Goods and Services Tax (Group I) Model Test Paper - 1 (Answers) | Model Test Papers for CA Intermediate PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 1 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) Invoice shall be issued before or at the time of removal of 
smartphones to distributors. 
2 (b) ITC of ` 18 lakh can be claimed and value of asset on which 
depreciation can be claimed under the provisions of Income- 
Tax Act, 1961 shall be ` 1 crore. 
3 (a) The demerged entity shall be treated as related party of the 
Company. 
4 (d) 72 months from due date of furnishing annual return for the 
relevant financial year 
5 (a) 45 days 
6 (c) The restriction of 180 days for payment of consideration is not 
applicable in the present case. 
7 (b) 2 days 
8 (c) Both (a) and (b) 
Division B - Descriptive Questions 
1. (a)  Computation of GST payable on outward supplies  
S. 
No. 
Particulars  CGST  
@ 9% (`) 
SGST  
@ 9% (`) 
IGST  
@ 18% (`)  
(i) Intra-State supply of goods for  
` 4,00,000 [Note-1] 
36,000 36,000 Nil 
(ii) Services rendered by way of 
labour contracts for repairing 
a single residential unit 
otherwise than as a part of 
residential complex [Note-2] 
9,000 9,000 Nil 
(iii) Services provided by way of 
training in recreational 
activities relating to sports 
[Note-3] 
Nil Nil 1,800 
(iv) Inter-State security services 
provided to Bharat higher 
secondary school for their 
annual day function to be held 
in Kaman Auditorium.[Note-4] 
Nil Nil 2,700 
 Total GST payable  45,000 45,000 4,500 
553
Page 2


ANSWERS OF MODEL TEST PAPER 1 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) Invoice shall be issued before or at the time of removal of 
smartphones to distributors. 
2 (b) ITC of ` 18 lakh can be claimed and value of asset on which 
depreciation can be claimed under the provisions of Income- 
Tax Act, 1961 shall be ` 1 crore. 
3 (a) The demerged entity shall be treated as related party of the 
Company. 
4 (d) 72 months from due date of furnishing annual return for the 
relevant financial year 
5 (a) 45 days 
6 (c) The restriction of 180 days for payment of consideration is not 
applicable in the present case. 
7 (b) 2 days 
8 (c) Both (a) and (b) 
Division B - Descriptive Questions 
1. (a)  Computation of GST payable on outward supplies  
S. 
No. 
Particulars  CGST  
@ 9% (`) 
SGST  
@ 9% (`) 
IGST  
@ 18% (`)  
(i) Intra-State supply of goods for  
` 4,00,000 [Note-1] 
36,000 36,000 Nil 
(ii) Services rendered by way of 
labour contracts for repairing 
a single residential unit 
otherwise than as a part of 
residential complex [Note-2] 
9,000 9,000 Nil 
(iii) Services provided by way of 
training in recreational 
activities relating to sports 
[Note-3] 
Nil Nil 1,800 
(iv) Inter-State security services 
provided to Bharat higher 
secondary school for their 
annual day function to be held 
in Kaman Auditorium.[Note-4] 
Nil Nil 2,700 
 Total GST payable  45,000 45,000 4,500 
553
Notes 
1. A registered person (excluding composition supplier and 
registered persons making supply of specified actionable claims) 
has to pay GST on the outward supply of goods at the time of 
supply as specified in section 12 of the CGST Act, 2017, i.e. date 
of issue of invoice or the last date on which invoice ought to have 
been issued.  Thus, liability to pay tax on the advance received in 
January will also arise in the month of February, when the invoice 
for the supply is issued. 
2. Services by way of pure labour contracts of construction, erection, 
commissioning, or installation of original works pertaining to a 
single residential unit otherwise than as a part of a residential 
complex are exempt. Labour contracts for repairing are thus, 
taxable. 
3. Services by way of training in sports is exempt under GST, only if 
provided by charitable entities registered under section 12AA or 
section 12AB of the Income-tax Act,1961.  Thus, in the given case, 
said service is taxable. 
4. Security services provided to Bharat higher secondary School for 
Annual Day function organised outside the school campus will be 
taxable as only the security services performed within the 
premises of the higher secondary school are exempt. 
Computation of total ITC 
Particulars CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Opening ITC  57,000 Nil 50,000 
Add: Purchase of goods from a 
composition dealer 
[ITC is not available in case of supply 
of goods where tax has been paid 
under composition scheme] 
Nil Nil Nil 
Add: Membership of a club [Blocked 
credit] 
Nil Nil Nil 
Add: Goods transport services 
received from GTA  
[Input tax credit is available for the 
services received from GTA as the 
same are used in the course or 
furtherance of business.] 
Nil Nil 24,000 
Add: Inputs to be received in 4 lots, 
out of which 2
nd
 lot was received 
during the month [In case of goods 
received in lots, ITC can be taken 
only upon receipt of the last lot] 
Nil Nil Nil 
Total ITC  57,000 Nil 74,000 
554
Page 3


ANSWERS OF MODEL TEST PAPER 1 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) Invoice shall be issued before or at the time of removal of 
smartphones to distributors. 
2 (b) ITC of ` 18 lakh can be claimed and value of asset on which 
depreciation can be claimed under the provisions of Income- 
Tax Act, 1961 shall be ` 1 crore. 
3 (a) The demerged entity shall be treated as related party of the 
Company. 
4 (d) 72 months from due date of furnishing annual return for the 
relevant financial year 
5 (a) 45 days 
6 (c) The restriction of 180 days for payment of consideration is not 
applicable in the present case. 
7 (b) 2 days 
8 (c) Both (a) and (b) 
Division B - Descriptive Questions 
1. (a)  Computation of GST payable on outward supplies  
S. 
No. 
Particulars  CGST  
@ 9% (`) 
SGST  
@ 9% (`) 
IGST  
@ 18% (`)  
(i) Intra-State supply of goods for  
` 4,00,000 [Note-1] 
36,000 36,000 Nil 
(ii) Services rendered by way of 
labour contracts for repairing 
a single residential unit 
otherwise than as a part of 
residential complex [Note-2] 
9,000 9,000 Nil 
(iii) Services provided by way of 
training in recreational 
activities relating to sports 
[Note-3] 
Nil Nil 1,800 
(iv) Inter-State security services 
provided to Bharat higher 
secondary school for their 
annual day function to be held 
in Kaman Auditorium.[Note-4] 
Nil Nil 2,700 
 Total GST payable  45,000 45,000 4,500 
553
Notes 
1. A registered person (excluding composition supplier and 
registered persons making supply of specified actionable claims) 
has to pay GST on the outward supply of goods at the time of 
supply as specified in section 12 of the CGST Act, 2017, i.e. date 
of issue of invoice or the last date on which invoice ought to have 
been issued.  Thus, liability to pay tax on the advance received in 
January will also arise in the month of February, when the invoice 
for the supply is issued. 
2. Services by way of pure labour contracts of construction, erection, 
commissioning, or installation of original works pertaining to a 
single residential unit otherwise than as a part of a residential 
complex are exempt. Labour contracts for repairing are thus, 
taxable. 
3. Services by way of training in sports is exempt under GST, only if 
provided by charitable entities registered under section 12AA or 
section 12AB of the Income-tax Act,1961.  Thus, in the given case, 
said service is taxable. 
4. Security services provided to Bharat higher secondary School for 
Annual Day function organised outside the school campus will be 
taxable as only the security services performed within the 
premises of the higher secondary school are exempt. 
Computation of total ITC 
Particulars CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Opening ITC  57,000 Nil 50,000 
Add: Purchase of goods from a 
composition dealer 
[ITC is not available in case of supply 
of goods where tax has been paid 
under composition scheme] 
Nil Nil Nil 
Add: Membership of a club [Blocked 
credit] 
Nil Nil Nil 
Add: Goods transport services 
received from GTA  
[Input tax credit is available for the 
services received from GTA as the 
same are used in the course or 
furtherance of business.] 
Nil Nil 24,000 
Add: Inputs to be received in 4 lots, 
out of which 2
nd
 lot was received 
during the month [In case of goods 
received in lots, ITC can be taken 
only upon receipt of the last lot] 
Nil Nil Nil 
Total ITC  57,000 Nil 74,000 
554
   Computation of minimum GST payable from electronic 
cash ledger 
Particulars CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
GST payable  45,000 45,000 4,500 
Less: ITC [First ITC of IGST should be 
utilized in full - first against IGST 
liability and then against CGST and 
SGST liabilities in a manner to 
minimize cash outflow] 
(24,500) 
IGST 
(3) 
(45,000
) 
IGST 
(2) 
(4,500) 
IGST 
(1) 
Less: ITC of CGST to be used against 
CGST 
(20,500) 
CGST 
 
 
Minimum GST payable in cash Nil Nil Nil 
 Note: Since sufficient balance of ITC of CGST is available for paying 
CGST liability and cross utilization of ITC of CGST and SGST is not 
allowed, ITC of IGST has first been used to pay SGST (after paying IGST 
liability) and then CGST to minimize cash outflow.   
(b) Computation of GST liability 
S. 
No. 
Particulars Mridul 
Traders 
(`) 
Kalu 
Motors Ltd. 
(`) 
(i) Price of goods 10,000 30,000 
(ii) Add: Packing charges (Note-1) 500  
(iii) Add: Commission (Note-1) 500  
(iv) Add: Weighment charges (Note-1) - 2,000 
(v) Less: Discount for prompt payment  
(Note-2) 
 
 - 
 
     1,000 
 Value of taxable supply 11,000 31,000 
 IGST payable @ 18% (Note-3) 1,980  
 CGST payable @ 9% (Note-4)  2,790 
 SGST payable @ 9% (Note-4)  2,790 
Notes: 
1. Incidental expenses, including commission and packing, charged 
by supplier to recipient of supply is includible in the value of supply.  
Weighment charges are also incidental expenses, hence includible 
in the value of supply [Section 15 of the CGST Act, 2017]. 
2. Since discount is known at the time of supply, it is deductible from 
the value in terms of section 15 of the CGST Act, 2017. 
3. Section 10 of the IGST Act, 2017 provides that where the supply 
involves movement of goods, the place of supply of such goods 
555
Page 4


ANSWERS OF MODEL TEST PAPER 1 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) Invoice shall be issued before or at the time of removal of 
smartphones to distributors. 
2 (b) ITC of ` 18 lakh can be claimed and value of asset on which 
depreciation can be claimed under the provisions of Income- 
Tax Act, 1961 shall be ` 1 crore. 
3 (a) The demerged entity shall be treated as related party of the 
Company. 
4 (d) 72 months from due date of furnishing annual return for the 
relevant financial year 
5 (a) 45 days 
6 (c) The restriction of 180 days for payment of consideration is not 
applicable in the present case. 
7 (b) 2 days 
8 (c) Both (a) and (b) 
Division B - Descriptive Questions 
1. (a)  Computation of GST payable on outward supplies  
S. 
No. 
Particulars  CGST  
@ 9% (`) 
SGST  
@ 9% (`) 
IGST  
@ 18% (`)  
(i) Intra-State supply of goods for  
` 4,00,000 [Note-1] 
36,000 36,000 Nil 
(ii) Services rendered by way of 
labour contracts for repairing 
a single residential unit 
otherwise than as a part of 
residential complex [Note-2] 
9,000 9,000 Nil 
(iii) Services provided by way of 
training in recreational 
activities relating to sports 
[Note-3] 
Nil Nil 1,800 
(iv) Inter-State security services 
provided to Bharat higher 
secondary school for their 
annual day function to be held 
in Kaman Auditorium.[Note-4] 
Nil Nil 2,700 
 Total GST payable  45,000 45,000 4,500 
553
Notes 
1. A registered person (excluding composition supplier and 
registered persons making supply of specified actionable claims) 
has to pay GST on the outward supply of goods at the time of 
supply as specified in section 12 of the CGST Act, 2017, i.e. date 
of issue of invoice or the last date on which invoice ought to have 
been issued.  Thus, liability to pay tax on the advance received in 
January will also arise in the month of February, when the invoice 
for the supply is issued. 
2. Services by way of pure labour contracts of construction, erection, 
commissioning, or installation of original works pertaining to a 
single residential unit otherwise than as a part of a residential 
complex are exempt. Labour contracts for repairing are thus, 
taxable. 
3. Services by way of training in sports is exempt under GST, only if 
provided by charitable entities registered under section 12AA or 
section 12AB of the Income-tax Act,1961.  Thus, in the given case, 
said service is taxable. 
4. Security services provided to Bharat higher secondary School for 
Annual Day function organised outside the school campus will be 
taxable as only the security services performed within the 
premises of the higher secondary school are exempt. 
Computation of total ITC 
Particulars CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Opening ITC  57,000 Nil 50,000 
Add: Purchase of goods from a 
composition dealer 
[ITC is not available in case of supply 
of goods where tax has been paid 
under composition scheme] 
Nil Nil Nil 
Add: Membership of a club [Blocked 
credit] 
Nil Nil Nil 
Add: Goods transport services 
received from GTA  
[Input tax credit is available for the 
services received from GTA as the 
same are used in the course or 
furtherance of business.] 
Nil Nil 24,000 
Add: Inputs to be received in 4 lots, 
out of which 2
nd
 lot was received 
during the month [In case of goods 
received in lots, ITC can be taken 
only upon receipt of the last lot] 
Nil Nil Nil 
Total ITC  57,000 Nil 74,000 
554
   Computation of minimum GST payable from electronic 
cash ledger 
Particulars CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
GST payable  45,000 45,000 4,500 
Less: ITC [First ITC of IGST should be 
utilized in full - first against IGST 
liability and then against CGST and 
SGST liabilities in a manner to 
minimize cash outflow] 
(24,500) 
IGST 
(3) 
(45,000
) 
IGST 
(2) 
(4,500) 
IGST 
(1) 
Less: ITC of CGST to be used against 
CGST 
(20,500) 
CGST 
 
 
Minimum GST payable in cash Nil Nil Nil 
 Note: Since sufficient balance of ITC of CGST is available for paying 
CGST liability and cross utilization of ITC of CGST and SGST is not 
allowed, ITC of IGST has first been used to pay SGST (after paying IGST 
liability) and then CGST to minimize cash outflow.   
(b) Computation of GST liability 
S. 
No. 
Particulars Mridul 
Traders 
(`) 
Kalu 
Motors Ltd. 
(`) 
(i) Price of goods 10,000 30,000 
(ii) Add: Packing charges (Note-1) 500  
(iii) Add: Commission (Note-1) 500  
(iv) Add: Weighment charges (Note-1) - 2,000 
(v) Less: Discount for prompt payment  
(Note-2) 
 
 - 
 
     1,000 
 Value of taxable supply 11,000 31,000 
 IGST payable @ 18% (Note-3) 1,980  
 CGST payable @ 9% (Note-4)  2,790 
 SGST payable @ 9% (Note-4)  2,790 
Notes: 
1. Incidental expenses, including commission and packing, charged 
by supplier to recipient of supply is includible in the value of supply.  
Weighment charges are also incidental expenses, hence includible 
in the value of supply [Section 15 of the CGST Act, 2017]. 
2. Since discount is known at the time of supply, it is deductible from 
the value in terms of section 15 of the CGST Act, 2017. 
3. Section 10 of the IGST Act, 2017 provides that where the supply 
involves movement of goods, the place of supply of such goods 
555
shall be the location of the goods at the time at which the movement 
of goods terminates for delivery to the recipient.  Thus, place of 
supply is Gujarat.   
 Further, where the location of the supplier and the place of supply 
are in two different States, supply of goods shall be treated as a 
supply of goods in the course of inter-State trade or commerce.  
Since supply made to Mridul Traders is an inter-State supply, IGST 
is payable. 
2. (a)  
S. No. Particulars  Taxability 
(i) Supply of manpower for cleanliness of roads not 
involving any supply of goods.  
[Pure services provided to Government are 
exempt.] 
Exempt 
(ii) Service provided by Fair Price Shops by way of 
sale of sugar under Public Distribution System  
[Service provided by Fair Price Shops to 
Government by way of sale of sugar under Public 
Distribution System against consideration in the 
form of commission is exempt.] 
Exempt 
(iii) Service of maintenance of street lights in a 
Municipal area involving replacement of defunct 
lights and other spares constituting 35% of the 
supply of service.  
[Composite supply of goods and services to 
Government in which the value of supply of goods 
constitutes not more than 25% of the value of the 
said composite supply is exempt.  Since, in this 
case value of supply of goods constitutes 35% of 
the supply of composite service, same is taxable.] 
Taxable 
(iv) Service of brochure distribution provided under a 
training programme. 
[Services provided to the Government under any 
training programme for which 75% or more of the 
total expenditure is borne by the Government is 
exempt. Since in the given case, 70% of the total 
expenditure is borne by the Government, it is 
taxable.] 
Taxable 
 (b) (i) As per Para I of Schedule III of the CGST Act,2017 services by an 
employee to the employer in the course of or in relation to his 
employment are non-supplies, i.e. they are neither supply of goods 
nor supply of services.  Services provided by the independent 
directors who are not employees of the said company to such 
company, in lieu of remuneration as the consideration for the said 
services, are clearly outside the scope of Schedule III of the CGST 
556
Page 5


ANSWERS OF MODEL TEST PAPER 1 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) Invoice shall be issued before or at the time of removal of 
smartphones to distributors. 
2 (b) ITC of ` 18 lakh can be claimed and value of asset on which 
depreciation can be claimed under the provisions of Income- 
Tax Act, 1961 shall be ` 1 crore. 
3 (a) The demerged entity shall be treated as related party of the 
Company. 
4 (d) 72 months from due date of furnishing annual return for the 
relevant financial year 
5 (a) 45 days 
6 (c) The restriction of 180 days for payment of consideration is not 
applicable in the present case. 
7 (b) 2 days 
8 (c) Both (a) and (b) 
Division B - Descriptive Questions 
1. (a)  Computation of GST payable on outward supplies  
S. 
No. 
Particulars  CGST  
@ 9% (`) 
SGST  
@ 9% (`) 
IGST  
@ 18% (`)  
(i) Intra-State supply of goods for  
` 4,00,000 [Note-1] 
36,000 36,000 Nil 
(ii) Services rendered by way of 
labour contracts for repairing 
a single residential unit 
otherwise than as a part of 
residential complex [Note-2] 
9,000 9,000 Nil 
(iii) Services provided by way of 
training in recreational 
activities relating to sports 
[Note-3] 
Nil Nil 1,800 
(iv) Inter-State security services 
provided to Bharat higher 
secondary school for their 
annual day function to be held 
in Kaman Auditorium.[Note-4] 
Nil Nil 2,700 
 Total GST payable  45,000 45,000 4,500 
553
Notes 
1. A registered person (excluding composition supplier and 
registered persons making supply of specified actionable claims) 
has to pay GST on the outward supply of goods at the time of 
supply as specified in section 12 of the CGST Act, 2017, i.e. date 
of issue of invoice or the last date on which invoice ought to have 
been issued.  Thus, liability to pay tax on the advance received in 
January will also arise in the month of February, when the invoice 
for the supply is issued. 
2. Services by way of pure labour contracts of construction, erection, 
commissioning, or installation of original works pertaining to a 
single residential unit otherwise than as a part of a residential 
complex are exempt. Labour contracts for repairing are thus, 
taxable. 
3. Services by way of training in sports is exempt under GST, only if 
provided by charitable entities registered under section 12AA or 
section 12AB of the Income-tax Act,1961.  Thus, in the given case, 
said service is taxable. 
4. Security services provided to Bharat higher secondary School for 
Annual Day function organised outside the school campus will be 
taxable as only the security services performed within the 
premises of the higher secondary school are exempt. 
Computation of total ITC 
Particulars CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Opening ITC  57,000 Nil 50,000 
Add: Purchase of goods from a 
composition dealer 
[ITC is not available in case of supply 
of goods where tax has been paid 
under composition scheme] 
Nil Nil Nil 
Add: Membership of a club [Blocked 
credit] 
Nil Nil Nil 
Add: Goods transport services 
received from GTA  
[Input tax credit is available for the 
services received from GTA as the 
same are used in the course or 
furtherance of business.] 
Nil Nil 24,000 
Add: Inputs to be received in 4 lots, 
out of which 2
nd
 lot was received 
during the month [In case of goods 
received in lots, ITC can be taken 
only upon receipt of the last lot] 
Nil Nil Nil 
Total ITC  57,000 Nil 74,000 
554
   Computation of minimum GST payable from electronic 
cash ledger 
Particulars CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
GST payable  45,000 45,000 4,500 
Less: ITC [First ITC of IGST should be 
utilized in full - first against IGST 
liability and then against CGST and 
SGST liabilities in a manner to 
minimize cash outflow] 
(24,500) 
IGST 
(3) 
(45,000
) 
IGST 
(2) 
(4,500) 
IGST 
(1) 
Less: ITC of CGST to be used against 
CGST 
(20,500) 
CGST 
 
 
Minimum GST payable in cash Nil Nil Nil 
 Note: Since sufficient balance of ITC of CGST is available for paying 
CGST liability and cross utilization of ITC of CGST and SGST is not 
allowed, ITC of IGST has first been used to pay SGST (after paying IGST 
liability) and then CGST to minimize cash outflow.   
(b) Computation of GST liability 
S. 
No. 
Particulars Mridul 
Traders 
(`) 
Kalu 
Motors Ltd. 
(`) 
(i) Price of goods 10,000 30,000 
(ii) Add: Packing charges (Note-1) 500  
(iii) Add: Commission (Note-1) 500  
(iv) Add: Weighment charges (Note-1) - 2,000 
(v) Less: Discount for prompt payment  
(Note-2) 
 
 - 
 
     1,000 
 Value of taxable supply 11,000 31,000 
 IGST payable @ 18% (Note-3) 1,980  
 CGST payable @ 9% (Note-4)  2,790 
 SGST payable @ 9% (Note-4)  2,790 
Notes: 
1. Incidental expenses, including commission and packing, charged 
by supplier to recipient of supply is includible in the value of supply.  
Weighment charges are also incidental expenses, hence includible 
in the value of supply [Section 15 of the CGST Act, 2017]. 
2. Since discount is known at the time of supply, it is deductible from 
the value in terms of section 15 of the CGST Act, 2017. 
3. Section 10 of the IGST Act, 2017 provides that where the supply 
involves movement of goods, the place of supply of such goods 
555
shall be the location of the goods at the time at which the movement 
of goods terminates for delivery to the recipient.  Thus, place of 
supply is Gujarat.   
 Further, where the location of the supplier and the place of supply 
are in two different States, supply of goods shall be treated as a 
supply of goods in the course of inter-State trade or commerce.  
Since supply made to Mridul Traders is an inter-State supply, IGST 
is payable. 
2. (a)  
S. No. Particulars  Taxability 
(i) Supply of manpower for cleanliness of roads not 
involving any supply of goods.  
[Pure services provided to Government are 
exempt.] 
Exempt 
(ii) Service provided by Fair Price Shops by way of 
sale of sugar under Public Distribution System  
[Service provided by Fair Price Shops to 
Government by way of sale of sugar under Public 
Distribution System against consideration in the 
form of commission is exempt.] 
Exempt 
(iii) Service of maintenance of street lights in a 
Municipal area involving replacement of defunct 
lights and other spares constituting 35% of the 
supply of service.  
[Composite supply of goods and services to 
Government in which the value of supply of goods 
constitutes not more than 25% of the value of the 
said composite supply is exempt.  Since, in this 
case value of supply of goods constitutes 35% of 
the supply of composite service, same is taxable.] 
Taxable 
(iv) Service of brochure distribution provided under a 
training programme. 
[Services provided to the Government under any 
training programme for which 75% or more of the 
total expenditure is borne by the Government is 
exempt. Since in the given case, 70% of the total 
expenditure is borne by the Government, it is 
taxable.] 
Taxable 
 (b) (i) As per Para I of Schedule III of the CGST Act,2017 services by an 
employee to the employer in the course of or in relation to his 
employment are non-supplies, i.e. they are neither supply of goods 
nor supply of services.  Services provided by the independent 
directors who are not employees of the said company to such 
company, in lieu of remuneration as the consideration for the said 
services, are clearly outside the scope of Schedule III of the CGST 
556
Act and are therefore taxable.  Further, such remuneration paid to 
the directors is taxable in hands of the company, on reverse charge 
basis.   
 Thus, GST is applicable in this case and Star Company Private 
Limited is liable to pay GST. 
(ii) The part of director’s remuneration which is declared as salaries in 
the books of a company and subjected to TDS under section 192 
of the Income-tax Act (IT Act), is not taxable being consideration 
for services by an employee to the employer in the course of or in 
relation to his employment in terms of Schedule III of the CGST 
Act,2017.  
Further, the part of employee director’s remuneration which is 
declared separately other than salaries in the company’s accounts 
and subjected to TDS under section 194J of the IT Act as fees for 
professional or technical services are treated as consideration for 
providing services which are outside the scope of Schedule III and 
is therefore, taxable.  The recipient of the said services i.e. the 
company, is liable to discharge the applicable GST on it on reverse 
charge basis. 
In lieu of the above provisions, ` 60,000 declared as salaries in the 
books of Star Company Private Limited and subjected to TDS under 
section 192 of the Income-Tax Act (IT Act), is not taxable being 
consideration for services by an employee to the employer in the 
course of or in relation to his employment in terms of Schedule III 
of the CGST Act,2017.   
Further, ` 65,000 declared separately other than salaries in the Star 
Company Private Limited’s accounts and subjected to TDS under 
section 194J of the IT Act as professional services is treated as 
consideration for providing services which is outside the scope of 
Schedule III of the CGST Act,2017 and is therefore, taxable.  The 
recipient of the said services i.e. the Star Company Private Limited, 
is liable to discharge the applicable GST on it on reverse charge 
basis. 
3. (a) As per section 22 of the CGST Act, 2017 read with Notification No. 
10/2019 CT dated 07.03.2019, a supplier is liable to get registered in the 
State/Union territory from where he makes a taxable supply of goods 
and/or services, if his aggregate turnover in a financial year exceeds the 
threshold limit.  The threshold limit for a person making exclusive intra-
State taxable supplies of goods is as under:- 
(a) ` 10 lakh for the Special Category States of Mizoram, Tripura, 
Manipur and Nagaland. 
(b) ` 20 lakh for the States, namely, States of Arunachal Pradesh, 
Meghalaya, Puducherry, Sikkim, Telangana and Uttarakhand. 
(c) ` 40 lakh for rest of India except persons engaged in making 
supplies of fly ash bricks/blocks, building bricks, bricks of fossil 
meals, earthen/roofing tiles, ice cream and other edible ice, 
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