Indirect Tax Laws (GST & Customs)SubjectiveQuestion 5847 of 504
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Vanguard Techtronics Ltd., a registered manufacturer in Pune (Maharashtra), provides the following details of outward and inward transactions for the month of October 2024: 1. Outward Supplies: - Intra-state supply of taxable manufactured goods: ₹40,00,000 (GST rate 18%) - Inter-state supply of taxable manufactured goods: ₹30,00,000 (GST rate 18%) - Intra-state supply of wholly exempt goods: ₹10,00,000 2. Inward Supplies (Input Tax Credit): - Opening balance in Electronic Credit Ledger: IGST ₹2,50,000, CGST ₹1,20,000, SGST ₹1,20,000 - Inputs purchased from Gujarat (Inter-state): Invoice value ₹15,00,000 + IGST @ 18% (₹2,70,000) - Inputs purchased from Mumbai (Intra-state): Invoice value ₹10,00,000 + CGST @ 9% (₹90,000) + SGST @ 9% (₹90,000). (Goods were used exclusively in manufacturing exempt goods) - Input services received from Pune (Intra-state) for general business operations: Invoice value ₹5,00,000 + CGST @ 9% (₹45,000) + SGST @ 9% (₹45,000) Compute the Net GST payable in cash by Vanguard Techtronics Ltd. for the month of October 2024, adhering strictly to the statutory order of ITC utilization under Section 49, 49A, and 49B of the CGST Act, 2017 read with Rule 88A.

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Detailed Solution & Explanation

### **Step 1: Computation of Outward GST Liability**

ParticularsValue (₹)CGST @ 9% (₹)SGST @ 9% (₹)IGST @ 18% (₹)
Intra-state taxable supply40,00,0003,60,0003,60,000-
Inter-state taxable supply30,00,000--5,40,000
Intra-state exempt supply10,00,000ExemptExempt-
Total Output Liability (A)80,00,0003,60,0003,60,0005,40,000

### **Step 2: Computation of Eligible Input Tax Credit (ITC)**
1. **Opening Balance**: IGST ₹2,50,000, CGST ₹1,20,000, SGST ₹1,20,000.
2. **Inter-state inputs from Gujarat**: Fully eligible ITC of **₹2,70,000 (IGST)**.
3. **Intra-state inputs used exclusively for exempt goods**: Ineligible under Section 17(2) of the CGST Act. ITC = **₹0**.
4. **Intra-state input services for common business operations**: Eligible ITC = **₹45,000 (CGST)** and **₹45,000 (SGST)**.

ITC SourceCGST (₹)SGST (₹)IGST (₹)
Opening Balance1,20,0001,20,0002,50,000
Current Month Eligible Inputs--2,70,000
Current Month Eligible Input Services45,00045,000-
Total ITC Available (B)1,65,0001,65,0005,20,000

### **Step 3: Statutory Order of ITC Utilization (Section 49, 49A, 49B & Rule 88A)**
1. **IGST Credit Utilization**: IGST credit (₹5,20,000\displaystyle ₹5,20,000) must first be utilized completely against IGST liability (₹5,40,000\displaystyle ₹5,40,000).
Balance IGST liability=₹5,40,000−₹5,20,000=₹20,000Balance IGST liability\displaystyle \text{Balance IGST liability} = ₹5,40,000 - ₹5,20,000 = ₹20,000
2. **CGST Credit Utilization**: CGST credit (₹1,65,000\displaystyle ₹1,65,000) is utilized against CGST liability (₹3,60,000\displaystyle ₹3,60,000).
Balance CGST liability=₹3,60,000−₹1,65,000=₹1,95,000Balance CGST liability\displaystyle \text{Balance CGST liability} = ₹3,60,000 - ₹1,65,000 = ₹1,95,000
3. **SGST Credit Utilization**: SGST credit (₹1,65,000\displaystyle ₹1,65,000) is utilized against SGST liability (₹3,60,000\displaystyle ₹3,60,000).
Balance SGST liability=₹3,60,000−₹1,65,000=₹1,95,000Balance SGST liability\displaystyle \text{Balance SGST liability} = ₹3,60,000 - ₹1,65,000 = ₹1,95,000

Tax HeadOutput Tax (₹)Paid via IGST (₹)Paid via CGST (₹)Paid via SGST (₹)Net Cash Payable (₹)
IGST5,40,000(5,20,000)--20,000
CGST3,60,000-(1,65,000)-1,95,000
SGST3,60,000--(1,65,000)1,95,000
Total12,60,000(5,20,000)(1,65,000)(1,65,000)4,10,000

**Conclusion**: Total Net GST payable in cash is **₹4,10,000** (IGST: ₹20,000, CGST: ₹1,95,000, SGST: ₹1,95,000).

Key Concepts to Understand

Supply

Total amount of a good available to consumers.

Ledger

The principal book of accounts in which all business transactions are classified and posted under separate account heads. It is also called the 'Book of Final Entry' or the 'King of All Books'.

More Questions from Indirect Tax Laws (GST & Customs)

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