of cultivation is over and paddy has been harvested. Further, processing of paddy into rice is not usually carried out by cultivators, but by rice millers. Milling of paddy into rice also changes its essential characteristics.
The milling of paddy into rice cannot be considered as an intermediate production process in relation to cultivation of plants for food, fibre or other similar products milling of paddy into rice is not eligible for exemption under said notification. Therefore, the contention of the Department is correct.
Question 10.
Shiva Medical Centre, a Multi-speciality hospital, is a registered supplier in Mumbai. It hires senior doctors and consultants independently, without entering into any employer-employee agreement with them. These doctors and consultants provide consultancy to the in-patients – patients who are admitted to the hospital for treatment – without there being any contract with such patients. In return, they are paid the consultancy charges by Shiva Medical Centre.
However, the money actually charged by Shiva Medical Centre from the in-patients is higher than the consultancy charges paid to the hired doctors and consultants. The difference amount retained by the hospital, i.e. retention money, includes charges for providing ancillary services like nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure, etc.
Further, Shiva Medical Centre has its own canteen – Annapurna Bhawan – which supplies food to the in-patients as advised by the doctor/nutritionists as also to other patients (who are not admitted) or their attendants or visitors.
The Department took a stand that senior doctors and consultants are providing services to Shiva Medical Centre and not to the patients. Hence, their services are not the health care services and must be subject to GST. Further, GST is applicable on the retention money kept by Shiva Medical Centre as well as on the services provided by its canteen – Annapurna Bhawan alleging that such services are not the health care services.You are required to examine whether the stand taken by the Department is correct provided the services provided by Shiva Medical Centre are intra-State services. [RTP, Nov. 18]
Answer:
As per Notification No. 12/2017 services by way of health care services by a clinical establishment, an authorised medical practitioner or para-medics are exempt from GST.
GST on the retention money: The entire amount charged by hospital from the patients including the retention money and the fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt from GST. In view of the same, GST is NOT applicable on the retention money kept by Shiva Medical Centre [Circular No. 32/06/2018].
Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not, are also healthcare services exempt from GST. Hence, services provided by the senior doctors and consultants hired by Shiva Medical Centre, being healthcare services, are also exempt from GST.
Food supplied by the hospital canteen to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare services and is not separately taxable. Thus, it is exempt from GST. However, other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. In view of the same, GST is not applicable on the food supplied by Annapurna Bhawan to in-patients as advised by doctors/nutritionists while other supplies of food by it to patients (not admitted) or their attendants/visitors are taxable.
Question 11.
Asha Medical Centre, a clinical establishment, offers the following services:
| Particulars | Amount (₹) Excluding GST |
| (i) Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of section 2(h) of Clinical Establishments Act, 2010. | 10,00,000 |
| (ii) Plastic surgeries (One such surgery was conducted to repair cleft lip of a new born baby. Consideration of ₹ 1,00,000 was charged for the same.] |
20,00,000 |
| (iii) Air ambulance services to transport critically ill patients from distant locations to Asha Medical Centre. | 1,00,000 |
| (iv) Alternative medical treatments by way of Ayurveda. Such therapy is not a recognized system of medicine in terms of section 2(h) of Clinical Establishments Act, 2010 | 2,50,000 |
Asha Medical Centre also operates a cord blood bank which provides services in relation to preservation of stem cells. You are required to compute the value of supply and GST liability of Asha Medical Centre, if any, in the light of relevant GST provisions. All the services provided by Asha Medical Centre are intra-State supplies. Assume the rates of CGST, SGST and [GST to be 9%, 9% and 18% respectively.]
Answer:
| Particulars | ₹ |
| (i) Reiki healing treatments [Working Note-1] | 10,00,000 |
| (ii) Plastic surgeries [₹ 20,00,000 – ₹ 1,00,000] [Working Note-2] | 19,00,000 |
| (iii) Air ambulance series to transport critically ill patients from distant locations to the Medical Centre [Working Note-3] | Nil |
| (iv) Alternative medical treatments by way of Ayurveda [Working Note-4] | Nil |
| (v) Services provided in relation to preservation of stem cells [Working Note-5] | Nil |
| Total Value of supply chargeable to GST | 29,00,000 |
Accordingly, The GST liability of Asha Medical Centre will be as follows:
CGST = ₹ 29,00,000 @ 9% = ₹ 2,61,000
SGST = ₹ 29,00,000 @ 9% = ₹ 2,61,000
Working Notes:
(1) Reiki healing treatment is not a recognized system of medicines.
(2) Health care services’ specifically excludes, inter alia, cosmetic or plastic surgery except when undertaken to restore/reconstruct anatomy/functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.
(3) ‘Health care services’ specifically includes services by way of transportation of the patient to and from a clinical establishment.
(4) Alternative medical treatments by way of Ayurveda are a recognized system of medicines.
(5) Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation are exempt from GST. Therefore, services provided in relation to preservation of stem cells by the cord blood bank operated by Asha Medical Centre will be exempt from GST.
The readers may refer the following statutory provisions for conceptual understanding:
Health care services provided by, inter alia, a clinical establishment in India are exempt from GST vide Notification No. 12/2017 CT (R) dated 28.06.2017. The definition of ‘health care services’ stipulates that such services must be provided in any recognized system of medicines.
As per section 2(h) of Clinical Establishments Act, 2010, recognized system of medicine means allopathy, yoga, naturopathy, ayurveda, homeopathy, siddha and unani system of medicines or any other system of medicines as may be recognized by the Central Government.
Question 12.
Mallika Sarabhai, a registered supplier, gave a classical dance performance in an auditorium. The consideration charged for the said performance is ₹ 1,48,500. Is Mallika Sarabhai liable to pay GST on the consideration received for the said performance if such performance is not for promotion of any product/services? If yes, determine his GST liability (CGST and SGST or IGST, as the case may be). Will your answer be different if:
(i) Mallika Sarabhai is a brand ambassador of a food product and aforesaid performance is for the promotion of such food product?
(ii) The dance performance given by Mallika Sarabhai is not a classical dance performance, but a contemporary Bollywood style dance performance?
(iii) Consideration charged by Mallika Sarabhai for the classical dance performance is ₹ 1,60,000?
Notes:
- Services provided by Mallika Sarabhai are intra-State supplies.
- Wherever applicable, GST has been charged separately.
- Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
Answer:
GST when consideration charged for the performance is ₹ 1,48,500Statutory Provision: Notification No. 12/2017 CT (R) dated 28.06.2017 exempts services by an artist by way of a performance in folk or classical art forms of
- music, or
- dance, or
- theatre, if the consideration charged for such performance is not more than ₹ 1,50,000.
However, exemption will not apply to service provided by such artist as a brand ambassador.
Answer: In view of the aforesaid provisions, services provided by Mallika Sarabhai are exempt from GST as consideration for the classical dance performance has not exceeded ₹ 1,50,000.
Therefore, her GST liability is nil.
| (i) If Mallika Sarabhai is a brand ambassador of a food product and aforesaid performance is for the promotion of such food product: | She will be liable to pay GST as aforesaid exemption is not applicable to service provided by an artist as a brand ambassador.
CGST liability = ₹ 1,48,500 × 9% = ₹ 13,365 |
| (ii) If Mallika Sarabhai gives a contemporary Bollywood style dance performance: | Such performance will not be eligible for aforesaid exemption. The reason for the same is that although the consideration charged does not exceed ₹ 1,50,000, said performance is not in folk or classical art forms of dance.
CGST liability – ₹ 1,48,500 × 996 = ₹ 13,365 |
| (iii) If the consideration charged for the classical dance performance by Mallika Sarabhai is ₹ 1,60,000: | She will be liable to pay GST on the same as although the performance is by way of classical art form of dance, consideration charged for such performance has exceeded ₹ 1,50,000.
CGST liability = ₹ 1,60,000 × 9% = ₹ 14,400 |
Question 13.
An individual acts as a referee In a football match organized by Sports Authority of India. He has also acted as a referee in another charity football match organized by a local sports club, in lieu of a lump sum payment. Discuss whether he Is required to pay any GST?
Answer:
Statutory Provision: Services provided to a recognized sports body by an individual inter alia as a referee in a sporting event organized by a recognized sports body is exempt from GST.
(i) Organized by Sports Authority of India
- The football match is organized by Sports Authority of India, a recognized sports body.
- Services provided by the individual as a referee in such football match will be exempt.
(ii) Organized by a local sports club
- Since local sports club is not a recognized sports body, aforementioned exemption is not available.
- GST will be payable in this case.
Question 14.
State with reasons whether the following transactions attract GST or not:
(i) Services provided by a private school bus operator to a school In relation to transportation of students to and from the school.
(ii) Campus Interview conducted by M/s. Sona College of Engineering, Mumbai by collecting entry fee from the corporate houses.
(iii) Ms. Geethanjall, a classical dancer receives 1,00,000 from an event management company for performing in a stage programme
(iv) Madras Music Academy charged 500 per ticket for a music concert of Mr. Srinlvas, an Indian Classical Singer. But charged 1000 per ticket for a music concert of another Indian classical singer Mr. K. J. Jesudas.
Answer:
| Cases | Tax | Reason |
| (i) Services provided by a private school bus operator | Exempt | As per Entry No. 66 of Notification No. 12/2017 |
| (ii) Entry fee for campus interview | Taxable | |
| (iii) Ms. Geethanjali, a classical dancer receives 1,00,000 for a performing stage program | Exempt | The benefit under Entry No. 78 of Notification No. 12/2017 is available as amount received is not more than ₹ 1.5 lakhs |
| (iv) Entry ticket ₹ 500 per ticket | Exempt | As per Entry No. 81 of Notification No. 12/2017, exemption is available if value of ticket is not more than ₹ 500. |
Question 15.
State whether the following services are exempt under GST.
| S.No. | Services by way of |
| 1. | Right to admission to Circus (Price of Ticket is ₹ 400 per person) |
| 2. | Right to admission to Dance Performance (Price of Ticket is ₹ 350 per person) |
| 3. | Right to admission to Drama (Price of Ticket is ₹ 600 per person) |
| 4. | Performance in Folk Dance on consideration of ₹ 1,00,000 per performance |
| 5. . | Performance in Western Dance (Consideration ₹ 80,000 per performance) |
| 6. | Performance in Classical Music (Consideration ₹ 1,90,000 per performance) |
| 7. | Collecting or providing news by an independent journalist |
| 8. | Health services by a veterinary clinic |
| 9. | Hotel with declared Tariff ₹ 1,200 per day but actually charged at ₹ 900 per day |
| 10. | Hotel with declared Tariff ₹ 1,000 per day charged at the same rate. |
| 11. | Hotel with declared Tariff ₹ 950 per day but actually charged at ₹ 1,250 per day |
Answer:
Computation of Value of Taxable Supplies
| Services by way of | Note | Nature |
| (1) Right to admission to Circus (Price of Ticket is ₹ 400 per person) | 1 | Exempt |
| (2) Right to admission to Dance Performance (Price of Ticket is ₹ 350 per person) | 1 | Exempt |
| (3) Right to admission to Drama (Price of Ticket is ₹ 600 per person) | 1 | Taxable |
| (4) Performance in Folk Dance on consideration of ₹ 1,00,000 per performance | 2 | Exempt |
| (5) Performance in Western Dance (Consideration ₹ 80,000 per performance) | 2 | Taxable |
| (6) Performance in Classical Music (Consideration ₹ 1,90,000 per performance) | 3 | Taxable |
| (7) Collecting or providing news by an independent journalist | 4 | Exempt |
| (8) Health services by a veterinary clinic | 5 | Exempt |
| (9) Hotel with declared Tariff ₹ 1,200 per day but actually charged at ₹ 900 per day | 6 | Exempt |
| (10) Hotel with declared Tariff ₹ 1,000 per day charged at the same rate. | 6 | Exempt |
| (11) Hotel with declared Tariff ₹ 950 per day but actually charged at ₹ 1,250 per day | 6 | Taxable |
Notes:
1. As per entry 81, the services by way of right to admission to circus, dance, or theatrical performance including drama are exempt where the consideration for right to admission to the events is not more than 500 per person. It may be noted that Vide Notification No. 2/2018-Central Tax (Rate) dated 25th January, 2018; the threshold limit of consideration for exemption has been increased to ₹ 500 per person in place of ₹ 250 per person.
In the cases (1) and (2), the consideration does not exceed ₹ 500. Therefore, these services are exempt. But, the third service is taxable.
2. The western dance form is not included in Entry No. 78. Hence, in the case of S. No. 5, it is taxable whereas S. No. 4 is exempt.
3. As per Entry No. 78, performance of artist in classical music is exempt. But, in the case of S. No. 6, it is taxable because it is more than ₹ 1,50,000.
4. As per Entry No. 49, the services by way of Collecting or providing news by an independent journalist are exempt.
5. As per Entry No. 46, the services by a veterinary clinic in relation to health care of animals or birds are exempt.
6. As per Entry No. 14, the services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having Value of Supply of a unit of accommodation below 1,000 per day or equivalent. It may be noted that Vide Notification No. 14/20 18- Central Tax (Rate) dated 26th July, 2018; the words TM Value of Supply” have been substituted in place of TMdeclared tariff”. It is clear that the declared tariff is not relevant at all in determining whether the service is exempt. Therefore, the service No. 11 is taxable as the value of supply is more than ₹ 1,000 per month.
Question 16.
Examine whether GST is payable in the following Independent cases:—
(i) Ekta Charitable trust, registered under section 10(23C)(v) of the Income-tax Act manages a temple in Rohini, Delhi. It has given on rent a community hail, located within temple premises, to public for celebration of Teej Mela Rent charged is ₹ 9,500 per day.
(ii) Speed post services by Department of Post to Union Territory of Daman & Diu.
(iii) ST Ltd. has given on hire 5 trucks to Titu Transporters of Delhi (a goods transport agency) for transporting goods in Central and West Delhi. The hiring charges for the trucks are ₹ 7,500 per truck per day.
Answer:
| (i) Renting of community hall by Ekta charitable trust | Exempt from GST, as rent is less than ₹ 10,000 per day. | The Exemption Notification No. 12/2017 CT (R) dated 28.06.2017/Notification No. 9/2017 IT (R) dated 28.06.2017 has exempted the said service wholly from GST. The said notification provides exemption to services by a person inter alia by way of renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a trust or an institution under section 10(23Q(v) of the Income-tax Act. However, this exemption does not apply where renting charges of premises, community halls, kalyanamandapam or open area are ₹ 10,000 or more per day. |
| (ii) Speed post services by Department of Post to Union territory of Daman & Diu. | GST is not payable | The Exemption Notification No. 12/2017 CT (R) dated 28.06.2017/Notification No. 9/2017 IT (R) dated 28.06.2017 has exempted the said service wholly from GST. This Exemption Notification inter alia provides exemption to services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to the Central Government, State Government, Union territory. Therefore GST is payable, if such service is provided to a person other than Central Government/State Government/Union Territory. |
| (iii) The hiring of trucks to Titu Transporters. | GST is not payable | The Exemption Notification No. 12/2017 CT (R) dated 28.06.2017 Notification No. 9/2017 IT (R) dated 28.06.2017 provides exemption to services by way of giving on hire inter alia to a goods transport agency, a means of transportation of goods. |
Question 17.
Determine taxable value of supply under GST law with respect to each of the following independent services provided by the registered persons:
| Particulars | Gross amount charged (₹) |
| Fees charged for yoga camp conducted by a charitable trust | 50,000 |
| Amount charged by business correspondent for the services provided to the rural branch of a bank with respect to Savings Bank Accounts | 1,00,000 |
| Amount charged by cord blood bank for preservation of stem cells | 5,00,000 |
| Amount charged for service provided by commentator to a recognized sports body | 5,20,000 |
Answer:
Computation of value of taxable supply
| Particulars | (₹) |
| Fees charged for yoga camp conducted by a charitable trust [Note-1] | Nil |
| Amount charged by business correspondent for the services provided to the rural branch of a bank with respect to Savings Bank Accounts [Note-2] | Nil |
| Amount charged by cord blood bank for preservation of stem cells [Note-3] | Nil |
| Service provided by commentator to a recognized sports body [Note-4] | 5,20,000 |
Working Notes:
1. Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable activities are exempt from GST. The activities relating to advancement of yoga are included in the definition of charitable activities. So, such activities are exempt from GST.
2. Services by business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch have been exempted from GST.
3. Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation are exempt from GST.
4. Services provided to a recognized sports body only by an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body are exempt from GST. Thus, services provided by commentators are liable to GST.