Goods and Services Tax (Group I) Model Test Paper - 2 (Answers) | Model Test Papers for CA Intermediate PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 2 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) The tax is payable at the time of supply of goods 
2 (b) ` 5 crores 
3 (a) Company has an option to issue single credit note against 
multiple invoices. 
4 (d) transaction value subject to the conditions mentioned in 
Section 15(2) of the CGST Act, 2017. 
5 (a) The Company shall be eligible to avail full input tax credit. 
6 (c) Invoice by Maharashtra unit to the Gujarat unit of the 
Company 
7 (c) Mr. Jambulal is liable to obtain registration as he makes the 
inter-State supply of goods. 
8 (b) No, service by way of renting of residential property is 
exempt. 
Division B - Descriptive Questions 
1. (a)     Computation of GST payable  
Particulars  Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`)  
GST payable under forward 
charge 
    
Carnatic music performance 
given to promote a brand of 
readymade garments  
[Carnatic music performance by  
Mr. Nandan lal is not exempt 
from GST even though the 
consideration charged does not 
exceed ` 1,50,000 since said 
performance has been made by 
him as a brand ambassador.] 
1,40,000 12,600 12,600 Nil 
Services of transportation of 
students provided to HSMG 
College  
[Services of transportation of 
students provided to an 
educational institution other 
1,00,000 9,000 9,000 Nil 
560
Page 2


ANSWERS OF MODEL TEST PAPER 2 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) The tax is payable at the time of supply of goods 
2 (b) ` 5 crores 
3 (a) Company has an option to issue single credit note against 
multiple invoices. 
4 (d) transaction value subject to the conditions mentioned in 
Section 15(2) of the CGST Act, 2017. 
5 (a) The Company shall be eligible to avail full input tax credit. 
6 (c) Invoice by Maharashtra unit to the Gujarat unit of the 
Company 
7 (c) Mr. Jambulal is liable to obtain registration as he makes the 
inter-State supply of goods. 
8 (b) No, service by way of renting of residential property is 
exempt. 
Division B - Descriptive Questions 
1. (a)     Computation of GST payable  
Particulars  Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`)  
GST payable under forward 
charge 
    
Carnatic music performance 
given to promote a brand of 
readymade garments  
[Carnatic music performance by  
Mr. Nandan lal is not exempt 
from GST even though the 
consideration charged does not 
exceed ` 1,50,000 since said 
performance has been made by 
him as a brand ambassador.] 
1,40,000 12,600 12,600 Nil 
Services of transportation of 
students provided to HSMG 
College  
[Services of transportation of 
students provided to an 
educational institution other 
1,00,000 9,000 9,000 Nil 
560
than an institution providing 
pre-school education or 
education up to higher 
secondary school, are not 
exempt.] 
Services provided to IFMP 
Bank as a business 
correspondent.  
[Services provided by a 
business correspondent to a 
banking company are not 
exempt when such services are 
provided with respect to 
accounts in its urban area 
branch.] 
2,00,000 18,000 18,000 Nil 
Services provided as a 
recovery agent 
[Tax is payable under forward 
charge since recovery agent’s 
services are being provided to a 
person other than banking 
company/financial institution/ 
non-banking financial 
company.] 
15,000 1,350 1,350 Nil 
Total GST payable under 
forward charge (A) 
 40,950 40,950 Nil 
GST payable under reverse 
charge 
    
Legal services availed from an 
advocate. 
[Legal services received by a 
business entity with aggregate 
turnover in the preceding 
financial year exceeding 
threshold limit for registration  
(` 20 lakh) are not exempt and 
tax on the same is payable 
under reverse charge.]  
1,75,000 Nil Nil 31,500 
Total GST payable under 
reverse charge (B) 
 Nil Nil 31,500 
Total GST payable [(A)+(B)]  40,950 40,950 31,500 
 
  
561
Page 3


ANSWERS OF MODEL TEST PAPER 2 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) The tax is payable at the time of supply of goods 
2 (b) ` 5 crores 
3 (a) Company has an option to issue single credit note against 
multiple invoices. 
4 (d) transaction value subject to the conditions mentioned in 
Section 15(2) of the CGST Act, 2017. 
5 (a) The Company shall be eligible to avail full input tax credit. 
6 (c) Invoice by Maharashtra unit to the Gujarat unit of the 
Company 
7 (c) Mr. Jambulal is liable to obtain registration as he makes the 
inter-State supply of goods. 
8 (b) No, service by way of renting of residential property is 
exempt. 
Division B - Descriptive Questions 
1. (a)     Computation of GST payable  
Particulars  Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`)  
GST payable under forward 
charge 
    
Carnatic music performance 
given to promote a brand of 
readymade garments  
[Carnatic music performance by  
Mr. Nandan lal is not exempt 
from GST even though the 
consideration charged does not 
exceed ` 1,50,000 since said 
performance has been made by 
him as a brand ambassador.] 
1,40,000 12,600 12,600 Nil 
Services of transportation of 
students provided to HSMG 
College  
[Services of transportation of 
students provided to an 
educational institution other 
1,00,000 9,000 9,000 Nil 
560
than an institution providing 
pre-school education or 
education up to higher 
secondary school, are not 
exempt.] 
Services provided to IFMP 
Bank as a business 
correspondent.  
[Services provided by a 
business correspondent to a 
banking company are not 
exempt when such services are 
provided with respect to 
accounts in its urban area 
branch.] 
2,00,000 18,000 18,000 Nil 
Services provided as a 
recovery agent 
[Tax is payable under forward 
charge since recovery agent’s 
services are being provided to a 
person other than banking 
company/financial institution/ 
non-banking financial 
company.] 
15,000 1,350 1,350 Nil 
Total GST payable under 
forward charge (A) 
 40,950 40,950 Nil 
GST payable under reverse 
charge 
    
Legal services availed from an 
advocate. 
[Legal services received by a 
business entity with aggregate 
turnover in the preceding 
financial year exceeding 
threshold limit for registration  
(` 20 lakh) are not exempt and 
tax on the same is payable 
under reverse charge.]  
1,75,000 Nil Nil 31,500 
Total GST payable under 
reverse charge (B) 
 Nil Nil 31,500 
Total GST payable [(A)+(B)]  40,950 40,950 31,500 
 
  
561
Computation of total ITC available 
Particulars Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Outdoor catering services 
availed  
[ITC on outdoor catering 
services is blocked except 
when such services are (i) 
used by the taxpayer who is in 
the same line of business or 
(ii) provided by the employer 
to its employees under a 
statutory obligation.] 
50,000 Nil Nil Nil 
Legal services availed  
[ITC is available as said 
services are used in course or 
furtherance of business.] 
1,75,000 Nil Nil 31,500 
General insurance taken on a 
car (seating capacity 5) used 
for official purposes  
[ITC on motor vehicles for 
transportation of persons with 
seating capacity = 13 persons 
(including the driver) is 
blocked except when the 
same are used for (i) making 
further taxable supply of such 
motor vehicles (ii) making 
taxable supply of 
transportation of passengers 
(iii) making taxable supply of 
imparting training on driving 
such motor vehicles.  Further, 
ITC is not allowed on services 
of general insurance relating 
to such ineligible motor 
vehicles.] 
40,000 Nil Nil Nil 
Total ITC available   Nil Nil 31,500 
Computation of net GST payable in cash 
Particulars CGST  
@ 9%  
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
GST payable under forward charge 40,950 40,950 Nil 
562
Page 4


ANSWERS OF MODEL TEST PAPER 2 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) The tax is payable at the time of supply of goods 
2 (b) ` 5 crores 
3 (a) Company has an option to issue single credit note against 
multiple invoices. 
4 (d) transaction value subject to the conditions mentioned in 
Section 15(2) of the CGST Act, 2017. 
5 (a) The Company shall be eligible to avail full input tax credit. 
6 (c) Invoice by Maharashtra unit to the Gujarat unit of the 
Company 
7 (c) Mr. Jambulal is liable to obtain registration as he makes the 
inter-State supply of goods. 
8 (b) No, service by way of renting of residential property is 
exempt. 
Division B - Descriptive Questions 
1. (a)     Computation of GST payable  
Particulars  Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`)  
GST payable under forward 
charge 
    
Carnatic music performance 
given to promote a brand of 
readymade garments  
[Carnatic music performance by  
Mr. Nandan lal is not exempt 
from GST even though the 
consideration charged does not 
exceed ` 1,50,000 since said 
performance has been made by 
him as a brand ambassador.] 
1,40,000 12,600 12,600 Nil 
Services of transportation of 
students provided to HSMG 
College  
[Services of transportation of 
students provided to an 
educational institution other 
1,00,000 9,000 9,000 Nil 
560
than an institution providing 
pre-school education or 
education up to higher 
secondary school, are not 
exempt.] 
Services provided to IFMP 
Bank as a business 
correspondent.  
[Services provided by a 
business correspondent to a 
banking company are not 
exempt when such services are 
provided with respect to 
accounts in its urban area 
branch.] 
2,00,000 18,000 18,000 Nil 
Services provided as a 
recovery agent 
[Tax is payable under forward 
charge since recovery agent’s 
services are being provided to a 
person other than banking 
company/financial institution/ 
non-banking financial 
company.] 
15,000 1,350 1,350 Nil 
Total GST payable under 
forward charge (A) 
 40,950 40,950 Nil 
GST payable under reverse 
charge 
    
Legal services availed from an 
advocate. 
[Legal services received by a 
business entity with aggregate 
turnover in the preceding 
financial year exceeding 
threshold limit for registration  
(` 20 lakh) are not exempt and 
tax on the same is payable 
under reverse charge.]  
1,75,000 Nil Nil 31,500 
Total GST payable under 
reverse charge (B) 
 Nil Nil 31,500 
Total GST payable [(A)+(B)]  40,950 40,950 31,500 
 
  
561
Computation of total ITC available 
Particulars Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Outdoor catering services 
availed  
[ITC on outdoor catering 
services is blocked except 
when such services are (i) 
used by the taxpayer who is in 
the same line of business or 
(ii) provided by the employer 
to its employees under a 
statutory obligation.] 
50,000 Nil Nil Nil 
Legal services availed  
[ITC is available as said 
services are used in course or 
furtherance of business.] 
1,75,000 Nil Nil 31,500 
General insurance taken on a 
car (seating capacity 5) used 
for official purposes  
[ITC on motor vehicles for 
transportation of persons with 
seating capacity = 13 persons 
(including the driver) is 
blocked except when the 
same are used for (i) making 
further taxable supply of such 
motor vehicles (ii) making 
taxable supply of 
transportation of passengers 
(iii) making taxable supply of 
imparting training on driving 
such motor vehicles.  Further, 
ITC is not allowed on services 
of general insurance relating 
to such ineligible motor 
vehicles.] 
40,000 Nil Nil Nil 
Total ITC available   Nil Nil 31,500 
Computation of net GST payable in cash 
Particulars CGST  
@ 9%  
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
GST payable under forward charge 40,950 40,950 Nil 
562
Less: ITC of IGST
1
 [Refer Note] (15,750) 
IGST 
(15,750) 
IGST 
- 
 
25,200 25,200 Nil 
Add: GST payable under reverse 
charge in cash 
[Tax payable under reverse charge, 
being not an output tax, cannot be set 
off against ITC and thus, will have to be 
paid in cash.] 
      Nil        Nil  31,500 
Net GST payable in cash 25,200 25,200 31,500 
 Note: ITC of IGST can be utilised towards payment of CGST and SGST 
in any proportion and in any order.  
(b) Computation of value of taxable supply made by M/s. LSP to 
Balwant Ltd.  
Particulars Amount 
(`) 
Price of the machine  
[Since the price linked subsidy is received from the State 
Government, the same is not includible in the value of 
supply]  
20,000 
Third party inspection charges  
[Any amount that the supplier is liable to pay in relation 
to the supply but has been incurred by the recipient and 
not included in the price actually paid or payable for the 
goods, is includible in the value of supply] 
6,000 
Freight charges for delivery of the machine  
[Since arranging freight is the liability of supplier, it is a 
case of composite supply and thus, freight charges are 
added in the value of principal supply.] 
1,000 
Total 27,000 
Less: Discount @ 2% on ` 20,000 being price charged 
to Balwant Ltd.  
[Discount given before or at the time of supply if duly 
recorded in the invoice is deductible from the value of 
supply] 
     400 
Value of taxable supply 26,600 
2. (a) (i) Services provided by way of renting of residential dwelling for use 
as residence except where the residential dwelling is rented to a 
registered person is exempt from GST.  Further, tax on service 
provided by way of renting of residential dwelling to a registered 
1
 Since IGST credit can be set off against CGST and SGST liability in any order and in any proportion, 
the same can be set off against CGST and/or SGST liabilities in different ways as well.  In all such 
cases, net CGST and net SGST payable from Electronic Cash Ledger will differ though the total amount 
of net GST payable ( ` 81,900) in cash will remain the same. 
563
Page 5


ANSWERS OF MODEL TEST PAPER 2 
SECTION B – GOODS AND SERVICES TAX (50 MARKS) 
SUGGESTED ANSWERS 
Division A - Multiple Choice Questions 
Question 
No. 
Answer 
1 (b) The tax is payable at the time of supply of goods 
2 (b) ` 5 crores 
3 (a) Company has an option to issue single credit note against 
multiple invoices. 
4 (d) transaction value subject to the conditions mentioned in 
Section 15(2) of the CGST Act, 2017. 
5 (a) The Company shall be eligible to avail full input tax credit. 
6 (c) Invoice by Maharashtra unit to the Gujarat unit of the 
Company 
7 (c) Mr. Jambulal is liable to obtain registration as he makes the 
inter-State supply of goods. 
8 (b) No, service by way of renting of residential property is 
exempt. 
Division B - Descriptive Questions 
1. (a)     Computation of GST payable  
Particulars  Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`)  
GST payable under forward 
charge 
    
Carnatic music performance 
given to promote a brand of 
readymade garments  
[Carnatic music performance by  
Mr. Nandan lal is not exempt 
from GST even though the 
consideration charged does not 
exceed ` 1,50,000 since said 
performance has been made by 
him as a brand ambassador.] 
1,40,000 12,600 12,600 Nil 
Services of transportation of 
students provided to HSMG 
College  
[Services of transportation of 
students provided to an 
educational institution other 
1,00,000 9,000 9,000 Nil 
560
than an institution providing 
pre-school education or 
education up to higher 
secondary school, are not 
exempt.] 
Services provided to IFMP 
Bank as a business 
correspondent.  
[Services provided by a 
business correspondent to a 
banking company are not 
exempt when such services are 
provided with respect to 
accounts in its urban area 
branch.] 
2,00,000 18,000 18,000 Nil 
Services provided as a 
recovery agent 
[Tax is payable under forward 
charge since recovery agent’s 
services are being provided to a 
person other than banking 
company/financial institution/ 
non-banking financial 
company.] 
15,000 1,350 1,350 Nil 
Total GST payable under 
forward charge (A) 
 40,950 40,950 Nil 
GST payable under reverse 
charge 
    
Legal services availed from an 
advocate. 
[Legal services received by a 
business entity with aggregate 
turnover in the preceding 
financial year exceeding 
threshold limit for registration  
(` 20 lakh) are not exempt and 
tax on the same is payable 
under reverse charge.]  
1,75,000 Nil Nil 31,500 
Total GST payable under 
reverse charge (B) 
 Nil Nil 31,500 
Total GST payable [(A)+(B)]  40,950 40,950 31,500 
 
  
561
Computation of total ITC available 
Particulars Value of 
supply 
(`) 
CGST  
@ 9% 
(`) 
SGST 
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
Outdoor catering services 
availed  
[ITC on outdoor catering 
services is blocked except 
when such services are (i) 
used by the taxpayer who is in 
the same line of business or 
(ii) provided by the employer 
to its employees under a 
statutory obligation.] 
50,000 Nil Nil Nil 
Legal services availed  
[ITC is available as said 
services are used in course or 
furtherance of business.] 
1,75,000 Nil Nil 31,500 
General insurance taken on a 
car (seating capacity 5) used 
for official purposes  
[ITC on motor vehicles for 
transportation of persons with 
seating capacity = 13 persons 
(including the driver) is 
blocked except when the 
same are used for (i) making 
further taxable supply of such 
motor vehicles (ii) making 
taxable supply of 
transportation of passengers 
(iii) making taxable supply of 
imparting training on driving 
such motor vehicles.  Further, 
ITC is not allowed on services 
of general insurance relating 
to such ineligible motor 
vehicles.] 
40,000 Nil Nil Nil 
Total ITC available   Nil Nil 31,500 
Computation of net GST payable in cash 
Particulars CGST  
@ 9%  
(`) 
SGST  
@ 9% 
(`) 
IGST  
@ 18% 
(`) 
GST payable under forward charge 40,950 40,950 Nil 
562
Less: ITC of IGST
1
 [Refer Note] (15,750) 
IGST 
(15,750) 
IGST 
- 
 
25,200 25,200 Nil 
Add: GST payable under reverse 
charge in cash 
[Tax payable under reverse charge, 
being not an output tax, cannot be set 
off against ITC and thus, will have to be 
paid in cash.] 
      Nil        Nil  31,500 
Net GST payable in cash 25,200 25,200 31,500 
 Note: ITC of IGST can be utilised towards payment of CGST and SGST 
in any proportion and in any order.  
(b) Computation of value of taxable supply made by M/s. LSP to 
Balwant Ltd.  
Particulars Amount 
(`) 
Price of the machine  
[Since the price linked subsidy is received from the State 
Government, the same is not includible in the value of 
supply]  
20,000 
Third party inspection charges  
[Any amount that the supplier is liable to pay in relation 
to the supply but has been incurred by the recipient and 
not included in the price actually paid or payable for the 
goods, is includible in the value of supply] 
6,000 
Freight charges for delivery of the machine  
[Since arranging freight is the liability of supplier, it is a 
case of composite supply and thus, freight charges are 
added in the value of principal supply.] 
1,000 
Total 27,000 
Less: Discount @ 2% on ` 20,000 being price charged 
to Balwant Ltd.  
[Discount given before or at the time of supply if duly 
recorded in the invoice is deductible from the value of 
supply] 
     400 
Value of taxable supply 26,600 
2. (a) (i) Services provided by way of renting of residential dwelling for use 
as residence except where the residential dwelling is rented to a 
registered person is exempt from GST.  Further, tax on service 
provided by way of renting of residential dwelling to a registered 
1
 Since IGST credit can be set off against CGST and SGST liability in any order and in any proportion, 
the same can be set off against CGST and/or SGST liabilities in different ways as well.  In all such 
cases, net CGST and net SGST payable from Electronic Cash Ledger will differ though the total amount 
of net GST payable ( ` 81,900) in cash will remain the same. 
563
person is payable by the recipient under reverse charge.   
 Therefore, in the given case, Anant Technologies is liable to pay 
GST on the residential dwellings taken on rent by it from Sapna 
Builders, under reverse charge mechanism. 
(ii) In case of services provided by any person by way of sponsorship 
to any body corporate or partnership firm, GST is liable to be paid 
under reverse charge by such body corporate or partnership firm 
located in the taxable territory. 
 Since in the given case, sponsorship services are being provided 
by the private NGO to a partnership firm – M/s. Verma Consultants, 
GST is payable by Verma Consultants on said services under 
reverse charge. 
 (b) Section 10(2A) of the CGST Act, 2017 provides the turnover limit of ` 50 
lakh in the preceding financial year for becoming eligible for composition 
levy for services.  Little Smiles has started the supply of services in the 
current financial year (FY), thus, it’s aggregate turnover in the preceding 
FY is Nil.  Consequently, in the current FY, Little Smiles is eligible for 
composition scheme for services.  A registered person opting for 
composition levy for services shall pay tax @ 3% [Effective rate 6% 
(CGST+ SGST/UTGST)] of the turnover of supplies of goods and 
services in the State.   
Further, Little Smiles becomes eligible for the registration when the 
aggregate turnover exceeds ` 20 lakh (the threshold limit of obtaining 
registration).  While registering under GST, Little Smiles can opt for 
composition scheme for services.   
The option of a registered person to avail composition scheme for 
services shall lapse with effect from the day on which his aggregate 
turnover during a financial year exceeds the threshold limit of ` 50 lakh.  
However, for the purposes of determining the tax payable under 
composition scheme, the expression “turnover in State” shall not include 
the value of supplies from the first day of April of a FY up to the date 
when such person becomes liable for registration under the CGST Act. 
Thus, for determining the turnover of the State for payment of tax under 
composition scheme for services, turnover of April,2024 – June,2024 
quarter [` 20 lakh] shall be excluded. On next ` 30 lakh [turnover of  
July, 2024 – September, 2024 quarter], it shall pay tax @ 6% [3% CGST 
and 3% SGST]. 
For the purposes of computing aggregate turnover of a registered person 
for determining his eligibility to pay tax under this section, aggregate 
turnover includes value of supplies from the 1
st 
April of a FY up to the 
date of his becoming liable for registration. 
Thus, while computing aggregate turnover for determining Little Smiles’s 
eligibility to pay tax under composition scheme, value of supplies from 
the first day of April of a financial year up to the date when it becomes 
564