XYZ Ltd., a registered supplier under GST in the State of Tamil Nadu, is engaged in providing various kinds of supplies of goods and services. It…

CA Final · Indirect Tax Laws · PYQS · May 2024
XYZ Ltd., a registered supplier under GST in the State of Tamil Nadu, is engaged in providing various kinds of supplies of goods and services. It provides the following information for month of October, 2023: S. No. Particulars Amount (₹) OUTWARD SUPPLY: (i) Supplies a consignment of goods in the territorial water to M/s Vikram Industries, registered in Kerala. The said territorial waters is located at a distance of 12 nautical miles from the baseline of State of Kerala and 11 nautical miles from the baseline of State of Tamil Nadu. 5,00,000 (ii) Provided pure labour services of construction of a single commercial unit located in Delhi not forming part of any residential complex to a customer in Delhi. 12,00,000 (iii) Supplied 25 televisions over the counter to Mr. Vijay, an unregistered buyer, who took it to his residence in Haryana. 14,00,000 INWARD SUPPLY: (i) Received a debit note in respect of inward intra-State taxable supplies received in the financial year 2020-21 for the quantity difference as agreed. These inward supplies were used for all goods manufactured in factory. Date of debit note is 17th October, 2023. 3,00,000 (ii) Purchased silk yarn (to be used as raw material) from Mr. Ravi, who manufactures silk yarn from raw silk. Mr. Ravi is registered in the State of Rajasthan. 8,00,000 (iii) Availed services of an arbitral tribunal in Chennai, Tamil Nadu to settle a case relating to the Companies Act. 6,00,000 (iv) Purchased raw material form ABK Ltd., registered in the State of Andhra Pradesh. 15,00,000 (v) Purchased a new truck from a dealer in Cochin, Kerala for transport of materials. 14,00,000 Notes: The company provided the following additional information related to above said transactions or otherwise: (i) The company claimed depreciation under the Income-tax Act, 1961 on the value of new truck purchased including all applicable taxes. (ii) The company provided a corporate guarantee of 2.5 crore to BYH Ltd., its related company, having registered office in the State of Maharashtra, for loan availed by the later form Mangal Bank Ltd., Maharashtra. No consideration has been charged against this corporate guarantee. (iii) In the month of March, 2023, company had availed services in an inter-State transaction with a taxable value of 9,00,000 and a tax rate of 18%. This transaction was liable to tax under reverse charge. Payment for the same to the supplier was not made till the current month (overdue for 181 days during October, 2023). However, tax due under the said transaction was paid to Government and input tax credit availed in the month of transaction itself. (iv) The accountant of the company did not claim input tax credit in respect of debit note received for the reason that the original purchase was related to earlier years for which ITC claim eligibility has become time barred. (v) Invoice issued to Mr. Vijay for televisions mentions only his name and State. However, his complete address of Haryana is missing in the invoice. (vi) ABK Ltd. is mandatorily required to issue e-invoice. However, it did not issue e-invoice with Invoice Reference Number (IRN) although the invoice was reflected in GSTR-2B. (vii) Turnover of XYZ Ltd. for the precious financial year was 190 lakh. (viii) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively for both inward and outward supply of goods and services involved. (ix) All the amounts given above are exclusive of the GST, wherever applicable. There is no opening balance of any input tax credit and all the conditions necessary for availing the input tax credit have been fulfilled except if mentioned otherwise and also that details of GST paid on inward supplies are available in GSTR 2B. (x) Assume that all the inward supplies have been used only for taxable outward supply. (xi) Company is not covered under any of the exception of rule 86B of the CGST Rules, 2017 regarding restriction on use of available input tax credit. Compute minimum net GST liability of M/s XYZ Ltd, to be paid in cash if any, after utilizing input tax credit if any, for the month of October, 2023. Note: Working notes along with legal reasoning of each item should form part of your answer.

Suggested Answer and Working Notes:

Computation of minimum net GST liability of XYZ Ltd. to be paid in cash for the month of October 2023 S. No. Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹) Output tax payable under forward charge (i) Supply of consignment in territorial waters [Where supply is in territorial waters, place of supply is deemed to be in coastal State where nearest point of the appropriate baseline is located. Therefore, place of supply will be in Tamil Nadu and hence, supply will be intra-State supply] 5,00,000 45,000 [5,00,000 x 9%] 45,000 [5,00,000 x 9%] (ii) Pure labour services [Since pure labour services provided for construction of only residential unit are exempt, such services provided for construction of commercial unit are taxable. Further, it is an inter-State supply since place of supply is location of immoveable property, viz. Delhi.] 12,00,000 2,16,000 [12,00,000 x 18%] (iii) Supply of 25 Televisions 1 [Inter-State supply since place of supply is location as per the address of the unregistered recipient (name of the State) recorded in the invoice issued in respect of the supply, viz. Haryana.] 14,00,000 2,52,000 [14,00,000 x 18%] (iv) Corporate guarantee provided. [Deemed supply under Schedule-I of the CGST Act, 2017 even though made without any consideration. Inter-State supply since place of supply is Maharashtra (location of recipient). Further, value of supply is higher of: (i) 1% of the amount of such guarantee offered, or (ii) actual consideration [Thus, value of supply is 1% of 2.5 crores, i.e. 2,50,000] 2,50,000 45,000 [2,50,000 x 18%] Total output tax 45,000 45,000 5,13,000 Less: ITC available for set off [Refer note below.] [IGST credit is utilized for payment of IGST. CGST and SGST credit is first utilized for payment of CGST and SGST liability respectively and thereafter, for payment of IGST liability.] (45,000) -CGST (45,000) -SGST (1,44,000) -IGST (36000) -CGST (36000) -SGST Net output tax payable in cash Nil Nil 2,97,000 GST payable under reverse charge Tax on services provided by the arbitral tribunal is payable under reverse charge by the recipient of service. [Arbitral tribunal services to XYZ Ltd., a business entity with aggregate turnover exceeding the applicable threshold limit for registration [viz.20 lakh] in the previous financial year are liable to tax under reverse charge mechanism.] 54,000 54,000 Tax on silk yarn supplied by a person who manufactures it from raw silk to a registered person is payable under reverse charge. 1,44,000 Minimum net GST payable for set off 54,000 54,000 4,41,000 Working note - Computation of eligible ITC available for set off S. No. Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹) (i) Debit note received. [ITC on debit notes issued in a financial year (FY) can be availed, any time till 30 th November of the succeeding FY or the date of filing of the relevant annual return, whichever is earlier, based on date of issue of debit note, irrespective of the date of original invoice/ supply.] 3,00,000 27,000 [3,00,000 × 9%] 27,000 [3,00,000 × 9%] (ii) Silk yarn purchased. [Inter-State supply since place of supply is location where movement of goods terminates, viz. Tamil Nadu. Further, ITC on goods to be used in course or furtherance of business is available.] 8,00,000 1,44,000 [8,00,000 × 18%] (iii) Services of the Arbitral Tribunal availed. [Such services are intra-State supply since place of supply is Tamil Nadu (location of recipient). Further, ITC on services used in course or furtherance of business is available.] 6,00,000 54,000 [6,00,000 × 9%] 54,000 [6,00,000 × 9%] (iv) Raw Material purchased from ABK Ltd. [ITC cannot be claimed on the e-invoices without IRN since an e-invoice without IRN is not treated as valid document for claiming ITC.] 15,00,000 (v) Truck purchased. [ITC is not available since depreciation has been claimed on the GST component.] 14,00,000 (vi) Condition of payment of value of supply plus tax within 180 days does not apply to supplies on which tax is payable under reverse mechanism. Total ITC available 81,000 81,000 1,44,000

Topics: Input Tax Credit

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