GST and CD

(2021 set) (15*4)

1a. Explain the salient features of Indirect Taxes. 5+5+5

Below are some salient features of indirect tax -
 Initially, its nature was regressive. This is because it formerly imposed a
significant burden on a taxpayer's income, whether high or low. However, it
turned progressive after the introduction of the Goods and Services Tax.
 The liability of tax payment can be transferable. This means retailers, service
providers or manufacturers pay the tax first. Then they accrue it from their
customer.
 The taxpayer is always the end consumer, and the taxable product is a
finished good and service.
 Indirect tax encourages an individual to save and invest and boost growth.
 It is impossible to escape this tax as it comes under the market price of a
product.

1b. Describe the provisions of “Constitution of India” regarding taxation.

Some of the key constitutional provisions relating to taxation include:

 Article 265: This article states that no tax can be levied or collected except by
the authority of law. This means that all taxes must be imposed by a valid law
and that no tax can be levied or collected without the authority of law.
 Articles 268 to 270: These articles deal with the levy of duties of customs,
excise and other taxes on goods imported into or exported out of India. These
taxes are levied by the Union government and the proceeds are shared
between the Union and the States.
 Article 286: This article restricts the power of the States to levy taxes on
goods and services that are imported into or exported out of India. This is to
prevent States from taxing goods that are in transit between different States.
 Articles 276 and 277: These articles deal with taxes that can be levied by the
States for the benefit of the State or for the benefit of a municipality, district
board or other local authority. These taxes are known as “cess” taxes and they
can be levied on a variety of subjects, such as professions, trades, callings and
employment.
 Articles 271 and 279: These articles deal with taxes that can be levied by the
Union and the States concurrently. This means that both the Union and the
 States can levy taxes on the same subject, but the Union government has the
power to override any State law that conflicts with a Union law.
 Articles 273, 275, 274 and 282: These articles deal with grants-in-aid that can
be given by the Union government to the States. These grants are given to
help the States meet their financial needs and they can be used for a variety of
purposes, such as education, health and infrastructure development.

1c. Discuss the various variants and methods of Value-Added Tax, which existed before
the introduction of GST w.e.f. 1st July 2017.

Prior to the implementation of GST, the major taxes were:-

 VAT (State level tax)

VAT (Value Added Tax) is an indirect tax levied on goods and services sold
intra-state. Output VAT was charged on sales made by a dealer. On the
other hand, Input VAT could be claimed as a tax credit for the VAT charged
on business purchases.

 Excise Duty

Products manufactured domestically (within the country) were subject to

excise duty levied by the Central Government. It was also known as
CENVAT (Central Value Added Tax).

 Customs Duty

A tax levied on imports and exports (international transactions) was a

customs duty. The idea behind charging customs duty was to ensure that
domestic products are safeguarded and also to be able to regulate the
movement of goods.

 Central Sales Tax

The sale or purchase of goods at an inter-state level was subject to the levy
of Central Sales Tax, an indirect tax imposed by the central government.
  Service Tax

The tax levied on service providers for services they provided (excluding
the list of services that came under the negative list) was termed a service
tax. Technically, although the tax is levied on the service providers, the tax
is paid by the customer at the time of availing the service.

2a. Briefly explain the genesis and structure of GST in India.

The idea of a nationwide GST in India was first proposed by the Kelkar Task Force on
Indirect taxes in 2000. The objective was to replace the prevailing complex and fragmented
tax structure with a unified system that would simplify compliance, reduce tax cascading,
and promote economic integration. The Empowered Committee of State Finance Ministers
prepared a design and roadmap, releasing the First Discussion Paper in 2009. The
Constitution Amendment Bill was introduced in 2011 but faced challenges regarding
compensation to States and other issues.
After years of deliberation and negotiations between the Central and State Governments,
the Constitution (122nd Amendment) Bill, 2014, was introduced in the Parliament. The Bill
aimed to amend the Constitution to enable the implementation of GST. The Constitution
Amendment Bill was passed by the Lok Sabha in May, 2015. The Bill with certain
amendments was finally passed in the Rajya Sabha and thereafter by the Lok Sabha in
August, 2016. Further, the Bill has been ratified by the required number of States and has
since received the assent of the President on 8 th September, 2016 and has been enacted as
the 101st Constitution Amendment Act, 2016. The GST Council was notified w.e.f.
15th September, 2016. For assisting the GST Council, the office of the GST Council Secretariat
was also established.
The GST Council, consisting of the Union Finance Minister and representatives from all
States and Union Territories, was established to make decisions on various aspects of GST,
including tax rates, exemptions, and administrative procedures. It played a crucial role in
shaping the GST framework in India. On 1 st July, 2017, GST laws were implemented,
replacing a complex web of Central and State taxes. Under the Indian GST, goods and
services are categorized into different tax slabs, including 5%, 12%, 18%, and 28%. Some
essential commodities are exempted from GST, Gold and job work for diamond attract low
rate of taxation. Compensation cess is being levied on demerit goods and ceratin luxury
items.
To prepare for the implementation of GST, extensive efforts were made to build the
necessary technological infrastructure and train tax officials and businesses. GST Network
(GSTN), a not-for-profit company, was created to provide the IT backbone for the GST
system, including taxpayer registration, return filing, and tax payments.
Since its implementation, the Indian GST has undergone various amendments and
refinements based on feedback from businesses and the evolving economic scenario. While
the GST implementation initially posed challenges for businesses in terms of understanding
the new compliance requirements and adapting to the changes, it has gradually settled into
the Indian tax landscape.
It can be said that the history of GST in India showcases a monumental shift in the country's
tax structure, aiming to create a more unified, efficient, and transparent indirect tax regime
for the benefit of businesses and the economy as a whole.
 2b. Briefly describe the benefits of GST for Government, Customers, Trade and Industry.

Benefits to the Benefits to the

Benefits to Industry and Trade
Common Man Economy

Exemption or low tax

rates on various Creation of a unified Uniform procedures for registration, filing,
products and common market. tax refunds.
services.

Ensured benefits for Increase in

Prevention of cascading taxes through tax
economically weaker manufacturing
credit flow.
sections. processes.

Enhancement of
Level playing field Small-scale suppliers can use composition
exports and
for small traders. schemes.
investments.

Simplified tax Generation of more job

Enhanced tax neutrality for competitive
structure with fewer opportunities through
exports.
exemptions. economic activity.

Seamless movement Improved coordination,

of goods and reduced tax barriers,
Efficient utilization of input tax credit.
services across the and streamlined
country. system.

Increased
Ensured revenue
competition leading
distribution through Competitive exports for global market.
to consumer-friendly
cooperative approach.
prices.

Lower prices for

items like movie
-
tickets, two-
wheelers, etc.

2c. Define GSTN. Briefly describe the functions of GSTN Portal

GSTN stands for Goods and Services Tax Network. It is a not for profit section 8 company, established
primarily to assist the rollout and implementation of GST and to act as the nodal agency to assist in terms of IT
infrastructure and services to the Central, State Governments, taxpayers and general public. In essence, it will
act as a common interface between the government, taxpayers, accounting authorities and bank.

Functions of GSTN
 Facilitate registration.
 Computation of IGST and settlement.
 File tax returns and submit to central and state authorities.
 Integrate banking network with tax payment details.
 Analyse tax payer’s profile.
 Manage computation engine of input tax credit.
 Submit MIS reports to governments.

3. (a) Explain with suitable examples the concept of “Composite Supplies” and “Mixed
Supplies” under the GST Act.
1. Composite Supplies:
o A composite supply involves two or more goods or services that are naturally
combined and supplied together as a single package.
o In such cases, one of the supplies is considered the principal supply, and the tax
liability is determined based on the applicable tax rate for that principal supply.
o Examples of composite supplies:
 AC Installation Services: When an air conditioner (AC) is sold along with installation
services, it constitutes a composite supply. The installation service is ancillary to the
primary supply of the AC.

2. Mixed Supplies:
o A mixed supply occurs when two or more goods or services are sold together, even if
they are not naturally bundled.
o The GST Act defines how such supplies must be rated, ensuring uniform tax
treatment.
o The tax liability for a mixed supply is determined differently:
 If the value of taxable goods in the mix exceeds the value of non-taxable goods, the
entire supply is subject to GST.
 Examples of mixed supplies:
 AC + Refrigerator: Selling an AC and a refrigerator together, even though they are
not inherently related, constitutes a mixed supply.

3b. Modern Fashions Pvt. Ltd., a supplier of readymade garments, announced „Buy
One get Two free‟ offer on Men‟s T-Shirts on Diwali to boost its sales. You are required
to advise the company on the availability of Input Tax Credit in respect of inward
supplies used in relation to such supply.
 1. Nature of the Offer:
o The “Buy One, Get Two Free” offer might initially seem like one item is being
supplied free of cost without any consideration. However, it’s essential to recognize
that this offer involves multiple individual supplies combined into a single price.
o Essentially, the customer receives two additional T-shirts at no extra cost when
purchasing one.
2. Taxability and Supply Type:
o The taxability of such an offer depends on whether it qualifies as a composite
supply or a mixed supply under the Goods and Services Tax (GST) Act.
o If it’s a composite supply, it will be taxed at the rate applicable to the principal
supply (i.e., the T-shirt being purchased).
o If it’s a mixed supply, the rate of tax will be determined by the highest rate
applicable to any of the goods involved in the offer.
3. Input Tax Credit (ITC):
o Despite the free supply of additional T-shirts, Modern Fashions Pvt. Ltd. can still claim
ITC for the inputs, input services, and capital goods used in relation to the entire
supply.
o In other words, the supplier can avail ITC for the goods or services provided as part
of the offer, even if they are supplied for free.
o Circular No. 92/11/2019-GST clarifies this aspect, emphasizing that ITC remains
available for inputs used in such promotional offers.

In summary, the “Buy One, Get Two Free” offer is not merely a supply of free goods;
it involves multiple individual supplies combined into a single price. The taxability
depends on the supply type (composite or mixed), but ITC remains accessible to the
supplier for the inputs used in relation to the offer
3c. Define the concept of time and value of supply. Briefly explain the time
limit for issue of invoice for supply of goods
1. Time of Supply:
o The time of supply refers to the moment when goods or services are considered to
be supplied. It plays a crucial role in determining when the taxpayer is liable to pay
taxes.
o For GST purposes, there are separate rules for identifying the time of supply for
goods and services.
o Goods: The time of supply for goods is determined by the earliest of the following
dates:
 Date of issue of the invoice.
 Last date by which the invoice should have been issued.
 Date of receipt of advance payment (if applicable).
o For example, if Mr. X sells goods to Mr. Y and issues an invoice on January 15th, the
time of supply is considered to be January 15th.
o If an advance payment of Rs 50,000 is received by Mr. X on January 1st (before the
invoice is issued), the time of supply for the advance amount is January 1st, while for
the remaining Rs 50,000, it remains January 15th.
2. Place of Supply:
o The place of supply is essential for determining the correct tax to be charged on the
invoice—whether it’s IGST (interstate) or CGST/SGST (intrastate).
 o Place of supply rules help address scenarios where transactions span different states
or involve services provided globally.
3. Value of Supply:
o The value of supply is crucial because GST is calculated based on the value of the
sale.
o If the value is incorrectly calculated, the GST charged will also be incorrect.
4. Time Limit for Issuing Invoice:
o The GST law specifies a time limit for issuing invoices for the supply of goods.
o The time limit is as follows:
 Goods: The invoice must be issued on or before the date of supply (earliest of the
three dates mentioned above).
 Failure to issue the invoice within this time frame may lead to compliance issues.

4. (a) Discuss how the taxable event for import and export of goods are determined
under section 12 of Customs Act, 1962.
taxable event for import and export of goods as stipulated under Section 12 of the Customs Act, 1962.

1. Import of Goods:
o When goods are brought into India, including its territorial waters, they
become imported goods from the moment they enter the territorial waters.
o The taxable event occurs at that point, and custom duty becomes leviable on
these goods.
o It is essential to determine whether the imported goods are exempt from
duty or not on that date.
o If they are wholly exempt, no question of calculating the duty payable arises
later.
o If they are chargeable to some duty, the question arises as to what duty is
payable.
o Even if the exemption is withdrawn or modified before the bill of entry is
presented or the goods are cleared for home consumption, wholly exempt
goods remain duty-free1.
2.
3. Export of Goods:
o For exports, the taxable event arises under Section 16(1) of the Customs Act,
1962.
o The event occurs when the proper officer makes an order (known
as LEO or entry outward granted), and the loading of the goods for
exportation takes place under Section 51 of the Customs Act, 19621.

In summary, the liability to pay custom duty commences as soon as goods enter
the territorial waters of India. No duty is leviable on goods that are in transit
within the same ship or when goods are in transit from one ship to
another. Additionally, no custom duty is leviable on sample goods
 (b) Briefly explain the “Basic Customs Duty” levied under section 12 of the
Customs Act, 1962

1. Applicability of BCD:
2.
o BCD is levied on all goods imported into India.
o These goods are valued based on Section 14 of the Customs Act.
o The duty payable is determined according to the rates specified under Section
15, read in conjunction with the Customs Tariff Act, 19751.
o
3. Taxation Event:
o As soon as goods enter India’s territorial waters, they are considered imported
goods.
o At this point, custom duty becomes leviable on them.
o The taxable event occurs when they cross into territorial waters, and it must be
determined whether they are exempt from duty or not on that date.
o If they are wholly exempt, no further calculation of duty arises.
o If they are partially chargeable, the question arises regarding the specific duty
payable1.
o
4. Territorial Waters:
o The term “territorial waters” refers to the area over which a sovereign state has
jurisdiction.
o It extends seaward up to 12 nautical miles from the baseline.
o Within this zone, the coastal state exercises sovereignty and jurisdiction over
the surface, seabed, subsoil, and airspace1.

In summary, BCD is a tax imposed on goods during their movement across

international borders. It serves to raise government revenue, protect
domestic industries, and regulate the flow of goods. Remember, the liability
to pay custom duty begins as soon as goods enter India’s territorial waters

(c) Briefly discuss the procedure of exportation of goods by vessel as per the provisions
of the Customs Act, 1962

Procedure for exporting goods by vessel under the provisions of the Customs
Act, 1962. Here are the key steps involved:
1. Shipping Bill or Bill of Export:
o The exporter must initiate the process by presenting either a shipping bill (for
goods exported by vessel or aircraft) or a bill of export (for goods exported by
land) to the proper customs officer.
o The shipping bill or bill of export should be in the prescribed format.
2. Customs Examination and Appraisal:
o The goods intended for export undergo customs examination to verify their
correctness and compliance with regulations.
o The customs officer assesses the goods, including their valuation, classification,
and eligibility for export.
3. Approval and Passing by Proper Officer:
o The goods cannot be loaded onto the vessel until they are duly passed by
the proper customs officer.
o The officer ensures that all necessary formalities are completed, including
payment of applicable duties and compliance with export restrictions.
4. Departure Manifest and Export Report:
o The exporter submits the departure manifest or export report to the customs
authorities.
o This document provides details about the goods, the vessel, and other relevant
information.
5. Compliance with Legal Requirements:
o The exporter must adhere to any other legal requirements specified by the
Customs Act, such as maintaining proper accounts, following procedures for
specific types of goods, and notifying the place of storage for certain items.

Remember that the Customs Act, 1962, governs the entire process of importing
and exporting goods, ensuring proper assessment, evaluation, and compliance
with regulations. Importers and exporters play a crucial role in self-assessing the
duty for their goods1234

(2022set)

1. (a) Explain the salient features of Indirect Tax in India. 6+6

b) State the major defects in the structure of Indirect Tax in India prior to introduction of GST.

Ans.
Below are some salient features of indirect tax -
 Initially, its nature was regressive. This is because it formerly imposed a
significant burden on a taxpayer's income, whether high or low.
 However, it turned progressive after the introduction of the Goods and
Services Tax.
 The liability of tax payment can be transferable. This means retailers,
service providers or manufacturers pay the tax first. Then they accrue it
from their customer.
 The taxpayer is always the end consumer, and the taxable product is a
finished good and service.
 Indirect tax encourages an individual to save and invest and boost
growth.
 It is impossible to escape this tax as it comes under the market price of a
product.

Certainly! Prior to the introduction of the Goods and Services Tax (GST) in India,
the indirect tax structure suffered from several significant defects. Let’s delve into
these issues:

1. Multiplicity of Taxes: The system was burdened with a plethora of indirect taxes,
each with its own rules and regulations. This complexity made compliance
challenging for businesses and taxpayers.
2. Lack of Cross-Utilization of Taxes: Under the pre-GST regime, there was limited
scope for cross-utilization of taxes paid at different stages of production or
distribution. This lack of flexibility hindered efficiency and increased the overall tax
burden.
3. Obstructed Movement of Goods: The existence of state-level taxes like the Central
Sales Tax (CST) created barriers to the free movement of goods across state borders.
These taxes acted as roadblocks to seamless trade and commerce.
4. Multiple Compliance Requirements: Businesses had to navigate various tax
authorities, file multiple returns, and adhere to diverse compliance procedures. This
administrative burden was time-consuming and resource-intensive.
5. Double Taxation of Dividends: Companies paying dividends faced double taxation.
First, they paid corporate taxes on their profits. Then, when distributing dividends to
shareholders, the recipients were subject to personal income tax on the same
income. This discouraged savings and capital formation.
6. High Rate and Low Yield of Direct Taxes: The rate of direct taxes (such as income
tax) was relatively high, but the contribution to total tax revenue remained low. Tax
evasion was rampant due to the high rates, and the exemption limits were often too
generous given the low per capita income.
7. Inequitable Tax Burden: The heavy reliance on indirect taxes disproportionately
affected lower-income groups. These regressive taxes impacted essential goods and
services, making them costlier for the common people.
8. Complexity and Lack of Clarity: The tax laws were intricate, leading to confusion
and disputes. Ambiguities in tax provisions resulted in litigation and delayed
resolution.
 The introduction of GST aimed to address many of these defects by streamlining the
tax structure, reducing multiplicity, and promoting a unified tax regime across India.

2. (a) What is “Goods and Services Tax Network”? State the salient features of
“Goods and Services Tax Network”.

(b) Briefly describe the geographical jurisdiction of Customs Act, 1962 2+6+4

Ans. GSTN stands for Goods and Services Tax Network. It is a not for
profit section 8 company, established primarily to assist the rollout and
implementation of GST and to act as the nodal agency to assist in terms of IT
infrastructure and services to the Central, State Governments, taxpayers and
general public. In essence, it will act as a common interface between the
government, taxpayers, accounting authorities and bank.

The Goods and Services Tax Network (GSTN) plays a crucial role in India’s tax
ecosystem. Here are its key features:

1. National Information Utility (NIU): GSTN is a trusted National Information Utility,

providing reliable and seamless IT infrastructure for tax processes 1. It acts as an
interface between the government and taxpayers.
2. Shared IT Infrastructure: GSTN offers shared IT services to both central and state
governments, as well as taxpayers and other stakeholders. It handles registrations,
front-end services, returns, and payments
3. Ownership Structure: The GSTN is partially owned by the Central Government
(49%) and private players (51%), including banks and financial institutions. This
unique collaboration ensures robust infrastructure and complex operations 1.
4. Holistic Functions:
o Registration: Facilitates business registrations for GST returns.
o Return Filing: Manages the entire process of filing GST returns.
o Payments & Refunds: Handles all payment and refund transactions.
o Invoicing: Supports invoicing related to GST returns, payments, and refunds.
5. Information Security: Given the central government’s significant ownership share,
GSTN prioritizes the confidentiality and security of taxpayer information
In summary, GSTN unifies IT systems, streamlines tax processes, and ensures smooth operations across
India’s GST framework.

According to the Customs Act, 1962, which consolidates and amends the law
relating to customs in India, the geographical boundaries are defined as follows:

1. India: The term “India” includes not only the landmass but also extends to
the territorial waters of India. These territorial waters stretch up to 12 nautical miles
(22 kilometers) into the sea from the appropriate baseline. Additionally, India
 encompasses not only the surface of the sea within these territorial waters but also
the airspace above and the ground at the bottom of the sea 123.

2. Exclusive Economic Zone (EEZ) of India: Beyond the territorial waters, India has
an Exclusive Economic Zone (EEZ). This zone extends further into the sea and is
subject to specific regulations and rights related to economic activities such as
fishing, mining, and exploration 2.

In summary, the Customs Act considers both the landmass and the maritime
boundaries of India, including territorial waters and the EEZ, for the purposes of
customs administration and regulation.

3. (a) What is Composition Levy U/S 10 of CGST Act, 2017? Describe the list of persons
who are not eligible for Composition Levy as per Sec. 10(2) of CGST Act, 2017.

(b) State the time of Supply of Goods U/S 12(1) of CGST Act, 2017. (2+6+4)
Ans. Composition levy is a mechanism available to taxpayers wherein they can
choose to pay tax at a fixed percentage on the state turnover. Such a scheme is
introduced to provide a very simple, hassle free compliance scheme for small tax
payers.

The major benefits enjoyed by taxpayers opting this scheme are,

 Non maintenance of elaborate books of accounts

 Quarterly returns
 Quarterly payment of tax.

You cannot opt for the Composition Levy under the Goods and Services Tax (GST) if
you fall into any of the following categories:

1. Supply of Goods Not Liable to Be Taxed: If you engage in any supply of goods that
are not liable to be taxed under the GST Act, you are ineligible for the Composition Levy.
2. Inter-State Outward Supplies: If you make inter-state outward supplies of goods, you
cannot opt for the Composition Levy.
3. Supplies Through E-Commerce Operators: If you supply goods through electronic
commerce operators who are required to collect tax under section 52, you are not eligible
for the Composition Levy.
4. Manufacturers of Notified Goods: If you are a manufacturer of notified goods, you
cannot choose the Composition Levy.
5. Casual Dealers: Casual dealers are also excluded from opting for the Composition Levy.
6. Non-Resident Foreign Taxpayers: Non-resident foreign taxpayers are not eligible for this
scheme.
7. Input Service Distributors (ISD): If you are registered as an Input Service Distributor
(ISD), you cannot opt for the Composition Levy.
8. TDS Deductors/Tax Collectors: Individuals registered as TDS deductors or tax
collectors are also ineligible for the Composition Levy.

Remember that the Composition Scheme is designed for specific scenarios, and these
restrictions help ensure its proper application within the GST framework.
 under Section 12(1) of the CGST Act, 2017, the liability to pay tax on goods arises
at the time of supply. The specific time of supply for goods is determined based on
the following criteria:
1. Date of Issue of Invoice: The time of supply of goods is the earlier of the following
dates:
o The date of issue of invoice by the supplier.
o The last date on which the supplier is required, under Section 31, to issue the invoice
related to the supply.
2. Date of Receipt of Payment: Alternatively, the time of supply can also be the date
on which the supplier receives payment with respect to the supply.

Additionally, there’s a provision related to small excess amounts: If the supplier of

taxable goods receives an amount up to one thousand rupees in excess of the
amount indicated in the tax invoice, the time of supply for that excess amount can be
the date of issue of invoice
4. (a) Briefly explain the “Taxable Event” in case of import ∕ export of goods U/S 12 of Customs
Act, 1962. ( 4+8)
(b) Briefly discuss the import procedure of goods by sea as per Customs Act, 1962.

Ans. the “Taxable Event” in the context of import and export of goods under the Customs
Act, 1962:
1. Import of Goods:
o The taxable event for imported goods occurs when they cross the territorial waters of India. At this
point, the goods are considered to have entered the Indian territory.
o It’s important to note that even if export duty is collected before the ship leaves the port, the
taxable event is not considered complete until the goods have physically crossed the territorial
waters12.
2. Export of Goods:
o In the case of exports, the taxable event is completed when the goods cross the territorial waters of
India. Once the goods have left Indian territory, the export process is considered finalized.
o However, if the ship sinks within the territorial waters, the export is not complete3.

In summary, the taxable event for import occurs when goods enter India’s territorial waters,
while for export, it happens when goods cross the territorial waters. These events mark the
points at which customs duties become leviable on imported or exported goods4.

The import procedure for goods by sea as per the Customs Act, 1962. Here are the key steps
involved

IGM FILING: Under section 30(1) of the Customs Act, before the Cargo reaches the destination
port, the person in charge of such vessel, aircraft or vehicle has to file a report based on the details of
the cargo. This report is called an import manifest or Import General Manifest (IGM).

Bill of Entry:
o When goods are imported into India via sea, the importer must submit a Bill of
Entry to the customs authorities.
o The Bill of Entry provides details about the imported goods, their value, and other
relevant information.
o Customs duty is assessed based on this document.

Customs Clearance Formalities:

o Goods arriving at the port are subject to customs clearance procedures.

o The importer must ensure that the relevant legal requirements are met.
o If the goods are not meant for immediate customs clearance (e.g., transit or
transshipment), specific formalities apply.

Types of Customs Duty:

o Basic Customs Duty (BCD): Imposed on imported goods.

o Countervailing Duty (CVD): Levied to offset excise duties on similar domestically
produced goods.
o Additional Customs Duty or Special CVD: Applied to specific goods.
o Protective Duty and Anti-dumping Duty: Aimed at safeguarding the economy and
preventing unfair trade practices.

Customs Act and Tariff Act:

o The Customs Act, 1962 governs the entry and exit of vessels, aircraft, goods, and
passengers.
o The Customs Tariff Act, 1975 provides the tariff rates for different categories of
goods.

Customs Clearance Process:

o All imported goods undergo examination, appraisal, assessment, and evaluation.

o This process ensures proper tax collection and prevents illegal imports.
o Valid documents must be submitted by the importer.

Transshipment:

o If the imported cargo needs to be transshipped to another port, ICD (Inland

Container Depot), or a foreign port, the relevant procedures apply.
o Transshipment details are mentioned in the import manifest.

Remember that customs procedures may vary based on the mode of import (sea, air,
or land). The Customs Act plays a crucial role in regulating the movement of goods
across international borders, ensuring economic stability and security.

Group B

1 . Name the different types of Custom Duties in India.

 In India, there are several types of custom duties. Here they are:
1. Basic Custom Duty (BCD): This is the standard import duty applied to goods
entering the country. It is calculated based on the value of the imported item.
2. Surcharge: Sometimes, an additional surcharge is levied on the basic customs duty.
It can vary based on the type of goods and the country of origin.
3. Additional Duty of Customs: Also known as Countervailing Duty (CVD), this duty
is imposed to offset any excise duty or sales tax that the imported goods would have
attracted if produced domestically.
4. Special Additional Duties: These are specific duties applied to certain goods. For
example, petroleum products and tobacco attract special additional duties.
5. Countervailing Duty: This duty is imposed to counteract any subsidies given by the
exporting country to its manufacturers. It ensures a level playing field for domestic
producers.
6. Anti-dumping Duty: When imported goods are sold at a price lower than their
normal value, anti-dumping duty is imposed to protect domestic industries from
unfair competition.
7. Safeguard Duty: This duty is temporary and is applied to protect domestic industries
from sudden surges in imports. It is usually imposed when there is a threat of serious
injury to the domestic industry.
8. Cess Duty: Certain goods, such as luxury items or those harmful to the environment,
attract a cess duty. The revenue generated from this duty is used for specific
purposes, such as environmental conservation or education.

(b) Write short notes on: 3+3

(i) Composite Supply (ii) Cascading Effect.
Ans.
1. Composite Supply:
2.
o Definition: Composite supply refers to a situation where two or more goods or services are
naturally bundled together and supplied as a single package.
o Characteristics:
 It involves a combination of different supplies.
 The components of the composite supply are interdependent and cannot be separated.
 The principal supply (the main purpose of the bundle) determines the tax treatment.
o Example: A restaurant offering a meal (which includes food, beverages, and service) is a
composite supply.
o Tax Treatment: The entire bundle is taxed at the rate applicable to the principal supply.

3. Cascading Effect:
o Definition: The cascading effect, also known as “tax on tax,” occurs when a tax is levied on
the value that already includes tax.
o Scenario: Imagine a manufacturer purchasing raw materials and paying tax on them. When
the manufacturer sells the finished product, the tax is again levied on the total value
(including the tax paid on raw materials). This results in a cascading effect.
o Impact:
 Increases the overall tax burden.
 Distorts pricing and competitiveness.
 Reduces efficiency in the supply chain.
o Mitigation: Measures like input tax credit (ITC) under the Goods and Services Tax (GST) aim
to reduce the cascading effect by allowing businesses to claim credit for taxes paid on
inputs.

(c) S Ltd. a manufacturer from West Bengal furnished the following information in respect
of various inputs purchased during the month of March 2022:

(i) Goods purchased with valid tax paying invoice `22,000.

(ii) Goods purchased and used for supplying exempted goods and services `7,000.

(iii) Goods imported from Canada in respect of which „Bill of Entry‟ is available with S Ltd.
`8,900.

(iv) Goods purchased from Kapoor Ltd. against which full payment is made by S Ltd., but
tax has not been deposited by Kapoor Ltd. `36,000.

You are required to determine the transactions and amount on which Input tax credit is
available.
1. Goods purchased with valid tax-paying invoice (22,000):
o These purchases are eligible for ITC because they were made with a valid tax invoice,
and the goods will be used for business purposes.
2. Goods purchased and used for supplying exempted goods and services ( 7,000):
o Unfortunately, ITC is not available for these purchases. When goods are used to
supply exempted goods or services, the associated ITC cannot be claimed.
3. Goods imported from Canada with a “Bill of Entry” (8,900):
o ITC can be claimed for these imported goods. The Bill of Entry serves as valid
documentation for customs clearance, allowing S Ltd. to avail ITC.
4. Goods purchased from Kapoor Ltd. (36,000):
o Although S Ltd. made full payment to Kapoor Ltd., the tax has not been deposited by
Kapoor Ltd.
o As per GST rules, ITC can only be claimed when the supplier has deposited the tax.
Since Kapoor Ltd. hasn’t done so, S Ltd. cannot avail ITC on this transaction.

 Eligible for ITC:

o Goods purchased with valid tax-paying invoice: 22,000
o Goods imported from Canada (with Bill of Entry): 8,900
 Not eligible for ITC:
o Goods used for supplying exempted goods and services: 7,000
o Goods purchased from Kapoor Ltd. (tax not deposited): 36,000

(d)List any six activities / transactions treated neither as “Supply of Goods” nor
“Supply of Services” as per Schedule III of CGST Act, 2017. (6)

Ans. As per Schedule III of the CGST Act, 2017, here are six activities or
transactions that are neither considered a supply of goods nor a supply of services:

1. Services by an employee to the employer in the course of or in relation to their

employment.
2. Services by any court or Tribunal established under any law currently in force.
3. Sale of land or building (except for under-construction buildings or complex).
4. Actionable claims, other than lottery, betting, and gambling.
5. Supply of goods from a place in the non-taxable territory to another place in the non-
taxable territory.
6. Supply of goods to a Special Economic Zone (SEZ) developer or SEZ unit.

These transactions fall outside the scope of either goods or services for GST
purposes
(e) Write short notes on: (i) Safeguard Duty (ii) Anti-Dumping duty (3+3)

Ans.
1. Safeguard Duty:
o Purpose: Safeguard duty is imposed temporarily on imported goods when they are being
brought into a country in increased quantities, which could potentially harm the domestic
industry.
o Application: It is applied to all imports, but there are exemptions for goods from developing
countries.
o Threshold: Safeguard duty becomes payable only after a set volume of goods has been
imported.
o Objective: The goal is to protect domestic industries from sudden surges in imports that
could negatively impact their competitiveness.
2. Anti-Dumping Duty:
o Context: Anti-dumping measures are taken when unexpectedly increasing imports pose a
threat to a country’s industries.
o Definition: Anti-dumping duty is an additional duty imposed on specific goods to counteract
the effects of dumping (selling goods in a foreign market at a price lower than their normal
value).
o Investigation: A detailed investigation is conducted to determine if the domestic industry is
being harmed due to unfair competition (such as export subsidies or dumping by trading
partners).
o Purpose: The aim is to create a level playing field and prevent unfair trade practices.

Both safeguard duty and anti-dumping duty are essential tools for maintaining fair
trade practices and protecting domestic industries from adverse effects caused by
imports

(f) Explain the concept of reverse charge mechanism of the CGST Act, 2017.
Distinguish between Nil rated and Exempted goods. 3+3

o RCM refers to a scenario where the recipient of goods or services becomes liable to
pay the tax instead of the supplier. In other words, the chargeability gets reversed.
o As per Section 2(98) of the CGST Act, 2017, “reverse charge” means the liability to
pay tax by the recipient of the supply of goods or services (or both) instead of the
supplier.

Example of Reverse Charge Mechanism (RCM) under the Goods and Services
Tax (GST):
1. Scenario:
o A GST-registered trader purchases services from a Goods Transport Agency
(GTA) for a total amount of Rs. 10,000.
2. Application of RCM:
o Goods Transport Agency services fall under the reverse charge list.
o As per RCM, the recipient (trader) becomes liable to pay the GST directly instead of
the supplier (GTA).
3. Calculation:
o GST rate applicable to GTA services is 18%.
o The trader must pay GST on the entire service amount of Rs. 10,000.
4. Tax Liability:
o GST payable under RCM: 18% of Rs. 10,000 = Rs. 1,800.
5. Input Tax Credit (ITC):
o The GST paid under RCM is allowed as input tax credit in the same month.
o Therefore, the net liability of tax does not increase for the trader.

In summary, the trader pays GST on the GTA services through reverse charge, but
this payment is offset by the ITC, ensuring a fair distribution of tax responsibility.

1. Nil Rated Supply under GST:

o Definition: Nil rated supply refers to goods or services that attract a GST rate of 0%.
o Tax Treatment:
 These supplies are taxable but are charged at a zero rate.
 Input tax credit cannot be claimed on such supplies.
o Examples of Nil Rated Goods:
 Grains
 Salt
 Jaggery
2. Exempt Supply under GST:
o Definition: Exempt supply includes items that are used for everyday purposes and do not
attract any GST at all.
o Tax Treatment:
 These supplies are not taxable under the GST system.
 No GST is levied on these items.
o Examples of Exempted Goods:
 Basic essentials like:
 Milk
 Fruits
 Vegetables
 Bread

GROUP-C (3×4 = 12)

(a) State any three functions of GSTN portal.
Ans.
1. Registration: GSTN enables taxpayers to register themselves for GST. It provides a
user-friendly interface for businesses to complete the registration process efficiently.
2. Returns and Payments: The GSTN portal allows taxpayers to file their GST returns,
make tax payments, and claim GST refunds. It ensures accurate and timely
submission of returns, which is essential for compliance.
3. Calculation and Settlement: GSTN handles complex operations related to
calculating and settling the Integrated GST (IGST) and managing the Input Tax Credit
(ITC). This includes tracking tax payments, generating business analytics, and
ensuring proper reconciliation.

(b)List the Central and State Levies which have been subsumed in GST in
India.
1. Central Taxes Subsumed:
o Central Excise Duty (CENVAT): This tax was imposed by the central government on
goods manufactured or produced within India.
o Additional Excise Duties: These were extra taxes on specific domestically
manufactured items, with revenue divided between the central and state
governments.
o Duties of Excise (Medicinal and Toilet Preparations) : An indirect tax on the
production of medicinal and toilet preparations containing alcohol or narcotic drugs.
o Additional Duties of Excise (Goods of Special Importance) : An additional tax levied on
special items like tobacco, sugar, and textiles-based clothing.
2. State Taxes Subsumed:
o State Value Added Tax (VAT): A tax on the value added to goods and services at each
stage of the supply chain, varying by state.
o Central Sales Tax: Applied to the sale of goods that occur across state lines

(c) State whether the following supply amounts to “Composite Supply” or

“Mixed Supply” with reason: — “A hotel provides 3 days and 2 nights package
wherein the facility of breakfast and dinner is provided along with the
accommodation”.

The supply described by the hotel, which includes a 3-day and 2-night
package with breakfast, dinner, and accommodation, falls under the category of
a “Composite Supply”. Here’s why:

 The hotel’s package includes accommodation (stay), breakfast, and dinner. These
services are inseparable and are typically availed together by guests.
 Guests do not have the option to choose only one component (e.g., accommodation
without meals).
 Therefore, the hotel’s offering qualifies as a composite supply under GST
regulations.

(d) What do you mean by “Inter-State Supply”?

Inter-State Supply refers to a transaction where the supplier of goods or services and
the place of supply are located in different states within India. Here’s a breakdown of what
it entails:

Interstate Meaning in GST:

 When goods or services are provided from one state or Union Territory (UT) to
another, it falls under the category of inter-state supply.

This also includes supplies related to import, export, or transactions

involving Special Economic Zone (SEZ) units or Export-oriented Units (EOUs).

The integrated GST (IGST) is levied by the central government on inter-state

supplies of goods and services. The revenue generated from IGST is then shared
between the central and destination state governments according to a
predetermined formula.

(e) List three items not eligible for “Input Tax Credit”

1. Motor Vehicles & Other Conveyances:

o ITC is not allowed for motor vehicles or conveyances, except in specific cases:
 When they are used for business purposes (e.g., transporting goods or passengers).
 Buses used for employee pick-up and drop (if approved capacity is more than 13
persons, including the driver).
2. Insurance, Repairs, and Maintenance for Motor Vehicles:
o is not allowed, unless ITC on the vehicles themselves is permitted.
3. Food & Beverages, Outdoor Catering, Beauty Treatment, Health Services, and
Cosmetic/Plastic Surgery:
o ITC is generally not available for these services.
o However, there is an exception:
 If an inward supply of such goods or services is consumed by a registered person for
making an outward taxable supply of the same category (e.g., providing food and
beverages to employees as per legal requirements), ITC may be allowed.

(f) Define the following terms as per Customs Act, 1962:

(i) Customs Area (ii) Customs Port (iii) Smuggling.

1. Customs Area:
o A Customs Area refers to any area within India that is designated by the Central
Government as a place where customs-related activities take place.
o It includes ports, airports, inland container depots, land customs stations, and other
specified locations.
2. Customs Port:
o A Customs Port is a specific location (such as a seaport, airport, or land border) that
is notified by the Central Government as a place for the entry or exit of goods and
passengers.
3. Smuggling:
o Smuggling refers to the illegal movement of goods across national borders without
proper customs clearance.
o It involves evading customs duties, taxes, or other legal requirements.

End of 2022 set

(2023set)
 Group A

1. (a) Define ‘Supply’ as per section 7 of CGST Act, 2017. 4+4+4

(b) Write down the activities made without consideration but treated as ‘supply’.

(c) Differentiate between ‘Composite Supply’ and ‘Mixed Supply’.

Ans.

As per Section 7(1) of the CGST Act, 2017, the term “supply” includes the
following:
1. All Forms of Supply:
o It encompasses all forms of supply of goods, services, or both. These forms
include:
 Sale
 Transfer
 Barter
 Exchange
 License
 Rental
 Lease
 Disposal
o These activities can be made or agreed to be made for a consideration by a
person in the course or furtherance of business.
2. Import of Services:
o The concept of supply also covers import of services for a consideration, whether or
not in the course or furtherance of business.
3. Exceptions:
o Certain activities are considered as supplies even without
consideration and furtherance of business. These exceptions are specified
in Schedule I of the CGST Act.
o For example, activities listed in Schedule I are treated as supplies even if
made without a consideration.

Under the Goods and Services Tax (GST) framework, there are specific activities that
are treated as supply even if they are made without consideration. Let’s explore these
activities:
1. Permanent Transfer or Disposal of Business Assets: When business assets are
transferred permanently, and input tax credit has already been availed on such
assets, it is considered a supply. In such cases, GST must be paid accordingly.
However, this provision applies only if the input tax credit was availed before the
disposal of the business asset. If no input tax credit was claimed, there would be no
GST payable on the disposal1.
2. Supply of Goods or Services Between Related Persons or Distinct Persons: When
goods or services (or both) are exchanged between related persons or distinct
persons (as specified in section 25), and this exchange occurs in the course or
 furtherance of business, it is treated as a supply. It’s important to note that gifts not
exceeding ₹50,000 in value from an employer to an employee are not considered
supply1.
o Related Persons: Individuals are deemed related if they fall under any of the following
categories:
 Officers or directors of each other’s businesses
 Legally recognized partners in business
 Employer and employee
 Direct or indirect ownership, control, or holding of 25% or more outstanding voting stock or
shares
 Direct or indirect control over each other
 Both directly or indirectly controlled by a third person
 Together, they directly or indirectly control a third person
 Members of the same family1

These activities, even if made without consideration, fall under the purview of supply
according to GST regulations. Keep in mind that this classification ensures
consistency and fairness in tax treatment across various transactions.

The differences between Composite Supply and Mixed Supply under the Goods
and Services Tax (GST) framework:
1. Composite Supply:
o Definition: A composite supply involves the provision of two or more goods or
services together as a single package, where they are naturally bundled.
o Key Characteristics:
 Main Element: In a composite supply, one item or service is the key or main part of
the supply.
 Inseparability: The bundled goods or services cannot be easily separated without
affecting their essential nature.
 Tax Treatment: For a composite supply, the GST rate is determined based on the
principal supply (the main item or service).
o Example: Consider a hotel offering a conference package that includes
accommodation, meeting rooms, and meals. Here, the hotel stay is the primary
service, and the other components are ancillary.
2. Mixed Supply:
o Definition: A mixed supply occurs when goods or services are provided together,
but they are not naturally bundled. These items can be sold separately.
o Key Characteristics:
 No Dominant Element: In a mixed supply, no single part is the dominant or key
element.
 Taxable and Non-Taxable Components: It includes both taxable and non-taxable
goods or services.
 Tax Treatment: The GST rate for a mixed supply is determined based on the item
with the highest GST rate among the components.
o Example: Suppose a store sells a laptop along with a free mouse. Since these items
are not naturally bundled, it constitutes a mixed supply.

2. (a) Briefly state the registration procedure under GST Act. 6+6

(b) Describe the place of supply of goods (other than import and export) as per section 10 of IGST
Act

Ans. Here’s a concise overview of the GST registration procedure:

1. Eligibility Criteria:
o If your aggregate turnover exceeds ₹40 lakhs (₹20 lakhs for special category states), you
are liable to register under the GST Act.
2. Documents Required:
o Permanent Account Number (PAN) of the applicant is essential for registration.
3. Online Registration Process:
o Visit the GST portal 1.
o Click on the “New Registration” option.
o Select the type of taxpayer (individual, company, etc.).
o Provide details such as business name, address, and PAN.
o Verify the application and await approval.
4. Unique Identification Number (GSTIN):
o Upon successful registration, you’ll receive a 15-digit GSTIN.
o The first two digits represent the state code, followed by the PAN.
o The thirteenth digit indicates the registration number within the state.
5. Benefits of GST Registration:
o Elimination of cascading effect (double taxation).
o Reduced compliance burden due to consolidation of indirect taxes.
o Avail Input Tax Credit.

Remember, GST registration is crucial for tax collection and seamless business
operations

Section 10 of the Integrated Goods and Services Tax (IGST) Act, 2017. This
section pertains to the place of supply of goods other than those imported into or
exported from India.

Here are the key provisions outlined in Section 10:

1. Movement of Goods:
o When the supply involves the movement of goods, whether by the supplier,
recipient, or any other person, the place of supply shall be the location of the
goods at the time when the movement terminates for delivery to the recipient.
o For instance:
 If goods are moved from a supplier’s factory in Orissa to Assam, the place of supply
will be Assam (IGST payable at Orissa).
 If the movement of goods occurs within Assam, the place of supply will be Assam
(CGST/SGST payable).
 If the recipient receives goods during movement from Kerala to Goa, the place of
supply will be Goa (IGST payable at Kerala).
2. Delivery by Supplier on Third Person’s Instruction:
o If goods are delivered by the supplier to the recipient based on the direction of a
third person (acting as an agent or otherwise), the place of supply will be
the principal place of business of that third person.
o The actual recipient’s location is not considered in this case.
3. Non-Movement of Goods:
o When the supply does not involve the movement of goods (whether by the supplier
or recipient), the place of supply shall be the location of the goods at the time of
delivery to the recipient.
4. Assembled or Installed Goods:
o If goods are assembled or installed at a specific site, the place of supply shall be
the place of installation or assembly.
5. Supply on Board a Conveyance:
o When goods are supplied on board a conveyance (such as a vessel, aircraft, train, or
motor vehicle), the place of supply shall be the location at which the goods are
taken on board.
6. Undetermined Place of Supply:
o If the place of supply of goods cannot be determined, it shall be determined in the
manner prescribed by law

3. (a) What do you mean by ‘Input Tax Credit’? State any four cases where Input Tax
Credit is not available.
2+5+5

(b) State the concept of ‘Transaction Value’ u/s 14 (1) of Customs Act, 1962 in case of
‘Imported Goods’.

1. Ans.
2. Definition of Input Tax Credit (ITC):
o ITC refers to the ability of businesses to claim a credit for the taxes paid on their
purchases. This credit can then be set off against the tax payable on their sales.
o In simpler terms, when a manufacturer or any other registered entity pays tax on
their output (final product), they can deduct the tax they previously paid on the
inputs (raw materials or services) they purchased.

Four cases where Input Tax Credit (ITC) is not available under the Goods and
Services Tax (GST) regime:
1. Motor Vehicles: ITC is not available for motor vehicles used to transport
persons, with a seating capacity of 13 or fewer persons (including the driver).
 However, if the seating capacity exceeds 13 persons, ITC can be claimed. Exceptions
include:
o When the vehicle is used for making taxable supplies (e.g., supply of other vehicles).
o For transportation of passengers (e.g., inter-city bus transport) 1.
2. Goods Lost, Stolen, Destroyed, Written Off, or Given as Gifts or Free Samples :
No ITC can be claimed for goods that fall into these categories 1.
3. Fraud Cases: ITC is not available for any tax paid due to fraud cases resulting in:
o Non or short tax payment.
o Excessive refund.
o Utilization of ITC in fraudulent transactions 1.
4. Specific Services and Goods: ITC is not available for the following services and
goods:
o Food and Beverages: Including outdoor catering.
o Beauty Treatment, Health Services, and Cosmetic and Plastic Surgery

Section 14 (1) of the Customs Act, 1962, the concept of “Transaction

Value” applies to both imported goods and export goods. Here are the key points:

1. Definition: The transaction value of imported or exported goods refers to

the actual price paid or payable for those goods.
o Specifically, it is the price when the goods are:
 Sold for export to India, with delivery at the time and place of importation.
 Sold for export from India, with delivery at the time and place of exportation.
o This valuation method applies when the buyer and seller of the goods are not related, and
the price is the sole consideration for the sale.
2. Inclusions in Transaction Value (for Imported Goods):
o In the case of imported goods, the transaction value includes:
 The actual price paid or payable.
 Additional amounts paid or payable for various costs and services:
 Commissions and brokerage.
 Engineering and design work.
 Royalties and license fees.
 Costs of transportation to the place of importation.
 Insurance, loading, unloading, and handling charges (as specified in rules).
3. Rules and Determinations:
o The rules made in this regard may cover:
 Related parties: Circumstances under which the buyer and seller are deemed related.
 Value determination: Methods when there is no sale, or price is not the sole consideration.
 Acceptance or rejection: Procedures when the declared value is doubted by the proper
officer.
o The exchange rate used for calculation is the rate in force on the date of presenting a bill of
entry (for import) or a shipping bill of export (for export)
4. Board’s Discretion:
o The Customs Board has the authority to fix tariff values for specific classes of imported or
exported goods.
o These tariff values are determined based on the trend of value for similar goods.
o When tariff values are fixed, duty is charged with reference to those values 1.
 4. (a) Explain the procedure to be followed for exporting goods from India to
abroad as per Customs Act, 1962.

(b) State the difference between Direct and Indirect Taxes (7+5)

Ans. The procedure for exporting goods from India to abroad as per the Customs
Act, 1962.
1. Bill of Entry:
o When goods are imported into India, they attract Customs duty. Importers must
submit a Bill of Entry to the Customs authorities.
o The Bill of Entry provides details about the imported goods, their value, and other
relevant information.
o Customs clearance formalities are followed by importers unless the goods are meant
for transit, transshipment, or export outside India.
2. Self-Assessment:
o Importers and exporters must self-assess the duty on the goods.
o Section 17 of the Customs Act, 1962, mandates self-assessment for imported goods
under section 46 and export goods under section 50.
3. Export Process:
o Goods exported from India must undergo a customs clearance process.
o Exporters need to submit valid documents to clear customs.
o The process applies to goods exported via sea, air, or land.
4. Re-Exportation:
o If you intend to re-export goods that were previously imported, follow these steps:
 Re-export within a maximum of two years from the date of duty payment on import.
 Ensure the goods are identified with earlier import documents and duty payment.
 Satisfy the Assistant/Deputy Commissioner of Customs during export.
5. Transshipment and Consolidation:
o Transshipment allows imported goods to move from one port to another (within
India or abroad).
o Consolidation permits international transshipment of imported goods in Full
Container Load (FCL).
6. Documentation:
o Prepare the necessary documents, including:
 Shipping Bill: For export clearance.
 Commercial Invoice: Details of the transaction.
 Packing List: Description of goods.
 Bill of Lading/Airway Bill: Evidence of shipment.
 Certificate of Origin: Origin details.
 Export License (if applicable).
7. Customs Examination and Assessment:
o Customs officials examine the goods to verify their description, quantity, and value.
o The assessment determines the applicable customs duty.
8. Payment of Duty:
o Pay the assessed customs duty.
o Various types of customs duty apply, including Basic Customs Duty (BCD),
Countervailing Duty (CVD), and Additional Customs Duty.
9. Export Declaration:
o Submit an Export Declaration to the Customs authorities.
o This declaration provides information about the goods, their value, and the
destination country.
10. Port Clearance:
o Once all formalities are completed, the goods receive port clearance.
o They are then ready for shipment to the foreign destination.

BASIS FOR
DIRECT TAX INDIRECT TAX
COMPARISON
Meaning Direct tax refers to financial Indirect tax is when the
charge, levied directly on taxpayer is just the hands that
the taxpayer, and paid deposit the amount of tax to
outrightly to the authority the authority imposing it, while
which imposes it, by the the burden of tax falls on the
taxpayer. final consumer.
Governed by Central Board of Direct Central Board of Indirect
Taxes (CBDT) Taxes and Customs (CBIC)
Who pays the Individuals, HUF, and Final Consumer
tax? Companies
Nature Progressive Regressive
Incidence and It falls on the same person. It falls on different persons.
Impact
Liability A person on whom the tax The person receiving the
is imposed is liable for its benefits is liable for its
payment. payment and not the person
on whom it is imposed.
Evasion Tax evasion is possible. Tax evasion is hardly possible
because it is included in the
price of the goods and
services.
Inflation Direct tax helps in reducing Indirect taxes promotes
inflation. inflation.

GROUP-B

(a) Discuss the features of Protective tax under Customs Tariff Act, 1975

The features of Protective tax under the Customs Tariff Act, 1975:
1. Levying Protective Duties:
o The Customs Tariff Act empowers the Central Government to impose protective
duties in specific cases. These duties are designed to protect domestic industries
from unfair competition due to imports.
o Protective duties are typically applied when there is a risk of harm to domestic
producers due to cheaper imports flooding the market.
2. Duration and Alteration:
o The duration of protective duties is determined by the Central Government. They can
be in effect for a specified period.
o The Central Government also has the authority to alter these duties as needed based
on changing circumstances.
3. Emergency Powers:
o In exceptional situations, the Central Government can exercise emergency
powers to increase or levy export duties.
o These emergency powers allow for swift action to safeguard national interests during
critical times.
4. Trade Agreements and Preferential Rates:
o The Act allows for the levy of a lower rate of duty when specified in a trade
agreement.
o Additionally, it addresses scenarios where both standard rates and preferential
rates are specified for certain goods.

(b) Write down five notified category of goods on which tax will be payable
under Reverse Charge Mechanism.

Under the Reverse Charge Mechanism (RCM) in the Goods and Services Tax (GST)
system, certain goods are subject to tax payment by the recipient rather than the
supplier. Here are five categories of goods that fall under this mechanism:

1. Cashew Nuts (not shelled or peeled): Agriculturists supply these, and the recipient (any
registered person) is liable to pay tax under reverse charge 1.
2. Bidi Wrapper Leaves (Tendu): Agriculturists provide these leaves, and again, the recipient
(any registered person) bears the tax liability 1.
3. Tobacco Leaves: Agriculturists supply tobacco leaves, and the recipient (any registered
person) is responsible for paying the tax 1.
4. Silk Yarn: When any person manufactures silk yarn from raw silk or silk worm cocoons for
supply, the recipient (any registered person) pays tax under reverse charge 1.
5. Raw Cotton: Agriculturists supplying raw cotton make the recipient (any registered person)
liable for tax payment1.

(c) State the advantages of Composition Scheme under GST Act.

The Composition Scheme under the GST Act offers several advantages for
taxpayers. Here are the key benefits:
1. Reduced Compliance Burden:
o Taxpayers opting for the Composition Scheme have lesser compliance requirements. They
need to file quarterly returns instead of the regular monthly returns. This simplifies record-
keeping and reduces administrative overhead12.
2. Limited Tax Liability:
o Businesses registered under the Composition Scheme enjoy limited tax liability. They pay
GST at a fixed rate of turnover, which provides predictability and stability in tax payments 12.
3. Improved Liquidity:
o Since the Composition Scheme’s GST rates are lower than the usual rates, businesses
have higher liquidity. This can be especially beneficial for small enterprises, allowing them
to manage cash flow more effectively.

(d) Write down four cases where E-Way Bills are not required.

Ans . Four cases where E-Way Bills are not required:

1. Liquefied Petroleum Gas (LPG): When transporting LPG for supply to household
and non-domestic exempted category (NDEC) customers, an E-Way Bill is not
necessary1.
2. Kerosene Oil under PDS: If you’re moving kerosene oil sold under the Public
Distribution System (PDS), you do not need to generate an E-Way Bill 1.
3. Postal Baggage by Department of Posts: When the Department of Posts transports
postal baggage, E-Way Bills are not required 1.
4. Goods Valued Less Than ₹50,000: If the value of goods being transported is less
than ₹50,000, you do not need to generate an E-Way Bill. However, please note that
for moving handicraft goods or interstate transportation, E-Way Bills are mandatory
even if the value is below ₹50,000. Additionally, if the goods are transported within
the same state or a notified area, E-Way Bills are not required. Also, when the mode
of transport is a non-motor vehicle, E-Way Bills are exempt.

(e) X summarised the following information and furnished to you for

calculating GST Liability:

Input A purchased intra-state excluding GST @ 12% `60,00,000

Input B purchased inter-state excluding GST @ 18% `50,00,000

Expenses incurred (with IGST `50,000) `5,00,000

Output sold intra-state at a GST of 18% `80,00,000

Output sold inter-state at a GST of 12% `40,00,000

Opening Balance of CGST `1,32,000

Calculate Liability of GST.

Ans . calculation of gst liablity

1. Input Tax Credit (ITC):

o Input A (purchased intra-state): ₹60,00,000
o Input B (purchased inter-state): ₹50,00,000
o Sundry Expenses (with IGST): ₹5,00,000
2. Output Sales:
o Intra-state sales (GST rate: 18%): ₹80,00,000
o Inter-state sales (GST rate: 12%): ₹40,00,000
3. Opening Balance of CGST: ₹1,32,000

Now let’s calculate the GST liability step by step:

 CGST Liability:
o Intra-state sales CGST: ₹80,00,000 × 18% = ₹14,40,000
o Inter-state sales CGST: ₹40,00,000 × 12% = ₹4,80,000
o Total CGST liability: ₹14,40,000 + ₹4,80,000 = ₹19,20,000
 SGST Liability (since it’s intra-state):
o SGST liability is the same as CGST liability: ₹19,20,000
 IGST Liability (for inter-state sales):
o IGST liability: ₹40,00,000 × 12% = ₹4,80,000

4. Net GST Liability:

o Total GST liability = CGST + SGST + IGST
o Net GST liability = ₹19,20,000 + ₹19,20,000 + ₹4,80,000 = ₹43,20,000

Therefore, the total GST liability based on the provided information is ₹43,20,000.

(f) Write short notes: (i) Exempt Supply (ii) Non-Taxable Supply (iii) Aggregate
Turnover.
Ans.

Exempt Supply:

o Exempt supply refers to goods or services that are not subject to Goods and Services Tax
(GST).
o These supplies do not attract any tax liability.
o Examples of exempt supply include:
 Goods or services with a NIL rate of tax.
 Supplies that are wholly exempt under section 11 or section 6 of the Integrated Goods and
Services Tax (IGST) Act.
o Exempt supply is included in the gross turnover but is deducted while computing tax
liability12.

2. Non-Taxable Supply:
o Non-taxable supply refers to goods or services that are not leviable to tax under the GST
Act or the Integrated Goods or Service Tax Act.
o Activities specified in Schedule III are considered neither supply of goods nor supply of
services and fall under non-taxable supply.
o Non-taxable supply is not included in the aggregate turnover calculation1.
3. Aggregate Turnover:
o Aggregate turnover plays a crucial role in GST and determines:
 Registration eligibility: Whether a person is liable for GST registration.
 Composition Scheme eligibility: Whether a person can opt for the Composition Scheme.
o The definition of aggregate turnover includes:
 Value of all taxable supply (excluding reverse charge supplies), exempt supply, export of
goods or services, and interstate supply by persons with the same Permanent Account
Number (PAN).
 Excludes central tax, state tax, union territory tax, integrated tax, and cess.
o It is calculated on an all-India basis.
o Notable points:
 For agents, supplies made on behalf of all principals are included.
 Job workers exclude certain supplies from their aggregate turnover.
 Schedule III activities are neither supply of goods nor supply of services and are not included

GROUP-C
(a) State four features of Customs Duty

Ans. Here are four features of Customs Duty:

1. Nature of Tax: Customs duty is a tax imposed solely on goods being exported or
imported between nations. It distinguishes itself from taxes applicable to all goods
sold domestically1.
2. Indirect Tax: Customs duty is applied indirectly by the government. It is levied on
the movement of goods, irrespective of sales or purchase 2.
3. Applicability to Goods: Customs duty is applicable only to goods, not services. It
plays a crucial role in regulating the inflow and outflow of goods across international
borders2.
4. Revenue Generation and Industry Protection: The primary objectives of customs
duty are to raise government revenues and safeguard local industries and
economies. By controlling the movement of goods, it ensures fair competition and
supports domestic businesses

(b) Write short note on ‘GST Compensation Cess’.

Ans.
GST Compensation Cess is imposed as a levy in addition to the regular GST
taxes. The cess is imposed on the supply of certain luxurious and demerit
goods and services that attract 28 per cent GST. The cess rate usually
ranges from 1% to 25% and is levied over and above the GST rate.
The main items that attract the cess are:
  Pan Masala

 Aerated waters

 Tobacco and tobacco products

 Coal, briquettes and solid fuels made from coal or ignite

 Motor cars and other motor vehicles

 Any other supplies as notified from time to time.

(c) State the Threshold Limit of GST

Ans. threshold limit for GST registration in India depends on the type of business
and its location. Here are the details:
1. For the supply of goods:
o Normal Category States: The threshold limit is an annual turnover of ₹40 lakhs.
o Special Category States: The threshold limit is an annual turnover of ₹20 lakhs.

2. For the supply of services:

o The threshold limit remains the same for both normal and special category states,
which is an annual turnover of ₹20 lakhs.

(d) Write note on ‘Indian Custom Water’.

Ans.
Indian customs waters cover both the Indian territorial waters and contiguous
zone as well. Indian territorial waters extend up to 12 nautical miles (nm) from
the base line whereas contiguous zone extend to a further 12 nm from the
outer limit of territorial waters. Therefore, Indian customs waters extend to a
total of 24 nm from base line.

(e) What are the different types of GST and rates of GST prevalent in India?

1. Ans. CGST (Central Goods and Services Tax):

o CGST is levied by the central government on intra-state transactions (i.e., within the
same state).
o The current CGST rate slabs are 0% (nil-rated), 5%, 12%, 18%, and 28%.
o Additionally, there are lesser-used rates such as 3% and 0.25%.
2. SGST (State Goods and Services Tax):
o SGST is imposed by individual state governments on intra-state transactions.
o Like CGST, the SGST rates mirror the central rates and include 0%, 5%, 12%, 18%,
and 28%.
3. IGST (Integrated Goods and Services Tax):
o IGST applies to inter-state transactions (i.e., between different states).
o The IGST rate is approximately the sum total of the CGST and SGST rates.
o The primary IGST slabs are 0%, 5%, 12%, 18%, and 28%.
4. Composition Scheme:
o Under this scheme, small businesses with a turnover below a specified threshold can
opt for reduced GST rates.
o Composition taxable persons pay GST at lower or nominal rates, such as 1.5%, 5%,
or 6% on their turnover.

(f) Name the members with whom GST Council Consists

Ans. As per Article 279A, a GST Council will have the following members:

 The Union Finance Minister as the chairperson of the GST Council

 The Union Minister of State in charge of revenue (finance) from the centre

 A minister from each state who is either in charge of finance or taxation or

has been nominated by the state to serve as a member of the GST Council

Accordingly, the ministers of state will elect a vice-chairperson of the GST Council
from amongst the members. The Secretary (Revenue) will serve as the GST
Council’s ex-officio secretary.

Additionally, the Central Board of Excise and Customs (CBEC)’s chairperson is a

permanent invitee to all the proceedings of the GST Council.

These notes are previous 3 years prepared from the question of 21-22-23 gst papers of nbu.