CA Inter Taxation - GST MCQ Test 12: answer key

Question 1 · 2 marks · Place of Supply · hard

Scenario. Suryansh Retail LLP (SRL) is registered in Jaipur, Rajasthan. It deals in home appliances and event support. During 2025-26 it enters into the following transactions. (1) Meera Enterprises, registered in Ahmedabad, Gujarat, orders 20 washing machines from SRL. SRL raises the invoice on Meera and, as per Meera's written direction, delivers the machines to Kavach Hotels in Udaipur, Rajasthan. (2) SRL sells a 'festive kitchen set' to Aarohi Stores, registered in Kota, Rajasthan, for a single price of Rs. 8,400. The set contains a mixer grinder, a non-stick pan and an insulated bottle, which are also sold separately; the applicable GST rates are 18%, 12% and 5%. (3) Nirvaan Sports Foundation, registered in Delhi, engages SRL to organise a sports event held in Goa and Maharashtra. The contract gives a consolidated fee of Rs. 12,00,000 and specifies State-wise allocation of Rs. 7,00,000 for Goa and Rs. 5,00,000 for Maharashtra. (4) SRL trains 30 employees of Prakash Ltd, registered in Gujarat, at SRL's Jaipur centre; Prakash Ltd pays Rs. 1,50,000. (5) SRL supplies an air conditioner with mandatory installation and two-year maintenance for a single price of Rs. 65,000 to a customer in Ajmer, Rajasthan; the air conditioner alone is taxable at 28%, while installation and maintenance are taxable at 18%. (6) SRL also runs an ordinary restaurant in Jaipur and lists it on FoodNest, an electronic commerce operator. FoodNest collects the payment from customers and pays SRL after commission; the restaurant is not at specified premises. All amounts are exclusive of GST unless stated. SRL wants to know the correct GST position on these transactions for compliance.

For transaction (1), what is the place of supply in the supply from SRL to Meera Enterprises and the tax treatment?

1. Place of supply is Udaipur because the machines are delivered there, so CGST and SGST are payable.
2. Place of supply is Jaipur because SRL dispatches the machines from Rajasthan, so CGST and SGST are payable.
3. Place of supply is Ahmedabad, being Meera's principal place of business, so IGST is payable. (correct answer)
4. Place of supply is Udaipur, but IGST is payable because Meera is registered in Gujarat.

Answer: C — Place of supply is Ahmedabad, being Meera's principal place of business, so IGST is payable.

Working. No arithmetic. Supplier Rajasthan; deemed recipient Meera in Gujarat; place of supply Gujarat; inter-State supply; IGST.

Explanation. Under section 10(1)(b) of the IGST Act, where goods are delivered to a person on the direction of a third person, the third person is deemed to have received the goods and the place of supply is the principal place of business of that third person. Meera is the third person and is registered in Ahmedabad, so IGST applies as SRL is in Rajasthan. Delivery at Udaipur does not fix the place of supply.

Where it goes wrong. Delivery destination is tempting, but the bill-to-ship-to rule uses the third person's principal place of business.

Authority. Section 10(1)(b) of the IGST Act, 2017

Question 2 · 2 marks · Supply under GST · medium

For transaction (2), what is the GST rate and amount of tax on the festive kitchen set priced at Rs. 8,400?

1. GST at 5% on Rs. 8,400, amounting to Rs. 420, because the lowest-rated item governs a package.
2. GST at 18% on Rs. 8,400, amounting to Rs. 1,512, because a mixed supply is taxed at the highest rate. (correct answer)
3. GST at 12% on Rs. 8,400, amounting to Rs. 1,008, because the pan is the principal item in the set.
4. GST at 18% on Rs. 5,400, amounting to Rs. 972, because only the mixer is taxable at the highest rate.

Answer: B — GST at 18% on Rs. 8,400, amounting to Rs. 1,512, because a mixed supply is taxed at the highest rate.

Working. Rs. 8,400 x 18% = Rs. 1,512.

Explanation. The set is a mixed supply under section 2(74): two or more individual supplies are made for a single price and the items are also sold separately, so they are not naturally bundled. Under section 8(b), a mixed supply is taxed at the rate of the supply attracting the highest rate. The highest rate is 18%, so tax is Rs. 8,400 x 18% = Rs. 1,512.

Where it goes wrong. The lowest or middle rate is tempting if the set is wrongly treated as a composite supply.

Authority. Section 2(74) of the CGST Act, 2017; Section 8(b) of the CGST Act, 2017

Question 3 · 2 marks · Place of Supply · hard

For transaction (3), what is the place of supply and the tax treatment of the event organisation fee?

1. Place of supply is Delhi; IGST is payable on the full Rs. 12,00,000 without State-wise apportionment. (correct answer)
2. Place of supply is Goa and Maharashtra; CGST and SGST are payable on Rs. 7,00,000 and Rs. 5,00,000 respectively.
3. Place of supply is Delhi; CGST and SGST are payable because the foundation is registered in Delhi.
4. Place of supply is Goa and Maharashtra; IGST is payable on the full amount without apportionment.

Answer: A — Place of supply is Delhi; IGST is payable on the full Rs. 12,00,000 without State-wise apportionment.

Working. No apportionment. Supplier Rajasthan; registered recipient Delhi; place of supply Delhi; inter-State supply; IGST.

Explanation. For organisation of an event supplied to a registered person, section 12(7) of the IGST Act fixes the place of supply at the location of the registered recipient. Nirvaan is registered in Delhi, so the place of supply is Delhi. The State-wise allocation for Goa and Maharashtra is irrelevant for a registered recipient. SRL is in Rajasthan, so the supply is inter-State and IGST applies.

Where it goes wrong. The event locations and State-wise allocation are tempting, but they matter for an unregistered recipient.

Authority. Section 12(7) of the IGST Act, 2017; Section 7(3) of the IGST Act, 2017

Question 4 · 2 marks · Place of Supply · medium

For transaction (4), what is the place of supply of the training service and the resulting tax?

1. Jaipur, because training is actually performed at SRL's centre, so CGST and SGST are payable.
2. Jaipur, because the employees physically receive the training there, so IGST is payable.
3. Gujarat, because the recipient is registered there, so CGST and SGST are payable.
4. Gujarat, because the recipient is registered there, so IGST is payable. (correct answer)

Answer: D — Gujarat, because the recipient is registered there, so IGST is payable.

Working. Supplier Rajasthan; registered recipient Gujarat; place of supply Gujarat; inter-State supply; IGST.

Explanation. Under section 12(5)(a) of the IGST Act, training and performance appraisal services supplied to a registered person have their place of supply at the location of that registered person. Prakash Ltd is registered in Gujarat, so the place of supply is Gujarat. SRL is in Rajasthan, making it an inter-State supply taxable under IGST, even though the training is performed in Jaipur.

Where it goes wrong. The place of performance is tempting, but for a registered recipient the location of the recipient governs.

Authority. Section 12(5)(a) of the IGST Act, 2017

Question 5 · 2 marks · Supply under GST · hard

For transaction (5), how is GST charged on the single price of Rs. 65,000?

1. GST at 18% on Rs. 65,000, amounting to Rs. 11,700, because installation and maintenance are separate services.
2. GST at 28% on Rs. 52,000 and 18% on Rs. 13,000, because each component must be taxed separately.
3. GST at 28% on Rs. 65,000, amounting to Rs. 18,200, because it is a composite supply of the air conditioner. (correct answer)
4. GST at 18% on Rs. 65,000, amounting to Rs. 11,700, because maintenance is the dominant element.

Answer: C — GST at 28% on Rs. 65,000, amounting to Rs. 18,200, because it is a composite supply of the air conditioner.

Working. Rs. 65,000 x 28% = Rs. 18,200.

Explanation. The air conditioner, mandatory installation and maintenance are naturally bundled and supplied for a single price. This is a composite supply under section 2(30), and the air conditioner is the principal supply under section 2(90). Under section 8(a), the entire composite supply is treated as the principal supply and taxed at 28%. Tax is Rs. 65,000 x 28% = Rs. 18,200.

Where it goes wrong. Splitting the price between goods and services is tempting, but a composite supply follows the principal supply.

Authority. Section 2(30) of the CGST Act, 2017; Section 2(90) of the CGST Act, 2017; Section 8(a) of the CGST Act, 2017

Question 6 · 2 marks · Charge of GST · medium

For transaction (6), who is liable to pay GST on the restaurant service supplied through FoodNest, and why?

1. SRL, because it actually supplies the restaurant service from its Jaipur restaurant to customers.
2. FoodNest, because section 9(5) makes the operator liable for notified restaurant service not at specified premises. (correct answer)
3. SRL, because FoodNest is only a payment collection agent and cannot be treated as supplier.
4. FoodNest, because it must collect TCS and that TCS discharges the entire GST liability.

Answer: B — FoodNest, because section 9(5) makes the operator liable for notified restaurant service not at specified premises.

Working. No arithmetic. Restaurant not at specified premises; ECO liable under section 9(5).

Explanation. Restaurant service supplied through an electronic commerce operator is notified under section 9(5) of the CGST Act, except where the restaurant is located at specified premises. SRL's restaurant is not at specified premises, so FoodNest is treated as the supplier liable to pay GST. TCS under section 52 is separate and does not discharge the GST liability on the restaurant service.

Where it goes wrong. The actual restaurant is tempting, but section 9(5) shifts the liability to the operator for notified services.

Authority. Section 9(5) of the CGST Act, 2017; Notification No. 17/2017 CT (R) dated 28.06.2017 as amended

Question 7 · 2 marks · TDS and TCS · hard

Scenario. Ganga Projects Ltd is a public sector undertaking registered in Delhi. It awards a contract to Orbit Security Services, registered in Haryana, for supply of security personnel at Ganga's office in Delhi. The contract value is Rs. 5,40,000, excluding GST, and the place of supply is Delhi. Orbit raises an invoice for Rs. 6,37,200 including GST at 18%. Ganga pays the invoice in November 2026. Ganga is notified for TDS under section 51.

What is the correct tax deduction at source by Ganga Projects Ltd on the payment to Orbit Security Services?

1. No TDS, because the supplier is registered in Haryana while the recipient is registered in Delhi.
2. TDS of Rs. 5,400 under CGST and Rs. 5,400 under SGST, because the place of supply is Delhi.
3. TDS of Rs. 12,744 under IGST, because TDS is computed on the invoice value including GST.
4. TDS of Rs. 10,800 under IGST, because the supplier is in Haryana and the place of supply is Delhi. (correct answer)

Answer: D — TDS of Rs. 10,800 under IGST, because the supplier is in Haryana and the place of supply is Delhi.

Working. TDS base = Rs. 5,40,000. IGST TDS = Rs. 5,40,000 x 2% = Rs. 10,800.

Explanation. Ganga is a public sector undertaking notified for TDS under section 51. The value for TDS excludes GST, so it is Rs. 5,40,000. The supplier is in Haryana and the place of supply is Delhi, so the supply is inter-State and TDS is under IGST at 2%, i.e. Rs. 10,800. The no-TDS proviso does not apply because the place of supply is in the recipient's State.

Where it goes wrong. The supplier's State is tempting for the no-TDS exception, but the place of supply is in the recipient's State.

Authority. Section 51 of the CGST Act, 2017; Section 20 of the IGST Act, 2017

Question 8 · 1 marks · E-way Bill · hard

Scenario. Rudra Traders, registered in Madhya Pradesh, sells TMT bars to Sagar Infra, registered in Maharashtra, for Rs. 46,000 excluding GST. GST at 18% is charged separately. Rudra also charges Rs. 3,500 as freight in the same invoice and arranges the transporter. The goods move by road from Indore to Pune. Rudra asks whether an e-way bill is required.

Is Rudra Traders required to generate an e-way bill for the movement, and why?

1. Yes, because the consignment value is Rs. 58,410, which exceeds Rs. 50,000. (correct answer)
2. No, because the taxable value of the goods is only Rs. 46,000, below Rs. 50,000.
3. No, because freight is a separate service and is excluded from consignment value.
4. Yes, because every inter-State movement of goods requires an e-way bill irrespective of value.

Answer: A — Yes, because the consignment value is Rs. 58,410, which exceeds Rs. 50,000.

Working. Rs. 46,000 + Rs. 3,500 = Rs. 49,500. GST = Rs. 49,500 x 18% = Rs. 8,910. Consignment value = Rs. 58,410.

Explanation. Consignment value is the value under section 15 as declared in the invoice and includes the tax charged. Freight charged in the same invoice is part of that value. The value is Rs. 46,000 + Rs. 3,500 = Rs. 49,500, and with GST at 18% the consignment value is Rs. 58,410. Since it exceeds Rs. 50,000, an e-way bill is required for the inter-State movement.

Where it goes wrong. Using only the taxable value of goods or excluding freight is tempting but wrong.

Authority. Rule 138(1) of the CGST Rules, 2017