GST Law and Practice 2024 Solved Question Paper [Dibrugarh University BCom 6th Semester]

Dibrugarh University B.Com 6th Sem Hons CBCS Pattern

GST Laws & Practice Solved Question Paper 2024

COMMERCE (Discipline Specific Core) 

Paper: C-614 (GST Law and Practice)

Full Marks: 80,  Pass Marks: 32, Time: 3 hours

The figures in the margin indicate full marks for the questions.

1. (a) Write True or False: 1x4=4

i) Direct taxes do not affect prices of goods and services.
True

ii) Control on indirect taxes is relatively easy.
True

iii) GST paid on goods has to be reversed if the goods on which GST was paid are lost, stolen, or destroyed.
False

iv) Under IGST, the proceeds will be apportioned between the Union and the States.
True

Also Read: GST Law and Practice Most Important Questions for Exam

1. (b) Fill in the blanks: 1x4=4

i) Indirect tax shifts to another person and is ultimately borne by consumers.

ii) Direct taxes are paid after the income reaches the hands of taxpayers.

iii) Indian GST system is chosen from Canadian country’s model.

iv) In GST, tax is payable on ad valorem basis, i.e., percentage of value of supply of goods or services.

2. Write short notes on any four of the following: 4x4=16

a) Composition Scheme under GST
Answer:  The Composition Scheme under the Goods and Services Tax (GST) in India is a simplified tax regime aimed at easing the compliance burden for small taxpayers. It is an optional scheme available to businesses with an annual aggregate turnover of up to ₹1.5 crore (₹75 lakh for special category states, subject to updates). Under this scheme, eligible taxpayers pay a fixed percentage of their turnover as tax instead of the regular GST rates, which vary by goods and services. The rates are typically lower—1% for traders, 2% for manufacturers, and 5% for restaurant services (non-AC, non-alcohol-serving). Key benefits include reduced paperwork, as participants file quarterly returns (e.g., GSTR-4) instead of monthly ones, and no need to maintain detailed records of input tax credit (ITC). However, there are limitations: businesses cannot collect GST from customers, cannot claim ITC, and are restricted from making inter-state supplies. This scheme is ideal for small enterprises seeking simplicity but may not suit those with significant input costs or inter-state operations.

b) Credit and Debit Notes
Answer:  Credit and debit notes are critical adjustment documents under GST, used to rectify discrepancies in invoices post-supply. A credit note is issued by a supplier when the taxable value or tax charged in the original invoice exceeds the actual amount due—e.g., due to goods being returned, discounts offered post-sale, or errors in pricing. It reduces the supplier’s tax liability and must be reported in the GST returns (e.g., GSTR-1), linked to the original invoice. Conversely, a debit note is issued when the taxable value or tax charged is less than the actual amount due—e.g., when additional goods are supplied, or the original invoice understates the price. It increases the buyer’s tax liability and is also reported in GST returns. Both documents must include details like the supplier’s GSTIN, date of issue, original invoice reference, and reason for issuance, as per GST rules. These tools ensure transparency and flexibility in adjusting tax obligations without altering the original transaction records.

c) Input Tax Credit
Answer:  Input Tax Credit (ITC) is a cornerstone of the GST framework, designed to eliminate the cascading effect of taxes and promote seamless taxation across the supply chain. ITC allows a registered taxpayer to offset the GST paid on inputs (purchases of goods or services) against the GST liability on outputs (sales). For example, if a manufacturer pays ₹50 as GST on raw materials and charges ₹80 as GST on finished goods, they can claim ITC of ₹50 and pay only ₹30 to the government. To avail ITC, certain conditions must be met: possession of a valid tax invoice or debit note, receipt of goods/services, payment of tax by the supplier to the government (verified via GSTR-2B), and filing of returns. ITC cannot be claimed for personal use, exempt supplies, or blocked categories (e.g., motor vehicles for personal use, subject to exceptions). This mechanism ensures tax is levied only on value addition, enhancing efficiency and reducing the cost of goods and services in the economy.

d) Dual Model of GST
Answer:   India’s GST operates on a dual structure, reflecting its federal framework, where both the Central and State Governments have the authority to levy and collect taxes on the same supply. This model comprises three components:

1. Central GST (CGST): Levied by the Central Government on intra-state transactions (within a state). The revenue goes to the Union.

2. State GST (SGST): Levied concurrently by the State Government on the same intra-state supply. The revenue is retained by the respective state.

3. Integrated GST (IGST): Levied by the Central Government on inter-state supplies and imports. IGST revenue is apportioned between the Centre and the destination state based on the place of supply rules.
   For instance, on a ₹100 intra-state sale, CGST (e.g., 9%) and SGST (e.g., 9%) together make 18% GST, split equally between the Centre and State. In an inter-state sale, a single IGST (e.g., 18%) applies, later divided. This dual model balances fiscal autonomy for states with a unified tax system, supported by the GST Council, which harmonizes rates and policies across jurisdictions.

e) Cascading Effect
Answer: The cascading effect, often termed "tax on tax," refers to the phenomenon where taxes are levied at multiple stages of the supply chain without allowing credit for taxes paid at earlier stages, leading to a cumulative tax burden. In pre-GST regimes like VAT or excise duty in India, this was common—e.g., a manufacturer paid tax on raw materials, then added a tax on the finished product, and the wholesaler paid tax again on the total value, including the earlier taxes. This inflated the final price for consumers. For instance, if raw materials worth ₹100 attracted a 10% tax (₹10), and the finished product sold for ₹200 with another 10% tax (₹20), the total tax became ₹30, including tax on the initial ₹10. GST eliminates this through the Input Tax Credit (ITC) mechanism, allowing businesses to deduct taxes paid on inputs from their output tax liability. Thus, tax is applied only on the value added at each stage (e.g., ₹10 on ₹100 value addition), reducing costs and enhancing economic efficiency.

3. (a) Explain briefly the history of indirect taxes in India. (14 marks)

Answer: Indirect taxes, levied on goods and services rather than income or profits, have a long history in India, evolving significantly over time. The history can be traced back to ancient times and has undergone multiple transformations through colonial rule, post-independence reforms, and modern economic policies.

In ancient India, texts like Arthashastra by Kautilya (around 300 BCE) mention taxes such as Shulka (customs duty) and Kara (levies on goods), indicating an early form of indirect taxation imposed by rulers on trade and commerce. During the medieval period, under Mughal rule, indirect taxes like Zakat and Octroi were collected on goods entering towns or traded in markets, forming a key revenue source for the state.

The British colonial era formalized indirect taxation in India. The East India Company introduced customs duties and excise taxes in the 18th century to maximize revenue from trade and production. The Salt Tax (introduced in the 19th century) became a notorious example, sparking widespread resentment and later fueling the independence movement, as seen in Gandhi’s Salt March (1930). By the late 19th and early 20th centuries, the British consolidated indirect taxes, including excise duties on goods like textiles and liquor, and customs duties on imports and exports.

Post-independence in 1947, India inherited this framework but adapted it to suit a developing economy. The government introduced excise duties under the Central Excise Act, 1944, and sales taxes managed by states, creating a dual taxation structure. Over time, this system became complex with multiple taxes like Value Added Tax (VAT) (introduced in the 1990s by some states), Service Tax (1994), and Octroi, leading to cascading effects (tax-on-tax) and administrative inefficiencies.

The turning point came with economic liberalization in 1991, which emphasized tax reforms to simplify indirect taxation and boost trade. This culminated in the introduction of the Goods and Services Tax (GST) in 2017, a landmark reform consolidating most indirect taxes into a unified system. GST replaced excise duty, service tax, VAT, and others, marking the most significant overhaul of indirect taxation in India’s history.

In summary, the history of indirect taxes in India reflects a journey from rudimentary levies in ancient times to a sophisticated, unified tax regime under GST, shaped by economic needs, colonial influence, and post-independence reforms.

(b) Write the concept of GST. Explain its framework as introduced in India. (14 marks)

Answer: The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services. It is designed to replace multiple indirect taxes, eliminating the cascading effect (tax-on-tax) and creating a unified tax structure. Introduced in India on July 1, 2017, GST aims to simplify taxation, enhance compliance, and foster a common national market.

Concept of GST

GST operates on the principle of value addition, where tax is imposed at each stage of the supply chain—production, distribution, and consumption—but with a mechanism (input tax credit) allowing businesses to offset taxes paid on inputs against taxes collected on outputs. Unlike origin-based taxes, GST is collected at the point of consumption, ensuring equitable revenue distribution. It promotes transparency, reduces tax evasion, and aligns with global taxation standards like VAT.

Framework of GST in India

The GST framework in India is built on a dual structure, balancing the federal system, and is supported by robust legislation and technology. Its key components are:

1. Dual GST Model:
   
   

• India adopted a dual GST system comprising Central GST (CGST) (levied by the central government) and State GST (SGST) (levied by state governments) for intra-state transactions.

• For inter-state transactions, the Integrated GST (IGST) is levied by the central government, with revenues shared between the center and the consuming state.

2. Legal Framework:

• GST was enabled by the Constitution (101st Amendment) Act, 2016, which created the GST Council—a joint body of central and state representatives—to oversee tax rates, exemptions, and policies.

• Key laws include the CGST Act, SGST Act, IGST Act, and UTGST Act (for Union Territories).

3. Tax Slabs:

• GST features a multi-tier rate structure: 0%, 5%, 12%, 18%, and 28%, with additional cess on luxury and demerit goods (e.g., tobacco, aerated drinks). Essential items like food grains are exempt, while most goods and services fall under 5%-18%.

4. Input Tax Credit (ITC):

• Businesses can claim ITC on taxes paid on inputs, reducing the overall tax burden and eliminating the cascading effect of earlier taxes like excise and VAT.

5. Technology Backbone:

• The GST Network (GSTN), a digital platform, manages registration, filing, and payment processes, ensuring transparency and ease of compliance.

6. Coverage:

• GST subsumed multiple indirect taxes, including central taxes (excise duty, service tax) and state taxes (VAT, entry tax), except customs duty and a few others like petroleum (currently outside GST).

7. Administration:

• Compliance is streamlined with monthly returns (e.g., GSTR-1, GSTR-3B) and annual audits for businesses above a turnover threshold (₹20 lakh initially, later revised).

The GST framework in India has transformed the tax landscape by fostering economic integration, reducing tax complexities, and boosting revenue efficiency. Despite initial challenges like compliance burden and rate adjustments, it represents a progressive step toward a unified market, aligning with the vision of "One Nation, One Tax."

4. (a) What were the needs for GST in India? 3+6+5=14

Answer: 4. (a) What were the needs for GST in India? 3+6+5=14

Answer:

GST was introduced in India to simplify the tax system, remove inefficiencies, and promote economic growth. The main reasons for implementing GST are as follows:

1. Complex Tax Structure: Before GST, India had multiple indirect taxes like VAT, excise duty, service tax, and entry tax. This made the tax system complicated, leading to confusion among businesses and increasing compliance costs. GST replaced all these taxes with a single, unified tax system, making it easier for businesses and consumers.

2. Elimination of Cascading Effect: The previous tax system had a "tax on tax" problem, where businesses had to pay tax on already taxed goods and services. GST introduced an input tax credit mechanism, ensuring that tax is paid only on the final value of the product or service. This reduced the overall tax burden and made the system fairer.

3. Uniform Taxation Across India: Before GST, different states had different tax rates, creating barriers to trade. GST introduced a single tax rate across the country, making goods and services prices more uniform and promoting seamless business operations across states.

4. Reduction in Compliance Burden: Earlier, businesses had to follow different tax rules in different states, leading to complex paperwork and compliance issues. With GST, businesses now follow a single tax law, reducing the burden of maintaining multiple records and making tax filing easier.

5. Increase in Government Revenue: GST helped reduce tax evasion by making transactions more transparent. Since it is collected at multiple stages with an input tax credit system, businesses have to report transactions correctly. This increased tax compliance and boosted government revenue.

6. Encouragement for Small Businesses: Small businesses previously faced difficulties due to multiple taxes and high compliance costs. GST introduced the Composition Scheme, which allowed small businesses to pay lower taxes with fewer compliance requirements. This helped them grow and compete with larger companies.

7. Boost to the Economy: By removing tax barriers and making taxation simple, GST created a common national market. It encouraged businesses to expand across India, leading to increased investment, higher production, and economic growth. A simplified tax system also made India a more attractive destination for foreign investors.

8. Transparency and Digital Taxation: GST is a technology-driven tax system, where tax filing, return submission, and payments are done online. This reduced human intervention, minimized corruption, and made the taxation process more efficient and transparent.

9. Better Control on Black Money: The previous tax system had loopholes that allowed businesses to evade taxes. With GST, every transaction is recorded digitally, reducing the chances of tax evasion and controlling black money circulation.

10. Improved Consumer Benefits: GST reduced the overall tax burden on goods and services, leading to lower prices for consumers. By eliminating the cascading effect, businesses could pass on the benefits of reduced costs to the customers, making essential goods and services more affordable.

Thus, GST was needed in India to simplify taxation, remove inefficiencies, and promote economic growth.

Or

4. (b) (i) Write the benefits of GST in the Indian scenario. (7 Marks)

Answer:

1. Simplification of Tax Structure: GST replaced multiple indirect taxes like VAT, excise duty, and service tax with a single tax, making the system easier to understand and comply with.

2. Elimination of Cascading Effect: The input tax credit mechanism ensures that tax is applied only to the final value of goods and services, reducing the "tax on tax" effect and lowering overall costs.

3. Uniform Taxation Across India: GST created a common national market by ensuring the same tax rates across states, reducing tax-related trade barriers and promoting seamless business operations.

4. Ease of Doing Business: A single tax system with online registration, return filing, and payments simplified compliance for businesses, reducing paperwork and administrative burdens.

5. Boost to Government Revenue: GST improved tax compliance by bringing more businesses under the formal tax system, reducing tax evasion, and increasing government revenue.

6. Encouragement for Small Businesses: The Composition Scheme under GST allows small businesses to pay lower taxes with minimal compliance requirements, helping them grow and compete.

7. Transparency and Digitalization: GST is a technology-driven tax system, reducing human intervention, minimizing corruption, and ensuring greater transparency in taxation.

4. (b) (ii) “GST is a destination-based tax.” Explain the statement. (7 Marks)

Answer:

1. Definition of Destination-Based Tax: GST is a tax that is levied at the place where goods or services are consumed rather than where they are produced. This ensures that tax revenue goes to the state where the final consumption happens.
   
   

2. Tax Collection at Consumption Point: Under GST, if a product is manufactured in one state but sold in another, the tax is collected by the state where the buyer resides rather than the state where it was produced.
   
   

3. Elimination of Origin-Based Taxation: Earlier, taxes like excise duty and VAT were origin-based, meaning they were collected in the state where the goods were produced. GST shifted this to a destination-based model to ensure fair tax distribution.
   
   

4. Impact on Inter-State Trade: Under the Integrated GST (IGST) system, when goods are sold from one state to another, the tax collected is transferred to the state where the goods are consumed, ensuring revenue balance among states.
   
   

5. Fair Revenue Distribution: Since GST is collected at the point of consumption, states with higher consumption benefit more, leading to a fair and efficient revenue distribution system.
   
   

6. Encouragement for Production and Trade: Since GST ensures that tax does not burden the production state, businesses are encouraged to manufacture without worrying about tax complexities, boosting industrial growth.
   
   

7. Global Practice in Taxation: Many countries follow the destination-based tax system as it ensures that consumers bear the tax burden and the producing state is not at a disadvantage, making GST an internationally accepted taxation model.
   
   

5. (a) Write, in detail, about the power of GST officers relating to inspection, search, and seizure. 14

Answer: Under the Goods and Services Tax (GST) law, GST officers have been given significant powers to prevent tax evasion and ensure compliance. Their powers relating to inspection, search, and seizure are provided under Section 67 of the CGST Act, 2017. These powers help in detecting tax fraud, unauthorized transactions, and fake invoicing. The details of these powers are as follows:

5. (a) Write, in detail, about the power of GST officers relating to inspection, search, and seizure. (14 Marks)

Answer:

1. Power of Inspection: GST officers have the authority to conduct inspections when they suspect tax evasion, improper tax filings, or incorrect maintenance of records. Only a Joint Commissioner or a higher officer can authorize an inspection if they believe that a taxable person has suppressed transactions or stock to evade tax. The inspection can be carried out at business premises, warehouses, godowns, or transport offices where goods or financial records are stored. Officers can also check transport vehicles for goods being moved without proper e-way bills or invoices.

2. Power of Search: A search is a more detailed investigation conducted when there is strong evidence of tax evasion. A Joint Commissioner or higher officer must approve the search in writing. The search can take place at a business location, warehouse, office, or even a residential premise if the officer believes taxable goods or undisclosed documents are hidden there. GST officers can use force with police assistance if required. They can search all physical and digital records, inventory, and storage areas to verify compliance with tax regulations.

3. Power of Seizure: Seizure occurs when the officer finds unaccounted goods or documents that indicate tax fraud. Goods transported without invoices or proper documentation can be seized on the spot. Similarly, business records, invoices, ledgers, and electronic data that suggest tax evasion can also be taken into custody. Once goods are seized, the owner must pay the applicable tax and penalty to get them released. If the owner fails to comply, the goods may be auctioned by the government. The seized documents must be returned within a reasonable period if they are not required for further investigation.

4. Legal Safeguards: GST laws include safeguards to ensure fair use of these powers. Inspections, searches, and seizures can only be conducted by authorized officers. Proper documentation of seized goods and records is mandatory to prevent misuse of power. If a business believes that an inspection or seizure was unjustified, they have the right to appeal against the action and seek legal redressal.

5. Importance of These Powers: The powers of inspection, search, and seizure are crucial for preventing tax evasion and ensuring compliance. They help detect fraudulent claims of input tax credit, fake invoicing, and underreporting of sales. These measures also ensure that businesses follow GST laws correctly and contribute to proper tax collection by the government. Regular inspections encourage businesses to maintain accurate records and follow tax regulations strictly.

Or

(b) Explain the special provisions of constitutional aspects of GST in India. 14

Answer: 5. (b) Explain the special provisions of constitutional aspects of GST in India. (14 Marks)

Answer:

1. Introduction to GST and Constitutional Amendment: The implementation of Goods and Services Tax (GST) in India required significant changes in the Constitution, as taxation powers were earlier divided between the Central and State governments. To facilitate GST, the 101st Constitutional Amendment Act, 2016 was introduced, which provided the legal framework for GST implementation by amending several provisions of the Indian Constitution.

2. Insertion of Article 246A – Special Power to Make GST Laws: Article 246A was introduced to grant both the Centre and States the power to levy and collect GST on goods and services. Unlike earlier provisions where taxation powers were divided under separate lists in the Seventh Schedule, this article provided a special and exclusive authority to legislate on GST matters. However, Parliament has exclusive power to levy GST on inter-state transactions (IGST).

3. Creation of Article 279A – GST Council Formation: The GST Council was established under Article 279A to ensure uniformity in GST laws across India. This body is responsible for making recommendations on tax rates, exemptions, and administrative processes. It consists of the Union Finance Minister (Chairperson), Minister of State for Finance, and State Finance Ministers. The Council follows a voting structure where the Central Government has one-third voting power, and the States collectively hold two-thirds voting power.

4. Amendment to Article 268 and 269 – Removal of Earlier Taxes: Before GST, the Constitution allowed the Centre to levy certain taxes like excise duty, service tax, and customs duty, while States imposed VAT, entry tax, and luxury tax. The 101st Amendment removed or modified these provisions, enabling the introduction of a unified tax system. Article 269A was inserted to empower the Centre to collect and distribute IGST in case of inter-state supply of goods and services.

5. Introduction of Compensation to States – Article 279A(4): As GST replaced multiple state-level taxes, many States feared revenue loss. To address this concern, the constitutional amendment ensured compensation to States for any shortfall in revenue for five years from GST implementation. This compensation is funded by the GST Compensation Cess, levied on certain goods like tobacco, coal, and luxury items.

6. Change in Seventh Schedule – Removal of Earlier Tax Entries: The Constitution's Seventh Schedule, which defines the powers of taxation for the Centre and States, was modified. Many entries related to indirect taxes were removed or merged under GST, ensuring a single tax system across India. Taxes such as excise duty (except on petroleum and alcohol), VAT, and service tax were subsumed under GST.

7. Special Provisions for Jammu & Kashmir: Initially, GST was not applicable to Jammu & Kashmir due to its special status under Article 370. However, after the abrogation of Article 370 in 2019, GST became fully applicable in Jammu & Kashmir, ensuring uniform taxation across all states and Union Territories.

8. Power of Parliament to Decide GST Laws for Union Territories: Since Union Territories (UTs) do not have independent legislative powers like states, Parliament was given exclusive authority to implement GST laws for UTs. This led to the introduction of the Union Territory GST (UTGST) Act, 2017, which governs GST implementation in UTs without legislatures.

9. Judicial Review and Constitutional Validity: The introduction of GST led to several legal challenges regarding its constitutional validity. However, the Supreme Court has upheld GST as a valid taxation system under the Indian Constitution, emphasizing that it ensures tax uniformity and simplifies the indirect tax structure in the country.

10. Exclusion of Certain Goods from GST: While GST covers most goods and services, some products like alcohol, petroleum products (petrol, diesel, natural gas, and aviation fuel), and electricity remain outside its purview. These items continue to be taxed under the old tax system until the GST Council decides to include them.

11. Concurrent Levy of CGST and SGST on Intra-State Transactions: The GST structure allows both the Centre and States to levy Central GST (CGST) and State GST (SGST) on intra-state supplies. This ensures that revenue is shared between the Centre and the respective State where the supply occurs.

12. IGST Mechanism for Inter-State Transactions: The Integrated GST (IGST) mechanism ensures smooth taxation for goods and services supplied between states. The Centre collects IGST on inter-state supplies and later distributes the appropriate share to the destination state, maintaining the destination-based taxation principle.

13. Abolition of the Concept of ‘Declared Goods’: Before GST, certain essential goods like coal, iron, and oilseeds were categorized as "declared goods" under Article 286, attracting special tax treatment. Under GST, this classification was removed, bringing all goods under a uniform tax structure.

14. Harmonization of Taxation Across India: One of the most significant constitutional impacts of GST is the creation of ‘One Nation, One Tax’, eliminating tax barriers between states. This ensures a unified market, reduces tax complexity, and enhances ease of doing business in India.

Thus, the constitutional provisions of GST in India, introduced through the 101st Amendment, have significantly transformed the tax structure by creating a uniform, transparent, and efficient taxation system.

6. (a) Write down the provisions for determining the time of supply of goods and services. 14

Answer: 

6. (a) Write down the provisions for determining the time of supply of goods and services. (14 Marks)

Answer:

1. Meaning of Time of Supply: The time of supply under GST determines when tax liability arises for a transaction. It is the point at which GST must be charged and paid to the government. The provisions for determining the time of supply differ for goods and services.

2. Time of Supply of Goods – General Rule: As per Section 12 of the CGST Act, 2017, the time of supply of goods is the earliest of the following:
   
   

1. The date of issue of invoice by the supplier, or

2. The last date on which the invoice should have been issued (i.e., within 30 days of supply), or

3. The date of receipt of payment (whichever is earlier).

3. Time of Supply of Services – General Rule: As per Section 13 of the CGST Act, 2017, the time of supply of services is the earliest of the following:

1. The date of issue of invoice (if issued within the prescribed period of 30 days), or

2. The date of provision of service (if the invoice is not issued within the prescribed period), or

3. The date of receipt of payment (whichever is earlier).

4. Time of Supply in Case of Advance Payment: If a supplier receives advance payment before issuing an invoice, the time of supply is the date of receipt of advance payment. However, as per the amendment in 2017, GST is not applicable on advances for goods, but it is still applicable for services.

5. Time of Supply in Case of Reverse Charge Mechanism (RCM): When GST is payable under the reverse charge mechanism, the time of supply is the earliest of the following:

1. The date of payment as recorded in the books of accounts, or

2. The date immediately after 60 days from the supplier’s invoice date (for services) or 30 days (for goods).

6. Time of Supply in Case of Continuous Supply of Goods: If goods are supplied on a continuous basis (e.g., pipeline supply of gas, long-term construction projects), the time of supply is:

1. The date of invoice, or

2. The date of receipt of payment, whichever is earlier.

7. Time of Supply in Case of Continuous Supply of Services: For services supplied continuously, the time of supply depends on the due date of payment:

1. If payment is due periodically (e.g., monthly contracts), the due date of payment is the time of supply.

2. If no due date is mentioned, the time of supply is the earlier of payment received or invoice issued.

8. Time of Supply in Case of Vouchers: If a voucher is issued for goods or services, the time of supply is:

1. The date of issue of the voucher, if the supply is identifiable at that time.

2. The date of redemption of the voucher, if the supply is not identifiable at the time of issue.

9. Time of Supply in Case of Rescinded or Cancelled Contracts: If a contract is canceled after advance payment, the supplier must issue a credit note to adjust the tax. The time of supply remains the date when the original invoice was issued.

10. Time of Supply for Interest, Late Fees, or Penalties: If a supplier charges interest, late fees, or penalties for delayed payment, the time of supply is the date on which the supplier receives such additional payment.

11. Time of Supply in Case of Goods Sent on Approval Basis: If goods are sent on an approval basis (i.e., the buyer confirms the purchase later), the time of supply is the earliest of the date of approval or six months from the date of supply.

12. Time of Supply in Case of Retrospective Price Changes: If the price of goods or services is increased or decreased after supply, the time of supply is the date of issuance of the debit note (for price increase) or credit note (for price decrease).

13. Special Provisions for Specific Industries: The government has notified special provisions for determining the time of supply for sectors like banking, insurance, and transportation, where invoices are issued periodically, and payment cycles vary.

14. Importance of Time of Supply: Correct determination of the time of supply ensures that businesses pay GST at the right time, avoiding penalties and interest on delayed payments. It also helps in proper compliance with GST return filing and input tax credit claims.

Thus, the time of supply provisions under GST are designed to ensure timely tax collection, prevent tax evasion, and streamline tax administration.

Or

(b) i) S. Ltd. Mumbai, a registered supplier, is manufacturing chocolates and biscuits. It provides the following details of taxable inter-State supply made by it for the month of October, 2020:

Particulars are:  List price of goods supplied inter-State ₹ 12,40,000

Items already adjusted in the price given in (i) above:

• Subsidy from the Central Government for supply of biscuits to government school ₹ 1,20,000

• Subsidy from trade association for supply of quality biscuits ₹ 30,000

Items not adjusted in the price given in (i) above:

• Tax levied by municipal authority ₹ 24,000

• Packing charges ₹ 12,000

• Late fees paid by recipient of supply for delayed payment of invoice ₹ 5,000

Calculate the value of taxable supply made by S. Ltd. for the month of October, 2020. (7 Marks)

Answer:

Step 1:  The list price of goods supplied inter-State
List price = ₹ 12,40,000

Step 2: Add items not included in the list price

• Tax levied by municipal authority = ₹ 24,000

• Packing charges = ₹ 12,000

• Late fees for delayed payment = ₹ 5,000

Total additions = ₹ 24,000 + ₹ 12,000 + ₹ 5,000 = ₹ 41,000

Step 3: Exclude subsidy from the Central Government

• Subsidy from the Central Government (₹ 1,20,000) is not included in taxable value as per GST rules.

Step 4: Include subsidy from trade association

• Subsidy from trade association ₹ 30,000 is considered part of the taxable value.

Step 5: Calculate the total taxable value
Taxable Value = ₹ 12,40,000 + ₹ 41,000 + ₹ 30,000  = ₹ 13,11,000

Thus, the value of taxable supply made by S. Ltd. for October 2020 is ₹ 13,11,000.

(ii) Discuss the features of Tax Invoice. (7 Marks)

Answer: A tax invoice is an important document issued by a registered supplier to the buyer for taxable goods or services. It is necessary for claiming Input Tax Credit (ITC) under GST. The key features of a tax invoice are:

1. Supplier Details – The invoice must include the name, address, and GSTIN (GST Identification Number) of the supplier.

2. Invoice Number and Date – Each tax invoice should have a unique sequential number and the date of issuance.

3. Recipient’s Details – The invoice must mention the name, address, and GSTIN of the buyer (if registered under GST).

4. Description of Goods/Services – It should clearly describe the goods or services supplied, along with quantity, unit price, and total value.

5. HSN Code or SAC Code – The invoice should include the HSN (Harmonized System of Nomenclature) Code for goods and the SAC (Service Accounting Code) for services as per GST rules.

6. Tax Details – The invoice must specify the applicable CGST, SGST, IGST, or UTGST along with their percentage and amount.

7. Payment Terms & Signature – The invoice should mention terms of payment, the mode of payment, and must be signed or digitally signed by the supplier or an authorized person.

A tax invoice is essential for proper GST compliance and enables the recipient to claim Input Tax Credit (ITC).

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