GST Law and Practice Solved Question Paper 2024 [Dibrugarh University BCOM 6th SEM CBCS Pattern]

GST Law and Practice Solved Question Paper 2024 (May)
Dibrugarh University BCOM 6^th SEM CBCS Pattern

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.

Ans: True (Only indirect taxes increases prices of goods and services)

ii) Control on indirect taxes is relatively easy.

Ans: True

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

Ans: False

[Hint: If the goods are lost, stolen, or destroyed, the GST already paid at the time of purchase cannot be recovered from the government. However, if ITC was claimed on such goods, then the ITC must be reversed as per Section 17(5)(h) of the CGST Act, 2017.]

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

Ans: True

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

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

Ans: Indirect Tax

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

Ans: Direct

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

Ans: Canadian

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

Ans: Ad-valorem

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

a) Composition scheme under GST

Ans: Composition Scheme: The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover does not exceed a specified limit. The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. It is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.

Composite scheme is introduced for small businesses whose aggregate turnover is less than 1.5 crores (75 lakhs for north-eastern seven sisters together with Himachal Pradesh). GST rate under composite scheme is 1% for trader and manufacturers, 5% for restaurants and 6% for service providers. Rate of GST is fixed under composition scheme and dealer is not allowed to claim input tax credit. Also dealers are required to file less return under Composite scheme.

Person not eligible to opt for composition scheme: The registered person shall not be eligible to opt for the composition scheme if:

a) He is engaged in supply of services where the turnover in the preceding financial year does not exceed 1.5 crores (75 lakhs for north-eastern seven sisters together with Uttarakhand).

b) He is supplying goods which are not taxable under GST law.

c) He is making any inter-state supplies of goods.

d) He is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under Sec 52; and

e) He is not a manufacturer of following goods notified by the Government:

- Ice cream and other edible ice, whether or not containing cocoa.

- Pan masala

- Tobacco and manufactured tobacco substitutes

- AERATED WATER

b) Credit and debit notes

Ans: Meaning and Definition of Credit Note: Credit note is issued when the value of goods or services invoiced earlier requires downward revision. The issue of the credit note allows the supplier to decreases his tax liability in his returns. Hence, the supplier will not be required to undergo the tedious process of claiming refunds.

Situations when Credit note is issued

1.    The supplier has erroneously declared value in the tax invoice which is more than the actual value of the goods or services provide;

2.    The tax charged as shown in the tax invoice is more than what should have charged;

3.    The quantity received by the recipient is less than what has been declared in the tax invoice;

4.    The recipient has returned the goods;

5.    The quantity of the goods or services or both supplied is not to the satisfaction of the recipient thereby necessitating a partial or total reimbursement on the invoice value; and

6.    Any other similar reasons;

Meaning and Definition of debit note: Debit note is issued by a supplier when the value of goods or services invoiced earlier requires upward revision. The issue of the debit note results into increase in his tax liability.

Situations when Debit note is issued

For issuing a Debit Note, one or more invoices for supply made in a financial year should have been issued earlier and subsequently any of the following situations has arisen:

1.    The supplier has erroneously declared value in the tax invoice which is less than the actual value of the goods or services provided;

2.    The tax changed as shown in the tax invoice is less than what should have charged;

3.    The quantity received by the recipient is more than what has been declared in the tax invoice;

4.    Any other similar reasons.

c) Input tax credit

Ans: The word input tax credit is the combination of three words – Input, tax and credit.

Input Means (Sec. 2(59) of the CGST Act, 2017): It means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business.

Input Tax Means (Sec. 2(62) of the CGST Act, 2017): In relation to a registered person, it means the Central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes:

(a) the integrated goods and services tax charged on import of goods;

(b) the tax payable under the provisions of Sec 9(3) and Sec. 9(4) of the CGST Act, 2017;

(c) the tax payable under Sec 5(3) and Sec. 5(4) of the IGST Act, 2017;

(d) the tax payable under SGST Act (i.e. person liable to pay GST under RCM);

(e) The tax payable under UTGST Act (i.e. person liable to pay GST under RCM),

But does not include the tax paid under the composition levy.

Input Tax Credit (Sec 2(63) of the CGST Act, 2017): It means the credit of input tax. It is deducted while calculating GST liability under regular scheme.

Eligibility for Claiming Input Tax Credit (ITC):

Eligibility for Claiming Input Tax Credit has been mentioned in Section 16(1) of the AGST Act, 2017. According to this section eligibility for claiming ITC is that:

a) The person must be registered under the GST Act; and

b) Purchase of goods or services or both made by him are used or intended to be used in the course of furtherance of his business and the said amount shall be credited to the Electronic Credit Ledger of such person.

d) Dual model of GST

Ans: The Dual Model of GST means that both the Central and State governments levy GST simultaneously on the same transaction. Center has the power of tax intra-state sales and states are empowered to tax services. Now GST has extended to all over the India.

GST in India comprises of Central Goods and Service Tax (CGST) – levied and collected by Central Government, State Goods and Service Tax (SGST) – levied and collected by State Governments/Union Territories with State Legislatures and Union Territory Goods and Service Tax. (UTGST)-levied and collected by Union Territories without State Legislatures, on intra-State supplies of taxable goods and/or services. (IGST)- Inter-State supplies of taxable goods and/or services are subject to Integrated Goods and Service Tax. IGST is approximately the sum total of CGST and SGST/UTGST and is levied by Centre on all inter-State supplies.

e) Cascading effect

Ans: The pre-GST regime indirect tax structure in India was complex, with multiple taxes being levied at different stages of the supply chain. This often resulted in cascading of taxes, where the same goods were taxed multiple times at different stages, leading to a higher overall tax burden for businesses and consumers. The GST was introduced in India in 2017 to simplify the indirect tax structure and eliminate cascading of taxes. Under the GST, all indirect taxes are subsumed into a single tax, making it easier for businesses to comply with the tax laws and reducing the overall tax burden.

Since only the value added at each stage is taxed under GST, there is no tax or cascading of taxes under GST system. GST does not differentiate between goods and services and thus the two are taxed at a single rate.

GST aims to simplify the indirect tax structure in India by subsuming all indirect taxes into a single tax. This eliminates the cascading of taxes and reduces the compliance burden for businesses, as they no longer have to deal with multiple tax rates, forms, and compliance requirements.

Also Read: GST Law and Practice Solved Question Papers

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Also Read: GST Law and Practice Important Questions

3. (a) Explain briefly the history of indirect taxes in India. 3+7+4=14

Ans: Article 245 of the Constitution is the source of all legislative powers of Parliament and State Legislatures. Article 246 has demarcated the legislative powers between the Union and the States by way of three lists of the Seventh Schedule to the Constitution. Under the existing constitutional arrangement relating to indirect taxation, while the States are authorised to levy and collect VAT, CST (Central Sales Tax), Entry tax, Luxury tax, Entertainment tax, Electricity duty, State excise duty, the Centre is authorised to levy and collect excise duties, service tax, custom duties etc. The centre does not have authority to impose tax on sale of goods and the States do not have power to lever tax on services.

The Centre has the exclusive authority to levy tax on services and excise duty on manufacture of goods, whereas the States have the exclusive authority to levy tax on sale of goods. This exclusive division of fiscal powers has led to multiplicity of indirect taxes resulting in a complex indirect tax structure in the country that is ridden with hidden costs for the trade and industry.

Need of GST in India

There was no uniformity of tax rates and structure across States, Cross utilization of credit of excise duty and service tax, levied by the Central Government, was not available while paying VAT, levied by the State Government and vice-versa. Hence, the prices of goods and services get artificially inflated to the extent of this tax on tax’.

There are onerous compliance requirements in terms of paper work, time and resources of umpteen numbers of indirect tax legislations of the present tax system which make the compliance cost very high for tax payers. The existing indirect tax structure has disintegrated the Indian market by creating tax barriers which have hampered efficient production and supply chain models in the economy. In order to do away with all the defects in the indirect tax system during pre-GST regime, the need to reform indirect tax system then existing in India was felt.

Further, the need for such reforming in indirect tax system became the need of the hour when India started following the path of liberalisation in 1991. However, serious work to integrate indirect tax legislations and simplify it did not start until the year 2000. Comprehensive and common in indirect tax legislation was possible only when the central and state governments worked together as India is having a federal structure.

History of GST

France was the first country to implement GST in the year 1954. Within 62 years of its advent, about 160 countries across the world have adopted GST because this tax has the capacity to raise revenue in most transparent and natural manner.

Initiative by Vajpayee Government

In the year 2000, the Vajpayee Government started discussion on GST by setting up an empowered committee, headed by Asim Dasgupta, (Finance Minister, Government of West Bengal). The committee was given the task designing the GST model and overseeing the IT back-end preparedness for its rollout.

Kelkar Task Force 2004

The Finance Ministry of Government of India set up a Task Force under the chairmanship Mr. Vijay Kelkar in 2004 on the implementation of Fiscal Responsibility and Budget Management. It made recommendations to bring about a radical transformation of the Indian Tax System. It disagreed with the existing approach of the government to reduce government expenditure to achieve the fiscal consolidation. It has advised to go for a Revenue-led Approach which focuses on enhancing the revenues instead of compressing the expenditure. It went further to suggest that the Government should enhance capital expenditure in order to counterbalance the contraction effects of fiscal consolidation.

The Goods and Service Tax is an outcome of the recommendations of the Task Force under the chairmanship of Mr. Vijay Kelkar. In India the draft of Goods and Service Tax (GST) was presented in the parliament in August, 2009.

Initiative of NDA Government

Subsequently, the then Union Finance Minister, Shri P. Chidambaram announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and continued to be shrouded by the clouds of uncertainty. The talks of ushering in GST, however, gained momentum in the year 2014 when the NDA Government tabled the Constitution. (122^nd Amendment) Bill, 2014 on GST in the Parliament on 19th December, 2014. The Lok Sabha passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016. Subsequent to ratification of the Bill by more than 50% of the States, Constitution. (122nd Amendment) Bill, 2014 received the assent of the President on 8th September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of GST in India. In the following year, on 27th March, 2017, the Central GST legislations - Central Goods and Services Tax Bill, 2017 integrates Goods and Service Tax Bill, 2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills on 29th March, 2017 and with the receipt of the President’s assent on 12th April, 2017, the Bills were enacted.

Or

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

Ans: According to Article 366 (12A) of Constitution of India, as amended by 101st Constitutional Amendment Act, 2016 defines the Goods and Services Tax (GST) “as a tax of supply of goods or services or both, except supply of alcoholic, liquor for human consumption”.

GST is a destination based tax on consumption of goods and services, right from the manufacturer to the consumer, to be levied on the same taxable event by both the states and the union government. It is levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set off. In a nutshell, only value addition is taxed. The burden of tax is to be borne by the final consumer. Concept of destination based tax is that the GST will accrue to the GST authority which has jurisdiction over the place of consumption. On each ‘supply’ of goods or services or both, there will be a State GST (SGST) as well as a Central GST (CGST).

Framework of GST as introduced in India

1. Dual GST: The Dual Model of GST means that both the Central and State governments levy GST simultaneously on the same transaction. Center has the power of tax intra-state sales and states are empowered to tax services. Now GST has extended to all over the India.

2 CGST/SGST/UTGST/IGST: GST is a destination based tax applicable on all transactions involving supply of goods and services for a consideration subject to exceptions thereof. GST in India comprises of Central Goods and Service Tax (CGST) – levied and collected by Central Government, State Goods and Service Tax (SGST) – levied and collected by State Governments/Union Territories with State Legislatures and Union Territory Goods and Service Tax. (UTGST)-levied and collected by Union Territories without State Legislatures, on intra-State supplies of taxable goods and/or services. (IGST)- Inter-State supplies of taxable goods and/or services are subject to Integrated Goods and Service Tax. IGST is approximately the sum total of CGST and SGST/UTGST and is levied by Centre on all inter-State supplies.

3. Legislative Framework: There is single legislation – CGST Act, 2017 – for levying CGST. Similarly, Union Territories without State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh] are governed by UTGST Act, 2017 for levying UTGST. States and Union territories with their own legislatures [Delhi and Puducherry] have their own GST legislation for levying SGST. Though there are multiple SGST legislations, the basic features of law, such as chargeability, definition of taxable event and taxable person, classification and valuation of goods and services, procedure for collection and levy of tax and the like are uniform in all the SGST legislations, as far as feasible. This is necessary to preserve the essence of dual GST.

4. Classification of Goods and Services: HSN (Harmonized System of Nomenclature) code is used for classifying the goods under the GST. A new Scheme of Classification of Services has been devised wherein the services of various descriptions have been classified under various sections, headings and groups. Each group consists of various Service Codes (Tariff).

5. Manner of utilization of ITC: Input Tax Credit (ITC) of CGST and SGST/UTGST is available throughout the supply chain, but cross-utilization of credit of CGST and SGST/UTGST is not possible, i.e. CGST credit cannot be utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be utilized for payment of CGST. However, cross utilization is allowed between CGST/SGST/UTGST and IGST, i.e. credit of IGST can be utilized for the payment of CGST/SGST/UTGST and vice versa.

6. Registration: Every supplier of goods and/ or services is required to obtain registration in the State/UT from where he makes the taxable supply if his aggregate turnover exceeds than Rs. 40 lakhs for goods and Rs. 20 lakhs for services. However, the limit of Rs. 40 lakhs and Rs 20 lakhs for goods and services will be reduced to Rs. 20 lakhs and Rs. 10 lakhs if the person is carrying out business in the Special Category States – [11 Special Category States are specified in Article 279A(4)(g) of the Constitution] - States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

7. Composition Scheme: In GST regime, tax (i.e. CGST and SGST/UTGST for intra-State supplies and IGST for inter-State supplies) is payable by every taxable person and in this regard provisions have been prescribed in the law. However, for providing relief to small businesses making intra-State supplies, a simpler method of paying taxes and accounting thereof is also prescribed, known as Composition Levy.

8. Exemptions: Apart from providing relief to small-scale business, the law also contains provisions for granting exemption from payment of tax on essential goods and/or services.

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

Ans: The Need and Importance of GST in India (Only for Members)

Or

(b) (i) Write the benefits of GST in the Indian scenario. 7  (Member’s only)

Ans: The introduction of Goods and Services Tax (GST) is a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it would mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated to be around 25%-30%. Introduction of GST would also make Indian products competitive in the domestic and international markets. The introduction of goods and services tax (GST) is called transformative because it is meant to benefit everyone and hurt none.

GST offers a number of benefits to all the stakeholders. Various stakeholders of GST are Governments, and Consumers. Therefore, the benefits of GST can be broadly discussed under the following heads:

1. Benefits to Governments;

2. Benefits for Business; and

2. Benefits of Consumers.

1. Benefits to Governments: Benefits/advantages accruing to the governments due to implementation of GST can be discussed under the following heads: (Only for Members)

Or

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

Ans: Constitutional aspects of GST

The Constitution contains the Union List and the State List within which the power to levy separate taxes is given to the Centre and States respectively. GST was to be levied in such a way that both the Centre and the States received the power to levy and collect it. Further, the legislation had to remain consistent across the Centre and the various State/Union Territory Legislatures. To provide for this, an amendment in the Constitution was necessary.

Constitution (101st Amendment) Act, 2016

In order to suitably implement the GST legislation, this Act resulted in the insertion, deletion and amendment of certain Articles of the Constitution. The following matters were dealt with as a result of these changes:

a) The delineation of powers to levy and make laws with respect to GST

b) The applicability and scope of the GST law

c) The manner of apportionment of revenue from GST among Centre and States

d) The constitution, powers and duties of the GST Council

e) The discontinuation of existing taxes to give way for GST

f) The manner of providing compensation to States for loss of revenue on account of the introduction of GST

Article 246A: Special Provision for GST

This Article was newly inserted to give power to the Parliament and the respective State/Union Legislatures to make laws on GST respectively imposed by each of them. However, the Parliament of India is given the exclusive power to make laws with respect to inter-state supplies. The IGST Act deals with inter-state supplies. Thus, the power to make laws under the IGST Act will rest exclusively with the Parliament. Further, the article excludes the following products from the scope of GST until a date recommended by the GST Council:

- Petroleum Crude

- High-Speed Diesel

- Motor Spirit

- Natural Gas

- Aviation Turbine Fuel

Article 269A: Levy and Collection of GST for Inter-State Supply

While Article 246A gives the Parliament the exclusive power to make laws with respect to inter-state supplies, the manner of distribution of revenue from such supplies between the Centre and the State is covered in Article 269A. It allows the GST Council to frame rules in this regard. Import of goods or services will also be called as inter-state supplies. This gives the Central Government the power to levy IGST on import transactions. Import of goods was subject to Countervailing Duty (CVD) in the earlier scheme of taxation. IGST levy helps a taxpayer to avail the credit of IGST paid on import along the supply chain, which was not possible before.  

Article 279A: GST Council

This Article gives power to the President to constitute a joint forum of the Centre and States called the GST Council. The GST Council is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of Goods and Services Tax in India.  

Article 286: Restrictions on Tax Imposition

This was an existing article which restricted states from passing any law that allowed them to collect tax on sale or purchase of goods either outside the state or in the case of import transactions. It was further amended to restrict the passing of any laws in case of services too. Further, the term ‘supply’ replaces ‘sale or purchase’.  

Article 366: Addition of Important definitions

Article 366 was an existing article amended to include the following definitions:

Goods and Services Tax means the tax on supply of goods, services or both. It is important to note that the supply of alcoholic liquor for human consumption is excluded from the purview of GST.

Services refer to anything other than goods.

State includes Union Territory with legislature.

Compensation to States Under GST

This Act also contains a provision to provide for relief to states on account of the revenue loss to the states arising due to the implementation of GST. It has a validity period of five years. The Goods and Services Tax (Compensation to States) Act, 2017 was born as a result.  

What does the Seventh Schedule State?

The Seventh Schedule to Article 246 contains three lists, which contain the matters under which the Union and the State Governments have the authority to make laws. 

List – I: Union List - It contains the matters with respect to which the Parliament (Central Government) have the exclusive right to make laws. 

List – II: State List - It contains the matters in respect of which the state government has the exclusive right to make laws. 

List – III: Concurrent List - It contains the mattes in respect of which both the Central and State Governments have the power to make laws. The relevant entries in this list were adjusted in such a way as to provide for the following:

a) To continue the levy of excise duty by the Centre on manufacture/production of five petroleum products namely: petroleum crude, high-speed diesel, motor spirit, natural gas, and aviation turbine fuel. In addition to the above, excise duty is also levied on tobacco and tobacco products. As a result, tobacco and tobacco products are subject to both excise duty and GST.

b) The power to levy taxes on the five petroleum products was given to the states too.

c) Entertainment tax was abolished except where it is levied by local bodies.

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

Ans: Time of Supply: The ‘time supply’ is the point when the liability to charge GST arises. It also indicates when a supply is deemed to have been made. As per the GST Acts (CGST and SGST/UGST Acts), there are separate provisions for ‘time of supply for goods’ and ‘time of supply of services’. These are discussed below:

Time of Supply of Goods

According to section 12(1) of the GST Act, 2017, the liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. According to section 12(2) of the Act, the time of supply of goods shall be the earlier of the following dates, namely:

a) The date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or

b) The date on which the supplier receives the payment with respect to be supply;

Provided that where 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 to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.

Time of Supply of Services

According to section 13(1) of the AGST Act, 2017, the liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section. The time of supply or services shall be the earliest of the following dates namely:

a)    The date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 (issue of Tax Invoice) or the date of receipt of payment, whichever is earlier; or

b)    The date of provision of service, if the invoice is not issued within the period prescribed under section 31 (issue of Tax Invoice) or the date of receipt of payment, whichever is earlier; or

c)    The date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:

Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount.

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

Ans: Only for Members

(ii) Discuss the features of Tax Invoice. 7

Ans: Only for Members