Paper/Subject Code: 86017/Elective: Finance: Indirect Taxes

TYBMS SEM 6

Financial:

Indirect Tax

(April 2025 Question Paper with Solution)

Course: TYBMS

Semester : VI

Subject : Indirect Tax

University : University of Mumbai

Exam : April 2025 Question Paper with Solution

Introduction

This article provides the TYBMS Semester 6 Indirect Tax question paper for the April Question Paper 2025 with Solutions examination along with detailed solutions. The solutions are explained step-by-step to help students understand the method used to solve each problem and prepare for their university examination.

Note:

1) All questions are compulsory.

2) Working Notes should form part of your answer.

3) Figures to the right indicate full marks.

Q.1 A. Select the most appropriate alternatives from those given below and rewrite the statements. (Any 8) (8)

1. The liability to pay tax on goods shall arise at the _________.

a) Dispatch of goods

b) Removal of goods

c) Time of supply

d) Delivery of goods

2. A person is liable to be registered under GST Law where his gate turnover exceeds __________.

a) Rs. 20 lakhs

b) Rs. 10 lakhs

c) Either (a) or (b) as the case may be

d) Rs. 15 lakhs

3. GST is based on the principle of ________ based consumption.

a) Origin

b) Source

c) Destination

d) Production

4. GST is charged on _________ of goods or service

a) Manufacture or provision

b) Consumption

c) Supply

d) Demand

5. CPIN stand for _________.

a) Common PAN identification number

b) Challan paid identification number

c) Common portal identification number

d) Challan portal identification number

6. Interest @ ________ is payable on payable on delayed payment of taxes.

a) 18%

b) 15%

c) 28%

d) 24%

7. Place of supply for services by way of admission to events are _______.

a) Place where event is actually held

b) Location of recipient

c) Location of supplier

d) None of the above.

8. The goods & services tax identification number is of _______ digit consisting state code, PAN or TAN number, entity code and checksum character.

a) 20

b) 15

c) 10

d) 27

9. Input credit of CGST can be utilized towards payment of ________.

a) CGST & SGST

b) CGST & UTGST

c) CGST & IGST

d) CGST only

10. The place of supply when goods are imported into India is ________

a) Location of importer

b) Location outside India

c) Location of supplier

d) None of the above

Q.1 B Match the following (Any 7/10) (07)

Column (A)	Column (B)
(1) Petroleum products	(a) Non Resident taxable person
(2) GSTR 5	(b) Person supplying goods wholly exempt from tax
(3) Reverse Charge basis	(c) Input tax credit
(4) Goods exported from India	(d) UTGST
(5) Not liable for registration	(e) Recipient is liable to pay GST
(6) Compulsory registration	(f) SGST
(7) Non banking financial institution (8) Electronic credit ledger	(g) Location outside India (h) GST yet to be notified
(9) Chandigarh	(i) E-commerce operator
(10) Pondicherry	(j) 45 days from the date of supply of service.

Ans:

Column (A)	Column (B)
(1) Petroleum products	(h) GST yet to be notified
(2) GSTR 5	(a) Non Resident taxable person
(3) Reverse Charge basis	(e) Recipient is liable to pay GST
(4) Goods exported from India	(g) Location outside India
(5) Not liable for registration	(b) Person supplying goods wholly exempt from tax
(6) Compulsory registration	(i) E-commerce operator
(7) Non banking financial institution (8) Electronic credit ledger	(j) 45 days from the date of supply of service. (c) Input tax credit
(9) Chandigarh	(d) UTGST
(10) Pondicherry	(f) SGST

Q.2 (A) Mr. Roshan gives you the following information of his transactions for November 2024. As per provisions related to goods and service Tax classify the following items as taxable or not taxable. (8)

Sr. No.	Particulars	Amount
1.	Rent received for machinery in the Factory	6,00,000
2.	Express Parcel post services	2,00,000
	A building was let out for Vidya Vikas school	6,00,000
	Interest received from Reserve Bank of India	90,000
5.	Houses are let out to an individual for residential purpose	50,000
6.	Royalty for authorship of books	1,00,000
7.	Training and coaching in different games	4,00,000

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Q.2 B M/s Rohit Limited a manufacturer of laptops has five factories in Chennai, Salem, Coimbatore, and Madurai. Is M/s Rohit Ltd can opt for a composition levy in the current year? (07)

Place	P.Y. Turnover Rs. In Lakhs (including taxes @ 18%)
Chennai	57.91
Salem	12
Coimbatore	8
Madurai	10
Chennai -II	23.6

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Q.2 C. Mr. Arvind gives you the following information of his transactions for November, 2024. Classify the following transaction as taxable and non-taxable. (08)

Sr. No.	Particulars	Amount
1.	For Hotel Rooms (Declared Tariff per day Rs. 1,200)	4,20,000
2.	Houses are let out to individuals for residential purpose.	3,00,000
3.	Placement services	2,50,000
	Renting of Agricultural Vacant Land for Rearing Horses	1,85,000
5.	Storage and Warehousing of Agricultural Produce	85,000
6.	Building was let out to Vidya Prasarak School	8,20,000
7.	Training in recreational activities relating to culture	1,50,000
8.	Royalty for authorship of books	80,000

Q.2 D. M/s Steve Archer Ltd, a TV manufacturer, has five factories in Panvel Palghar, Virar, Andheri, and Kalyan. Is M/s Steve Archer Ltd is eligible for a Composition levy in the current year? (07)

Place	Previous year Turnover Rs. in lakh Including Taxes @ 18%
Panvel	60
Palghar	20
Virar	12
Andheri	8
Kalyan	12.10

Q.3.A) Find out the time of supply of goods in the following independent cases as per the provisions of the CGST Act, 2017. (08)

Sr. No	Date of Removal	Date of invoice	Date of receipt of payment
1	10/11/2024	12/11/2024	15/11/2024
2	04/12/2024	02/12/2024	14/12/2024
3	09/12/2024	10/12/2024	19/12/2024
4	05/01/2025	15/01/2025	11/01/2025
5	10/01/2025	09/01/2025	15/01/2025
6	27/02/2025	05/03/2025	28/02/2025

Q.3 B Sushmita Pvt Ltd a registered supplier furnishes the following details relating to supplies during December 2024. The rate of tax for the goods supplied is 12%. Calculate the total taxable value of Supply. (07)

Particulars	Rs.
Sales price charged to customers within the state (excluding GST)	10,00,000
Service charges levied in the invoices	11,000
Packing and forwarding expenses incidental to sales	14,200
Weighing charges, shown separately in invoices	7,800
The commission charged to buyers	15,000
Subsidy received from the Government	50,000

Q.3 C. Find the place of supply of goods from the following transactions and give explanation to the answer. (08)

1. M/s Mr.Avadhoot of Nasik places an order on Mr. Rajas of Mumbai for delivery of goods. Mr. Avadhoot directs Mr. Rajas to deliver the goods to Miss Yogita in Aurangabad and Mr. Rajas arranges for transportation of the goods to Miss Yogita in Aurangabad.

2. Mr. Mayur of Pune receives an order from Mr. Prasad of Ahmadabad for the supply of certain goods. Mr. Mayur arranges for the transportation of the goods to Ahmadabad. The delivery of goods was taken by Mr. Prasad at Ahmadabad.

3. Mr. Anil of Madras entered into a contract with the railway authority for the supply of food to the passengers of the Madras-Rajasthan route. The journey commenced from Madras. The goods were located on board in Mumbai.

4. Mr. Kartik located in Pune places an order on Mr. Amol of Mumbai for the installation of machinery at his site in Indore.

Q.3 D. Determine the Time of Supply of Services in the following independent cases. (07)

Sr. No	Date of Provision of Service	Date of invoice	Date of receipt of payment
1	15-11-2024	11-11-2024	14-11-2024
2	18-11-2024	20-11-2024	17-11-2024
3	25-11-2024	26-12-2024	26-11-2024
4	22-12-2024	15-01-2024	21-12-2024
5	25-12-2024	28-01-2025	26-12-2024
6	12-01-2025	15-01-2025	22-01-2025

Q.4 A. Mr. Pratik is a new dealer. From the following information find out on which day he will be liable to register under GST, give reason for your answer. (08)

Date	Taxable purchases	Tax free Purchases	Taxable Sales	Tax Free sales
02/04/24	1,00,000	15,000	1,00,000	40,000
04/04/24			5,00,000	20,000
11/04/24	2,00,000		3,00,000	1,00,000
20/04/24			1,00,000	4,00,000
25/04/24	4,00,000	6,00,000	2,00,000	80,000
02/05/24			5,00,000	1,50,000
11/05/24	5,000	20,000	1,00,000	3,00,000

Q.4 B Mr. Nitin Verma is a registered dealer under GST and provides the following details for January 2023. Calculate the Input Tax Credit (ITC) available for the month. (07)

1. Legal consultancy services availed: ₹25,000

2. Professional fees paid to Ms. Priya for providing taxation services: 12,000

3. Office supplies purchased: ₹15,000

4. Raw material used in manufacturing: 260,000

5. Repairs of office equipment (No tax invoice available): ₹30,000

6. Purchase of office furniture: ₹20,000

7. Input purchased for constructing a new warehouse: 240,000

OR

Q.4. C Mrs. Rashmi is registered in state of Maharashtra provides details of the following for the month of March. Calculate her net tax liability for the month of March. Closing balance in electronic credit ledger as on last day of February was IGST Rs.90,000 CGST Rs.1,20,000 and SGST Rs. NILL. The following Amounts are excluding GST. (15)

Transaction during the month	Rs.
Sold Goods @ 5% GST to Sunita in Satara	4,50,000
Sold Goods @ 12% GST to Anita in Lonavala	6,70,000
Sold Goods @ 18% GST to Geeta in Nagpur	9,80,000
Sold Goods @ 28% GST to Sarita in Amravati	3,20,000
Inward supplies @ 18% GST from Pune	2,75,000
Inward supplies @ 12% GST from Latur	3,25,000
Inward supplies @ 28% GST from Jammu	1,00,000
Inward supplies (4) 5% GST from Bhopal	90,000

Q.5 A. Explain Credit note and Debit note. (08)

A credit note, also known as a credit memo, is a document issued by a seller to a buyer, reducing the amount the buyer owes to the seller. It essentially acts as a refund or allowance against a previously issued invoice. It's not a payment; instead, it reduces the outstanding balance.

Purpose of a Credit Note:

Incorrect Billing: To correct errors on an original invoice, such as overcharging for goods or services.
Returned Goods: When a customer returns goods due to defects, damages, or other reasons, a credit note is issued for the value of the returned items.
Price Adjustments: To reflect agreed-upon price reductions or discounts after the original invoice has been issued.
Allowances: To compensate a customer for minor issues, such as slight delays in delivery or minor imperfections in the goods.
Cancellation of Services: If services are cancelled before completion, a credit note may be issued for the unperformed portion.

A debit note, also known as a debit memo, is a document issued by a buyer to a seller, indicating that the buyer's account payable to the seller has been reduced. It's essentially a request for a credit note. It informs the seller that the buyer is debiting their account in the seller's books.

Purpose of a Debit Note:

Underbilling: To notify the seller of an undercharge on the original invoice. This is less common, as sellers usually catch these errors themselves.
Returned Goods (Buyer's Perspective): To formally notify the seller that goods have been returned and a credit is expected.
Damaged Goods: To inform the seller that goods received were damaged and a reduction in the invoice amount is requested.
Discrepancies: To highlight discrepancies between the goods received and the goods ordered.A debit note, also known as a debit memo, is a document issued by a buyer to a seller, indicating that the buyer's account payable to the seller has been reduced. It's essentially a request for a credit note. It informs the seller that the buyer is debiting their account in the seller's books.

Importance of Credit and Debit Notes

Accurate Accounting: They ensure that financial records accurately reflect the true value of transactions.
Dispute Resolution: They provide a formal record of discrepancies and adjustments, facilitating dispute resolution between buyers and sellers.
Customer Satisfaction: Issuing credit notes for legitimate claims can improve customer satisfaction and loyalty.
Audit Trail: They create a clear audit trail for financial transactions, making it easier to track and verify payments.
Compliance: Using credit and debit notes helps businesses comply with accounting standards and tax regulations.

Q.5 B. Explain Supply with Consideration under GST. (07)

Meaning of Supply

Under the Goods and Services Tax (GST), the term supply is the most important concept because GST is levied on supply of goods or services. As per Section 7 of the CGST Act, 2017, supply includes all forms of supply of goods or services made for a consideration in the course or furtherance of business.

Meaning of Consideration

Consideration means anything given in return for the supply of goods or services. It may be:

In money, or
In kind, or
In the form of an act or forbearance

Consideration must flow either from the recipient or any other person. It excludes government subsidies.

Supply with Consideration

A supply with consideration refers to a transaction where goods or services are supplied in exchange for some value, whether in cash, kind, or another service.

For a transaction to be treated as supply with consideration, the following conditions must be satisfied:

There must be a supply of goods or services
The supply must be for a consideration
The supply must be made in the course or furtherance of business
The supply must be made by a taxable person
The supply must be a taxable supply

Forms of Supply with Consideration

Supply for Money
Goods or services are supplied in exchange for money.
Example: Sale of goods for ₹50,000.
Barter or Exchange
Goods or services are exchanged for other goods or services.
Example: A mobile phone exchanged for a laptop.
Partly in Money and Partly in Kind
Consideration is partly in cash and partly in goods or services.
Example: Old car exchanged with ₹5,00,000 for a new car.

Examples of Supply with Consideration

Sale of goods by a trader
Providing consultancy services for fees
Renting of property for rent
Supply of goods under hire purchase
Exchange of goods or services

Taxability under GST

All supplies made for consideration in the course or furtherance of business are taxable under GST, unless they are:

Exempt supplies
Nil-rated supplies
Non-GST supplies

Importance of Supply with Consideration

It determines whether GST is applicable
It helps in identifying taxable transactions
It forms the basis for valuation and levy of tax

OR

Q.5 C. Short Notes (Any 3) (15)

1. Composite and Mixed Supply

Meaning of Composite Supply

As per Section 2(30) of the CGST Act, 2017, a composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

Features of Composite Supply

Two or more supplies are involved
Supplies are naturally bundled
Supplied together in the ordinary course of business
One supply is the principal supply
Tax rate of the principal supply is applicable on the entire supply

Example of Composite Supply

Supply of goods with transport and insurance
Restaurant service (supply of food along with service)
Sale of a computer with pre-installed software
Air travel including meals and baggage

Tax Treatment of Composite Supply

GST is charged at the rate applicable to the principal supply.

Example:
If a machine is sold with installation service, GST rate of the machine (principal supply) will apply to the entire value.

Meaning of Mixed Supply

As per Section 2(74) of the CGST Act, 2017, a mixed supply means two or more individual supplies of goods or services, made together for a single price, which are not naturally bundled.

Features of Mixed Supply

Two or more supplies are involved
Supplies are not naturally bundled
Supplied together for a single price
No principal supply
Highest rate of tax is applicable

Example of Mixed Supply

Gift hamper containing chocolates, dry fruits, soft drinks, and toys sold for one price
Festival combo pack
Free gifts supplied along with goods for a single price

Tax Treatment of Mixed Supply

GST is charged at the highest rate applicable to any item in the package.

Example:
If a gift hamper includes items taxed at 5%, 12%, and 18%, GST @18% will apply on the entire value.

2. Concept of related Person in GST

Meaning of Related Person

Under GST, the concept of related persons is important for determining the value of supply, especially when transactions are not at arm’s length.

As per Explanation to Section 15 of the CGST Act, 2017, persons are considered related if there is a relationship that may influence the price of goods or services.

Who are Treated as Related Persons under GST

Persons shall be deemed to be related if:

Officers or Directors
Such persons are officers or directors of one another’s businesses.
Legally Recognized Business Partners
They are legally recognized partners in business.
Employer and Employee
Employer and employee are related persons.
Control Relationship
Any person who directly or indirectly:

Owns, controls, or holds 25% or more of the outstanding voting stock or shares of both businesses.

Control by Third Person
One person directly or indirectly controls the other.
Common Control
Both persons are directly or indirectly controlled by a third person.
Family Members
They are members of the same family.
Sole Agent / Distributor / Concessionaire
One person is the sole agent, sole distributor, or sole concessionaire of the other.

Meaning of Family under GST

Family includes:

Spouse
Parents
Children (including adopted children)
Brothers and sisters

Importance of Related Person Concept

The concept is important because:

Price between related persons may not be at market value
GST valuation rules apply to ensure correct tax
Prevents tax evasion and under-valuation
Helps tax authorities determine fair transaction value

Valuation in Case of Related Persons

When supply is made between related persons, the transaction value may not be accepted, and valuation is done as per GST Valuation Rules, such as:

Open market value
Value of like kind and quality
Cost-based valuation

Examples of Related Persons

Company and its director
Employer and employee
Two companies under common control
Husband and wife carrying on business with each other
Sole distributor and manufacturer

3. E-way Bill.

The Electronic Way Bill (E-Way Bill) is a document mandated under the Goods and Services Tax (GST) regime in India for the movement of goods exceeding a specified value. It is essentially a compliance mechanism to track the movement of goods and prevent tax evasion. The E-Way Bill system was implemented to streamline the movement of goods across state borders and within states, replacing the earlier cumbersome system of physical check posts and multiple permits.

An E-Way Bill is an electronic document generated on the GST portal for the movement of goods from one place to another. It is required when the value of goods exceeds ₹50,000, whether the movement is for sale, transfer, job work, or any other reason.

E-Way Bill ensures that goods being transported are covered under GST law and helps prevent tax evasion.

When is E-Way Bill Required

An E-Way Bill is required when:

Value of consignment exceeds ₹50,000
Goods are supplied for sale
Goods are transferred between branches
Goods are sent for job work
Goods are returned
Goods are moved for reasons other than supply

Who Should Generate the E-Way Bill

Registered supplier
Registered recipient
Transporter, if supplier or recipient has not generated it

Components of E-Way Bill

An E-Way Bill consists of two parts:

Part A: Details of goods
(Invoice number, date, value, GSTIN of supplier and recipient)
Part B: Transport details
(Vehicle number or transporter ID)

Validity of E-Way Bill

The validity of the E-Way Bill depends on the distance the goods are being transported. The validity is calculated from the time of generation of the E-Way Bill.

Up to 200 km: 1 day validity
For every additional 200 km: Additional 1 day validity

Extension of Validity:

The validity of the E-Way Bill can be extended within 8 hours before or after the expiry time. The extension can be done by providing a valid reason for the delay.

Situations Where E-Way Bill is Not Required

Transport of exempt goods
Goods transported by non-motorised conveyance
Goods transported within notified areas
Goods below ₹50,000 (unless required by the state)

Penalty for Non-Compliance

Penalty of ₹10,000 or tax amount involved, whichever is higher
Goods and vehicle may be detained or seized

Importance of E-Way Bill

Prevents tax evasion
Ensures smooth movement of goods
Enables real-time tracking of goods
Promotes transparency under GST

4. Tax Invoice.

A tax invoice is a document issued by a supplier to a recipient for taxable supplies of goods or services. It serves as evidence of a transaction and is crucial for claiming input tax credits (or similar tax deductions) by the recipient. In essence, it's a detailed bill that includes specific tax information required by law.

A Tax Invoice is a document issued by a registered supplier to the recipient for the supply of taxable goods or services. It shows the value of supply, rate of GST, and amount of tax charged and is the primary document for charging GST.

A tax invoice is compulsory for all taxable supplies under GST.

Who Issues a Tax Invoice

A registered supplier
Issued to a registered or unregistered recipient
For taxable supplies only (not for exempt supplies)

Time Limit for Issuing Tax Invoice

Goods:
Issued before or at the time of removal or delivery of goods
Services:
Issued within 30 days from the date of supply of service
(45 days for banks and NBFCs)

Contents of a Tax Invoice

A tax invoice must contain the following details:

Name, address, and GSTIN of the supplier
Invoice number and date
Name, address, and GSTIN/UIN of recipient (if registered)
Description of goods or services
HSN or SAC code
Quantity and value of goods or services
Taxable value
Rate and amount of CGST, SGST/UTGST, or IGST
Place of supply (for inter-state supply)
Signature or digital signature of supplier

5. Compulsory Registration

Meaning of Compulsory Registration

Compulsory registration under GST means certain persons are required to register under GST irrespective of their turnover. Even if their turnover is below the threshold limit, registration is mandatory for them.

Persons Liable for Compulsory Registration

The following persons must compulsorily register under GST:

Inter-State Suppliers
Persons making inter-state supply of goods or services.
Casual Taxable Persons
Persons who occasionally undertake taxable supply in a state where they have no fixed place of business.
Non-Resident Taxable Persons
Persons who supply goods or services from outside India.
Persons Liable to Pay Tax under Reverse Charge
Persons required to pay GST under reverse charge mechanism.
E-Commerce Operators
Persons who own, operate, or manage digital platforms facilitating supply of goods or services.
Suppliers through E-Commerce Operator
Persons supplying goods or services through an e-commerce platform.
Input Service Distributors (ISD)
Persons distributing input tax credit to branches.
Persons Deducting TDS or Collecting TCS
Persons required to deduct TDS or collect TCS under GST.
Agents of a Supplier
Persons supplying goods or services on behalf of another registered person.
Persons Notified by the Government
Any class of persons notified by the government.

Importance of Compulsory Registration

Ensures tax compliance
Brings more taxpayers under GST
Prevents tax evasion
Enables proper tax collection

Example

A person supplying goods from Maharashtra to Gujarat must register under GST even if his turnover is ₹5 lakhs.

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TYBMS SEM 6 Indirect Tax April 2025 Question Paper with Solution