Sitaram Industries Limited, a registered entity under GST, in the State of Karnataka, is engaged in manufacture and supply of both taxable and…

(a) Computation of eligible ITC and net GST payable by M/s Sitaram Industries Ltd., for the month of October, 2023 Particulars Value IGST @ 18% CGST @ 9% SGST @ 9% Particulars ₹ Particulars ₹ Outward Supply: Sale of old warehouse building [Since sale of building is neither supply of goods nor supply of services in terms of para 5 of Schedule III of the CGST Act, 2017, it does not qualify as supply.] Nil - - - Supply of laptops [Inter-State supply since place of supply here is the 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, in terms of section 10(1)(ca) of the IGST Act, 2017. Further, as per section 8(a), supply of laptops with packing is a composite supply, chargeable to tax at the rate applicable to the principal supply (viz. supply of laptops) i.e., 18%.] 13,30,000 [12,00,000 + 1,30,000] 2,39,400 - - Direct Selling Agent service [Intra-State supply since place of supply here is the location of recipient, viz. Karnataka, in terms of section 12(2)(a) of the IGST Act, 2017. Further, tax will be payable under forward charge since such services are provided by a person other than individual - Notification No. 13/2017 CT(R) dated 28.06.2017.] 4,00,000 - 36,000 36,000 Pure labour servicer [Inter-State supply since place of supply here is the location of immoveable property, viz. Maharashtra in terms of section 12(3) of the IGST Act, 2017. Further, services by way of pure labour contracts of erection and installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex are exempt in terms of Notification No. 12/2017 CT(R) dated 28.06.2017. However, such services in relation to renovation work are not exempt.] 6,20,000 1,11,600 - - Free training to agents [Services provided by the company to agents without consideration is not deemed as supply in terms of para 3 of Schedule-l since only goods supplied by principal to agent are covered therein. Further, such services are also not covered in para 2 of Schedule I as agents are not related persons.] 1,00,000 - - - Corporate guarantee provided to Laxmi Logistics Limited [Supply of service between related parties even when made without any consideration is deemed supply in terms of Schedule I. Further, value of corporate guarantee, in terms of rule 28(2), will be higher of: (i) 1% of the amount of such guarantee offered, or (ii) actual consideration] (i.e. 1% of 2 crore) [Circular No. 204/16/2023 GST dated 27.10.2023] 2,00,000 - 18,000 18,000 Interest received on fixed deposits [Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest are exempt vide Notification No. 12/2017 CT (R) dated 28.06.2017] 2,00,000 - - - Gross GST liability [A] 3,51,000 54,000 54,000 Less: ITC available for set off [Refer Note (iii) below] 24,958 16,639 16,639 Net GST payable in cash 3,26,042 37,361 37,361 Notes: (i) Computation of ITC admissible to Sitaram Industries Ltd. for the month of October, 2023 Particulars Value IGST ₹ CGST ₹ SGST ₹ Debit note received [ITC on debit notes issued in a financial year can be availed any time till 30 th November of the succeeding financial year or the date of filing of the relevant annual return, whichever is earlier, irrespective of the date of original invoice/ supply, in terms of section 16(4).] 4,00,000 - 36,000 36,000 Solar panels purchased [ITC cannot be claimed in respect of solar panels, since ITC on goods or services or both received by a taxable person for construction of an immovable property (other than plant and machinery on his own account including when such goods or services or both are used in the course of furtherance of business is blocked in terms of section 17(5)(d).] 5,00,000 - - - Uniforms purchased [ITC on the uniforms which are necessary to ensure the safety of the employees while carrying out the business activity, is available. However, uniforms not provided for any safety purpose are construed as being used for personal consumption and thus, ITC thereon is blocked in terms of section 17(5)(d).] 3,00,000 54,000 - - Total 54,000 36,000 36,000 (ii) Computation of common credit attributable to exempt supplies in respect of Sitaram Industries Ltd. for the month of October, 2023 Particulars IGST (₹) CGST (₹) SGST (₹) Common credit on receipt of debit note [Debit note, although received in respect of taxable inward supply, is being used for all goods manufactured in factory which comprises of both taxable and exempt goods.] - 36,000 36,000 Common credit on purchase of uniforms [Uniforms are being used commonly for manufacturing of both taxable and exempt goods.] 54,000 - - Common credit attributable to exempt supplies (rounded off) = Common credit x (Exempt turnover during the period / Total turnover during the period) = 54,000 x 32,00,000/59,50,000 (IGST) = 36,000 x 32,00,000 /59,50,000 (CGST/SGST) Exempt turnover = 32,00,000 and total turnover = 59,50,000 [Refer note below] Note: As per explanation to section 17(3), the expression "value of exempt supply" shall not include the value of activities or transactions specified in Schedule III, except, inter alia , sale of building subject to clause (b) of paragraph 5 of Schedule II. Further, as per explanation to Chapter V (Input Tax Credit) of the CGST Rules, 2017, for determining the value of an exempt supply as referred to in section 17(3), the value of exempt supply in respect of land and building is the value adopted for the purpose of paying stamp duty. Further, as per explanation 1 to rule 43, the aggregate value of exempt supplies for the purpose of rules 42 and 43, inter alia , excludes the value of services by way of accepting deposits, extending loans or advances in so far as the consideration is represented by way of interest or discount, except in case of a banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances. Therefore, value of exempt turnover in the given case will be the value of building (₹ 32,00,000). Total turnover will be sum of value of building (₹ 32,00,000) + supply of laptop (₹ 13,30,000) + supply of Direct Selling Agent service (₹ 4,00,000) + supply of pure labour service (₹ 6,20,000) + supply of corporate guarantee (₹ 2,00,000) + interest received on fixed deposits (₹ 2,00,000) = 59,50,000 (iii) Computation of ITC available for set off of Sitaram Industries Limited for the month of October, 2023 Particulars IGST (₹) CGST (₹) SGST (₹) Common credit on inputs and input services 54,000 36,000 36,000 ITC available in the Electronic Credit Ledger 54,000 36,000 36,000 Less: Common credit attributable to exempt supplies during the tax period [As calculated in Note (ii) above] 29,042 19,361 19,361 ITC available for set off 24,958 16,639 16,639