Taxation - Income TaxQuestion 5648 of 146
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Question 5 (a) DEF Pvt. Ltd., a registered supplier of goods and services in Pune, Maharashtra, has furnished the following details for the month of January, 2024. The turnover of DEF Pvt. Ltd. was ` 3.2 crores in last financial year. Sr. No. Particulars Amount (`) 1. Intra State supply of taxable goods 5,00,000 2. F Ltd. of Mumbai (unregistered) had promised to DEF Pvt. Ltd. in Oct 23 to complete contract within 3 months, but they were not able to complete committed contract, so DEF Pvt. Ltd. received consideration for non-performance of contract on time as decided by pre written agreement. 2,00,000 3. DEF Pvt. Ltd. had provided service of booking of flight tickets for employee of H Enterprise (registered in Delhi) in the economy class from Bagdogra (West Bengal) to Pune Maharashtra. 20,000 4. DEF Pvt. had purchased goods worth ` 5,00,000 from R Ltd. (registered in Gujarat) on 15.03.2023. Now R Ltd. issued debit note on 15.01.2024 for post delivery service to DEF Pvt. Ltd. as per part of terms of sales. 25,000 5. DEF Pvt. Ltd. had sold one of its unit in Pune as a going concern (with all goods and unexecuted orders) to H Ltd. (registered in New Delhi) 10,00,000 6. DEL Pvt. Ltd. had provided service to Mr. Y (registered in Punjab) to organise business exhibition in Dubai. 5,00,000 7. Inter-State supply of service 10,00,000 8. Amount towards receipt of intra State services 6,00,000 9. Purchase of confectionery items which are to be used to supply free of cost to customers in a customer meet organised by DEF Pvt. Ltd. 1,00,000 Opening balance of Input Tax credit at the beginning of Jan 2024. CGST ` 25,000 SGST ` 25,000 IGST ` 30,000 Additional Information: (1) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively unless otherwise mentioned. (2) Both inward and outward supplies are exclusive of taxes, wherever applicable. (3) All the conditions necessary for availing the ITC have been fulfilled. From the information given above, compute the output tax liability and input tax credit available to DEF Pvt. Ltd., for the month of January, 2024. Make suitable assumptions wherever required. (10 Marks) (b) ABC Infra, is a partnership firm registered under GST. It furnishes the following details about services provided during the month of February 2024: Particulars Amount (i) Consideration received from neighbouring Housing Cooperative Society as ABC Infra agrees to install effluent plant for treatment of wastewater even though is no legal requirement to do so. 5,50,000 (ii) Consideration received from distribution of passes for cricket match organized as firm's annual event. Total 500 passes have been distributed. 2,42,500 (iii) Services given of booking air tickets in economy class for flight between Mumbai to Manipur. 1,20,000 (iv) Services given for construction of buildings to State Government in relation to function entrusted to Municipality under article 243W of the Constitution. Construction material used of ` 2,79,375 is included in the given figure. 8,20,000 All supplies mentioned above are intra-State supplies. GST rates for CGST, SGST, IGST are 9%, 9%, 18% respectively. Compute the GST payable by the ABC Infra for the month of February, 2024. (5 Marks)

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Detailed Solution & Explanation

(a)(i) Computation of Output Tax Liability of DEF Pvt. Ltd. for January 2024

| Sr. | Particulars | Value (\u20b9) | CGST @9% (\u20b9) | SGST @9% (\u20b9) | IGST @18% (\u20b9) |
|---|---|---|---|---|---|
| 1 | Intra-State supply of taxable goods | 5,00,000 | 45,000 | 45,000 | \u2014 |
| 2 | Consideration for non-performance of contract (liquidated damages) \u2013 Not a supply. Liquidated damages received for breach of contract are not consideration for tolerating non-performance; they are outside the ambit of GST. | 2,00,000 | \u2014 | \u2014 | \u2014 |
| 3 | Service of booking air tickets (economy class, Bagdogra to Pune) \u2013 Taxable. The service here is ticketing/booking, not transportation. Only transportation of passengers from Bagdogra is exempt. Place of supply = location of registered recipient (H Enterprise, Delhi) \u2192 Inter-State supply. | 20,000 | \u2014 | \u2014 | 3,600 |
| 4 | (Inward) Debit note from R Ltd., Gujarat \u2013 This is an inward supply (purchase); relevant for ITC, not output tax. | \u2014 | \u2014 | \u2014 | \u2014 |
| 5 | Sale of unit as going concern to H Ltd. (New Delhi) \u2013 Exempt. Transfer of a going concern as a whole is an exempt supply. | 10,00,000 | \u2014 | \u2014 | \u2014 |
| 6 | Business exhibition service in Dubai \u2013 Exempt. Services by an organiser to any person in respect of a business exhibition held outside India are exempt. | 5,00,000 | \u2014 | \u2014 | \u2014 |
| 7 | Inter-State supply of service | 10,00,000 | \u2014 | \u2014 | 1,80,000 |
| 8 | Intra-State services received \u2013 Inward supply; relevant for ITC, not output tax. | \u2014 | \u2014 | \u2014 | \u2014 |
| 9 | Purchase of confectionery \u2013 Inward supply; relevant for ITC. | \u2014 | \u2014 | \u2014 | \u2014 |
| | Total Output Tax Liability | | 45,000 | 45,000 | 1,83,600 |

(a)(ii) Computation of Input Tax Credit (ITC) Available to DEF Pvt. Ltd. for January 2024

| Particulars | Value (\u20b9) | CGST @9% (\u20b9) | SGST @9% (\u20b9) | IGST @18% (\u20b9) |
|---|---|---|---|---|
| Opening ITC balance | \u2014 | 25,000 | 25,000 | 30,000 |
| Debit note from R Ltd. (Gujarat) for post-delivery service \u2013 ITC on debit notes can be availed till 30th November of succeeding FY or date of annual return, whichever is earlier. Place of supply = Pune \u2192 CGST + SGST? No\u2014R Ltd. is in Gujarat, DEF is in Maharashtra \u2192 Inter-State \u2192 IGST applies. | 25,000 | \u2014 | \u2014 | 4,500 |
| Intra-State services received \u2013 ITC allowed (used in course of business) | 6,00,000 | 54,000 | 54,000 | \u2014 |
| Confectionery items (free supply to customers) \u2013 ITC on food and beverages specifically disallowed u/s 17(5)(b) unless used for making taxable outward supply of the same category | 1,00,000 | \u2014 | \u2014 | \u2014 |
| Total ITC Available | | 79,000 | 79,000 | 34,500 |


(b) Computation of GST Payable by ABC Infra for February 2024 (Intra-State Supplies)

| Particulars | CGST @9% (\u20b9) | SGST @9% (\u20b9) |
|---|---|---|
| (i) Consideration for agreeing to install effluent plant \u2013 Taxable. It is a supply of service (tolerating an act / agreeing to do an act). GST on \u20b95,50,000 | 49,500 | 49,500 |
| (ii) Passes for cricket match (500 passes @ \u20b9485 each = \u20b92,42,500) \u2013 Exempt. Services by way of right to admission to a sporting event (unrecognised) where consideration per person does not exceed \u20b9500 are exempt. \u20b9485 < \u20b9500 \u2192 Exempt | \u2014 | \u2014 |
| (iii) Booking air tickets economy class (Mumbai to Manipur) \u2013 Taxable. Service of booking/ticketing is not exempt; only transportation of passengers from Manipur is exempt. GST on \u20b91,20,000 | 10,800 | 10,800 |
| (iv) Construction of buildings for State Government (u/a 243W) \u2013 Value of construction material = \u20b92,79,375 which is 34.07% of \u20b98,20,000. Since material value > 25% of contract value, it is a composite supply of goods and services \u2013 Taxable. GST on \u20b98,20,000 | 73,800 | 73,800 |
| Total GST Payable by ABC Infra | 1,34,100 | 1,34,100 |

Key Concepts to Understand

Consideration

Something of value exchanged for a promise. 'Quid Pro Quo' (Something for something).

Supply

Total amount of a good available to consumers.

Function

A relation from a set A (Domain) to a set B (Codomain) such that every element in A is associated with exactly one element in B. Written as f: A→B. Types include Linear, Quadratic, Polynomial, and Exponential functions.

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