Manor Co. Ltd. is a company incorporated in India under the Companies Act, 2013 and is registered under GST in Visakhapatnam, Andhra Pradesh. They…

CA Final · Indirect Tax Laws · PYQS · January 2026
Manor Co. Ltd. is a company incorporated in India under the Companies Act, 2013 and is registered under GST in Visakhapatnam, Andhra Pradesh. They are engaged in manufacturing of taxable goods and provide various types of services related to advertisement sector, research and development services in pharmaceutical sector, software development, Data Hosting Service Provider (DHSP). Following details have been provided for the transactions undertaken during the month of June 2025: Sr. No. Particulars Amount (₹) (i) Supply of services by providing right to use the space on hoardings for advertisement at premium locations in Vijayawada, Andhra Pradesh to Laxmi Enterprise, a registered person in Coimbatore, Tamil Nadu. 12,50,000 (ii) Supply of goods to Broadway Exports, a merchant exporter in Visakhapatnam, Andhra Pradesh 15,00,000 (iii) Provided Research & Development services under a contract related to clinical trials to Elysium Pharmaceuticals, USA. 25,20,000 (iv) Provided services as Data Hosting Service Provider (DHSP) to Malher International, Germany, a Cloud Computing Service Provider (CCSP) 18,65,000 (v) Supply of services to Marshal & Co. located in New Zealand. Manor Co. Ltd. is sister concern of Marshal & Co. 10,90,000 (vi) Export of services to Libra Software Co. of Australia. Due to urgent requirement of supply of software, Manor Co. Ltd. took help of Klare Software Co. of New Zealand, who is not related to Manor Co. Ltd., for a consideration paid of 25% of the total contract amount of 25,60,000. 25,60,000 Inward supplies: (i) Paid for hiring of Yacht in Australia for 25 days from Bizzee Corporation registered under GST in Delhi. 1,40,000 (ii) Paid under works contract for construction of effluent plant in the manufacturing unit for treatment of wastewater to remove pollutants before reuse. It is an intra-state supply. 2,25,000 Additional information: (a) Ownership of hoardings mentioned in point (i) is of Manor Co. Ltd. (b) Merchant exporter and Manor Co. Ltd has availed the benefits available and also complied with all the conditions mentioned in Notification no. 40/2017 CT(R) dated 23.10.2017, with reference to point (ii) mentioned above. (c) Regarding point (iii) mentioned above clinical trials have been performed in Visakhapatnam only. Clinical trials have been conducted to develop drug for human consumption. It helps in collection of information related to drugs profile in human body such as absorption, distribution, metabolism, excretion and interaction. It allows choice of safe dosage. (d) In respect to point (iv), there is no contact between Manor Co. Ltd being DHSP and the end users/consumers/subscribers of the Malher International, Germany being foreign CCSP. Manor Co. Ltd provides data hosting services to the Malher International, Germany on a web platform through computing and networking equipment, for the purpose of collecting, storing, processing, distributing or allowing access to large amounts of data. (e) Marshal & Co. has been incorporated by or under the laws prevailing in New Zealand. (f) In respect to point (vi) Manor Co. Ltd raised invoice for whole contract value whereas payment to Klare Software Co. has been directly made by Libra Software Co. RBI by general instruction or by specific approval has allowed that a part of the consideration for such exports can be retained or utilized outside India. (g) Effluent plant is fixed to earth by a foundation. (h) All figures are exclusive of tax except otherwise provided for. (i) All transactions related to export of services fulfils all conditions mentioned in section 2(6) and section 13(2) of IGST Act, 2017. (j) GST rates are 9% each for CGST and SGST and 18% IGST for all inward and outward supplies, except otherwise provided for. (k) All inward supplies have been used for taxable supplies only. (l) LUT/Bond has been executed/filed for the export related supplies. (m) All the conditions necessary for availing input tax credit have been complied with. (n) Your answers should be explained with relevant provisions of GST Law and clarifications if any. Compute the net minimum GST payable in cash for the month of June 2025 by Manor Co. Ltd.

Suggested Answer and Working Notes:

Answer Computation of minimum net GST liability payable in cash for the month of June 2025 S. No. Particulars Value (₹) CGST (₹) SGST (₹) IGST (₹) GST payable under forward charge (i) Supply of services by providing right to use the space on hoardings [It is an intra-State supply since place of supply is Andhra Pradesh being the location where the hoardings are located.] 12,50,000 1,12,500 (12,50,000 x 9%) 1,12,500 (12,50,000 x 9%) (ii) Supply of goods to merchant exporter [Supplies to merchant exporters are taxed @ 0.05% CGST/SGST. Further, it is an intra-State supply since place of supply is Visakhapatnam being location of goods at the time at which movement terminates for delivery to recipient.] 15,00,000 750 (15,00,000 x 0.05%) 750 (15,00,000 x 0.05%) (iii) Research & Development services [Place of supply is USA, being the location of recipient. Further, it is zero-rated supply, since it qualifies as export of services 1 . Further, LUT/Bond has been executed.] 25,20,000 Nil (iv) Provided services as DHSP [Place of supply is Germany, being location of recipient. Further, it is zero rated supply, since it qualifies as export of services 2 . Further, LUT/Bond has been executed] 18,65,000 Nil (v) Supply of services to Marshal & Co. [Services provided to related establishment incorporated under the laws outside India qualify as 'export of services' 3 and thus, is a zero-rated supply. Further, LUT/Bond has been executed.] 10,90,000 Nil (vi) Export of services to Libra Software Co. of Australia. [Total contract value will be considered as export of services and thus, is a zero-rated supply 4 . Further, LUT/Bond has been executed.] 25,60,000 Nil Total output tax 1,13,250 1,13,250 Less: ITC available for set off [Refer working note below.] [FIRST IGST credit is being utilized for payment of CGST and SGST in equal proportion.] (57,600) (57,600) Thereafter, CGST and SGST credit is being utilized for payment of CGST and SGST liability respectively. (20,250) (20,250) Net tax payable 35,400 35,400 Nil GST payable under reverse charge Add: Services provided by Klare Software Co. (25% of 25,60,000) [Tax on portion of imported services provided by supplier outside India to recipient outside India is payable under reverse charge by supplier in India. 5 6,40,000 1,15,200 Minimum net GST payable in cash [Tax payable under reverse charge, being not an output tax, cannot be set off against ITC and will have to be paid in cash.] 35,400 35,400 1,15,200 1 Since said services are being provided from taxable territory to non-taxable territory as per a contract and such services fulfill all other conditions of export of services except the condition that place of supply is outside India, the place of supply shall be the location of the recipient of services in terms of Notification No. 04/2019 IT dated 30.09.2019. 2 Circular No. 232/26/2024 GST dated 10.09.2024 3 Circular No. 161/17/2021 GST dated 20.09.2021 4 Circular No. 78/52/2018 GST dated 31.12.2018 5 Circular No. 78/52/2018 GST dated 31.12.2018 Working note - Computation of eligible ITC available for set off Particulars Amount (₹) CGST (₹) SGST (₹) IGST (₹) Services provided by Klare Software Co. [ITC of IGST paid on said imported services is available. 6 ] 6,40,000 - - 1,15,200 Hiring of Yacht 1,40,000 - - Nil [ITC on yacht being a vessel is blocked; thus, ITC on hiring of such vessels is also blocked.] Works contract [Since plant is affixed to earth by foundation, it is eligible plant and machinery and ITC on works contract services availed for construction of eligible plant and machinery is allowed.] 2,25,000 20,250 20,250 - Total ITC available 20,250 20,250 1,15,200 6 Circular No. 78/52/2018 GST dated 31.12.2018 Note - In terms of sections 49(5), 49A, 49B, rule 88A and Circular No. 98/17/2019 GST dated 23.04.2019 prescribing the sequence of utilisation of ITC, ITC of IGST can be set off against CGST and SGST liability in any order and in any proportion. Thus, there can be multiple ways to set off the ITC of IGST against CGST and SGST liability to keep net GST payable in cash to minimum. However, in all cases, total amount of net GST payable in cash will be - 70,800 together under CGST and SGST and - 1,15,200 under IGST.

Topics: Input Tax Credit

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