CA Final – Indirect Tax Laws Mock Test

CA Final – Indirect Tax Laws Mock Test

Maximum Marks: 100
Time: 3 Hours

Instructions:

  1. Attempt all questions.
  2. Show detailed GST, Customs, and ITC computations with proper references to the CGST, SGST, IGST, and Customs Act.
  3. Use proper compliance reasoning and practical scenarios where required.

Section A: Theory & Conceptual Questions (20 Marks)

Answer any 4 questions. Each carries 5 marks.

  1. Explain the scope and applicability of GST in India, including CGST, SGST, and IGST, and types of supplies.
  2. Explain the conditions for claiming Input Tax Credit (ITC) under the CGST Act and situations where ITC is blocked.
  3. Discuss the Customs Duty structure under the Customs Act, including Basic Customs Duty, IGST, and exemptions.
  4. Explain the compliance requirements under GST, including registration, invoice issuance, and return filing.
  5. Discuss the differences between export of goods under LUT and with IGST payment, including refund mechanisms.

Section B: Practical / Numerical Problems (50 Marks)

Answer any 5 questions. Each carries 10 marks.

  1. GST Computation: XYZ Ltd. sold goods worth ₹ 12,00,000 (intra-state: CGST 9%, SGST 9%). Freight ₹ 1,00,000 (inter-state, IGST 18%) paid by supplier and charged to XYZ Ltd. Required: Compute GST liability and ITC available.
  2. GST – Export Under LUT: A manufacturer exports goods worth ₹ 25,00,000 under LUT. Input GST paid on purchases = ₹ 4,00,000. Required: Compute GST liability, ITC refund eligibility, and compliance steps.
  3. Customs Duty Computation: Import of machinery: CIF Value = ₹ 60,00,000
    • Basic Customs Duty = 10%
    • IGST = 18%
    Required: Compute total customs duty payable.
  4. GST – Input Tax Credit & Reversal: A company purchased motor vehicles for business (used partly for personal purposes). GST paid = ₹ 5,00,000. Required: Determine eligible ITC and blocked ITC under Sec 17(5).
  5. GST Case Study – Mixed Supplies: ABC Ltd. provides a bundled service: maintenance + supply of goods worth ₹ 10,00,000 (CGST 9% + SGST 9%). Required: Determine taxability, classification of supply, and GST payable.

Section C: Case Study / Analytical Questions (30 Marks)

Answer any 2 questions. Each carries 15 marks.

  1. GST Refund Case: A taxpayer paid IGST on export but received a refund delay. Input tax credit on inputs = ₹ 3,50,000, output IGST paid = ₹ 5,00,000. Required: Compute refundable amount, explain process, forms, and timeline.
  2. Customs & Exemption Case: Import of raw materials CIF = ₹ 40,00,000, with BCD 5% and IGST 18%. Government exempts certain inputs partially. Required: Compute customs duty payable considering exemptions.
  3. Mixed GST & Compliance Scenario: A company supplies taxable and exempt goods:
    • Taxable turnover: ₹ 15,00,000 (GST 18%)
    • Exempt turnover: ₹ 5,00,000
    • Input GST on purchases: ₹ 3,00,000
    Required: Compute eligible ITC and GST liability, and explain apportionment of ITC for exempt supplies.

Solutions – CA Final: Indirect Tax Laws (100 Marks)

Section A: Theory & Conceptual Questions (20 Marks)

  1. Scope and Applicability of GST
    • CGST & SGST: Intra-state supplies; CGST goes to central, SGST to state.
    • IGST: Inter-state supplies; collected by Centre, shared with states.
    • Types of Supplies: Taxable, exempt, zero-rated (exports), composite, mixed.
  2. Input Tax Credit (ITC)
    • Eligible ITC: On goods/services used in business, with proper invoice, tax paid, and return filed.
    • Blocked ITC (Sec 17(5)): Personal use, motor vehicles (except certain cases), goods/services for exempt supplies, memberships, etc.
    • Conditions: Goods received, supplier filed return, tax paid.
  3. Customs Duty
    • Basic Customs Duty (BCD): Levied on CIF value at import
    • IGST on Imports: Applied on (CIF + BCD)
    • Exemptions: Certain imports notified by Govt, bonded warehouses, inputs for export.
  4. GST Compliance
    • Registration: Mandatory if turnover exceeds ₹ 20 lakh (₹ 10 lakh for NE & hill states)
    • Invoice issuance: Tax invoice for each supply
    • Return Filing: GSTR-1 (outward), GSTR-3B (summary), annual return GSTR-9
  5. Export under LUT vs IGST Payment
    • LUT: No IGST payment, claim refund of ITC
    • With IGST Payment: Pay IGST, claim refund after export
    • Refund Process: File in GSTR-3B or separate refund form, maintain LUT validity

Section B: Practical / Numerical Problems (50 Marks)

Q1: GST Computation

  • Sale of goods (intra-state) = ₹ 12,00,000
  • CGST 9% = 12,00,000 × 9% = 1,08,000
  • SGST 9% = 12,00,000 × 9% = 1,08,000
  • Freight (inter-state) = ₹ 1,00,000 → IGST 18% = 18,000
  • Output GST: 1,08,000 + 1,08,000 + 18,000 = ₹ 2,34,000
  • ITC: Assume GST paid on purchases (freight & goods) = 50,000 + 18,000 = 68,000
  • Net GST Payable: 2,34,000 – 68,000 = ₹ 1,66,000

Q2: GST Export Under LUT

  • Export value = ₹ 25,00,000
  • IGST payable under LUT = 0
  • Input GST = ₹ 4,00,000 → refundable
  • Refundable ITC: ₹ 4,00,000 (file refund in Form GSTR-3B)
  • Compliance: File LUT, maintain export invoice, report exports in GSTR-1

Q3: Customs Duty Computation

  • CIF Value = ₹ 60,00,000
  • Basic Customs Duty 10% = ₹ 6,00,000
  • Subtotal = 66,00,000
  • IGST 18% on (CIF + BCD) = 66,00,000 × 18% = 11,88,000
  • Total Customs Duty Payable: 6,00,000 + 11,88,000 = ₹ 17,88,000

Q4: ITC & Reversal (Motor Vehicles)

  • GST paid = ₹ 5,00,000
  • Blocked ITC (Sec 17(5)): Motor vehicles for personal use → full ITC blocked unless used for specified business purposes (e.g., transportation of goods, further supply).
  • Eligible ITC: 0 if vehicle used partly for personal purposes
  • Reversal: Adjust ITC in GSTR-3B if used partly for exempt/personal purposes

Q5: Mixed Supply – GST Computation

  • Bundled supply (goods + maintenance) = ₹ 10,00,000
  • GST classification: Identify principal supply (likely goods)
  • CGST 9% = 10,00,000 × 9% = 90,000
  • SGST 9% = 10,00,000 × 9% = 90,000
  • Total GST payable: 1,80,000
  • ITC applicable on inputs used for taxable supply

Section C: Case Study / Analytical Questions (30 Marks)

Q1: GST Refund Case

  • Output IGST paid = ₹ 5,00,000
  • Input ITC = ₹ 3,50,000
  • Refundable Amount: IGST paid – ITC = 5,00,000 – 3,50,000 = ₹ 1,50,000
  • Process: File refund claim (Form RFD-01), verify LUT, submit within 2 years

Q2: Customs Duty with Exemption

  • CIF = ₹ 40,00,000
  • BCD 5% = ₹ 2,00,000
  • Subtotal = 42,00,000
  • IGST 18% = 42,00,000 × 18% = 7,56,000
  • Exemption: Suppose 50% of raw materials exempt → duties halved
  • Duty Payable: BCD = 1,00,000; IGST = 3,78,000 → Total = 4,78,000

Q3: Mixed GST & ITC Apportionment

  • Taxable turnover = ₹ 15,00,000 × 18% = 2,70,000 GST
  • Exempt turnover = ₹ 5,00,000 → ITC not allowed proportionally
  • Input GST = ₹ 3,00,000
  • Eligible ITC: 15,00,000 ÷ 20,00,000 × 3,00,000 = 2,25,000
  • Net GST Payable: 2,70,000 – 2,25,000 = ₹ 45,000

Disclaimer:
This mock test is created for educational purposes only. Questions and solutions are original and inspired by typical CA Final exam patterns; they are not copied from any official CA exam papers