CA Inter Taxation - GST MCQ Test 15: answer key

Question 1 · 2 marks · Supply under GST; Charge of GST · hard

Scenario. Nakshatra Flowtech Pvt. Ltd. (NFP), a registered manufacturer of industrial pumps in Gurugram, Haryana, also provides installation services and has a registered branch at Ludhiana, Punjab. During FY 2025-26, NFP entered into these transactions. On 12 May 2025, it received Rs. 1,20,000 as advance from Udgam Infra Ltd., a registered person in Jaipur, Rajasthan, for a pump priced at Rs. 8,00,000 excluding GST. The pump was removed on 5 June 2025 and the invoice for the pump was issued on 3 June 2025. Installation at the Jaipur site was completed on 20 June 2025 and was invoiced separately on that date. The balance was received on 30 June 2025. GST on the pump and installation is 18%. On 8 July 2025, NFP moved pumps costing Rs. 3,00,000, plus GST at 18%, from Gurugram to its Ludhiana branch without raising any invoice or charging consideration; both locations are registered. On 15 August 2025, Sarthak Roadlines, a goods transport agency that has not taken input tax credit and has not opted to pay GST under forward charge, supplied freight services of Rs. 50,000 to NFP and issued a consignment note; NFP paid the freight on 10 September 2025. On 1 September 2025, an advocate issued an invoice of Rs. 40,000 for legal services relating to NFP's business; NFP paid on 20 October 2025. On 10 November 2025, NFP bought a car with seating capacity of five for its director for Rs. 6,00,000 plus GST at 28%, and paid Rs. 2,00,000 plus GST at 18% for works contract services for its office building, capitalised in its books. On 1 December 2025, NFP supplied a pump to Tarun Retail, an unregistered person, for Rs. 2,00,000 plus GST at 18%. The invoice recorded Tarun's billing address in Haryana and delivery address in Delhi. On 20 December 2025, under an agreement existing at the time of that supply, NFP gave Tarun a post-sale discount of Rs. 10,000 linked to the invoice; Tarun had no input tax credit to reverse. All amounts are exclusive of GST unless stated.

Which statement correctly describes NFP's 8 July 2025 movement of pumps to its Ludhiana branch?

1. It is not a supply because no consideration is charged and no invoice is raised by NFP for the movement.
2. It is a supply under Schedule I; IGST applies as the two registered units are distinct persons. (correct answer)
3. It is not a supply because both units belong to the same company with the same PAN and no consideration is charged.
4. It is a supply only when the Ludhiana branch later sells the pumps to an external customer in Punjab.

Answer: B — It is a supply under Schedule I; IGST applies as the two registered units are distinct persons.

Working. Schedule I para 2; separate registrations in Haryana and Punjab are distinct persons; inter-State movement attracts IGST.

Explanation. A transfer between registered establishments of the same person in different States is a supply between distinct persons under Schedule I even without consideration when made in the course of business. Since the supplier location is Haryana and the branch is in Punjab, IGST is attracted. The absence of invoice or consideration does not make it a non-supply.

Where it goes wrong. The no-consideration fact tempts treating the stock transfer as outside supply.

Authority. Section 7(1)(c) read with Schedule I, CGST Act 2017; Section 25(4), CGST Act 2017; Section 7(5), IGST Act 2017

Question 2 · 2 marks · Place of Supply · hard

For the 1 December 2025 supply to Tarun Retail, what is the place of supply and the tax implication?

1. Delhi, because delivery address is recorded in the invoice; IGST applies as supplier is in Haryana. (correct answer)
2. Haryana, because the billing address is in Haryana; CGST and SGST apply on the supply.
3. Delhi, because delivery address is recorded; CGST and SGST apply as the invoice is raised from Haryana.
4. Haryana, because the recipient is unregistered; IGST applies as the supplier is in Haryana.

Answer: A — Delhi, because delivery address is recorded in the invoice; IGST applies as supplier is in Haryana.

Working. Supplier located in Haryana; recipient address recorded in invoice includes delivery address in Delhi; place of supply is Delhi under section 10(1)(ca); hence inter-State supply liable to IGST.

Explanation. Under section 10(1)(ca) of the IGST Act, 2017, for a supply of goods made to an unregistered person, the place of supply is the location as per the address of the said person recorded in the invoice. The invoice recorded Tarun's delivery address in Delhi. Since the supplier is in Haryana and the place of supply is Delhi, the supply is an inter-State supply attracting IGST. Option b wrongly ignores the recorded address for delivery.

Where it goes wrong. Treating a delivery address as the recipient address even when the invoice separately records the unregistered recipient's billing address.

Authority. Section 10(1)(ca), IGST Act 2017

Question 3 · 2 marks · Time of Supply · medium

What is the time of supply of the goods transport agency service received from Sarthak Roadlines?

1. 10 September 2025, being earlier than the 61st day from invoice. (correct answer)
2. 15 October 2025, because it is the 61st day from issue of invoice.
3. 15 August 2025, because invoice date fixes time of supply for all reverse charge services.
4. 31 August 2025, because 15 days after invoice is the prescribed limit for GTA services.

Answer: A — 10 September 2025, being earlier than the 61st day from invoice.

Working. Invoice 15 Aug 2025; 60 days end 14 Oct 2025; 61st day 15 Oct 2025; payment 10 Sep 2025 earlier.

Explanation. GTA service here is under reverse charge. For services under reverse charge, time of supply is earlier of date of payment and the 61st day from invoice where the supplier issues invoice. Payment was on 10 September. The 61st day from 15 August falls later. Hence 10 September 2025 is the time of supply.

Where it goes wrong. The invoice date is used only to compute the 61st day; it is not automatically the time of supply.

Authority. Section 13(3), CGST Act 2017

Question 4 · 2 marks · Input Tax Credit · hard

What is the amount of input tax credit NFP can avail from the car, works contract, GTA and legal service transactions, ignoring other supplies?

1. Rs. 7,200, comprising RCM credit only on legal services because GTA service is exempt.
2. Rs. 2,12,700, comprising all GST paid on the motor car, works contract services, GTA freight and legal services.
3. Rs. 1,77,700, comprising car credit and RCM credit but not works contract credit.
4. Rs. 9,700, being RCM credit on GTA and legal services; car and works contract credit are blocked. (correct answer)

Answer: D — Rs. 9,700, being RCM credit on GTA and legal services; car and works contract credit are blocked.

Working. GTA 5% x 50,000 = 2,500; legal 18% x 40,000 = 7,200; eligible = 9,700. Car 28% x 6,00,000 = 1,68,000 blocked; works 18% x 2,00,000 = 36,000 blocked.

Explanation. GTA tax under reverse charge is 5% of Rs. 50,000 = Rs. 2,500; legal service tax under reverse charge is 18% of Rs. 40,000 = Rs. 7,200. Both are eligible if used for business. Credit on the car is blocked as it is a motor vehicle for persons with seating up to 13 and is not used for an allowed purpose. Credit on capitalised works contract for office building is also blocked.

Where it goes wrong. The car and works contract GST figures are large and tempt inclusion.

Authority. Section 16, CGST Act 2017; Section 17(5)(a), CGST Act 2017; Section 17(5)(c), CGST Act 2017

Question 5 · 2 marks · Value of Supply · hard

What is the value of the 1 December 2025 supply to Tarun Retail after considering the post-sale discount?

1. Rs. 1,90,000, because the discount is linked to the invoice and the agreement existed at supply.
2. Rs. 2,00,000, because the recipient could not reverse any input tax credit on the discount. (correct answer)
3. Rs. 1,90,000, because NFP issued a credit note for the discount after the supply was made.
4. Rs. 2,10,000, because the discount must be added back to the invoice value for GST.

Answer: B — Rs. 2,00,000, because the recipient could not reverse any input tax credit on the discount.

Working. Invoice value = ₹2,00,000. Post-sale discount ₹10,000 cannot be deducted because recipient reversal of ITC under section 15(3)(b)(ii) is absent. Taxable value = ₹2,00,000.

Explanation. Under section 15(3)(b)(ii) of the CGST Act, 2017, a post-supply discount is excluded from value only if input tax credit attributable to the discount has been reversed by the recipient. Because Tarun is unregistered and availed no input tax credit, no input tax credit was or could be reversed by him. Consequently, the condition of section 15(3)(b)(ii) is not satisfied, and the discount of ₹10,000 cannot be excluded. The value remains ₹2,00,000.

Where it goes wrong. Treating a zero ITC position of an unregistered recipient as if it prevented the statutory discount conditions from being met.

Authority. Section 15(3)(b), CGST Act 2017

Question 6 · 2 marks · Time of Supply · medium

For the pump supplied to Udgam Infra Ltd., what is the time of supply for payment of GST on the pump?

1. 12 May 2025, because NFP received the advance on that date from Udgam.
2. 5 June 2025, because removal of goods fixes time of supply even if invoice is earlier.
3. 3 June 2025, because the invoice was issued before removal within the section 31 time limit. (correct answer)
4. 20 June 2025, because installation at site was completed on that date.

Answer: C — 3 June 2025, because the invoice was issued before removal within the section 31 time limit.

Working. Invoice 3 June 2025 before removal 5 June 2025; section 31 time met; time of supply 3 June 2025.

Explanation. For goods under forward charge, GST is payable at the time of supply given in section 12(2)(a), i.e. invoice date or last date for invoice. The invoice was issued on 3 June before removal on 5 June, so it was within the section 31 limit. The advance received on 12 May does not fix time of supply for goods.

Where it goes wrong. The advance and installation date are distractors for goods under forward charge.

Authority. Section 12(2)(a), CGST Act 2017; Notification No. 66/2017 CT dated 15.11.2017

Question 7 · 2 marks · Place of Supply · hard

Scenario. MetroAds owns a billboard fixed on land in Noida. Kavya Advertising, registered in Delhi, contracts MetroAds to display Kavya's client advertisement for 30 days. MetroAds keeps possession of the billboard, controls the display, and is responsible for arranging visibility at the location. No right to use the billboard or the space is transferred to Kavya. MetroAds invoices Kavya for advertisement services. What is the place of supply of MetroAds's service to Kavya under the IGST Act, 2017?

What is the place of supply of MetroAds's service to Kavya Advertising?

1. Noida, because the advertisement is displayed at the billboard location in Noida.
2. Noida, because the billboard is an immovable property structure fixed to earth and the service directly relates to it.
3. Delhi, because the service is advertisement and the recipient Kavya is registered in Delhi. (correct answer)
4. Delhi, because the invoice is raised by MetroAds from its office in Delhi.

Answer: C — Delhi, because the service is advertisement and the recipient Kavya is registered in Delhi.

Working. No sale of space or grant of right to use immovable property; general rule applies; registered recipient in Delhi.

Explanation. MetroAds keeps possession and control of the billboard and provides a display service; it does not transfer the right to use immovable property. The service is therefore advertisement service governed by the general rule. For a registered recipient, place of supply is the location of the recipient, Kavya, in Delhi.

Where it goes wrong. The fixed billboard tempts applying the immovable property rule.

Authority. Section 12(2), IGST Act 2017; CBIC clarification on advertising space and display services

Question 8 · 1 marks · TDS and TCS · medium

Scenario. Prakhar Ltd., registered in Gujarat, sells goods through BazaarHub, an electronic commerce operator that collects consideration. In July, net taxable inter-State supplies made through BazaarHub by registered suppliers were Rs. 20,00,000. BazaarHub also supplied restaurant services notified under section 9(5) through its platform worth Rs. 2,00,000, on which BazaarHub paid GST. What amount of TCS is BazaarHub required to collect for July?

What amount of TCS is BazaarHub required to collect for July?

1. Rs. 11,000, because TCS applies to all supplies including section 9(5) restaurant services.
2. Nil, because BazaarHub paid GST on restaurant services under section 9(5) through its platform.
3. Rs. 5,000, because TCS under IGST is 0.25% of net taxable supplies for the month.
4. Rs. 10,000, because TCS at 0.5% applies to net inter-State supplies excluding section 9(5) services. (correct answer)

Answer: D — Rs. 10,000, because TCS at 0.5% applies to net inter-State supplies excluding section 9(5) services.

Working. Net inter-State taxable supplies = 20,00,000; section 9(5) value 2,00,000 excluded; TCS = 0.5% x 20,00,000 = 10,000.

Explanation. TCS under section 52 is on net value of taxable supplies made through the operator by other suppliers, excluding services notified under section 9(5). For inter-State supplies the notified rate is 0.5%. Restaurant services on which BazaarHub paid GST under section 9(5) are excluded. TCS is 0.5% of Rs. 20,00,000 = Rs. 10,000.

Where it goes wrong. Including the section 9(5) restaurant value gives Rs. 11,000.

Authority. Section 52, CGST Act 2017; Section 20, IGST Act 2017; Notification No. 17/2017 CT (R) dated 28.06.2017