Taxation - GSTMCQQuestion 5618 of 512
All Questions

5. Purchased raw material to manufacture finished goods. Such finished goods to be sold to potential customers under Scheme ‘Buy one get one free’. 1,50,000 Compute the amount of net ITC available to M/s Poorvi Ltd. for the month of August 2024 with necessary explanations for the treatment of all the items in the table as per the provision of the CGST Act, 2017 or CGST Rules, 2017 wherever applicable. Subject to information given above, all other conditions necessary for availing the ITC have been fulfilled. (5 Marks) (

Options

AComputation of net ITC available to M/s Poorva Ltd. for August 2024 Particulars `
BExamine the following independent cases and determine whether the services are taxable under GST Law: (i) Dhruv Printing Press, a registered entity under GST, received an order of ` 1,50,000 from Vishwakarma Technical Institute, a private ITI providing courses notified under Apprentices Act, 1961 for printing of pre- examination items like question papers, OMR sheets, Answer booklets required for conducting of examination by the institute. (ii) State Board of Education, a registered entity, charged ` 50,000 per year as affiliation charges from a school run by Dharampal Trust, registered under section 12AA of Income Tax Act, 1961 which gives education from class 1 to class 10. (iii) Wecare Hospital, a registered entity, charged ` 19,500 for 3 days from Mr. Sahil who was admitted in Intensive Cardiac Care Unit (ICCU) due to heart attack. (iv) Citcare Hospital, a registered entity, entered into an arrangement with Swadisht Caterers, a registered entity, to supply food to in-patients as per advice of doctor/nutritionist. Swadisht Caterers sends monthly bill to hospital for the food supplied by them to the admitted patients of hospital. Determine the taxability of Citcare Hospital. (5 Marks) Answer (
C
D
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option A — Computation of net ITC available to M/s Poorva Ltd. for August 2024 Particulars `

All Options:

  • AComputation of net ITC available to M/s Poorva Ltd. for August 2024 Particulars ` ✓
  • BExamine the following independent cases and determine whether the services are taxable under GST Law: (i) Dhruv Printing Press, a registered entity under GST, received an order of ` 1,50,000 from Vishwakarma Technical Institute, a private ITI providing courses notified under Apprentices Act, 1961 for printing of pre- examination items like question papers, OMR sheets, Answer booklets required for conducting of examination by the institute. (ii) State Board of Education, a registered entity, charged ` 50,000 per year as affiliation charges from a school run by Dharampal Trust, registered under section 12AA of Income Tax Act, 1961 which gives education from class 1 to class 10. (iii) Wecare Hospital, a registered entity, charged ` 19,500 for 3 days from Mr. Sahil who was admitted in Intensive Cardiac Care Unit (ICCU) due to heart attack. (iv) Citcare Hospital, a registered entity, entered into an arrangement with Swadisht Caterers, a registered entity, to supply food to in-patients as per advice of doctor/nutritionist. Swadisht Caterers sends monthly bill to hospital for the food supplied by them to the admitted patients of hospital. Determine the taxability of Citcare Hospital. (5 Marks) Answer (
  • C
  • D

Ad

Detailed Solution & Explanation

Let us analyze the details of M/s Poorvi Ltd. (part a) and the independent cases (part b) from first principles:
**Part (a): Computation of net ITC available to M/s Poorvi Ltd. for August 2024:** 1. **CSR Expenditure (GST Paid: ` 3,00,000):** Section 17(5)(fa) of the CGST Act, 2017 blocks ITC on goods or services used for activities relating to obligations under Corporate Social Responsibility (CSR) u/s 135 of the Companies Act, 2013. Thus, ITC available is **Nil**. 2. **Raw Material in 5 Lots (GST Paid: ` 90,000):** As per the first proviso to Section 16(2) of the CGST Act, 2017, where goods are received in lots or instalments, the registered person is entitled to take ITC only upon receipt of the last lot or instalment. Since 2 lots are to be received in September 2024, no ITC is available in August 2024. Thus, ITC available is **Nil**. 3. **Outdoor Catering Expenses (GST Paid: ` 50,000):** Section 17(5)(b)(i) blocks ITC on outdoor catering services unless it is obligatorily provided by the employer to its employees under any law for the time being in force. Since there is no legal obligation, ITC is **Nil**. 4. **Om Traders Invoice not uploaded (GST Paid: ` 2,00,000):** Under Section 16(2)(aa), ITC can only be availed on invoices that are uploaded by the supplier in GSTR-1/IFF and communicated to the recipient. Therefore, the ITC of ` 50,000 for the un-uploaded invoice is disallowed. ITC available = `2,00,000 - 50,000 = 1,50,000`. 5. **Buy One Get One Free Scheme (GST Paid: ` 1,50,000):** Under the "Buy one get one free" offer, two goods are supplied for a single price. It is a single supply of two goods for the price of one, and is not a free sample/gift without consideration. Hence, the ITC blocking u/s 17(5)(h) does not apply. ITC is fully available on inputs used to manufacture these goods. Thus, ITC available is **1,50,000**.
Total Net ITC available = `Nil + Nil + Nil + 1,50,000 + 1,50,000 = 3,00,000`. This matches the first part of Option A.

**Part (b): Taxability of Independent Cases under GST Law:** (i) **Vishwakarma Technical Institute:** It is a private ITI providing courses notified under the Apprentices Act, 1961, which qualifies as an "educational institution" since it provides an approved vocational education course. Services provided to an educational institution by way of printing of pre-examination items (question papers, answer booklets, etc.) are exempt. Hence, the service is **Exempt**. (ii) **State Board of Education Affiliation Charges:** Services by way of affiliation provided by State educational boards are taxable unless they are provided to a Government school. Therefore, affiliation charges of ` 50,000 charged from a school run by a private trust are **Taxable**. (iii) **ICCU Room Charges:** Health care services provided by a clinical establishment are exempt under GST. Renting of rooms in a hospital is exempt, unless the room rent exceeds ` 5,000 per day. However, this restriction of ` 5,000 per day does not apply to intensive care units (ICU/CCU/ICCU/NICU). Thus, the charges of ` 19,500 for ICCU are **Exempt**. (iv) **Food to in-patients:** Food supplied by a hospital to its in-patients as per the advice of doctors/nutritionists is part of a composite health care service and is exempt. The fact that the hospital outsourced the catering service to Swadisht Caterers does not affect the exemption on the supply from hospital to patients. Hence, the service is **Exempt**.
Hence, **Option A** is the correct answer.

More Questions from Taxation - GST

A sum of money invested in compounded interest doubles itself in four years. In how many years it becomes 32 times of itself as the same rate of compound interest?

The simple interest on 600\displaystyle 600 for 9 months is 27\displaystyle 27. Find the interest rate.

Miss Liza lent 4,000\displaystyle 4,000 in such a way that some amount was given to Mr. A at 3%\displaystyle 3\% p.a. S.I. and rest amount to was given to B at 5%\displaystyle 5\% p.a. S.I., the annual interest from both is 144\displaystyle 144. Find the amount lent to Mr. A.

A certain sum of money was put at S.I. for 2.5\displaystyle 2.5 years at a certain rate of S.I. p.a. Had it been put at 4%\displaystyle 4\% higher rate, it would have fetched 500\displaystyle 500 more. Find the sum of money.

Rs.1,25,000\displaystyle 1,25,000 is borrowed at compound interest at the rate of 2%\displaystyle 2\% for the 1st year, 3%\displaystyle 3\% for the second year and 4%\displaystyle 4\% for the 3rd year. Find the amount to be paid after 3 years.

If Rs. 1,000\displaystyle \text{Rs. }1,000 be invested at interest rate of 5%\displaystyle 5\% and the interest be added to the principal every 10\displaystyle 10 years, then the number in years in which it will amount to Rs. 2,000\displaystyle \text{Rs. }2,000 is:

Ready to Master Taxation - GST?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free