ICWAI Final new SyllabusNew syllabus of ICWAI final is effective from December 2008. The name of paper is ‘Indirect and Direct Tax Management’. Questions relating to indirect taxes are given below. ICWA Final December 2011 Q1(a) Fill in the blanks : (i) A certificate of CST registration issued by the concerned Authority shall be in Form . . (ii) Under the CST Act, 1956, one declaration in Form C can cover all the transactions of purchase in one . . ________ , irrespective of the total value of the transactions during the said period (iii) A shipping bill or bill of entry filed through ICEGATE shall be digitally signed with digital signature issued by .________ . (iv) Duty drawback rate shall not exceed . . percent of market price of export goods (1 mark each) Q1(b) Provide brief answers {not exceeding three or four sentences) for the following - (i) State the type of goods and the situations in which packing, repacking, etc. constitutes deemed manufacture under the Central Excise Act, 1944 (ii) Briefly discuss about excise duty based on production capacity (iii) Are inputs used for other purposes, like repair, maintenance, and/or installation of capital goods, entitled for CENVAT credit? (iv) Under Customs Law, state the initial steps to be undertaken by a person for carrying out export of goods (any two), (v) In the context of anti-dumping duty, what is meant by "New Shipper Review"? (vi) When is e-filing of service tax return mandatory? (vii) Is it correct to say that all imports are free unless restricted or prohibited under the Foreign Trade Policy (FTP)? (2 marks each) Q2(a) In the context of business auxiliary services in service tax, when is job work liable for service tax? State the exemptions/exclusions available in this regard (b) Name the goods which have been specifically excluded from the definition of 'input' under Cenvat Credit Rules (c) (d) - Income tax questions (e) While ascertaining the assessable value for customs duty purposes, specify any two charges to be excluded under rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (4+2=2 marks) Q3(a) Does delayed payment of service tax attract any interest? If so, what is the rate of interest payable with effect from 1.4.2011? (b) Anantha, the assessee sold certain goods to Govinda Co. Ltd. for ` 17,000 on 29.02.2011. The buyer is a related person as defined under section 4(3)(b) of the Central Excise Act, 1944. The buyer did not sell the goods but used it as intermediary product. The cost of production of the goods was `. 16,000. What should be the assessable value? What should be the assessable value, if the goods were sold to an unrelated person for `. 20,000, who also used it as intermediary product? You may assume that the price charged from the buyer is excluding excise duty and other taxes (c) Name any four Duty Credit Schemes which are being used as export promotional measure (2+4+4 marks) Q4(a) Johar Engineering Industries are selling a component for gross price of `. 80 per unit. The price includes packing charges of ` 2, loading charges within the factory of `. 1, excise duty @ 10%, education cess as applicable and State Vat @ 5%. Calculate excise duty and Vat payable per unit (4+3 marks) Q4(d) M/s. Pioneer Consulting Ltd., provided Consulting Engineering Services to a client at USA for value of `. 50 lakhs during the financial year 2010-11. No service tax was paid during the year. The company availed input services and procured inputs capital goods which were used in relation to providing such services. Total eligible input tax credit was ` 50,000. M/s. Pioneer Consulting Services Ltd. claimed rebate for such input tax complying to the procedures enumerated under service tax legislation/rules and notifications there-under. The jurisdictional Assessing Officer rejected the claim of rebate on the ground that the export of services are exported against which no rebate would be available. As a tax consultant, you are required to clarify,— (i) Should Consulting Engineering Services provided by M/s. Pioneer Consulting Services Ltd. be treated as an exempted service? (ii) What are the alternatives available to M/s. Pioneer Consulting Services Ltd. on payment of service tax and claim of refund of input tax credit? (iii) Has M/s. Pioneer Consulting Services Ltd. rightly exported without payment of service tax? (6 marks) Q5(b) Briefly explain the provisions relating to provisional assessment of customs duty (c) What are the purposes for which Advance Authorisation can be issued? (d) In respect of stock/branch transfers, can input tax credit be claimed under State VAT laws? (4+2+2 marks) Q6 (b) From the data given below relating to import of printing machinery, compute the assessable value for customs duty purposes (in USD) - * FOB value of printing machinery - 1,00,000 * Air Freight- 22,000 * Expenses incurred by seller for improving the design, at buyer-importer's request - 4,000 * Transit insurance - 3,000. Exchange rate 1 USD = ` 50. Basic duty may be taken as 30% (4 marks) (c) State the excise duty exemptions conferred to SSI units (7 marks) Q7(a) Who are the persons not eligible for compounding of offence as per the provisions of the Central Excise Act, 1944? (4 marks) (b) Mr. Nathan is a qualified Cost Accountant and has been rendering taxable services for the past several years. He furnishes the following details pertaining to the quarter ended 30th June, 2010 (in Rupees) - (i) Services rendered to Reserve Bank of India - 6,18,000 (ii) For preparation of accounting statements for Charitable trusts - 2,00,000 (iia) For preparation of accounting statements for other clients - 7,00,000 (iii) Advance received from LMN Ltd. for tax consultancy - 3,09,000 (iv) Fees received for appearing before first appellate authority in income tax - 4,12,000 (v) Fees received from World Health Organisation - 6,00,000. The assessee ultimately did not render any service to LMN Ltd. and by mutual consent, ` 2 lacs was returned to LMN Ltd. on 10th March, 2011. All the above figures are gross amounts of receipts and wherever required, service tax was billed separately and the same was also received separately from all the clients. You are required to compute the value of taxable services rendered by Mr. Nathan for the above quarter (assume that service tax is chargeable on receipt basis) (7 marks) (c) In the context of VAT law, explain the difference between exempt sale and zero rated sale (4 marks) Q8(a) What is 'Importer Exporter Code Number' (IEC)? State the manner in which IEC has to be applied for. In what export/import documents should the same be stated? (4 marks) (c) Achdha Castings Ltd. is manufacturing a product (which is captively consumed) to produce a final product, which is exempt from the payment of excise duty. The intermediary product is having a distinct market of its own. The company is of the view that since the final product is exempt, no duty liability arises on the intermediary product also. The Department objected to the view of the assessee. Discuss, with reference to a decided case law, if any, whether the view of company is justified (4 marks)
ICWAI – FINAL EXAMINATION New Syllabus – June.-2011 Answer Question No. 1 which is compulsory and any five questions from the rest. Q 1 (a) Fill in the blanks in the following sentences by using appropriate words/phrases given in the brackets (2 marks each) - (vii) As per section 35C(2A) of Central Excise Act, the validity or stay granted by CESTAT for recovery of duty, interest and penalty is for. . . . (180/365) days (viii) If it is found that customs duty is not levied, short levied or erroneously refunded, the Customs Officer u/s 28 of Customs Act, can issue a show cause notice within . . . . (six/twelve) months demanding duty or interest. Q1(b) State whether the following statements are true or false. If false, give the correct statement. If true give the reason in brief (3 marks each) - (i) Person claiming refund of excise duty and interest paid on such duty should make application to AC/DC within six months of relevant date (ii) Excise duty cannot be levied on immovable property (iii) Process of mixing and grinding amounts to manufacture (3 x 3 = 9 marks). Q2.(a) M/s. Engineers Ltd. is a Works Contractor providing works contract services to M/s BKAY Ltd. and already crossed the threshold limit under service tax laws. The Company quoted an amount of ` 10 lakhs for a construction contract. It is agreed that if M/s. BKAY Ltd. supplied the steel and cement, the contract amount will be reduced on the agreed basis. M/s. BKAY Ltd. supplied steel and cement of ` 1 lakh for use in the construction activities as a result the contract amount reduced to ` 9 lakhs. Further M/s. Engineers Ltd. had supplied goods worth ` 2 lakhs under a separate agreement which was also used while providing above works contract service. M/s. Engineers Ltd., the Service Provider preferred to pay service tax under composition scheme. Please find out (i) What is the gross amount chargeable to Service Tax Laws? (ii) What is the Service Tax payable under Composition Scheme by Engineers Ltd. (iii) Can M/s. Engineers Ltd. avail Cenvat credit also? (3+2+2 = 7 marks) Q2(b) M/s. Ajay Security Services Ltd., a Company while signing a contract for providing taxable service on dated 15th June, 2010 has received ` 1,00,000 by an account payee cheque as advance. On dated 14th November, 2010 an amount of ` 5,00,000 has been received through credit card while providing the service and another ` 5,00,000 by a pay order after completion of service on 18th March, 2011. Above amount is inclusive of service tax as applicable and over and above threshold limit of exemption available under service tax law (i) What would be the total service tax liability for the financial year 2010-11? (ii) What is the value of taxable Service? (iii) What would be the due date of payment of service tax electronically through internet banking? What would be the amount of service tax payable on different due dates? (iv) If the entire service tax is deposited on dated 14th April, 2011 what would be the interest liability (2 x 4 = 8 marks) Q3(a) An excisable product is covered under provision of the Standards of Weights & Measures Act. 1976 and falls in the category of specified goods subject to excise duty on the basis of retail price. From the particulars compute (rounded to nearest rupee) : (i) Assessable value (ii) Excise duty & Cess payable. - MRP printed on the package is ` 10,640. The price is inclusive of excise duty @ 10% and education and secondary and higher education cess at the applicable rates as per Finance Act, 2010. The product is eligible for an abatement of 38% [5+4 = 9 marks] Q 3(b) Briefly explain the following with reference to Central Excise Laws - (i) Is it compulsory to pay tax through PLA after forfeiture of facility of payment by installments? (ii) Can an assessee claim refund of money deposited in PLA, when there is a provision of unjust enrichment? (2 + 2 = 4 marks) Q3(c)(i) An exemption notification under Central Excise Act was issued on 22nd December, 2010.The same was published in Official Gazette on 2nd January, 2011. From which date the notification is effective? (ii) KSK Ltd. a manufacturer dispatched rubber products to Mr. X from factory at Pune after payment of duty. The goods were rejected by the buyer as found defective and sent back to the manufacturer for rectification. Can Mr. X avail Cenvat credit? (1 + 1 = 2 marks) Q4(a) Briefly explain the term 'Export' for the purpose of duty drawback under section 75 of the Customs Act, 1962. Is duty drawback available if the goods do not reach the destination? (5 marks) Q4(b) Computation of duty drawback : Discuss whether any duty drawback is admissible under section 75 in the following cases and if yes, what is the quantum of such duty drawback? (10 marks)
* In case (viii), the Central Government has specified a minimum value-addition to be achieved @ 40% of imported material in terms of FOB value. Q5(a) A, an unit in SEZ, received services as covered u/s 65(105) from various service provider in relation to the authorized operation in the SEZ. At the time of making payment, service provider ask it to pay the service tax, however, it argues that service tax is not liable on taxable services provided to it. Now, you are approached to confirm the contention of A with the following details – (i) Services consumed within the SEZ – ` 5,00,000 (ii) Service partially consumed within the SEZ and partially out of the SEZ – ` 3,00,000 (iii) Services consumed wholly out of the SEZ – ` 6,00,000 (6 marks) Q5(b) A show cause notice demanding customs duty was issued in case of clearances made by a 100% Export Oriented Undertaking (EOU) to Domestic Tariff Area (DTA). Is the show cause notice defective in law? (2 marks) Q5(c) Detail the provisions for registration of dealers under section 7 of CST Act, relating to (i) Compulsory Registration (ii) Voluntary Registration and indicate the benefits of certificate of registration (7 marks) ICWAI – FINAL EXAMINATION New Syllabus – December 2010 (Only questions relating to indirect tax covered) Answer Question No. 1 which is compulsory and any five questions from the rest. Q 1(a) (iv) A service provider, whether registered or not, providing taxable services under brand name//trade name of others ___________ (will/will not) be eligible for availing threshold limit of Rs. 10 lakhs available to small service providers. (v) Where excise duty has been paid on provisional basis, refund claim should be filed within _________ (one year/two years) after duty has been adjusted in final assessment (vi) A sale or purchase of goods is deemed to be in the course of import, inter alia, if such sale or purchase _________ the import of such goods (occasions/follows) (vii) Certificate of registration under Central Sales Tax Act is to be issued by the registration authority in the prescribed Form ________ (B/G). (viii) An EOU is required to execute a bond in form _______ (B22/B17) for issue of a certificate on strength of which goods will be cleared from Customs without payment of duty. (ix) If raw material is supplied to a job worker on principal to principal basis the supplier is _______ (manufacturer/not manufacturer) under Central Excise Law (xi) Anti dumping and countervailing duties are imposed under the ________ Act (Customs/Central Sales Tax). (xii) The form for bill of entry for _______ (warehousing/home consumption) is printed on yellow paper. (xiii) The demand of duty can be raised within ________ (one/five) years, in case of fraud, collusion, willful misstatement and suppression of facts or contravention of any provision of Central Excise Act or Rules with intent to evade payment of duty made by a manufacturer (xiv) An importer importing under an authorization or EPCG is required to execute ________ (a bond/a bond with guarantee), when he has export obligation. (xv) Transaction Value _____ (includes/does not include) receipts/recoveries or charges incurred or expenses provided for in connection with manufacturing, marketing, selling of excisable goods to be part of the price payable for goods sold (1 mark each) Q1(b) Answer the following questions in brief : (i) What is a Large Tax Payer Unit? (ii) What is the basic distinction between VAT & Sales Tax? (iii) Is mens rea essential for imposing penalty under Central Excise Act/Customs Act? (2 marks each) Q 2(d) TRAI EXPORTERS imported some goods in January 2010 and the goods were cleared from Paradeep Port for warehousing on 8th January, 2010 after assessment. Assessment was completed at the exchange rate $ 1 = Rs. 47.50. The rate of duty on that date was 20% (no other additional duty is payable). The goods were warehoused at Cuttack and were cleared from Cuttack warehouse on 5th March, 2010 when rate of duty was 15% and exchange rate was $1 = 47.00. What is the rate of duty and exchange rate applicable on the date of removal of goods from Cuttack warehouse (4 marks) Q3(c) What will be the Central sales Tax leviable to registered and unregistered dealer in following situations? Rate of CST applicable is 2%. (i) If local VAT is 1%. (ii) If VAT is 2%. (iii) If VAT is 4%. (iv) If VAT is 12.5% (4 marks) (d) M/s Link Ltd. a service provider engaged in providing advertising agency services deposited Rs. 2 lakhs as service tax for the month of April, 2009 on 5th May, 2009 with a designated bank by cheque. The check was cleared on 10th May, 2009. The department alleging that the service tax for the month of April, 2009 has not been deposited in due rate for which interest @ 13% p.a. would be levied. (i) Is the action of the department right on levy of interest? Give reasons in support of your answer. (ii) Will the situation be different if the cheque deposited could not be realized due to insufficient funds (3 marks) Q4 (a) State briefly whether the following services are taxable services under the Service Tax: (i) Services provided in the State of Rajasthan by a person having a place of business in Jammu and Kashmir (ii) Service provided from outside India and received in India by an individual otherwise than for the purpose of use in business or commerce (6 marks) (b) M/s. Y Consultants are engaged in the business of supply of manpower to M/s Z Enterprises. They charge to the principal employer for the wages of their labour which amounts to Rs. 1,50,000 plus their service charges of Rs. 30,000, What is the amount of service Tax payable? (2 marks) (c) (i) is e-filing of service tax return permitted? (ii) Should service tax be paid even if not collected from the client or service receiver? (4 marks) (d) M/s Y rendered taxable service to a client. A bill for Rs. 40,000 was raised. No service tax was separately charged in the bill. What is the value of taxable service and the service tax payable? (3 marks) Q5 (a) State the objectives of Central Sales Tax Act (b) State whether the following are goods under CST Act: (i) Patent (ii) Lottery Tickets (iii) Old newspapers (iv) Cheque (4 marks) (c) State whether the following are includible in ‘Sale Price’- (i) Excise Duty (ii) Packing materials and Packing charges (iii) Insurance charges (iv) Weighment charges paid for goods (2 marks) (d) A registered dealer of Bikaner (Rajasthan) sold goods worth Rs. 4,36,000 (including tax @ 9%) to an unregistered dealer in Gujarat. Calculate the amount of Central Sale Tax payable, if the sales tax rate on such goods in Rajasthan is 9% and surcharge @ 15% is also payable on it (4 marks) Q8. (a) What are the essential ingredients of interstate sale - Elucidate (6 marks) (b) State whether sale by VPP is liable to CST (3 marks) (c) What are the exceptions to section 3 of CST Act? (4 marks) (d) Give four instances of Goods of special importance in Interstate Trade or Commerce u/s 14 of CST Act (2 marks)
ICWAI FINAL EXAMINATION June 2010 (New Syllabus) Indirect and Direct Tax Management Answer Question No. 1 which is compulsory and any five questions from the rest. (Only questions relating to indirect tax covered) Q1 (a) Fill up the blanks: (1 mark each) (ii) A unit is entitled to SSI concessions under excise provisions if its turnover in the earlier year does not exceed Rupees . . .. (iii) Parts used during warranty period for repairs or replacement . . . (are/are not) excisable. (iv) CVD . . . (is/is not) payable on anti-dumping duty. (v) Customs value of excisable goods is determined, inter alia, under section . . . of the Customs Act, 1962. (vi) Section 18 of the Customs Act, 1962 provides for . . . of duty. (vii) All items other than those which are restricted/prohibited can be imported . . . (freely/subject to nominal import duty of 10% on assessable value). (viii) Where advance authorization has been obtained, export obligation should be fulfilled within . . . from the date of . . .. (ix) Forms received from branches for stock transfers should be submitted to CST authorities on . . . basis. (x) Under the Central Sales Tax Act, 1956, sale price means the amount payable to dealer as consideration for sale of goods and . . . (includes/does not include) CST whether shown separately or not. (xv) In service tax matters, an eligible appeal should be filed within . . . from the date of receipt of order appealed against. Q1(b) State with reasons, whether the following statements are True or False (mere conclusion will not deserve any credit; for a 'True" conclusion, the question should not be merely repeated, but reasoning should be given): (2 marks each) - (ii) Import manifest is required to be submitted at the customs station within twelve hours of arrival of aircraft or vessel. (v) Where taxable services are provided by a person not residing in India and are utilized in India, the agent of the non-resident residing on India is liable to collect and pay the service tax on behalf of the non-resident. Q2.(a) Is it correct to say that mandatory levy of penalty under section 11 AC of the Central Excise Act, 1944 is not applicable to every case of non-payment or short-payment of duty? (5 marks) (b) LMN Aluminium Ltd. is engage in manufacture of aluminium sheets and allied products. The assessee noticed some difference at the time of physical verification of stock, as compared to book records, due to several reasons like rain seepage, weighment differences, accounting method employed, etc. The assessee applied under Rule 21 of the Central Excise Rules, 2002, seeking remission of duty. This claim is resisted by the Department on the ground that the reasons for the differences were neither due to natural causes, nor due to unavoidable accident. The assessee's request was hence turned down, though there was clear evidence to the effect that the assessee has suffered loss of stock. Is the action of the Department justified? Advise the assessee suitably (6 marks) (c) Who are the persons not eligible for compounding of offence as per the provisions of the Central Excise Act, 1944? (4 marks) Q3.(a) VSK Motors manufactures Light Motor Vehicles (LMV). The practice followed is that the chassis of the LCV is sent to Nathan Ltd. for building the body as per design and specifications furnished. The LCV chassis is not sold but is transferred after payment of excise duty on stock transfer basis. Nathan Ltd. avails CENVAT credit on the excise duty on chassis; after completing the body building, Nathan Ltd. discharges the duty on the assessable value comprising the value of chassis and the job charges. After receipt of the body-built LMV from Nathan Ltd., VSK Motors sells the same at a higher price. You are required to examine whether the practice followed is correct in terms of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (4 marks) (b) What is the quantum of CENVAT credit that can be availed in respect of inputs and capital goods cleared on or after 07.09.2009 from an EOU or by a unit in electronic hardware technology park or in a software technology park? (5 marks) (c) State the cases under which the Central Government is empowered under Rule 12CC of the Central Excise Rules, 2002 to withdraw facilities or impose restrictions on a manufacturer, first stage or second stage dealer, or an exporter (6 marks) Q 4(a) State the cases where the import duty shall be refunded to the person who has paid such duty, as laid down in section 26A of the Customs Act, 1962 (5 marks) (b) Mr. Bhar imported goods on 14.1.2010, Bill of entry was presented on 15.1.2010, Assessable value (in Euro) 50,000. Goods were removed to warehouse. Order permitting the deposit of goods in bonded warehouse issued on 19.1.2010. Mr. Bhar neither obtained permission of time for the warehousing period, nor cleared the goods within the permitted warehousing period of 18.4.2010. Only after a notice was issued under section 72 demanding duty and other charges, Mr. Bhar removed the goods from the warehouse, on 15th May, 2010. Assuming that no additional duty or SAD is payable, on the basis of following information, compute the amount of duty payable by Mr. Bhar while removing the goods (i) Rate of exchange (1 Euro =) 65 (on 15.1.2010), 66 (on 18.4.2010) and 67 (on 15.5.2010) (ii) Basic customs duty 12% (on 15.1.2010), 15% (on 18.4.2010) and 18% (on 15.5.2010) (5 marks). Q4(c) M/s. Nigamanth Cables are engaged in the business of providing cable TV and high speed internet services in Salem, Tamil Nadu. For their business requirements, they imported Optic Fibre Cables (OFC) and classified them under Heading 85-44 of the Customs Tariff. This was not accepted by the Revenue and according to them, the goods should be classified under Heading 9001. The assessee's stand was accepted by Commissioner of Customs (Appeals). The matter was carried in appeal before CESTAT against the said order, which has yet not been decided. Meanwhile, the customs authorities (DRI officers) had seized the consignment of OFC imported and permitted Nigamanth Cables to clear the goods on payment of duty assessed under Heading 9001 and forced Nigamanth Cables to pay the differential duty between Headings 85-44 and 9001 by threat and coercion. You are required to consider the validity of the aforesaid action of the customs authorities in the light of judicial pronouncements (5 marks) Q5(a) M/s. DPC & Co., a consulting engineering firm, has provided consulting engineering services to NFD Ltd. in connection with construction of power plant during the financial year 2009-10, for a value of Rs. 50 lacs, excluding service tax. While providing the services, DPC & Co. appointed Mr. X, sub-consultant, to provide services to the extent of Rs. 11 lacs, inclusive of all expenses and taxes, if any. A show cause notice has been served on Mr. X, requiring them to pay services of Rs. 11 lacs rendered by it to DPC & Co., who have utilised the same in providing the services to NFD Ltd. Mr. X is of the opinion that he is not liable to service tax since DPC & Co. have paid the service tax on the entire contract of Rs. 50 lacs. In the light of these facts, state (i) Whether the ground taken by Mr. X for non-payment of service tax is correct. (ii) If the answer is in the negative, what is the service tax payable, assuming that Mr. X has crossed threshold limit, (iii) How payment of service tax by Mr. X is beneficial to DPC & Co. (4 marks) (b) With reference to business auxiliary services, examine whether service tax liability is attracted in following cases - (i) Manufacture of an excisable goods on behalf of the client, which is exempt from duty, (ii) Business auxiliary service provided by a service provider to any other person (service receiver) during the course of manufacture or processing of alcoholic beverages by the service provider, for or on behalf of the service receiver (6 marks) (c) Compute the net VAT liability of Janak from the under-mentioned information: (i) Raw material purchased from foreign market (including duty paid on imports @ 20%) - Rs 47,000 (ii) Raw material purchased from local market (including VAT charged on the material @ 1 %) – Rs 10,100 (iii) Raw material purchased from another State (excluding CST) – Rs 20,000 (iv) Storage, transportation cost and insurance – Rs 3,000 (v) Other manufacturing expenses incurred – Rs 600. - - Janak sold the goods to Prem adding margin of profit @ 10% on the selling price. VAT rate on sale of such goods is 10% (5 marks) Q6(a) What are the reasons for setting up of Export Promotion Councils? Write a brief note on their responsibilities and types of Councils in India in the context of foreign trade policy. Should an exporter compulsorily register himself as a member of such Export Promotion Council? (5 marks) (b) Briefly explain the different types of Drawback rates (7 marks) (c) While importing goods under Duty Free Import Authorisation (DFIA), should any customs duty be paid? Is the DFIA transferable? (3 marks)
December 2009 Indirect and Direct Tax Management (Only questions relating to indirect tax covered) Q1 (a) Fill up the blanks: (ii) Ownership of raw materials is ______ (relevant/not relevant) for excise duty. (iii) Customs duty is levied under section _____ of the Customs Act, 1962 (iv) Stock transfer to branch is not treated as inter-state sale when Form ____ is submitted (v) An authorized dealer in foreign exchange has the option to pay service tax at ___ % of the gross amount of currency exchanged, instead of paying service tax at the usual rate (vi) Duty drawback _______ (is/is not) available in respect of goods manufactured by EOU/SEZ unit. (vii) Application for IEC number must be made to ___. (One mark each) Q1(b) State with reasons, whether the following statements are true or false (answer without any reasoning will not deserve any credit): (i)Waste and scrap are always treated as excisable goods (ii) Importers can store imported goods without payment of duty in public warehouse or private warehouse (iii) Security demanded from dealer under the Central Sales Tax Act, 1956 can be satisfied in the form of surety bond (v) Duty drawback rate is fixed by the Central Government in consultation with the Board (2 marks each) Q1(c) Provide brief answers - (i) On 18.06.2009, Mr. Sakti discovers a mistake in the service tax refund pertain up to the half year ended 31.03.2009, filed on 23.04.2009. Can he rectify the mistake? (ii) As per the White Paper on State-level VAT, is a trader eligible for refund if VAT credit of input tax available cannot be utilized for any reason (iii) Enumerate any four matters covered by Foreign Trade Policy (2 marks each). Q2 (a) State the transactions which have been excluded from levy of central sales tax and those in respect of which central sales tax leviable is Nil (b) You have been appointed as Cost Auditor to conduct special audit of Cenvat credit under section 14AA of Central Excise Act, 1944. Discuss major areas where you will concentrate while conducting your audit (c) Question on income tax (8+5+2 = 13 marks) Q3 (a) State the basic principle of VAT (b) Question on income tax (c) Mr. and Mrs. Bose visited Canada and brought following goods while returning to India on 9th February, 2009 (i) Their personal effects like cloths, etc., valued at Rs. 40,000/- (ii) A personal computer bought for Rs. 36,000/- (iii) A laptop computer bought for Rs. 98,000/- (iv) Two litres of liquor bought for Rs. 2,000/- (v) A new camera bought for Rs. 38,000/-. What is the amount of customs duty payable by Mr. Bose? (6+6+3 = 15 marks) Q4(a) (i) Is ‘Duty Free Import Authorization (DFIA)’ transferable? (ii) Is any value addition required for the same? (iii) What are the conditions relating to issue of DFIA? (b) State the provisions relating to best judgment assessment in the context of service tax (c) Examine the validity of the following statements with regard to service tax - (i) The service provided by a consulting engineer engaged in providing consultancy in the discipline of computer software engineering shall be exempt under the category “Consulting engineer’s service”. (ii) Some transporters undertake door-to-door transportation of goods or articles and they have made special arrangements for speedy transportation and timely delivery of such goods or articles. Such services are known as ‘Express Cargo Service’ with assurance of timely delivery. Such ‘Express Cargo Service’ is covered under ‘courier agency service.’ (7+4+4 = 15 marks) Q5(a) Durga Steel Industries imported certain goods and kept them in warehouse. However, the goods were not removed from the warehouse at the expiration of statutory time period during which such goods were permitted under section 61 to remain in a warehouse. Durga Steel Industries sought to relinquish the title to such goods under the proviso to section 68 of the Customs Act, 1962. However, the Department contended that since the goods were deemed to be improperly removed from the warehouse (considering the over-stay of such goods in the warehouse) under section 73(1)(b), the case would not fall under section 68 and thus proviso to section 68 could not be invoked. It was submitted that before invoking the proviso to section 68, the conditions of section 68 must be fulfilled which was not done in the instant case. The Department further contended that the relinquishment is subject to discretion of proper officer and the same cannot be done where the importer has the ability to pay the impugned duty. Durga Steels contends that this relinquishment absolves the importer from total liability. Examine the correctness of the rival contentions (b) Illustrate the points of differences between pilferage of goods under section 13 and loss/destruction of goods under section 23 of the Customs Act, 1962 (c) The value of clearance from four units of Janak Corporation Limited (JCL) during 2008-09 are as follows: (in Rs lakhs) - Units situated at - Noida-110, Kolkata-90, Salem-120, Chennai-140. JCL sought your advice as a consultant whether benefit under Excise Notification No. 8/2003 shall be available to JCL during 2009-10. You are required to indicate your advice in this context (6+5+4 = 15 marks) Q7 (b) M/s ABC Services Ltd. a service provider for the first time made an agreement on 22nd May, 2008 with XYZ Ltd. to provide different services covered under Business Auxillary Services at a price of Rs. 80 lakhs ( inclusive of service tax) per annum. They are not providing any other services except as above. As per terms of contract executed by ABC Services Ltd., an advance of 15% of contract price has been received for the services to be provided which would be adjusted against final bill in the end of the year. The bills raised and amount received (in Rs lakhs) are given as follows – (1) Advance 15% of Contract price for service to be provided - Bill dated 01.06.2008 for Rs 12 lakhs – Amount received Rs 12 lakhs on 01.06.2008 - 12 lakhs (2) 1st Bill for June 2008 for service provided - Bill dated 08.07.2008 for Rs 25 lakhs. Amount received on 20.07.2008 Rs 12 lakhs (3) 2nd Bill for July 2008 for service provided – Bill dated 05.08.2008 – Rs 12 lakhs –Amount received on 18.08.2008 – Rs 25 lakhs. Service tax due as per provision has been deposited in due time. Total gross value of services provided was Rs. 37 lakhs after which the contract was terminated with mutual consent. On closure of the contract amount of advance of Rs. 12 lakhs has been refunded to M/s XYZ Ltd. Please explain the following assuming service tax payable is 10.3% (and figures are expressed in Rs. in lakhs) -(i) What action should be taken by ABC Services Ltd. on execution of agreement on dated 22nd May, 2008? (ii) Can ABC Services Ltd. avail threshold limit for the year 2008-09, if so what is the amount? (iii) Service tax payable on the advance of Rs. 12 lakhs for which no service has been provided. How much advance is taken for computation of service tax? (iv) What is the value of services taken for computation and the amount of service tax paid through designated branches and on which dates? (v) What will happen to the service tax, if any, excess deposited for which no service was provided due to termination of contract and refund of the amount thereof? (9 marks) Q7(c) Please specify the relevant date for determination of rate of customs duty in respect of following goods imported/exported: (i) In the case of entry for export under section 50 of the Customs Act, 1962. (ii) If bill of entry is presented before the date of entry inward of Vessel. (iii) In case of goods imported by Postal Parcel (3 marks) Q8(a) M/s XYZ Ltd. sold machinery to Mr. K at a price of Rs. 5 lakhs on 15th June, 2008 and the same was removed from the factory at Kolkata. The rate of excise duty applicable is 10.3% on the date of removal. Mr. K. refused to take delivery of the machine when it reached his destination. In the meantime, M/s. XYZ Ltd. increased the prices of the similar type of machinery to Rs. 6 lakhs with effect from 16th June, 2008. The machinery as refused by Mr. K. has been sold on 20th June 2008 to Mr. L at the revised price of Rs. 6 lakhs. The excise duty including education cess is 12.36% applicable with effect from 10th June, 2008. Explain the following with reasons: (i) What is the value to be taken as assessable value? (ii) What is the rate of excise duty applicable and duty payable on above transaction? (iii) The Central Excise Officer is demanding duty on the price of Rs. 6 lakhs at the time of sale to Mr. L. Is he right in his approach? (iv) Does cost of production have any bearing on the assessable value? (8 marks) INDIRECT AND DIRECT TAX MANAGEMENT June 2009 Final Question No. 1 is compulsory. Answer any five from the rest. (Portion relating to indirect taxes) Q 1(a) Fill up the blanks (iv) Where a service provider renders taxable as well as exempt service and some input services are used partially for the taxable services, one of the options available to the service provider is that he pays an amount equal to ______% value of exempted services (v) Simple labeling or relabeling without any repacking _______ (is/is not) “deemed manufacture” for central excise purposes (vi) The term “excisable goods” for central excise purposes ______ (will/will not) include articles capable of being sold (vii) The customs duty payable on project imports is _________ %. (viii) The maximum amount of penalty leviable under section 117 of the Customs Act, 1962 is Rs. __________. (ix) In the bill raised on the client, the service provider _________ (is/is not) bound to show the service tax separately (1 each) Q 1(b) State with reasons, whether the following statements are true or false (mere conclusion will not deserve any credit): (iii) Service tax on GTA will have to be paid by cash/cheque/e-payment only, and not though Cenvat Credit (iv) The Central Government is authorized to issue notification specifying that excise duty in respect of certain notified products is leviable on the basis of production capacity of the factory (v) No anti-dumping duty is payable by EOUs under the Customs Act, 1962, even where the goods imported are used for manufacture of goods sold in India. (vi) As per section 8(2) of the Central Sales Tax Act, 1956 in respect of inter-State of goods not falling under section 8(1), the CST rate applicable is the State Sales tax (or VAT) rate. (vii) Abatement of 30% is allowed from the gross amount charged in case of services provided in relation to chit, by whatever named called. (viii) There is no scheme for furnishing a service tax return through Service Tax Return Preparers (2 marks each). Q 3 (a) M/s. Abanti Associates is a registered dealer engaged in the manufacturing of steel in the State of Maharashtra. During the year 2008-09 the firm has procured raw materials of Rs. 25,50,320 (VAT @ 4%) and purchased plant and machinery of Rs. 20,00,000 (VAT @ 4%) and Rs. 5,00,000 (CST @ 2%) for use in the manufacturing of steel. Sales of steel materials made during the year is Rs. 40,00,000/- (VAT @ 4%) and inter-State sale is Rs. 5,29,000 (@ 2% CST). Besides above, branch transfer of Rs. 3,20,000 was made to Kolkata. Calculate the following as per White Paper on VAT Law in India. (i) Output tax (ii) Input tax credit to be availed during the year: (iii) Balance tax payable; and (iv) Input tax credit, if any, to be carried forward (b) Is a single declaration form in Form C sufficient to cover all the transactions between two dealers in a financial year under the Central Sales Tax Act, 1956? (c) Can PQR Ltd., providing taxable services from different locations and billing the clients from each location, opt for a centralized service tax registration? Explain. (d) State briefly the provisions relating to rate of exchange applicable for customs valuation [6+2+2+5 = 15 marks] Q 4 (a) M/s Akshaya Processors Ltd. supplies raw material to a job worker B Ltd. After completing the job work, the finished products of 5,000 packets are returned to M/s Akshaya Processors Ltd., putting the retail price as Rs. 20 in each packet. The product in the packet is covered under MRP provisions and 40% abatement is available on it. Determine the assessable value under Central Excise law from the following details: Cost of raw material supplied – Rs. 30,000/- , Payment made to job workers including profit – Rs. 10,000/- , Transportation charges for sending the raw material to B Ltd. – Rs. 5,000/- Transportation charges for returning the finished products factory – Rs. 5,000/- Who is liable to pay excise duty in the above situation? (b) Briefly explain: (i) What is the date of removal of excisable goods in case of captive consumption? (ii) Is it required to issue invoice for removal of goods even for captive consumption? If so, why? (c) XYZ Ltd. has availed Cenvat Credit as soon as goods enter the factory premises during 2007-08. The same has been written off fully in the books of accounts during the year 2008-09 due to obsolescence - (i) What would be the impact of such write off of inputs? (ii) What will happen if goods are subsequently used in the manufacturing of goods? (d) Discuss briefly about Cenvat Credit on exempted final products/output services. (5+3+3+4 = 15 mark) Q 5 (a) M/s Khusub, a SSI unit, can avail full benefit of exemption from payment of duty up to turnover of Rs. 150 lakhs and exercised the option to get the benefit of exemption for the year 2008-09 on 15th August, 2008. You are required to answer the following. (i) To get exemption benefit, the turnover of what will be taken? (ii) What will happen if M/s. Khusub has more than one factory? (iii) M/s. Khusub cleared goods of Rs. 90 lakhs up to 15th August, 2008. On 16th August, 2008, they cleared goods and issued invoice of Rs. 100 lakhs. Can they claim exemption of balance amount Rs. 60 lakh as a part of invoice? (b) How is the value of goods supplied by the buyer treated in customs valuation for customs duty? (c) XYZ Ltd. supplied tools, dies and moulds costing Rs. 2,00,000 to M/s Hooks Ltd., China for issue in the manufacture of goods imported. The tools, dies and moulds etc. are expected to produce 10,000 units of goods. First shipment is made for 5,000 units. How will the same be treated while arriving at transaction value for arriving at value for imposition of duty? (d) Mr. Nirvan Ltd. has imported 10,000 units of materials through Kolkata Port. The ship arrived on 15th January, 2009. After completion of customs formalities, goods were cleared for home consumption. It is found that: (i) 500 units are pilfered when they are in custody of port authorities (ii) 200 units are found deteriorated in such a condition that the goods are abandoned and right relinquished. Explain with provisions, how the above attract customs duty [5+4+2+4 = 15 marks] Q 6 (a) Discuss in brief about the options available to an exporter to procure goods from indigenous source against advance release order or back to back inland letter of credit (b) Can the valuation of goods manufactured and cleared as free samples be done on the basis of MRP for excise purpose? If Not, how should they be valued? (c) -(d) - (5+4+3+3 = 15 marks) Q 7 (a) Write a brief note on Import/Export Authorisation (b) Under the Foreign Trade Policy of India, state the restriction on exports relating to : (i) Export of warranty spares, and (ii) SCOMET items. (c) Thilagam Turbines Ltd. manufactured a steam turbine for Mr. Prem, who supplied special steel purchased by him from wholesale market (Cost Rs. 10,00,000 plus Central Excise Rs. 1,33,000). The normal price of such material is Rs. 12,00,000 plus Central Excise Rs. 1,48,320. Mr. Prem is eligible to claim Cenvat Credit. Janak Turbines Ltd. incurred manufacturing cost of Rs. 23,00,000. What is assessable value of the turbine? Briefly touch upon the issues involved (7+4+4 = 15 marks) Q 8 (a) What type of goods are eligible for purchase at concessional rate in inter-State sales? Should any document be submitted in this regard? (b) What are the various bonds which are required to be executed for Central Excise purposes? State briefly the purpose of each bond. (c) M/s. Niran & Associates, a firm of Cost Accountants, raised an invoice for Rs. 39,326 (Rs. 35,000 + service tax of Rs. 4,326) on 12th February, 2008. The client paid lump sum of Rs. 36,000 on dated 2nd April, 2008 in full and final settlement: (i) How much service tax M/s. Niran & Associates have to pay and what is the due date for payment of service tax? (ii) What will be the liability if the client refuses to pay service tax and pays only Rs. 35,000? (4+6+5 = 15 marks)
INDIRECT AND DIRECT TAX MANAGEMENT Dec 2008 Final Question No. 1 is compulsory. Answer any five from the rest. Q 1 (a) Provide brief answers to the following : (i) Hema Polymers Pvt. Ltd. has paid excise duty of Rs. 45 lakhs during the year ended 31.03.2008. During the current year, duty payments are expected to be Rs. 70 lakhs. Should the company make only e-payment of duty during the current year i.e. financial year 2008-09? (ii) Can the valuation of goods manufactured and cleared as free samples be done on the basis of MRP for excise purposes? If not, how should they be valued? (iii) Vasudha Spinners Ltd., supplies yarn to a job worker for dyeing. The cost of yarn is Rs. 2,000. Dyeing charges are Rs. 300/- After receipt of dyed yarn from job worker, the finished product is sold at Rs. 2,500/- excluding VAT. The rate of duty is 14%. Find out the assessable value and duty payable. (iv) Vivitha Telecom Ltd. imported an equipment, which reached Indian territorial waters on 20.02.2008. The rate of customs duty on imports was 10% then. The equipment was cleared from bonded warehouse on 28.03.2008. The customs duty on the said date is 12%. What is the rate of customs duty payable? (v) On 18.06.2008, Vasudevan discovers a mistake in the service-tax return pertaining to the half-year ended 31st March, 2008 filed on 23.04.2008. Can he rectify the mistake? (vi) Hema Transformers Ltd. has imported 12,000 units of raw material under Advance Authorization. 11,000 units of the same were consumed to manufacture 14,000 units of finished products. 13,200 units of finished goods were exported to meet the export obligation. Can the 1,000 units of raw materials and 800 units of finished goods remaining after export, be disposed off? (vii) to (x) – questions on direct taxes [2 marks each] Q 1(b) Fill up the blanks - (iii) For delay in payment of service tax, interest is chargeable at _ _ _ _ %, for the period for which payment is delayed. (iv) Application for CST registration should be furnished within _ _ _ _ days from the date when the dealer _ _ _ . (vii) If Central Excise duty is short paid or not paid or erroneously refunded, show cause notice can be issued under section 11A(1) of Central Excise Act within _ __ _ _ from relevant date. (viii) “Exclusive economic Zone” extends to _ _ _ _ nautical miles from the base line under the Customs Act. (ix) SSI unit availing concession on the basis of annual turnover has to file return on quarterly basis within _ _ _ _ days from the close of quarter in Form ER-3. (x) Where subsequent to the provisional assessment, higher amount of customs duty is found payable in final assessment, interest on differential amount will be payable at the rate prescribed under section _ _ _ _ of the Customs Act [1 mark each] Q 2(a) Durga Steel is denied the benefit of a notification under which excise duty exemption is granted to steel rod manufacturers (subject to monetary limit), if no Cenvat Credit of duty paid on inputs is taken. Durga Steel erroneously took Cenvat Credit on inputs first, but prior to utilization, reversed the same. Is the action of Department justified? Can penalty be levied? (b) For certain taxable services rendered by Prem, VAT as well as service tax is leviable. The following bill was raised by Prem on Vignesh (service receiver) on 20-3-2008 - Amount of bill - Rs. 40,000, Vat – Rs. 400. Total - Rs. 40,400. On 31.03.2008, Prem received a sum of Rs. 30,000 in full settlement. What is the service tax payable? You are informed that Vignesh has incurred hotel bills of Rs. 3708/- on behalf of Prem. Clearly indicate the provisions considered in arriving at the service tax payable (c) Direct tax question [4+6+4 = 14 marks] Q 3(a) Enumerate the cases where Cenvat Credit will have to be reversed. (b) Direct tax question (c) Is the material imported under Duty Free Import Authorization (DFIA) transferable? Is value addition required in respect of DFIA? Is Cenvat Credit available in respect of the inputs? (d) At the last minute, Pankaj, an Indian resident, cancels his journey from Singapore to Chennai. However, his baggage is allowed to be sent to Chennai without him accompanying it. Is general free allowance under the Customs Act available in respect of this baggage at Chennai? [6+ - +3+2 marks] Q 4(a) Direct tax question (b) Kimanshu Inc. of Tokyo operates through an agency at Chennai. ERP implementation support services are provided to Chennai unit. Is the Chennai agency liable to pay service tax? (c) Prem Granites Ltd. appealed against excess levy of customs duty on a machinery imported and used for captive use, after paying the disputed amount under protest. Though appeal was decided in its favour, the Department refuses to grant refund on the ground that doctrine of unjust enrichment applies. Is the Department correct? Will your answer be different if the assessee reverses Cenvat Credit taken on input and agitates the matter? (d) Briefly discuss about provisions applicable to EOU for available credit of excise duty paid on inputs and service tax paid on input services [- +4+4+3 marks] Q 5(a) What are the items of turnover which are required to be included while calculating the excise duty exemption limits for SSI units? (b) Examine the liability of principal and agent under the Customs Act, 1962 (c) and (d) – direct tax questions [5+4 marks] Q 6(a) A SSI manufacturer may like to pay full duty even when he is eligible for SSI exemption. (i) Can he do so? (ii) Why he would like to pay full duty? (iii) What is the duty payable? (b) and (c) direct tax questions (d) Can an exporter replace free of cost and without any authorization, spares related to a product exported earlier and found to be defective, within the warranty period? Can the entire product exported earlier be replaced? Can it be so done after the warranty period also? [4+4 marks] Q 7(a) Hema Pipes Ltd. a manufacturer of PVC pipes, removed goods from its factory from 01.06.2007 onwards after payment of excise duty under protest. Raghu Pipes, a sole trader and a customer of Hema Pipes Ltd. had purchased goods on 15.06.2007; in the sale bill issued to Raghu Pipes excise duty was charged. Hema Pipes Ltd., have appealed against the levy of excise duty on 25.06.2007 on 1st June, 2007. Hema Pipes Ltd. informs Raghu Pipes about the factum of their having filed appeal. On the same day, Raghu Pipes seek your advice relating to filing of refund claim and want to know whether the same can be filed after 3 months, by which time the appeal of Hema Pipes Ltd., will be decided. Advise Raghu Pipes as to the period of limitation and documents to be adduced in proof relating to the refund claim. (c) Briefly list the distinctions between ‘Zero rate sale’ and ‘exempt sale’ as per White Paper on VAT laws in India [4+5 marks] Q 8(a) Where from bulk packing, repacking of small packets is done for being marketed, is there “manufacture” as per Central Excise Act? Can it be said that there is ‘deemed manufacture’, where in respect of ready to market imported packs, affixing a sticker containing importer’s details. MRP, etc. is done? (b) Mr. Datey, Cost Accountant rendered taxable service to Vishwa Cement Ltd. In this regard the company sent 200 cement bags free of cost, for the house construction of Mr. Datey. Explain how the value of the taxable service will be determined in this case. Will your answer be different if the service had been rendered free of charge? (c) direct tax question [3+5 marks]
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