Miss Shreya, proprietor of M/s. Happy Enterprise, a registered supplier of taxable goods and services in the state of West Bengal, pays GST under…

CA Intermediate · Taxation · MTP · January 2025
Miss Shreya, proprietor of M/s. Happy Enterprise, a registered supplier of taxable goods and services in the state of West Bengal, pays GST under regular scheme. It is not eligible for any threshold exemption. It provided the following information for the month of December 2024: S. No. Particulars Amount (₹) OUTWARD SUPPLY: i. Intra-state supply of goods to M/s. Reliable & Sons 7,00,000 ii. Intra-state transfer of goods to its branch office in the state of West Bengal. Both places are under the same GSTIN. 1,00,000 iii. Permanent transfer of old computers to orphanage home without consideration. Input tax credit was not availed on the same. 80,000 iv. Advance received for Future supply of management consultancy service to Mr. Shubam (Intra-state supply) 40,000 INWARD SUPPLY: (Intra-state) i. Purchase of taxable goods from registered suppliers. 8,00,000 ii. Availed Works Contract service for repair of office building. Amount of repair was debited in the profit & loss account. 30,000 iii. Availed legal service form an advocate to represent the matter in the Court relating to collection of disputed proceed from customers. 50,000 Notes: (i) Rate of CGST, SGST and IGST on all supplies are as below: Particulars CGST SGST IGST Goods 2.5% 2.5% 5% Supply of services 9% 9% 18% (ii) Both inward and outward supplies given above are exclusive of taxes. (iii) All the conditions necessary for availing the ITC have been fulfilled. (iv) The aggregate turnover of M/s Happy Enterprise in the preceding financial year exceeds the threshold limit for registration. (v) Working note should form part of the answer. Compute the net minimum GST payable in cash by M/s. Happy Enterprise for the month of December 2024.

Suggested Answer and Working Notes:

Computation of minimum net GST payable in cash by M/s Happy Enterprise for the month of December 2024 Particulars Value (₹) CGST (₹) SGST (₹) IGST (₹) GST payable under forward charge Intra-State supply of goods to M/s Natural & Sons 7,00,000 17,500 [7,00,000 × 2.5%] 17,500 [7,00,000 × 2.5%] Intra-State branch transfer 1,00,000 -- -- [Such transfer is not a supply as the branch has the same GSTIN as that of the head office and thus, is not a distinct person.] Permanent transfer of old computers to orphanage home without consideration. 80,000 -- [Permanent transfer or disposal of business assets was not treated as supply even if made without consideration in terms of Schedule-I of the CGST Act, 2017, as ITC was not availed on the same.] Advance received for future intra-State supply of management consultancy service 40,000 3,600 [40,000 × 9%] 3,600 [40,000 × 9%] (In case of supply of service, tax is payable at the time of receipt of advance amount too) Total output tax 21,100 21,100 Less: ITC utilized 27,200 27,200 Net GST payable [A] Nil Nil Legal services availed [B] 50,000 4,500 [50,000 × 9%] 4,500 [50,000 × 9%] [Tax on legal services availed by a business entity from an advocate is payable under reverse charge. Further, tax payable under reverse charge cannot be set off against ITC and thus, reverse charge has to be paid in cash since the tax payable under reverse charge is not an output tax.] Minimum net GST payable in cash [A] + [B] 4,500 4,500 Working Note: Computation of ITC available Particulars Value (₹) CGST (₹) SGST (₹) IGST (₹) Intra-State purchase of taxable goods 8,00,000 20,000 [8,00,000 × 2.5%] 20,000 [8,00,000 × 2.5%] [ITC of goods used in the course/ furtherance of business is available.] Works contract service for repair of office 30,000 2,700 [30,000 × 9%] 2,700 [30,000 × 9%] [ITC is available since the repair amount is debited in the profit & loss account and not capitalized in the books of account.] Legal services availed 50,000 4,500 [50,000 × 9%] 4,500 [50,000 × 9%] [ITC of services used in the course/ furtherance of business is available.] Total 27,200 27,200

Topics: Paper 3B: Goods and Services Tax

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