Taxation - GSTSubjectiveQuestion 6089 of 512
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Question 6 (a) M/s Poorvi Ltd, a registered supplier of various goods and services, provided the following information pertaining to GST paid on inward supplies for the month of August, 2024. Sr No. Particulars GST Paid (`) 1. Purchased goods which are used for activities related to his obligation under corporate social responsibility referred to in section 135 of The Companies Act, 2013. 3,00,000 2. Purchased raw material worth ₹ 5,90,000 including GST in 5 lots. 3. lots of raw material worth ₹ 3,00,000 excluding GST received in the current month and remaining lots will be received in the month of September, 2024. 90,000 3. Company paid for outdoor catering expenses for the lunch of its factory employees during the lunch hours as per the policy of the company. There is no legal obligation to provide such lunch facility to the employees. 50,000 4. Purchased goods from M/s Om Traders -all goods and invoices were received by the company in August 2024, but one invoice out of these invoices has not been furnished by the supplier in the statement of outward supplies (using IFF). The GST paid on the invoice not furnished is ₹ 50,000. 2,00,000 TAXATION 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) (b) Examine 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)

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Detailed Solution & Explanation

(a) Computation of net ITC available to M/s Poorva Ltd. for August 2024 Particulars ₹ 1. Goods used for activities related to corporate social responsibility [ITC in respect of goods used for activities relating to obligations under corporate social responsibility (CSR) is not available under section 17 of the CGST Act, 2017 as the same is blocked. ] - 2. Raw material purchased in lots [When goods are received in lots, ITC can be taken only upon receipt of the last lot]. - 3. Outdoor catering expenses [ITC on outdoor catering services is blocked as ITC is not available under section 17 since such services are being provided by employer to employee without any statutory obligation.] - 4. Goods purchased from M/s Om Traders [2,00,000 – 50,000] [ITC can be availed only if the details of the invoice have been furnished by the supplier in Statement of outward supplies or GSTR-1 OR using Invoice Furnishing Facility (IFF). Thus, ITC of GST amounting to ₹ 50,000 paid on supply in respect of which the details of invoice have not been furnished, is not available.] 1,50,000 5. Raw material [“Buy one get one free” offer is not an individual supply of two goods, it is supply of two goods for the price of one. Thus, ITC is available on the inputs used in relation to supply of goods as part of said offer.] 1,50,000 Total ITC 3,00,000 TAXATION (b) Particulars Taxability (i) Vishwakarma Technical Institute qualifies as an educational institution2. Thus, services provided by Dhruv Printing Press to Vishwakarma Technical Institute are exempt since services are being provided to an educational institution by way of services relating to conduct of examination by such institution. Exempt (ii) Affiliation services by State educational boards are exempt only when they are provided to Government Schools. Thus, affiliation charges of ₹ 50,000 charged by State Board of Education from a school run by Dharampal Trust is taxable. Taxable (iii) Renting of room by a clinical establishment to a person receiving health care services are exempt provided room charges are upto ₹ 5,000 per day. However, this limit does not apply to renting of Intensive Cardiac Care Unit (ICCU). Thus, amount of ₹ 19,5003 charged by Wecare Hospital from Mr. Sahil admitted in ICCU is exempt. Exempt (iv) Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare by Citcare Hospital and is not separately taxable. Thus, said supply is exempt. Exempt

Key Concepts to Understand

Supply

Total amount of a good available to consumers.

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