SEMESTER-4 PAPER: CH4.1: INDIRECT TAX PRACTICAL QUESTIONS Q.1. MCSS Tech Solutions is providing taxable Information Technology software services, and provide the following information related to the services rendered, invoice issued and payment received for these services, for the half year ended on 31st March 2016 (i) Advance received on 31st March, 2016 for upgradation and enhancement of software service to be rendered in the month of April, 2016 Rs 7,50,000 (ii) Service provi ded to United Nations in New Delhi for analysis, design and programming of latest information technology software Rs 6,00,000 (iii) Service billed to various clients (including the services provided to United Nations) Rs 56,00,000 (iv) Service tax has been charged separately in all the bills. Compute the value of total taxable services and the total service tax payable by MCSS Tech. Solutions @ 14% for the half year ended on 31st March, 2016. [4 marks] Q2. Mr. Devansh, a dealer of ric e plant machinery in the State of Punjab, provide the following informations Total inter-state sales during the F.Y. 2015-16 is Rs 95,00,000, CST included in this sales. This sales also include the following (a) Dharmada Rs 7,50,000 (b) Freight Rs 4,50,000 (Rs 3,00,000 shown separately in the invoices). Cost of packing boxes for machinery are of Rs 68,500 and installation and commissioning charges shown separately are of Rs 65,000, Determine CST payable assuming that all transactions were covered by valid C forms and the VAT rate within the state is 5%. [4 marks] Q3. Rahul & Co. is a firm engaged in the business of recruitment and supply of Manpower. It furnishes the following details pertaining to the quarter ended 31-03-2016 (i) Amount collected from clients for recruitment of Permanent Staff Rs 5,00,000 and for recruitment of Temporary Staff Rs 3,00,000 (ii) Amounts collected from clients for pre -recruitment screening Rs 2,50,000 (iii) Domestic helps arranged for friends & r elative (Value of similar services is Rs 45,000 to other customers) Nil (iv) Amount collected from a warehouse of agricultural produce for labour provided for loading and unloading. Rs 1,75,000 (v) Advances received from prospective employers for condu cting campus interviews in colleges to be held in May 2016 Rs 2,00,000 (Such campus interviews could not be conducted due to students strike in those colleges. Hence, the advances received was later on returned to the employers). None of the clients of Rahul & Co. was a body corporate during the relevant quarter. Compute the value of taxable services rendered and the total service tax payable @ 14% by the assessee for the relevant quarter assuming that Rahul & Co. is not eligible for the small service provider s exemption in the financial year 2015-16. Alt above amounts are inclusive of service tax, where applicable [5 marks] Q4. Balaji enterprises, a registered dealer provide the following details of purchases, sales, etc. for the year ended 31s Mar ch, 2016 (a) Purchase of raw materials within State (1,500 units) inclusive of VAT @ 12.5% Rs 4,05,000 (b) Inter -State purchases of raw materials, inclusive of CST @ 2% Rs 3,06,000 (c) Import of raw materials, inclusive of custom duty of Rs 50,000 Rs 4,50,000 (d) Capital goods purchased on 15-6-2015, inclusive of VAT levy @ 10% (input credit to be spread over 3 financial years) Rs 3,30,000 (e) Manufacturing expenses Rs 1,75,000 (f) Sales of taxable goods within state, inclusive of VAT @ 4% Rs 10,92,000 (g) Sale of exempted goods within state (manufactured from Inter -State purchase
of raw materials) Rs 2,25,000 (h) Closing Stock of 200 units of raw material purchased within State as on 31st March, 2016 (i) input tax credit is allowed only on r aw materials used in manufacturing of taxable goods. Compute the net VAT liability of Balaji enterprises, for the year ended on 31st March, 2016. [3 marks] Q5. BC Pvt Ltd., a manufacturer, has furnished the following information : (i) Input A - Invoice dated 23-03-2015- Excise duty paid Rs 1,56,000 (ii) Input B -Invoice dated 10-4- 2016 Excise duty paid Rs 1,35,000 (iii) Input C Invoice missing excise duty paid Rs 89,460 (iv) Input Service X -Invoice dated 12-11-2015 service tax paid Rs 45,3 40 (v) Input Service Y -Invoice dated 20-2-2015 service tax paid Rs 68,240 (vi) Machinery (being eligible capital goods under Chapter 82) -Invoice dated 12-9-2014 excise duty paid Rs 3,54,670 (vii) GTA service for bringing raw materials to the factory (Payment has not been made to GTA but service tax has been paid under reverse charge) Invoice dated 14-1-2016, value of services Rs 3,00,000 service tax paid under reverse charge as applicable on 6-3-2016 (viii) BC Pvt. Ltd. is not ent itled to SSI exemption. You are required to determine the total CENVAT credit that can be availed by BC Pvt. Ltd. during the month of April, 2016 (5 marks) Q6. Rajeshwari Industries imported a machinery from Germany in an aircraft. The bill of entry was presented on 12-07-2015 and the aircraft arrived in India on 25-07-2015. The rate of import duty are: (a) Bill of entry on 12-07-2014 rate of customs duty 12% (b) Arrival of aircraft on 25-07-2014 rate of customs duty 15%. In the above case, determi ne the applicable rate of import duty [3 marks] Q7 With reference to the service tax laws -as contained in the Finan ce Act, 1994, kindly explain the following (i) What will be the point of taxation in case of continuous supply of services? (ii) Moha n, a service provider had received Rs 2,50,000 in advance, from Rakesh. Mohan had deposited service tax on such amount in the relevant half year. He finally rendered services valuing to Rs 2,20,000 only and refunded balance amount to Rakesh. Mohan wants to adjust service tax on Rs 30,000 refunded by him, from his current dues of Service tax. Advise him. [2+2 = 4 marks] Q8. A manufacturer of machinery sold his machine on which excise duty is payable under Section 4 of Central Excise Act, 1944 (a) Total In voice price Rs 7,50,000 (b) Erection Charges (erection to be done at customer s factory) Rs 50,000 (c) Packng Charges Rs 12,000 (d) Design Charges Rs 20,000 (e) Insurance Charges (for dispatch to customer s factory) Rs 8,.000 (f) Outward freight (from-place of removal to customer s factory Rs 17,000 (g) State VAT 12.5% (g) Gash discount @ 2% was allowed as the customer had made full advance payment. (h) Excise duty rate is 12.5%. Calculate Assessable Value of the machine and excise duty payable [4 marks] Q9. State whether the following services are covered under negative list of services under Section 66 D. Need not assign any reason (i) Service provided by the Department of Post by way of speed post, express parcel post, Life Insurance and agency services provided to a person other than Government (ii) Service provided by way of supply of farm labour relating to agriculture (iii) Services by way of renting of residential dwellings for use as residence (iv) Services for funeral, burial, c rematorium or mortuary and transportation of the deceased (v) Services relating to education as a part of an approved vocational education course (vi) Service of transportation of passengers with or without accompanied belongings, by Railways in an air con ditioned coach (vii) Services by way of transportation of goods by road by a
goods transportation agency (viii) Selling of space or time slots for advertisement broadcast by FM Radio[4 marks] Q10. Define the term Transaction value as per Central Excise Act, 1944 [4 marks] Q11. Ms. Vasundhara, a service provider, who pays service tax regularly, was of the opinion that a particular service rendered by her was not liable to service tax. She therefore, did not charge service tax in her bill. She received th e payment for the bill amount without service tax. However, it was later confirmed that service tax is payable on said service. How will service tax liability of Ms. Vasundhara be determined in such a case? [4 marks] Q12. Explain the term Price cum Duty as per Central Excise Act, 1944 [4 marks] Q13. Ashok, a taxable service provider outsourced a part of work by engaging Suresh, a subcontractor. Service tax is charged and paid by Ashok for the total work. Whether Suresh, the sub contractor is liable to charge and pay any service tax? [4 marks] Q14. RSL Pvt. Ltd. purchased a pollution control equipment on 20-6-2010 for Rs 15,00,000 (including excise duty of Rs 1,85,400); and took the CENVAT credit of 50% of the excise duty paid in the financial year 2 010-11 and balance credit of 50% in the financial year 2011-12. After using such equipment, sold it as scrap for Rs 50,000 excluding excise duty, on 31st Dec., 2014. Examine whether : (i) RSL Pvt. Ltd. was correct in availing the CENVAT credit on the sai d equipment in financial years 2010-11 and 2011-12? (ii) On selling of above equipment in the financial year 2014-15, it needs to pay the amount of excise duty earlier availed as CENVAT Credit? (4 marks) Q15. Compute the Service Tax liability of Mr. Saksham. an Air Travel Agent for the quarter ended September 30, 2013 using the following details : (i) Basic Air fare collected for Domestic booking of tickets Rs 45,00,000 (ii) Basic Air fare collected for International booking of tickets Rs 90,00, 000 (iii) Commission received from the airlines towards the sale of above tickets Rs 12,00,000 In the above case, would the Service Tax liability of Mr. Saksham be reduced if he opts for special provision for payment of Service Tax as provided under Rule 6 of the Service Tax Rules, 1994 instead of paying Service Tax @12%. Mr. Saksham is not eligible for Small Service Providers exemption, also Service Tax has been charged separately (6 marks) Q16. The following data relating to an importer for the pre vious year 2013-14 is available : (i) Customs Value (Assessable Value of imported goods) is Rs 4,00,000 (ii) Basic Customs Duty payable 10% (iii) If the goods were produced in India, Central Excise Duty would have been 16%. Education cess and seconda ry higher education cess are as applicable. Special CVD at appropriate rate is applicable. Find the customs duty payable. How much Cenvat credit can be availed by importer if the importer is a manufacturer? (4 marks] Q17. ABC private Ltd. is engaged in p roviding taxable Services. The aggregate value of taxable services provided and invoiced during January 2014 are Rs. 18,00,000. The invoices of Rs. 18,00,000 include the following * Rs. 1,00,000 relating to betting * Rs. 1,25,000 for services rendered within the Indian territorial waters * Rs. 1,75,000 for services rendered to its associated enterprise * Rs. 1,50,000 for services rendered in State of Jammu & Kashmir. Note : All the invoices are inclusive of service tax. In the financial year 2012-13 ABC
Private Ltd. had paid Rs. 2,06,000 as service tax @ 12.36%. Compute the Service Tax payable for the month of January 2014 (5 marks) Q18. Mr. Mani reported Interstate sales of Rs. 45,00,000 for the financial year 2013-14. In this regard following ad ditional information is available : (i) Freight Rs. 2,30,000 (Rs. 80,000 is not shown separately on Invoices) (ii) Goods Sold to Mr. X for Rs. 45,000 on 15-05-2013 were returned on 18-10-2013 (iii) Mr. Z a buyer to whom goods worth Rs. 30,000 were dispatched on 17-04-2013 rejected such goods. The said goods were received back on 18-11-2013. Determine the taxable turnover and CST payable, assuming that all the transactions were covered by valid C forms and Sales Tax rate within the slate is 5% (3 marks) Q19. Mr. Shiven is providing service of Construction of Buildings. He purchased the following items in May, 2013. The items purchased and excise duty paid in Rs (including education cess) on each item is as follows * Dumpers 1,06,000 * Electric t ransformer falling under chapter 85 of Excise Tariff 40,000 * Refrigerator fitted in office 15,000 * Diesel for use in Dumper 25,000 * Car for use of Employees for coming to site and going back 1,50,000 * Trucks used for the transport of constructi on material falling under tariff sub-heading 8704 15,000. You are required to determine the amount of CENVAT Credit available with Mr. Shiven (4 marks] Q20. Calculate the Assessable Value and the Excise Duty payable from the following particulars Total Invoice price (inclusive of taxes) 55,000 * State VAT 5,500 * Insurance charges for dispatch of final product 275 * Packing charges 1,200 * Outward Freight beyond the place of removal 2,100. Excise duty rate is 12% and Education Cesses as applicable. An Exemption Notification grants Exemption of 50% of the duty payable on this product (4 marks) Q21 Mr. Vineet a Service Provider received an advance of Rs. 1,00,000 from Mr. X on 05-04-2013 as part payment for a service. The Service was completed on 10-04-2013 and the date of invoice was 16-05-2013. He received the remaining amount of Rs. 1,50,000 on 14-06- 2013. Determine the Point of Taxation in the above case. Would your answer be different if the above Service becomes taxable for the first time with effect from 01-06-2013? (4 marks) Q22 Vivitha& Co., a registered dealer in Ludhiana. furnishes the following details of purchases and sales pertaining to the month of March. 2014 : * Opening balance in VAT Input Credit brought forward Rs 0.20 lakhs * Purchases of raw materials within the State (final invoice value) from registered dealers Rs 26.00 lakhs * Purchases of raw materials within the State (final invoice value) from dealers opting for Composition Scheme Rs 5.20 lakhs * Purchases from outside the State (final invoice value) Rs 10.20 lakhs * Sales within State of finished goods, excluding VAT Rs 40.00 lakhs. The Input VAT rate for raw materials is 4%; Output rate is 10%. Determine the VAT liability of the dealer (4 marks) Q23 Not All the Services provided by an Employee to the Employers are outside the ambit of Service. Explain the statement with reference to Service Tax law (2 marks) Q.24 Discuss whether the following services are liable to Tax : Services provided on cont ract basis by a person to another (1 mark)
Q.25 Discuss whether the following services are liable to Tax : Services provided by a casual worker to Employer who gives wages on daily basis to the workers (1 mark) Q26. Discuss the validity of the following statement with reference to computation of liability- under CST Act: (i) Cost of freight, separately charged in the invoice, shall be deducted from sale price (ii) Subsidy given by Government to manufacturers (selling the product at controlled price) to compensate cost of production will form part of sale price, (in) Charity or dharmada collected by dealer will not form part of sale price (iv) Free of cost material supplied by the customer will be added to the sale price (4 marks) Q27. Gupta Associates, a firm of lawyers rendered legal Advice to Mr. Das, an Architect and Surya Ltd. an Advertising agency during December, 2013. Both Mr. Das and Surya Ltd. are not entitled for Small Service Provider exemption in the year 2013-14. Who is Liable to pay Service Tax in this Case? Will your answer be different if Mr. Das and Surya Ltd. sought Legal Advice from Mr. Dev a Lawyer (4 marks) Q28. Mittal Brothers are the manufacturers of certain Non -Excisable Goods. They manufactured goods worth Rs. 2,00,000 on June 25, 2013. These goods were removed from the factory on September 20, 2013. On September 1, 2013 these goods were brought within the purview of the Tariff and chargeable to duty @ 12%. Discuss the leviability of Excis Duty in the hands of Mittal Brothers (3 marks) Q29. Compute the interest payable on delayed payment of service tax by Service provider in following cases : (A) Name of the service provider PQR Ltd.; Service Tax Liability Rs. 1,23,600; Delay in paym ent of Service Tax 20 Days; Aggregate value of taxable services rendered in previous financial year 2012-13 by PQR Ltd. was Rs. 40,00,000 (B) Name of the service provider Mr. Manik; Service Tax Liability Rs. 2,16,000; Delay in payment of Service Tax 25 Days; Aggregate value of taxable services rendered in previous financial year 2012-13 by Mr. Manik was Rs. 62,00,000. Assume that Service Tax liability and delay given above relates to financial year 2013-14 (4 marks) Q30. R. R Pharma Ltd. man ufactures a particular drug, which is not covered by MRP. On 12-3-2014, 2,000 units of this drug were cleared from the factory for distribution as free samples to physicians. The MRP of a unit is Rs. 202, inclusive of VAT at 1% and excise duty at 12.36%. Cost of production per unit is Rs 160 per unit. The company has approached you with the following views : (i) Free samples given to the doctors cannot be sold by any one, as per the Drug Control Act; hence they are not marketable. As a logical corollary, Ex cise Duty is not leviable (ii) If this has to be valued, the company makes no profit and hence should be valued at cost. Advise the company suitably, as regards the value -to be adopted for the free samples (4 marks) THEORY QUESTIONS e SERVICE TAX 1. Explain the selective and the comprehensive approach of service tax law. Which approach is followed in India presently?
2. A club has 50 members. It provides service to its members. Since members and club are the same entity, service tax is not applicable. Do you agree? 3. What is the meaning of service? What is the significance of consideration in attracting service tax liability? 4. What do you mean by declared service? Name any four such services. 5. Discuss any five services under the Negative list. 6. Discuss the significance of place of provision of service rules in computing service tax liability. 7. What is bundled service? How service tax liability is ascertained in the case of bundled service? 8. What is Reverse Charge Mechanism? Discuss the c ases covered by Reverse Charge Mechanism. 9. What are the provisions in the context of a small service provider under service tax laws? 10. Discuss the provisions pertaining to Invoice to be prepared by service provider. 11. When is a person liable for penalty under service tax? 12. What are the due dates for payment of service tax and filing of returns? Are there any penalties for non-filing or delay filing of the returns? VAT & CENTRAL EXCISE 1. What is the need for introducing VAT? 2. What are the different modes of computation of VAT? What are the advantages of adoption of tax credit method? 3. What is Composition Scheme under VAT? What are its merits and demerits? 4. What is input tax credit? Explain with the help of an example. 5. What are the contents of VAT invoice? 6. What is excise duty? What are the basic conditions for levy of excise duty? 7. Briefly discuss the meaning of Manufacture and Deemed manufacture in the context of Central Excise Act. 8. To attract the levy of Central Excise, goods must be moveable as well as marketable. Discuss briefly.
9. What are the different methods of calculation of excise duty payable? 10. Discuss the provisions regarding Cenvat Credit under Excise Laws. 11.What are the basic procedures under Central Excise? Discuss briefly. 12. What are the benefits enjoyed by a small scale industrial unit under Central Excise? 13. Differentiate between non-excisable goods and non-dutiable goods. 14. What is compounded levy scheme? CUSTOMS LAW 1. What is Anti-Dumping duty? Briefly examine the significance of the levy of anti -dumping duty under the Customs Law. 2. What are the different exemptions under customs duty? 3. Discuss in brief the import procedures and export procedures. 4. Explain the scheme of self-assessment of customs duty. 5. Discuss the provisions regulating baggage under the Customs Law. 6. What is Countervailing Duty?