Taxation - GST Ch 03: Charge Composition - Test 4: answer key

Question 1 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. RapidRide Technologies Pvt. Ltd., registered in Maharashtra, operates a digital platform connecting passengers with independent transport providers. During September 2026, it facilitates four categories of intra-State passenger transportation services. First, individual motorcycle owners provide passenger rides through the platform for aggregate consideration of ₹4,80,000. Second, independent drivers operating radio taxis provide rides aggregating ₹6,20,000. Third, Dholera Tours, a registered partnership firm, operates an omnibus carrying passengers and facilitates bookings through RapidRide for ₹3,00,000. Fourth, MetroCoach Pvt. Ltd., a company incorporated under the Companies Act, 2013, provides omnibus passenger transportation through the same platform for ₹5,00,000. MetroCoach issues its own tax invoices to passengers and accounts for GST on its services. RapidRide collects the customer consideration, deducts a platform commission of 20% and remits the remaining amount to the respective transport providers. The stated amounts are gross passenger fares before deduction of commission and GST. RapidRide maintains records identifying the vehicle category and actual transport provider for each booking. It has no ownership interest in the vehicles and does not employ the individual drivers. All four categories involve transportation of passengers, rather than transportation of goods. The finance controller proposes to treat every transport service facilitated through the platform as a supply on which RapidRide must pay GST under section 9(5). However, MetroCoach argues that the special treatment of omnibus services supplied by a company is different from the treatment of services supplied by a partnership firm. Assume that all qualifying services attract GST at 5%, and there are no exemptions or valuation adjustments.

RapidRide facilitates passenger transportation through individual motorcycle owners and independent radio-taxi drivers. Which of the following services falls within the specified category under section 9(5) of the CGST Act, 2017?

1. Transportation of industrial goods by a goods vehicle booked through RapidRide.
2. Passenger transportation by an individual motorcycle owner through RapidRide. (correct answer)
3. Passenger transportation supplied by a company through an omnibus.
4. Transportation of company-owned machinery through a third-party logistics platform.

Answer: B — Passenger transportation by an individual motorcycle owner through RapidRide.

Explanation. Clause (i) of Notification No. 17/2017 covers passenger transportation by radio-taxi, motorcab, maxicab, motorcycle and other motor vehicles except omnibus. Consequently, the individual motorcycle owner's service falls within the notified category when supplied through RapidRide. The company transporting industrial goods is supplying a different service, while omnibus transportation is governed by the separate clause (ia). The special company exception for omnibus cannot be extended to motorcycle passenger transport. Section 9(5) therefore places the applicable tax liability on RapidRide.

Where it goes wrong. Confusing passenger transportation with goods transportation and overlooking the separate treatment prescribed for omnibus services.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), dated 28.06.2017, clause (i), as amended by Notification No. 17/2021-Central Tax (Rate)

Question 2 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Dholera Tours, a partnership firm, and MetroCoach Pvt. Ltd., a company, both provide omnibus passenger transportation through RapidRide. Which statement correctly identifies the ECO's liability?

1. RapidRide pays tax on both services because every omnibus service is covered by section 9(5).
2. Both providers pay tax themselves because omnibus transportation is excluded from section 9(5).
3. The partnership firm pays tax, while RapidRide pays tax on the company's service.
4. RapidRide pays tax on the partnership firm's service, while MetroCoach pays tax itself. (correct answer)

Answer: D — RapidRide pays tax on the partnership firm's service, while MetroCoach pays tax itself.

Explanation. Clause (ia) covers passenger transportation by omnibus through an ECO except where the person supplying the service is a company. Dholera Tours is a partnership firm, so RapidRide must pay tax on its ₹3,00,000 service. MetroCoach is a company, so it falls outside the ECO liability and pays tax itself. At 5%, MetroCoach's tax is ₹5,00,000 × 5% = ₹25,000. The ECO's tax responsibility therefore differs according to the legal form of the actual omnibus supplier.

Where it goes wrong. Treating every omnibus provider as a company or ignoring the specific company exception in clause (ia).

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (ia); Section 2(17) of the CGST Act, 2017

Question 3 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Calculate the total GST payable by RapidRide under section 9(5) on the qualifying passenger transportation services described in the scenario, excluding the omnibus service supplied by MetroCoach Pvt. Ltd. Assume a 5% GST rate.

1. ₹70,000 on aggregate qualifying passenger fares of ₹14,00,000. (correct answer)
2. ₹95,000 on aggregate qualifying passenger fares of ₹19,00,000.
3. ₹45,000 on aggregate qualifying passenger fares of ₹9,00,000.
4. ₹50,000 on aggregate qualifying passenger fares of ₹10,00,000.

Answer: A — ₹70,000 on aggregate qualifying passenger fares of ₹14,00,000.

Explanation. Qualifying fares comprise motorcycles ₹4,80,000, radio taxis ₹6,20,000 and partnership-firm omnibus services ₹3,00,000. Aggregate qualifying value = ₹4,80,000 + ₹6,20,000 + ₹3,00,000 = ₹14,00,000. GST = ₹14,00,000 × 5% = ₹70,000, comprising CGST ₹35,000 and SGST ₹35,000. MetroCoach's ₹5,00,000 service is excluded from the ECO computation because the supplier is a company and pays tax itself.

Where it goes wrong. Including the company's omnibus fares in the ECO's tax base or excluding the partnership firm's omnibus fares.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clauses (i) and (ia)

Question 4 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

RapidRide retains 20% commission on the aggregate qualifying fares of ₹14,00,000 before remitting the balance to the transport providers. Assuming that the tax rate is 5%, what is the GST payable by RapidRide on the passenger transportation services under section 9(5)?

1. ₹56,000, calculated on the net amount remitted after commission.
2. ₹60,000, calculated after deducting commission from the qualifying fares.
3. ₹70,000, calculated on gross qualifying passenger fares. (correct answer)
4. ₹84,000, calculated by adding the platform commission to the qualifying fares.

Answer: C — ₹70,000, calculated on gross qualifying passenger fares.

Explanation. The qualifying passenger-service value is the gross fare of ₹14,00,000. Commission retained by RapidRide is ₹14,00,000 × 20% = ₹2,80,000, leaving ₹11,20,000 payable to transport providers. However, the commission deduction does not reduce the value of the underlying passenger service. GST under section 9(5) = ₹14,00,000 × 5% = ₹70,000. The commission service provided separately by RapidRide is a distinct transaction.

Where it goes wrong. Calculating tax on the net settlement amount rather than the gross consideration for the passenger transportation service.

Authority. Section 9(5) of the CGST Act, 2017; Section 15 of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate)

Question 5 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. StayNest Technologies Ltd., registered under GST in Karnataka, operates an online accommodation and household-services booking platform. During September and October 2026, it facilitates accommodation and housekeeping services supplied by four independent providers. Ms. Anuradha Sen owns a small homestay and has aggregate turnover of ₹17,40,000 during FY 2025-26. She is unregistered and provides accommodation through StayNest for ₹2,00,000 during October 2026. Each unit is priced below ₹7,500 per day. CityStay Hotels, a registered sole-proprietorship concern, had aggregate turnover of ₹24,00,000 during FY 2025-26. It supplies accommodation through StayNest for ₹3,00,000 during September 2026, with unit prices below ₹7,500 per day. PlumbCare Services, operated by an individual plumber, has aggregate turnover of ₹12,00,000 in FY 2025-26. It voluntarily obtained GST registration under section 25(3), although it is not liable for compulsory registration under section 22(1). It undertakes plumbing assignments through StayNest for ₹1,20,000 during September 2026. HighRise Housekeeping Pvt. Ltd., a registered company with aggregate turnover of ₹32,00,000 in FY 2025-26, provides housekeeping services through the platform for ₹2,00,000. The platform collects customer payments, deducts commission and settles the balances with the providers. All suppliers and the ECO are located in Karnataka. Assume the applicable GST rates are 5% for the stated accommodation services and 18% for housekeeping and plumbing services. The management must distinguish the registration-threshold exception applicable to accommodation and housekeeping services from the treatment of suppliers who have merely obtained voluntary registration.

Ms. Anuradha Sen supplies accommodation through StayNest for ₹2,00,000. Her preceding-year aggregate turnover is ₹17,40,000 and she is unregistered. Who is liable to pay GST on this booking, assuming the property is not a specified premise and the applicable rate is 5%?

1. Anuradha pays GST because accommodation supplied through an ECO is always taxable in her hands.
2. Anuradha pays GST because she provides commercial lodging rather than residential accommodation.
3. No GST arises because an unregistered accommodation supplier is exempt from every GST liability.
4. StayNest pays ₹10,000 under section 9(5) because Anuradha is below the section 22 threshold. (correct answer)

Answer: D — StayNest pays ₹10,000 under section 9(5) because Anuradha is below the section 22 threshold.

Explanation. The accommodation entry covers lodging services supplied through an ECO except where the supplier is liable for registration under section 22(1). Anuradha's aggregate turnover of ₹17,40,000 is below the assumed ₹20,00,000 threshold. Therefore, StayNest is liable under section 9(5). GST = ₹2,00,000 × 5% = ₹10,000. The supplier's unregistered status does not eliminate the ECO's statutory liability.

Where it goes wrong. Assuming that the unregistered accommodation provider's threshold exemption also exempts the ECO from paying tax under section 9(5).

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (ii); Section 22(1) and section 24(ix) of the CGST Act, 2017; Notification No. 12/2017-Central Tax (Rate)

Question 6 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

CityStay Hotels had aggregate turnover of ₹24,00,000 during FY 2025-26 and is liable to registration under section 22(1). It supplies accommodation through StayNest for ₹3,00,000 during September 2026. Determine who pays GST at the assumed rate of 5%.

1. CityStay Hotels pays ₹15,000 under forward charge because it is liable to registration under section 22(1). (correct answer)
2. StayNest pays ₹15,000 under section 9(5) because the booking is made through its platform.
3. Both parties pay ₹7,500 each because accommodation liability is shared.
4. No GST applies because the accommodation provider has not crossed the hotel tariff limit.

Answer: A — CityStay Hotels pays ₹15,000 under forward charge because it is liable to registration under section 22(1).

Explanation. The accommodation entry excludes supplies where the supplier is liable for registration under section 22(1). CityStay's preceding-year aggregate turnover of ₹24,00,000 exceeds the assumed threshold of ₹20,00,000. Hence, StayNest does not pay tax under section 9(5), and CityStay remains liable under forward charge. GST = ₹3,00,000 × 5% = ₹15,000, comprising CGST ₹7,500 and SGST ₹7,500.

Where it goes wrong. Confusing the registration threshold with the ₹7,500 hotel accommodation value criterion used for specified premises.

Authority. Section 9(1) and section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (ii); Section 22(1) of the CGST Act, 2017

Question 7 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

PlumbCare Services voluntarily obtained registration under section 25(3), although its aggregate turnover is only ₹12,00,000. It provides plumbing services through StayNest for ₹1,20,000. Which party bears the tax at 18% under the housekeeping entry?

1. PlumbCare pays ₹21,600 because any registered service provider is excluded from section 9(5).
2. StayNest pays ₹10,800 because plumbing is treated as accommodation-related service.
3. StayNest pays ₹21,600 because PlumbCare is not liable for registration under section 22(1). (correct answer)
4. Both parties pay ₹10,800 because voluntary registration creates shared liability.

Answer: C — StayNest pays ₹21,600 because PlumbCare is not liable for registration under section 22(1).

Explanation. The housekeeping entry excludes a supplier who is liable for registration under section 22(1), not every supplier who happens to hold GST registration. PlumbCare's turnover of ₹12,00,000 remains below the assumed ₹20,00,000 threshold, and its registration is voluntary under section 25(3). Therefore, StayNest remains liable under section 9(5). GST = ₹1,20,000 × 18% = ₹21,600.

Where it goes wrong. Treating voluntary registration under section 25(3) as equivalent to liability for compulsory registration under section 22(1).

Authority. Section 9(5) of the CGST Act, 2017; Section 22(1) and section 25(3) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (iii)

Question 8 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Calculate the aggregate GST payable by StayNest under section 9(5) on the qualifying accommodation and plumbing services in the scenario. Exclude the accommodation supplier liable under section 22(1) and the housekeeping company liable for registration.

1. ₹31,600, after applying 5% to both qualifying transactions.
2. ₹31,600, comprising ₹10,000 on accommodation and ₹21,600 on plumbing. (correct answer)
3. ₹36,600, after including CityStay's accommodation service.
4. ₹52,000, after including all four suppliers' services.

Answer: B — ₹31,600, comprising ₹10,000 on accommodation and ₹21,600 on plumbing.

Explanation. Anuradha's qualifying accommodation value is ₹2,00,000 × 5% = ₹10,000. PlumbCare's qualifying plumbing value is ₹1,20,000 × 18% = ₹21,600. Aggregate ECO liability = ₹10,000 + ₹21,600 = ₹31,600. CityStay and HighRise are liable for registration under section 22(1), so their supplies are excluded from the ECO computation. No tax attributable to those two supplies is included in the ₹31,600.

Where it goes wrong. Including all platform-facilitated services in the ECO tax base without testing the supplier-registration exception separately for each category.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clauses (ii) and (iii)

Question 9 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. FoodOrbit India Pvt. Ltd., registered in Delhi, operates a food-delivery platform connecting restaurants, cloud kitchens and consumers. During October 2026, it facilitates restaurant services supplied by three establishments. TinyBite Cloud Kitchen, an unregistered individual-owned business, supplies restaurant services through FoodOrbit for ₹4,00,000. It operates only a kitchen and has no dining premises. Its aggregate turnover is below the applicable registration threshold. Nandini Diner Pvt. Ltd., a registered restaurant with aggregate turnover exceeding ₹20,00,000, supplies restaurant services through FoodOrbit for ₹6,00,000. Its premises are not classified as specified premises. Grand Meridian Hotel operates a restaurant at premises where the hotel had supplied accommodation worth ₹9,000 per unit per day during FY 2025-26. Consequently, the premises qualify as specified premises for FY 2026-27 under the revised definition. The hotel supplies restaurant services through FoodOrbit for ₹3,00,000 during October 2026. The platform collects the customer's entire payment, deducts its commission and transfers the balance to the restaurant or hotel. All amounts are gross restaurant-service values before deduction of commission and GST. Assume that the applicable GST rate on restaurant services outside specified premises is 5%, while restaurant services at specified premises attract 18%. The management also has ₹35,000 of eligible input tax credit available in its electronic credit ledger and proposes to utilise it against the tax payable under section 9(5). The finance team must determine which restaurant supplies are covered by the ECO liability, who issues the restaurant-service invoice, and the treatment of TCS and input tax credit.

TinyBite Cloud Kitchen is unregistered and supplies restaurant services through FoodOrbit for ₹4,00,000. The kitchen is not located at specified premises. Who pays GST at 5%?

1. FoodOrbit pays ₹20,000 under section 9(5), notwithstanding the kitchen's unregistered status. (correct answer)
2. TinyBite pays ₹20,000 under forward charge because every restaurant supplier must register.
3. FoodOrbit pays ₹10,000 because the tax liability is restricted to CGST.
4. No GST applies because the kitchen does not operate a dine-in restaurant.

Answer: A — FoodOrbit pays ₹20,000 under section 9(5), notwithstanding the kitchen's unregistered status.

Explanation. Restaurant services supplied through an ECO are covered by clause (iv), except those supplied by restaurants located at specified premises. The entry does not contain the supplier-registration threshold exception applicable to accommodation and housekeeping services. The circular also clarifies that the ECO pays tax on restaurant services supplied through it, including services from an unregistered restaurant. GST = ₹4,00,000 × 5% = ₹20,000, payable by FoodOrbit.

Where it goes wrong. Importing the section 22 registration-threshold exception for hotel and housekeeping services into the separate restaurant-service entry.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (iv); Circular No. 167/23/2021-GST dated 17.12.2021

Question 10 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Grand Meridian Hotel supplies restaurant services through FoodOrbit from premises where a hotel accommodation unit had a value of supply of ₹9,000 per unit per day during FY 2025-26. What is the correct treatment for restaurant services supplied during FY 2026-27?

1. FoodOrbit pays ₹54,000 because all restaurant services through an ECO attract section 9(5).
2. FoodOrbit pays ₹27,000 because only the CGST component is covered under section 9(5).
3. Grand Meridian pays ₹54,000 under forward charge because its premises are specified premises. (correct answer)
4. The hotel and FoodOrbit share the liability of ₹54,000 equally.

Answer: C — Grand Meridian pays ₹54,000 under forward charge because its premises are specified premises.

Explanation. The revised specified-premises definition uses the value of hotel accommodation supplied in the preceding financial year. Since a unit was supplied at ₹9,000 per day during FY 2025-26, the premises qualify for FY 2026-27. Restaurant services supplied there are excluded from the section 9(5) entry. Tax = ₹3,00,000 × 18% = ₹54,000, comprising CGST ₹27,000 and SGST ₹27,000, payable by the hotel.

Where it goes wrong. Applying section 9(5) to every restaurant booking through an ECO without testing the specified-premises exception.

Authority. Section 9(1) and section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (iv); Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 05/2025-Central Tax (Rate)

Question 11 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Calculate the GST payable by FoodOrbit under section 9(5) on the restaurant services supplied by TinyBite and Nandini Diner. Exclude Grand Meridian Hotel because its restaurant is located at specified premises.

1. ₹20,000, being 5% of TinyBite's restaurant services only.
2. ₹65,000, being 5% of all three establishments' restaurant services.
3. ₹35,000, being 5% of the combined value after commission.
4. ₹50,000, being 5% of the aggregate ₹10,00,000 qualifying restaurant value. (correct answer)

Answer: D — ₹50,000, being 5% of the aggregate ₹10,00,000 qualifying restaurant value.

Explanation. TinyBite's restaurant services are valued at ₹4,00,000 and Nandini Diner's at ₹6,00,000. Both are supplied through FoodOrbit from premises that are not specified premises. Qualifying value = ₹4,00,000 + ₹6,00,000 = ₹10,00,000. GST = ₹10,00,000 × 5% = ₹50,000. Grand Meridian's ₹3,00,000 is excluded because its premises are specified premises and its supplier pays tax under forward charge.

Where it goes wrong. Including restaurant services supplied from specified premises or calculating ECO liability on the net settlement amount rather than the gross restaurant-service value.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (iv); Circular No. 167/23/2021-GST dated 17.12.2021

Question 12 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

FoodOrbit facilitates restaurant services from TinyBite and Nandini Diner. Which statement correctly identifies the invoice and TCS treatment for these section 9(5) services?

1. Each restaurant must issue the customer tax invoice and FoodOrbit must collect TCS under section 52.
2. FoodOrbit issues the invoice for restaurant services and does not collect TCS under section 52 on those supplies. (correct answer)
3. FoodOrbit issues only a bill of supply and collects TCS on the gross restaurant-service value.
4. The restaurants issue invoices, while FoodOrbit pays GST only on its commission income.

Answer: B — FoodOrbit issues the invoice for restaurant services and does not collect TCS under section 52 on those supplies.

Explanation. Circular No. 167/23/2021 clarifies that the invoice for restaurant services supplied through an ECO under section 9(5) is issued by the ECO. Since the ECO itself pays GST on these services, it is not required to collect TCS under section 52 on the same restaurant supplies. The restaurants must nevertheless account for the value of restaurant services supplied through ECOs in their aggregate turnover. The commission charged by FoodOrbit is a separate supply.

Where it goes wrong. Confusing section 9(5) liability with the ordinary section 52 TCS mechanism applicable to other platform-facilitated supplies.

Authority. Section 9(5) of the CGST Act, 2017; Section 52 of the CGST Act, 2017; Circular No. 167/23/2021-GST dated 17.12.2021

Question 13 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered passenger-transport platform facilitates passenger trips during October 2026. Motorcycle operators supply services worth ₹2,40,000, radio-taxi drivers supply services worth ₹4,00,000, and motorcab operators supply services worth ₹3,60,000. A company also provides omnibus transportation worth ₹5,00,000 through the platform. Separately, a goods vehicle transports merchandise worth ₹2,00,000. Assuming a 5% GST rate on qualifying passenger services, determine the ECO's total liability under section 9(5).

1. ₹75,000, calculated on all passenger fares including the company omnibus.
2. ₹50,000, calculated on all platform transactions excluding only goods transportation.
3. ₹50,000, calculated on qualifying passenger fares of ₹10,00,000. (correct answer)
4. ₹40,000, calculated on qualifying passenger fares of ₹8,00,000.

Answer: C — ₹50,000, calculated on qualifying passenger fares of ₹10,00,000.

Explanation. The qualifying services are motorcycle ₹2,40,000, radio taxi ₹4,00,000 and motorcab ₹3,60,000. Aggregate value = ₹2,40,000 + ₹4,00,000 + ₹3,60,000 = ₹10,00,000. GST = ₹10,00,000 × 5% = ₹50,000. Company omnibus service is excluded under clause (ia), while transportation of merchandise is not passenger transportation and is outside the notified categories.

Where it goes wrong. Including company-operated omnibus fares or goods transportation merely because both are booked through the same passenger platform.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clauses (i) and (ia); Section 2(22), section 2(25), section 2(27) and section 2(29) of the Motor Vehicles Act, 1988

Question 14 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

MetroTransit Pvt. Ltd. provides passenger transportation by omnibus through a registered ECO during October 2026. MetroTransit is incorporated under the Companies Act, 2013. Its gross passenger fares are ₹8,00,000 and the ECO retains commission of ₹1,00,000 before settlement. Assuming a 5% GST rate, determine the tax liability of the ECO and the company.

1. The ECO has no section 9(5) liability; MetroTransit pays ₹40,000 under forward charge. (correct answer)
2. The ECO pays ₹35,000 under section 9(5) on the net settlement value.
3. MetroTransit and the ECO each pay ₹20,000 under a shared liability.
4. The ECO pays ₹40,000 under section 9(5) on the gross passenger fares.

Answer: A — The ECO has no section 9(5) liability; MetroTransit pays ₹40,000 under forward charge.

Explanation. Clause (ia) excludes omnibus passenger transportation where the actual service provider is a company. MetroTransit is incorporated under the Companies Act and therefore pays tax itself. GST = ₹8,00,000 × 5% = ₹40,000. The ECO's commission of ₹1,00,000 is consideration for a separate platform service and does not change the tax liability on the omnibus service.

Where it goes wrong. Assuming that the ECO becomes liable merely because it facilitates an omnibus booking, without testing the corporate identity of the actual supplier.

Authority. Section 9(1) and section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (ia)

Question 15 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A hotel operator supplies accommodation directly to walk-in guests and through three separate booking platforms. Its aggregate turnover from all outward supplies during FY 2026-27 is ₹20,60,000 as on 15 October 2026. Its ordinary-State registration threshold is ₹20,00,000. On 20 October, it receives another accommodation booking worth ₹1,20,000 through an ECO. The hotel has not yet completed its registration application. Determine whether the ECO remains liable under section 9(5) on the October booking.

1. The ECO remains liable because the supplier has not physically obtained GST registration.
2. The ECO is not liable because the supplier has exceeded the section 22(1) threshold. (correct answer)
3. The ECO pays tax only on the first ₹60,000 of the October booking.
4. The ECO and hotel share the tax because the threshold was crossed during the year.

Answer: B — The ECO is not liable because the supplier has exceeded the section 22(1) threshold.

Explanation. The threshold is tested using aggregate turnover, including supplies made through different ECOs and direct channels. Turnover already stands at ₹20,60,000, exceeding the ₹20,00,000 threshold by ₹60,000. The supplier is therefore liable for registration under section 22(1), even if the registration application remains pending. The accommodation exception consequently removes the ECO's section 9(5) liability on the later booking of ₹1,20,000. The supplier must discharge the applicable tax.

Where it goes wrong. Testing actual registration instead of statutory liability for registration under section 22(1), or ignoring sales through multiple platforms.

Authority. Section 9(5) of the CGST Act, 2017; Section 22(1) of the CGST Act, 2017; Section 2(6) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (ii)

Question 16 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A hotel restaurant supplies restaurant services through an ECO during FY 2026-27. During FY 2025-26, the hotel supplied a unit of accommodation at ₹7,800 per day. The hotel has not filed a separate declaration for FY 2026-27. Determine whether the premises qualify as specified premises for the purpose of excluding the restaurant service from the ECO liability under section 9(5).

1. The premises are not specified because a separate declaration is compulsory in every case.
2. The premises qualify only if accommodation exceeded ₹10,000 per unit per day.
3. The premises qualify only where the restaurant itself has aggregate turnover exceeding ₹20,00,000.
4. The premises qualify because preceding-year accommodation value exceeded ₹7,500 per unit per day. (correct answer)

Answer: D — The premises qualify because preceding-year accommodation value exceeded ₹7,500 per unit per day.

Explanation. From 1 April 2025, specified premises include premises from which hotel accommodation was supplied in the preceding financial year at a value exceeding ₹7,500 per unit per day. Here, the value is ₹7,800, which exceeds ₹7,500 by ₹300. Therefore, the premises qualify as specified premises for FY 2026-27 without requiring a separate declaration. Restaurant services supplied there are excluded from the ECO's section 9(5) liability.

Where it goes wrong. Treating the declaration route as compulsory even when the premises already satisfy the preceding-year accommodation-value criterion.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 11/2017-Central Tax (Rate), Explanation relating to specified premises; Notification No. 05/2025-Central Tax (Rate), dated 16.01.2025; Notification No. 17/2017-Central Tax (Rate), clause (iv)

Question 17 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered restaurant has aggregate turnover of ₹38,00,000 during FY 2026-27. It supplies restaurant services through an ECO for ₹8,00,000 from premises that are not specified premises. The restaurant argues that section 9(5) cannot apply because it is already registered and liable to pay GST under the normal scheme. Assuming a 5% GST rate, determine the person liable and the amount.

1. The ECO pays ₹40,000 under section 9(5), notwithstanding the restaurant's registration. (correct answer)
2. The restaurant pays ₹40,000 because registered restaurants are excluded from ECO liability.
3. The restaurant and ECO each pay ₹20,000 because both are registered.
4. No tax is payable because the restaurant's turnover exceeds the threshold.

Answer: A — The ECO pays ₹40,000 under section 9(5), notwithstanding the restaurant's registration.

Explanation. The restaurant-service entry excludes only restaurants located at specified premises. It does not provide a supplier-registration threshold exception. Hence, even though the restaurant has turnover of ₹38,00,000 and is registered, the ECO pays tax because the service is supplied through its platform from non-specified premises. GST = ₹8,00,000 × 5% = ₹40,000, comprising CGST ₹20,000 and SGST ₹20,000.

Where it goes wrong. Transferring the registration-threshold exception from accommodation and housekeeping services to restaurant services.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (iv); Circular No. 167/23/2021-GST dated 17.12.2021

Question 18 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A food-delivery ECO facilitates restaurant services worth ₹5,00,000 during September 2026. It retains a platform commission of ₹80,000 and remits ₹4,20,000 to the restaurant. The restaurant is located outside specified premises. Assuming a 5% GST rate, determine the ECO's tax liability on the restaurant services.

1. ₹21,000, calculated on the net settlement value.
2. ₹29,000, calculated by adding the commission to the gross order value.
3. ₹25,000, calculated on the gross restaurant-service value. (correct answer)
4. ₹4,000, calculated on the platform commission alone.

Answer: C — ₹25,000, calculated on the gross restaurant-service value.

Explanation. The gross value of restaurant services supplied through the platform is ₹5,00,000. The ECO retains commission of ₹80,000 and remits ₹4,20,000, but this settlement does not reduce the underlying restaurant-service value. Tax under section 9(5) = ₹5,00,000 × 5% = ₹25,000. The commission is a separate taxable service supplied by the ECO, for which its own applicable GST liability must be determined separately.

Where it goes wrong. Deducting the ECO's commission from restaurant consideration before computing the section 9(5) tax liability.

Authority. Section 9(5) of the CGST Act, 2017; Section 15 of the CGST Act, 2017; Circular No. 167/23/2021-GST dated 17.12.2021

Question 19 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered ECO has section 9(5) GST liability of ₹45,000 on qualifying services. Its electronic credit ledger contains eligible ITC of ₹30,000, which was incurred on inputs and input services used to operate the platform. Under Circular No. 240/34/2024-GST, determine the amount payable in cash and whether proportionate reversal of the credit is required.

1. ₹15,000 in cash, with reversal of ₹30,000 ITC attributable to section 9(5) services.
2. ₹45,000 in cash, without proportionate reversal of otherwise eligible ITC. (correct answer)
3. ₹45,000 through ITC, with no cash payment required.
4. ₹30,000 in cash and ₹15,000 through ITC, without any reversal.

Answer: B — ₹45,000 in cash, without proportionate reversal of otherwise eligible ITC.

Explanation. Circular No. 240/34/2024 clarifies that an ECO is not required to reverse eligible ITC proportionately merely because it pays tax under section 9(5). However, the full section 9(5) liability must be discharged through the electronic cash ledger. Consequently, cash payment = ₹45,000. The available ITC of ₹30,000 cannot be used against this liability, although eligible credit may continue to be utilised for the ECO's own taxable supplies.

Where it goes wrong. Confusing permission to retain eligible ITC with permission to use that credit for discharging section 9(5) tax.

Authority. Section 9(5) of the CGST Act, 2017; Section 49 of the CGST Act, 2017; Circular No. 240/34/2024-GST dated 31.12.2024

Question 20 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered ECO facilitates a passenger transportation service under section 9(5). The service is completed on 11 September 2026, the customer pays consideration which is credited to the ECO's bank account on 18 September, and the ECO issues its tax invoice on 20 September. The invoice is within the prescribed period under section 31(2). Determine the time of supply under section 13(2) of the CGST Act.

1. 11 September, being the date on which the passenger journey is completed.
2. 20 September, being the date on which the ECO issues its tax invoice.
3. 30 September, being the last day of the tax period.
4. 18 September, being the earlier of payment receipt and invoice issue. (correct answer)

Answer: D — 18 September, being the earlier of payment receipt and invoice issue.

Explanation. Section 13(2) applies the ordinary service time-of-supply rule to the ECO treated as the supplier under section 9(5). Since the invoice is issued within the prescribed period, the earlier of invoice issue and payment receipt determines the time of supply. Invoice date is 20 September, while the amount is credited to the bank on 18 September. Therefore, the time of supply is 18 September 2026.

Where it goes wrong. Using the date of service completion automatically even when the invoice has been issued within the statutory period and payment was received earlier.

Authority. Section 9(5) of the CGST Act, 2017; Section 13(2) of the CGST Act, 2017; Section 31(2) of the CGST Act, 2017

Question 21 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

An ECO facilitates a taxable passenger service on 3 October 2026. It receives consideration on 25 October 2026 but issues the tax invoice only on 7 November 2026, more than 30 days after the service. Assuming that no special invoice period applies, determine the invoice deadline and the time of supply under section 13(2).

1. Invoice deadline is 2 November; time of supply is 25 October.
2. Invoice deadline is 7 November; time of supply is 7 November.
3. Invoice deadline is 2 November; time of supply is 3 October. (correct answer)
4. Invoice deadline is 3 November; time of supply is 25 October.

Answer: C — Invoice deadline is 2 November; time of supply is 3 October.

Explanation. Rule 47 prescribes thirty days from the date of supply for issuing an invoice for taxable services. Counting from 3 October, the thirtieth day is 2 November 2026. The invoice dated 7 November is late. Under section 13(2)(b), where the invoice is not issued within the prescribed period, the earlier of the date of provision of service and payment receipt applies. The earlier of 3 October and 25 October is 3 October 2026.

Where it goes wrong. Applying section 13(2)(a) despite the invoice being issued after the prescribed thirty-day period.

Authority. Section 13(2) of the CGST Act, 2017; Section 31(2) of the CGST Act, 2017; Rule 47 of the CGST Rules, 2017

Question 22 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A foreign ECO supplies qualifying passenger transportation services through its platform in India. It has no physical presence in the taxable territory but has appointed a representative in India to handle tax compliance. The tax department seeks to recover section 9(5) liability from the actual individual drivers. Which person is liable to pay GST under the statutory proviso?

1. The foreign ECO alone, irrespective of its representative in India.
2. The person representing the ECO in the taxable territory. (correct answer)
3. Each individual driver separately in proportion to their passenger fares.
4. The passenger booking the ride through the foreign platform.

Answer: B — The person representing the ECO in the taxable territory.

Explanation. The first proviso to section 9(5) provides that where an ECO has no physical presence in the taxable territory, any person representing it for any purpose in that territory is liable to pay tax. Here, the representative is available in India, so that person discharges the GST liability. If the ECO had neither physical presence nor a representative, it would be required to appoint a person in the taxable territory for payment of tax.

Where it goes wrong. Applying the second proviso even though the first proviso already identifies a representative in India.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate); Section 2(45) of the CGST Act, 2017

Question 23 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered ECO has section 9(5) GST liability of ₹80,000 for September 2026. The amount is due for payment on 20 October 2026, but the ECO deposits the entire tax on 14 November 2026. Assuming simple interest at 18% per annum and a 365-day year, calculate the interest payable for the delay. Treat 21 October as the first day of delay.

1. ₹986.30, being interest for 25 days at 18% per annum. (correct answer)
2. ₹789.04, being interest for 20 days at 18% per annum.
3. ₹1,183.56, being interest for 30 days at 18% per annum.
4. ₹1,578.08, being interest for 40 days at 18% per annum.

Answer: A — ₹986.30, being interest for 25 days at 18% per annum.

Explanation. Interest is payable on tax remaining unpaid after the due date at the notified annual rate of 18%. Delay runs from 21 October to 14 November: 11 days in October plus 14 days in November = 25 days. Interest = ₹80,000 × 18% × 25/365 = ₹986.30, rounded to paise. The calculation uses the entire unpaid section 9(5) tax liability and simple interest.

Where it goes wrong. Starting the interest calculation from the due date itself or applying the annual interest rate without proportionately adjusting for the actual delay.

Authority. Section 50(1) of the CGST Act, 2017; Section 9(5) of the CGST Act, 2017; Notification No. 13/2017-Central Tax, dated 28.06.2017

Question 24 · 2 marks · Taxation - GST Ch 03: Charge Composition · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A customer purchases packaged electrical appliances worth ₹3,00,000 through an ECO's marketplace. The marketplace collects the consideration and remits it to a registered supplier after deducting its commission. The ECO argues that section 9(5) makes it liable to pay GST because the transaction is facilitated through an electronic platform. Determine the correct distinction between section 9(5) and section 52.

1. The ECO pays all GST under section 9(5) because every platform sale is notified.
2. The ECO and supplier share GST equally because consideration passes through the platform.
3. The customer pays GST under section 9(5) because the ECO is only an intermediary.
4. The supplier pays GST under the ordinary levy, while the ECO applies section 52 TCS where applicable. (correct answer)

Answer: D — The supplier pays GST under the ordinary levy, while the ECO applies section 52 TCS where applicable.

Explanation. Section 9(5) applies to specified categories of services notified by the Government, not to every supply facilitated through an electronic platform. Packaged electrical appliances are goods, so the ordinary forward-charge liability rests on the registered supplier under section 9(1). Where the ECO collects consideration on the supplier's behalf, the applicable TCS provisions under section 52 operate separately. The ECO's marketplace role does not transfer the supplier's output-tax liability to it under section 9(5).

Where it goes wrong. Confusing the special ECO tax liability under section 9(5) with the separate TCS mechanism applicable to other platform-facilitated transactions.

Authority. Section 9(1) and section 9(5) of the CGST Act, 2017; Section 52 of the CGST Act, 2017; Section 2(45) of the CGST Act, 2017

Question 25 · 2 marks · Taxation - GST Ch 03: Charge Composition · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A registered cloud kitchen supplies restaurant services through an ECO for ₹4,80,000 during October 2026. Its aggregate turnover is ₹32,00,000, exceeding the ordinary-State registration threshold. The kitchen operates from premises that are not specified premises. It argues that its registration and turnover make it solely liable for GST, unlike an unregistered cloud kitchen. Assuming a 5% GST rate, determine the correct tax liability under section 9(5).

1. The kitchen pays ₹24,000 because all registered restaurants are excluded from the ECO provision.
2. The kitchen and ECO pay ₹12,000 each because registration creates joint liability.
3. The ECO pays ₹24,000 under section 9(5), since restaurant services have no supplier-threshold exception. (correct answer)
4. No tax arises because cloud kitchens are not restaurants under the GST notification.

Answer: C — The ECO pays ₹24,000 under section 9(5), since restaurant services have no supplier-threshold exception.

Explanation. The restaurant-service entry applies to restaurant services supplied through an ECO, except those supplied by restaurants located at specified premises. Unlike accommodation and housekeeping services, this entry does not exclude suppliers liable for registration under section 22(1). Therefore, even though the cloud kitchen has aggregate turnover of ₹32,00,000 and is registered, the ECO pays tax. GST = ₹4,80,000 × 5% = ₹24,000, comprising CGST ₹12,000 and SGST ₹12,000.

Where it goes wrong. Applying the registration-threshold exception of the accommodation and housekeeping entries to the restaurant-service entry, which has a different statutory condition.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017-Central Tax (Rate), clause (iv); Circular No. 167/23/2021-GST dated 17.12.2021