Question Papers of Indirect Taxes – CA IPCC and PCC
Question Papers of PCC and IPCC/AT (Service Tax and Vat portion of 25 marks each only)
CA Integrated PCC and Accountant Technician
IPCC Inter May 2013
Question No. 1 is compulsory. Attempt any five questions from the remaining six questions.
Q1(b) Q Ltd. is engaged in providing the taxable services. Ascertain the amount of service tax payable by it in the month of September, 2012 from the information given below – (i) Supply of farm labour for agriculture purpose. – 1,00,000 (ii) Service to people free of cost – 60,000 (iii) Advance received in September, 2012 from clients for which no service has been rendered till date – 85,000 (iv) Amount received for the services rendered in June, 2012 (bills for the same were issued on 25th June, 2012) – 90,000 (v) Bill raised for the services rendered in the month of September, 2012 against which no amount is received so far. – 75,000. The above amounts are exclusive of service tax. Q. Ltd is not eligible for small service provider’s exemption in the financial year 2012-13. The rate of Service Tax is 12%, Education Cess is 2% and Higher Education cess is 1% (5 marks)
Q1(c) Mr. Bansilal of Punjab is a manufacturer, registered under VAT. He provides the following particulars for the financial year 2012-13. (1) Purchases from local registered dealer (excluding VAT 4%) – 1,15,000 (2) Purchases from a dealer having opted composition scheme (includes VAT 4%) – 2,20,000 (3) Purchases of machinery eligible for input credit on 1-10-2012 (excluding VAT 4%) Depreciation rate 15% p.a. – 5,00,000 (4) Other direct & indirect expenses – 30% of total purchases (excluding depreciation) (5) Profit margin – 20% of the total cost. (6) Unutilized balance of VAT input credit as on 1-4-2012. - 7,500 (7) 90% of the production is sold during the year. (8) VAT rate for sales is 12.5%. Find the taxable turnover, net VAT payable and input credit for the year 2012-13 (5 marks)
Q 2(b) What is “Negative list of services”? Which services by Government or a local authority are not included in the negative list of services? (4 marks)
Q 2(c) One of the merits of VAT is ‘Neutrality’. Explain. (4 marks)
Q3(b) What is meant by EASIEST scheme? Enlist the benefits of EASIEST scheme to an assessee under the Service Tax Provisions (4 marks)
Q3(c) Seth Traders, a registered dealer of Bihar having stock of goods worth Rs 60,000 purchased from West Bengal wishes to opt for composite scheme. Advise the dealer whether it is possible? (4 marks)
Q4(b) State with reasons whether the following statements are correct or incorrect under the Service Tax provisions : (1) Mr. P provides the service in March, 2012. He receives the payment by cheque on 30-3-2012 and the cheque is cleared on 15-4-2012. The point of taxation of this service will be 30-3-2012 and the rate of service tax will be 10%.(2) Postal services for registered post are liable to service tax (3) M/s SR Brothers having office in Jammu, provide the services to M/s QR Ltd. in Patna. These services are not liable to service tax (4) Jaipur Branch of ABC Ltd. provides services to Baroda Branch of ABC Ltd. These services are not liable to service tax (4 marks)
Q4(c) Discuss the provisions of VAT for ‘stock transfer’. (4 marks)
Q5(b) ABC & Co. is a partnership firm engaged in the business of recruitment and supply of labourers. The firms, which had rendered taxable services to the tune of Rs 30 lacs in the financial year 2011-12, furnishes the following details pertaining to the half year ended on 30-9-2012 (1). Amounts collected from companies for pre-recruitment screening.- Rs 3,00,000 (2) Amounts collected from companies for recruitment of Permanent staff – Rs 1,80,000 (3) Amounts collected from companies for recruitment of Temporary staff – Rs 4,50,000 (3) Advances received from prospective employers for conducting campus interviews in colleges – Rs 80,000. Wherever applicable, service tax has been charged separately and received from clients. Compute the value of taxable services rendered and the service tax payable by the assessee for the relevant half year. The rate of service tax is 12%, education cess is 2% and higher education cess is 1%.
Q5(c) Manufacturer A sold product X to B of Delhi @ Rs 1,000 per unit. He has charged CST @ 4% on the said product and paid Rs 60 as freight. B of Delhi sold goods to C of Delhi @ Rs 1,250 per unit and charged VAT @ 12.5%. C of Delhi sold goods to D, a consumer @ Rs 1,500 per unit and charged VAT @ 12.5%. Compute VAT Liability of B & C (4 marks)
Q6(b) Mr. Rajesh, a proprietor of Z enterprise provides taxable services. He received the following amount during the financial year 2012-13 :(i) Rs 1,25,000 as advance while signing a contract.(ii) Rs 6,00,000 by pay order during process of providing service.(iii) Rs 5,25,000 by credit card after completion of service as on 31st Dec, 2012. Compute the value of taxable service and amount of service tax payable by him. Assume service tax has been charged separately. Z enterprise is not eligible for small service provider’s exemption in the financial year 2012-13. The rate of service tax is 12%, education cess is 2% and higher education cess is 1% (4 marks)
Q6(c) Distinguish between Gross Variant and Consumption Variant of VAT. (4 marks)
Q7(b) How is the value of the service under service tax provisions determined where such value is not ascertainable ? (4 marks)
Q7(c) What are the procedural requirements under VAT Act for claiming set off of input tax on capital goods ? (4 marks)
CA IPCC November 2012
Q1 (b) Mr. Ghosh is a practising Chartered Accountant. He has furnished the following information for the month of January 2012. (i) A bill for annual professional service was raised on Amco Ltd., for Rs. 7,20,000 on 22nd December 2011. However he received Rs. 7,00,000 in full and final settlement of the above bill on 23rd January 2012. (ii) An advance of Rs. 3,00,000 was received from Atul Ltd., for services to be provided in the month of April and May. (iii) Services were provided to a friend free of cost in January 2012 for which Ghosh normally charges Rs. 1,20,000 from other clients. (iv) Rs.1,00,000 was received on January 20, 2012 from client ‘C’ whom Ghosh represented in the Income-tax Appellate Tribunal which sent a notice to Mr. C. (v) Rs. 1,00,000 was received on 18th January 2012 for services rendered as a part time lecturer in a local college. – - Mr. Ghosh provides the following additional informations : (i) In all the aforesaid cases the service tax has not been charged separately (ii) He is not eligible for the exemption available to the small service provider. – - Compute the service tax, education cess and higher education cess payable by Mr. Ghosh for the month of January 2012. The rate of service tax is 12 per cent education cess is 2 per cent and higher education cess is 1 per cent (5 marks)
Q1(c) The following are details of purchases, sales, etc. effected by Varadan & Co., a registered dealer, for the year ended March 31, 2012 – (figures in Rupees) (a) Purchase of raw materials within State (500 units, inclusive of VAT levy at 12.5%) – 11,25,000 (b) Inter-State purchases of raw materials, inclusive of CST at 4% – 4,08,000 (c) Import of packing material, inclusive of customs duty of Rs. 10,000 – 2,10,000 (d) Capital goods purchased on April 1, 2011 of VAT levy at 10% (input credit to be spread over 2 financial years) – 5,50,000 (e) Sales of taxable goods within State, inclusive of VAT levy at 4% – 40,24,000. (f) Sales of goods within State, exempt from levy of VAT (Goods were manufactured from the Inter-State purchase of raw materials) – 1,20,000. – - Compute the VAT liability of the dealer for the year ended March 31, 2012 (5 marks)
Q2(b) D & Co. has been providing taxable services for the past few years. Its gross value of taxable services provided during the financial year 2009-10 and 2010-11 is Rs.12 lakhs and Rs. 8.75 lakhs respectively. During the financial year 2011-12 it provided service for Rs. 13 lakhs. Calculate the service tax liability of D & Co. for the financial year 2011-12 Rate of service tax 10 per cent, education cess 2 per cent and higher education cess @ 1 per cent (4 marks)
Q2(c) How is VAT computed under the subtraction method ? (4 marks)
Q3 (b) State whether the following are true or false giving reasons to substantiate
your answer – (i) A multiple service provider should file multiple service tax returns, one for each service provided (ii) A Ltd., a foreign company incorporated in the U.K. provides taxable services in India to B Ltd., an Indian company incorporated in Mumbai. In the instant case, the service recipient and not the service provider is liable to service tax (iii) Even if no service has been provided during a half year and no service tax is payable; the assessee has to file a nil return within the prescribed time limit (iv) The assessee cannot file a revised return under Service Tax Law (4 marks)
Q3(c) Enlist any six purchases eligible for availing input tax credit (4 marks)
Q4 (b) Pranav Private Ltd. is engaged in providing a taxable service and furnishes you the following information of Services billed and received (In `) – (a) December 2011 (includes `. 2,00,000 for the services rendered to the United Nations Organisation) – 5,00,000 (b) January 2012 (includes `. 1,50,000 for the services rendered within the Indian territorial waters) – 4,00,000 (c) February 2012 (includes Rs. 1,75,000 for services rendered to the RBI)-5,00,000 (d) March 2012 Advance receipt for services to be rendered in April 2012 (includes Rs. 1,60,000 for services rendered in the State of Jammu & Kashmiri)-5,00,000. Compute the taxable services for the year ended March 31, 2012 (4 marks)
Q4(c) What are the conditions to be fulfilled by the dealer accepting the composition scheme under the value added tax ? (4 marks)
Q5 (b) What are the consequences of non-payment or delayed payment of service tax ? (4 marks)
Q5(c) What is meant by input tax credit in the context of VAT provisions ? How does input tax credit help in achieving the essence of VAT ? (4 marks)
Q6 (b) Briefly explain the provision relating to advance payment of service tax. (4 marks)
Q6(c) Discuss the compulsory and voluntary registration under VAT (4 marks)
Q7 (b) Explain the treatment for excess amount of service tax collected from the Recipient under Service Tax (4 marks)
Q7(c) Since the VAT system emphasizes on self assessment the need for a system of cross-checking has arisen. Elaborate (4 marks)
CA IPCC May 2012
Q1 (b) Infotech software systems is an information technology software company. The receipts during financial year 2011-12 are as under – (i) Receipts for the analysis of information technology software – ` 1,80,000 (ii) Receipts for providing advice consultancy and assistance on matter related to specifications to secure a database – ` 4,10,000 (iii) Receipts for providing the right to use the canned software on which the amount of excise duty has been paid and the benefit under Notification (No. 31/2010 Cus Dated 27-02-2010 has not been availed) – ` 5,10,000 (iv) Receipts for the upgradation of the information technology software – 2,65,000 (v) Infotech software systems in the financial year 2010-11 has provided the taxable services valuing of ` 15,00,000. – - Determine the value of taxable service and the amount of service tax, education cess and secondary and higher education cess payable by Infotech software systems for the financial year 2011-2012. The amount of service tax has been charged separately.
Q1(c) R. Ltd of Mumbai made a total purchases of input and capital goods of Rs. 60,00,000 during the month of February, 2012. The following further information is available, (i) Goods worth Rs. 15,00,000 were purchased from Assam on which C.S.T 2% was paid, (ii) The purchases made in February, 2012 include goods purchased from unregistered dealers amounting to `. 18,50,000. (iii) It purchased capital goods (not eligible for input credit) worth `. 6,50,000 and those eligible for input credit for ` 9,00,000. (iv) Sales made in Mumbai during the month of February, 2012 is ` 10,00,000 on which VAT at 12.5% is payable. – - Assuming that all purchases given are exclusive of tax and VAT 4% is paid on them calculate – (a) the amount of purchases eligible for input credit (b) the amount of input credit available for the month of February, 2012 (c) the VAT payable for the month of February, 2012. – - The input VAT credit on eligible capital goods is available in 36 equal monthly instalments.
Q2 (b) A Partnership Firm, gives the following particulars relating to the services provided to various clients by them for the half-year ended on 30-09-2011 – (i) Total Bills raised for Rs. 8,75,000 out of which bill for Rs. 75,000 was raised on an approved International Organization and payments of bills for Rs. 1,00,000 were not received till 30-09-2011 (ii) Amount of Rs. 50,000 was received as an advance from XYZ Ltd. on 25-09-2011 to whom the services were to be provided in October, 2011. You are required to find out the – (a) Taxable value of services (b) Amount of service tax and education cess and secondary and higher education cess payable.
Q2(c) Explain the consumption variant of VAT. Mention the reasons for the preference of this variant of VAT.
Q3(b) Test the veracity of the following assertions with reference to the statutory provisions relating to service tax. Do not assign any reason for them – (a) Services provided by consulting engineers in computer hardware engineering and computer software engineering are not includible in their taxable services (b) Services provided to any person by a mandap keeper for the use of the precincts of a religious place as a mandap are not exempt from service tax (c) The following are the person(s) who provides scientific or technical consultancy service – (i) a scientist (ii) a technocrat (iii) any engineering organisation (d) Pre-school coaching institutions services are taxable (e) X-took certificate of practice with effect from 25-1-2012. He has to make an application for registration before 24-3-2012 (f) Small scale service provider who is claiming exemption of Rs. 10 lakh shall have to apply for registration where the aggregate value of taxable services exceeds ` 9 lakhs (g) Gross amount charged for taxable services includes only that amount received towards the taxable service which is received after the provision of such services (h) Service tax for the month of March or quarter ending March should be deposited by 5th April.
Q3(c) Test the veracity of the following assertions with reference to the statutory provisions relating to value added tax. Do not assign any reason for them – (a) Input credit under VAT is available in respect of Central Sales Tax paid on purchases (b) VAT is leviable at the first stage of sale (c) Input credit is available in respect of customs duty paid on goods imported from a country outside India (d) Input credit is available only if the purchaser has obtained proper tax invoice (e) No registration is required under any VAT regime (f) A trader can take credit of the inputs purchased by him only if he has obtained proper tax invoice from the valuer (g) VAT is inflationary in nature (h) White paper on Slate level VAT provides a framework for drafting various Stale VAT legislations.
Q4(b) Punjabi Banquets is engaged in providing ‘mandap keeper services’. For the month of January, 2012, it provided the following information – (1) Banquet hall let out for marriage function – The gross amount charged for banquet hall including catering charges (Catering charges have been separately indicated in the invoice) – 6,00,000 (2) Amount received for rooms let out for stay of guests attending the marriage – 40,000 (3) Amount collected for letting out the hall for All India Dance Competition. No food was supplied alongwith it – 5,00,000 (4) Mandap for shooting of marriage sequence of a Daily Soap Opera – 2,40,000. Compute the amount of service tax, education cess and secondary and higher education cess payable by Punjabi Banquets for the month of January, 2012. Additional Information: (1) Point of taxation in all the aforesaid case is January, 2012 (2) All the amounts stated above arc exclusive of service tax (3) Punjabi Banquets is not eligible for small service providers exemption under notification. No.6/2005-ST dated 01-03-2005 for the financial year 2011-12.
Q4(c) Determine the liability of VAT of X for the month of December 2011 using invoice method of computation from the following data: * Purchase price of goods acquired from local market (including VAT) – `. 52 lakhs * VAT rate on input – 4 % * Transportation, insurance, warehousing and handling cost incurred by X – ` 20,000 Goods sold at a profit margin – 14 % * VAT rate on sales – 12.50%.
Q5(b) What are the documents to be attached by a service provider along with an application for registration under service tax ?
Q5(c)(i) What arc the different variants of VAT and how is deduction available for tax paid on inputs including capital inputs ?
Q5(c)(ii) What arc the different stages of VAT ? Can it be said that the entire burden falls on the final consumer ?
Q6(b) Avinash is a qualified Chartered Accountant. He acquired the certificate of practice from the 1CA1 in May, 2010. For the financial year 2011-12 his receipts (including service tax) are as follows (figures in Rupees) : * Services received in tax planning – 50,000 * Representation of client before CESTAT – 40,000 * Preparation of financial statements of XYZ Ltd. – 4,00,000 * Certification of documents under Export and Import policy of Government of India – 1,50,000 *Receipts for the legal advice given to clients in the month of December, 2011.-50,000. – - In the financial year 2010-11 he has provided the value of taxable service of value. of Rs. 11,00,000. Using the above information, calculate the value of taxable services for the financial year 2011-2012.
Q6(c) Ms. Pragya, a dealer submits the following information. Compute the net VAT liability from the following information (figures in Rupees) * Import of raw material (including 10% import duty) – 1,10,000 * Raw material purchased from Kerala, (including excise duty @ 12%) VAT @ 4 % on the above purchase – 2,24,000 * Raw material purchased from Karnataka – 85,000 * Transportation and manufacturing expenses – 47,000. – - Pragya sold entire stock to Nishu at a profit of 10 % on the cost of production. VAT rate on such sale is 4%.
Q7(b) Mention the due dates for filing of service tax returns. Can an assessee submit a revised return?
Q7(c) Briefly explain the system of cross checking under VAT Act.
CA IPCC November 2011
Q1(c) Vikas Coaching Centre engaged in commercial training and coaching service furnishes you the following information and the amounts received by it for the half-year ended 31-3-2011 – (i) Coaching fee for civil service examinations – ` 3,50,000 (ii) Postal coaching fees for University examinations – ` 2,40,000 (iii) Sports coaching fee from a local college ` 1,10,000 (iv) Fee for management diploma of a foreign university (not recognised by law in force in India) – ` 4,40,000 (v) Coaching and training provided by sending staff to the residence of service receivers – ` 6,40,000. – - Determine the value of taxable service. Your answer must be with reasons (5 marks).
Q1(d) Laxman, a registered dealer submits the following information for the month of February, 2011 (Amount in Rupees) – (A) Details of purchase – (i) Raw material purchased from another State (CST @ 2%) – 10,00,000 (ii) Raw material X purchased within the State – 15,00,000 Vat rate 1% (iii) Raw material Y imported from Singapore (includes customs duty paid @ 10%) – 11,00,000 (iv) Raw material Z purchased within the State – 6,00,000 Vat rate 12.5% (B) Details of sales – (i) Sale of goods produced from raw material X – 27,00,000 Rate of Vat 4% (ii) Sale of goods produced from inter-state purchase and imported raw materials – 32,00,000 Rate of Vat 1% (iii) Sale of goods produced from raw material Z – 8,00,000 Rate of Vat 12.5%. – - Note – The purchase and sales figures given above do not include VAT/CST. – - Assume that there was no opening or closing inventory. Compute the amount of Value Added Tax (VAT) payable by Laxman for the month of February, 2011 (5 marks).
Q2(b) (i) When does e-payment of service tax become mandatory? (ii) State the ‘due date’ for e-payment of service tax by individuals and companies (4 marks)
Q2(c) Explain the role of Chartered Accountants in proper compliance of VAT (any 4 points) (4 marks)
Q 3(b) ABC Private Ltd. is engaged in providing a taxable service. For the month of January, 2011, its gross receipts were ` 18,00,000. The breakup of Month in which services are performed and the receipts in January, 2012 and are as follows – (i) March, 2010 (Includes ` 1,00,000 for the services rendered to an international organisation) – ` 4,00,000 (ii) April, 2010 (includes ` 1,25,000 for the services rendered within the Indian territorial waters) – ` 3,00,000 (iii) January, 2011 (includes ` 1,75,000 for services rendered to its associated enterprise) ` 5,00,000 (iv) February, 2011 (includes ` 1,50,000 for services rendered in the State of Jammu and Kashmir) – ` 6,00,000. – - In the financial year 2009-10, ABC Private Ltd. had paid ` 2,06,000 as service tax @ 10.30%. State the amount of service tax payable for the month of January, 2011 (4 marks)
Q3(c) State any two benefits and two drawbacks for a dealer who opts for composition scheme under VAT as per White paper (4 marks)
Q4(b) Explain optional composition scheme under service tax for distributor or selling agents of lotteries (4 marks)
Q4(c) State with reasons whether the following are true or false in the context of VAT as per White Paper – (i) No declaration form is prescribed under VAT system (ii) Taxpayer’s Identification Number (TIN) is a 10 digit alpha numerical (iii) Self assessment concept on deemed basis is one of the important features of VAT (iv) Set off of input tax credit on capital goods is available only to manufacturers and not to traders (4 marks)
Q5(b) State the contents of service tax return (any eight points) (4 marks)
Q5(c) Ashok purchased raw material ‘A’ for ` 30,00,000 plus VAT @ 4%. Out of such raw material 60% was used for manufacture of taxable goods and the remaining for manufacture of goods which are exempt from VAT. Another raw material ‘B’ was purchased for ` 15,00,000 on which VAT was paid @ 1%. Entire raw material ‘B’ was purchased for manufacture of taxable goods only. The entire taxable goods were sold for ` 50,00,000 plus VAT @ 12.5%. Compute VAT liability of Ashok on the assumption that there was no opening or closing inventory. Note – Ashok is not a dealer who opted for composition scheme (4 marks)
Q6(b) Write short notes on Service Tax Code Number and the objective sought to be achieved thereunder (4 marks)
Q6(c) Briefly explain the benefits of the system of cross-checking under VAT as per White Paper (4 marks)
Q7(b) Vaibhav Cargo Ltd. is engaged in providing Cargo Handling Service. In January, 2011, it received ` 150 lakhs for the service rendered. The breakup of the total receipts are given below (in Rupees lakhs) – (i) for export of cargo and handling of passenger baggage – 55 (ii) for storage and cleaning of empty containers of shipping lines – 13 (iii) For packing and transport of Cargo – 10 (iv) For handling cargo of agriculture produce – 20 (v) Other receipts for providing cargo handling service – 52. Calculate the value of taxable service under ‘Cargo Handling Services’ for the month of January, 2011 (4 marks)
Q7(c) X Co. furnishes you the following information – (i) Raw material purchased ` 5,00,000 plus VAT @ 4% (ii) Manufacturing expenses (revenue nature) – ` 2,00,000 (iii) Sale price ` 8,00,000 plus VAT @ 4% (iv) Plant and machinery acquired ` 2,50,000 plus VAT @ 4% eligible for input tax credit in the year of acquisition itself. Compute VAT liability under (i) gross product variant (ii) consumption variant. State which variant is beneficial to the dealer? (4 marks)
CA IPCC, May 2011
Question 1(c) – Pareesh & Co., is a partnership firm engaged in the business of recruitment and supply of labourers. The firm, which had rendered taxable services to the tune of ` 20.2 lakh in the financial year 2009-10, furnishes the following details pertaining to the half year ending September 30, 2010 – (i) Amounts collected from companies for pre-recruitment screening – 2,50,000 (iia) Amounts collected from companies for recruitment of permanent staff – 3,00,000 (iib) Amounts collected from companies for recruitment of temporary staff – 4,00,000 (iv) Advances received from prospective employers for conducting campus interviews in colleges – 1,00,000. Wherever applicable, service tax has been charged separately and received from clients. Compute the value of taxable services rendered and the service tax payable by the assessee for the relevant half year.
Question 1(d) – The following are details of purchases, sales, etc. effected by Vasudha & Co., a registered dealer, for the year ending March 31, 2011 – (a) Purchase of raw materials within State, 1,000 units, inclusive of VAT levy at 6 per cent – 5,30,000 (b) Inter-State purchases of raw materials, inclusive of CST at 2 per cent – 2,04,000 (c) Import of raw materials, inclusive of customs duty of ` 35,000 – 4,35,000 (d) Capital goods purchased on May 1, 2010, inclusive of VAT levy at 10 per cent (input credit to be spread over 2 financial years) – 3,30,000 (e) Other manufacturing expenses – 1,50,000 (f) Sale of taxable goods within State, inclusive of VAT levy at 4 per cent – 7,28,000 (g) Sale of goods within State, exempt from levy of VAT (goods were manufactured from the Inter-State purchase of raw materials) – 1,20,000 (h) Closing stock as on March 31, 2011 was 100 units of raw materials purchased within the State. Input credit is allowed only on raw materials used in manufacture of the taxable goods. Compute the VAT liability of the dealer for the year ending March 31, 2011.
Question 2(b) – During the year ending March 31, 2010, Kohli & Co., running a coaching centre, has collected a sum of ` 10.20 lakh as service tax. ` 70,000 was met through Cenvat credit and the balance was paid by cheque on various dates. The details pertaining to the quarter ending June 30, 2010 are as under – (a) Value of free coaching rendered – 20,000 (b) Coaching fees collected from students (service tax collected separately) – 14,50,000 (c) Advance received from a college for coaching their students, on June 30, 2010. However, no coaching was conducted and the money was returned on April 12, 2011 – 3,00,000. Determine the service tax liability for the quarter and indicate the date by which service tax has to be remitted by the assessee.
Question 2(c) – Which variant of VAT is most widely used in the World and why ? Are some services also included in the VAT net by such countries?.
Question 3(b)(i) – Where any transaction of taxable service is entered into with an associated enterprise, receipt of service tax is not material for levy of service tax. Explain with reasons, where you agree or disagree with this statement .
Question 3(b)(ii) Briefly discuss about the adjustment of excess amount of service tax paid in case of renting of immovable property service, owing to property tax payment.
Question 3(c) – Staruss & Co., a registered dealer under the local VAT law, having stock of goods purchased from outside the State, wishes to opt for the Composition Scheme. Advise him whether the same is possible. Will the VAT chain be broken if the dealer opts for the said scheme ?.
Question 4(b) – State the provisions which enable the Central Government to make rules for administering service tax. For what purposes are such rules made ? Name any four such rules issued by the Central Government so far.
Question 4(c) – What is meant by input tax credit in the context of VAT provisions ? How does input tax credit help in achieving the essence of VAT ?
Question 5(b) – Briefly explain the provisions relating to advance payment of service tax.
Question 5(c) – What are the major deficiencies of VAT system in India?
Question 6(b) – Nigamnath Cargo Handlers (P.) Ltd. is a cargo handling agency, in existence since 2003. For the quarter ending March 31, 2011, total collections for handling cargo (excluding service tax) was ` 32,00,000. The same included the following receipts also : (a) Handling of cargo containing life saving drugs 2,00,000 (b) Handling of export cargo – 3,00,000 (c) Handling of cargo for storage in cold storage – 1,00,000 (d) Towards providing service of packing together with transportation of cargo – 4,00,000. Ascertain the quantum of taxable cargo handling services for the quarter ended March 31, 2011. Wherever applicable, service tax was charged separately and received in full.
Question 6(c) – How can a chartered accountant help a client in the handling of VAT audit called for by the Department and in conducting external audit of VAT records?
Question 7(b) – State the due dates for filing service tax returns. Will the delayed filing of service tax return result in payment of any late fee? If so, how much?
Question 7(c) – Briefly list out the contents of VAT Invoice.
IPCC November 2010
(Only questions on service tax and Vat covered)
Q 1(c) Smart & Express Co. is providing taxable information technology software services. The firm furnishes the following information relating to the services rendered, bills raised, amount received pertaining to this service, for the financial year ended on 31st March, 2010 as under – (i) Amount received being 10% of the assignment fees on 31st March, 2010 for the upgradation and enhancement of software services to be rendered during the financial year 2010-11- Rs 6,00,000 (ii) Services provided to UNICEF, an International Organisation in Gandhinagar, for analysis, design and programming of latest information technology software – Rs 5,00,000 (iii) Services billed to client – Rs 3,00,00,000 (In one of the bill amounting to Rs. 3,00,000, service tax was not charged due to conflicting nature and in another bill, the firm failed to recover the service tax from the client, which was charged separately, due to insolvency of the client, the bill details are us under – Being the charges for right to use IT software – Rs 8,00,000 plus Service tax @10% Rs 80,000 plus Education cess @ 2% Rs 1,600 plus Secondary & Higher education cess @1% Rs 800 – Total Rs 8,82,400) (iv) Amount received for services rendered during current financial year (excluding payment for 2 bills in item (iii) above for which payment received during current financial year) – Rs 1,04,78,500. – - Service tax and education cess have been charged separately in all the bills except wherever mentioned when it is not so charged separately. – - Compute the value of total taxable services and service tax payable theron for the year ended 31-03-2010, assigning reason in brief to the treatment of all items (5 marks)
Q 1(d) Mr. Rajesh is a registered dealer and gives the following information. You are required to compute the net tax liability and total sales value under Value Added Tax. Rajesh sells his products to dealers in his State and in other States. The profit margin is 15% of cost production and VAT rate is 12.5% of sales (i) Intra State purchases of raw material Rs. 2,50,000 (excluding VAT @ 4%) (ii) Purchases of raw material from an unregistered dealer – Rs. 80,000 (including VAT @ 12.5%) (iii) High seas purchases of raw material are Rs. 1,85,000 (excluding custom duty @ 10% of Rs. 18,500) (iv) Purchases of raw materials from other States (excluding CST @ 2%) – Rs. 50,000 (v) Transportation charges, wages and other manufacturing expenses excluding tax – Rs. 1,45,000 (vi) Interest paid on bank loan Rs. 70,000 (5 marks)
Q2 (b) How can an assessee adjust the excess payment of service tax against his liability of service tax for subsequent periods? What is the basic condition for it? (4 marks)
Q2(c) What record should be maintained under VAT system by a registered dealer? (4 marks)
Q.3(b) Write a note in brief on provisional payment of service tax (4 marks)
Q3(c) State the Variants of VAT. Present them in schematic diagram and explain each one briefly (4 marks).
Q. 4(b) How will a taxable service be valued when the consideration thereof is not wholly or partly in terms of money? (4 marks)
Q4(c) State with reasons in brief whether the following statements are correct or incorrect with reference to the provision of Value Added Tax. (i) It is permitted to issue ‘tax invoice’ inclusive of VAT i.e. aggregate of sales price & VAT. (ii) A registered dealer is compulsorily required to get its books of accounts audited under VAT Laws of different states irrespective of limit of turnover (4 marks)
Q5(b) What do you mean by e-filing of returns? Is there any facility of e-filing of service tax returns? If yes, then which of the services are eligible for this facility? (4 marks)
Q5(c) What are the conditions to be fulfilled by the dealer accepting the composition scheme under the Value Added Tax? (4 marks)
Q6(b) State with reasons in brief whether the following statements are correct or incorrect with reference to the provisions of Service Tax – (i) The scope of taxable service shall include any service provided or to be provided to business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law including service provided by way of appearance before any court, tribunal or authority (ii) Service tax provisions are not applicable in Jammu and Kashmir because State Government concurrence was not obtained in respect of Finance Act, 1994
Q6(c) Mention the purchases which are not eligible for input tax credit (any eight items) under Value Added Tax (4 marks)
Q7(b) Shashwat Hotels Pvt. Ltd. has given the following information for F.Y.2009-10. You are required to compute the taxable services under Service Tax Act and the tax thereon for FY 2009-10 without assigning any reason for the treatment – (i) Reception room and vehicle parking space were let out for a film shooting for 3 months. The charges received for this Rs. 5 Lacs (ii) The conference hall was let out to a Gujarati Samaj Trust for a week for a music competition for Rs. 50,000 (iii) The hotel was booked by a customer for 3 days for a marriage function. The room booking charges were received in advance (excluding service tax) in the same year of Rs. 50,000. The electricity charges separately billed Rs. 20,000, hire charges including catering charges for 3 days billed of Rs. 3,25,000 after deducting the advance (iv) During the year, the conference hall was let out to MNO Ltd. The charges received were as under – Hall rent Rs. 4 Lacs, computer & projector systems charges Rs. 25,000, electricity charges Rs. 30,000. Hall rent includes charges for snacks and cold drinks Rs. 50,000 (v) The hotel garden was let out to a political party for 2 days for a meeting. The charges received Rs. 25,000. – - The hotel charges 10% service charges which are later distributed as tips to employees. – - The above charges are excluding service tax. All the charges have been received in FY 2009-2010. The hotel has already been registered under Service Tax Act in F.Y. 2008-09 (4 marks)
Q7(c) Compute the VAT amount payable by Mr. Shyam, who purchased goods from a manufacturer on payment of Rs. 4,16,000 (including VAT) and earned 20% profit on purchase price. VAT rate on both purchases and sales is 4% (4 marks)
CA-IPCC May 2010 and AT
(Only questions on service tax and Vat covered)
Q 5 Provide brief answer to the following questions on Service tax: (a) Is Service tax payable in respect of services provided in the Indian territorial waters? (b) Is Service tax leviable on fee collected by Public authorities while performing statutory functions under the provisions of law? (c) Can an assessee file a revised Service tax return? (d) Explain the term “Commercial training or Coaching centre” (Marks 4 x 2 =8)
Q 6(a) X & Co., a partnership firm, is providing taxable legal consultancy services, for the second consecutive assessment year. The firm furnishes the following information relating to the services rendered, bills raised, amount received relating to this service, for the year ended 31.03.2010: I -Free Service rendered to poor people (Value of the services computed on comparative basis – Rs 40,000. II – Advances received from clients for which no taxable service has been rendered so far – Rs 5,00,000 III – Services billed to clients Gross amount (service tax has been charged separately in all the bills; the firm follows mercantile system of accounting – Rs 12,00,000 IV – The firm has received the following amounts during the year: Relating to taxable services rendered in March, 2009 (excluding service tax at applicable rates and TDS under section 194-J of the IT Act, 1961 to the Tune of Rs.45,320) – Rs 5,44,680 V - Relating to taxable services rendered in current year 2009 (excluding Service tax at applicable rates and TDS under section 194-J of the IT Act, 9161 to the tune of Rs.1,20,000) – Rs 9,80,000 (includes Rs.50,000 for appearance fee before Labour Court received from another firm). Service tax has been separately received for applicable items in (IV) above. You are required to compute the value of taxable services for the year ended 31.3.2010 and the Service tax payable, briefly explaining the treatment of each item above (Marks 8)
Q 6(b) Answer the following questions on Service Tax: (i) What is the scope of taxable service in respect of membership of Clubs or Associations? State the exception to the same. (ii) Does a service provider have an option to pay Service tax at a rate different from the general rate applicable on gross value of taxable services, in the case of purchase and sale of foreign currency? (iii) What is the late fee payable for delay in furnishing the Service tax return? Can the same be waived? (Marks 3 x 3 =9)
Q 7 Answer the following questions on VAT: (a) What are the items aggregated in the Addition method to calculate the VAT payable? When is this method mainly used? (b) Is any threshold exemption limit fixed for dealers to obtain VAT registration, as per the White Paper? If yes, why is the same provided? (c) Is the VAT chain continued when a purchasing dealer opts for VAT composition scheme? What is the loss to the seller and buyer opting for the composition scheme, and the subsequent buyers? (d) Can it be said that VAT brings about certainty to a great extent in the matter of interpretational issues? If so, how (Marks 4 x 2 =8)
Q8(a) Mr.X, a dealer in Mumbai dealing in consumer goods, submits the following information pertaining to the Month of March, 2010: (i) Exempt goods ‘A’ purchased for Rs.2,00,000 and sold for Rs.2,50,000. (ii) Goods ‘B’ purchased for Rs.2,25,000 (including VAT) and sold at a margin of 10% profit on purchases (VAT rate 12.5%); (ii) Goods ‘C’ purchased for Rs.1,00,000 (excluding VAT and sold for Rs.1,50,000 (VAT rate 4%) (iii) His unutilized balance in VAT input credit on 01.03.2010 was Rs.1,500. Compute the turnover, Input VAT, Output VAT and Net VAT payable by Mr. X (Marks 8).
Q 8(b) Answer the following questions on VAT – (i) What are the merits of VAT in the context of tax evasion, neutrality and transparency? (ii) State the importance of VAT invoice/ tax invoice in administering VAT (iii) Discuss the tax consequences of Stock transfer under the VAT scheme (Marks 3×3=9
CA PCC May 2012
Q1(d) ABC & Co purchased raw material ‘A’ for ` 30,00,000 plus VAT at 12.5%. Out of such raw material 80% was used for manufacture of taxable goods and the balance for the manufacture of exempted goods. Another raw material ‘B’ was purchased for ` 20,00,000 on which VAT was paid @ 1%. Out of the raw material ‘B’, 50% was used for manufacture of taxable goods and the balance for the manufacture of exempt goods. The entire taxable goods were sold for ` 44,00,000 plus VAT at 12.5%. There was no opening or closing inventory of taxable goods or raw materials. Compute the VAT liability of ABC & Co.
Answer – Vat Credit – (a) Material A – Vat paid on purchases @ 12.5% of 30,00,000 is ` 3,75,000. Input credit available is 80% i.e. ` 3,00,000 (b) Material B – Vat paid on @ 1% of purchases of ` 20,00,000 is ` 20,000. Input credit available is 50% i.e. ` 10,000. Hence, total input credit available is ` 3,10,000.
Vat paid on taxable goods is 12.5% of 44,00,000 i.e. ` 5,50,000. Input tax credit available is ` 3,10,000. Hence net Vat payable is ` 2,40,000 [5,50,000 - 3,10,000].
Q2(b) (i) Can the service tax return be revised ‘.’ If so, state the relevant period before which it can be done ? (ii) Mr. Amarnath, a registered service provider did not render any taxable services during the financial year 2011-12. Whether he is required lo file service lax return? Is he liable for penalty for non-filing ? If so, how much?
Q3 (c) Lee Traders a registered dealer having stock of goods cost Rs. 30,000 purchased from outside the State, wishes to opt for the Composition Scheme Advise the dealer whether it is possible ? State the conditions to be satisfied by a dealer before opting for composition scheme.
Q4(c) Amin & Co. Ltd., is engaged in providing taxable service. For the month of October 2011, its gross receipts were Rs. 15,00,000. The break up of the receipts is given below – (i) Services rendered to associate enterprise during the month Rs. 3,00,000 and amount received during the month Rs. 1,00,000 (ii) Services rendered in Jammu & Kashmir Rs. 3.00,000 (iii) The balance amount received represents services rendered during the month and realized in full. Compute the amount of service tax. Education Cess and Secondary & Higher Education Cess payable and the due date for payment.
Q5 (b) What are the different rates under VAT system ?
Q6 (d) What is EASIEST scheme and state the benefits in the context of service tax ?
Q7(c) What records should be maintained under VAT system by a registered dealer ? OR State briefly the contents of service tax return.
CA PCC November, 2011
Q1(d) The following particulars are provided by Mr. Prohit of Calcutta, who has purchased Raw materials for manufacturing PVC Cans and PVC pipes from Mr. Arvind. The State Vat for raw materials and other materials was 12.5%. (in `) (i) Cost of raw materials purchased – 1,00,000 (ii) Vat paid by Mr. Arvind – 12,500 (iii) Cost of other materials (local) – 20,000, (iiia) Cost of other materials (inter-state purchases) – 40,000 (iv) VAT paid on local material purchased 12.5% – 2,500 (v) CST paid 2% – 800 (vi) Manufacturing Expenses 39,200 (vii) Profit margin (on sale value) 20%. – - Mr. Prohit utilised and manufactured 75% of production as PVC Cans and 25% of production as PVC pipes. While PVC Cans are subject to 12.5% VAT, PVC pipes are exempt. All materials were used in production and there was no closing stock of raw materials and other materials. What would be the invoice value of Sales charged by Mr. Prohit if all the manufactured goods were sold within the State? What would be his liability to VAT? (5 marks)
Q2(b) Chandra Ltd. was started to provide taxable services. The services became taxable from 1-10-2010. Chandra Ltd. for the month of March, 2011 received following receipts (in `) (inclusive of service tax) – (i) Amount received in respect of services rendered in July and August, 2010 – 10,30,000 (ii) Services provided to the Branch of World Health Organisation – a unit of UN – 1,03,000 (iii) Services rendered to its Auditors against Audit Fee Payable 5,15,000 (iv) Advance received for services to be rendered in May, 2011 – 6,18,000 (v) Services provided to office staff and their relatives free of cost – 20,000. Out of advance received, 50% was returned on 15-4-2011 to the party, as they have closed their operations from 31-3-2011. Compute the taxable services and service tax payable for March, 2011 by Chandra Ltd. (4 marks)
Q3(c)(i) Whether service tax is payable by independent directors who are part of the Board of Directors under management consultancy service (ii) S Ltd. paid service tax of ` 8 lakhs during the preceding financial year and utilised CENVAT credit of ` 3 lacs. Whether he is required to deposit service tax electronically for the financial year 2010-11 (4 marks)
Q4(c) Briefly explain the following in reference to service tax – (i) Applicability of service tax liability in case of job work (ii) Exemption available to small scale service providers (iii) Liability of service tax in case of sponsorship services (iv) Liability of service tax in case of export of services (4 marks)
Q5(c) Briefly explain the consumption variant of VAT and reasons for its preference over other variants (4 marks)
Q6(c) State the liability of service tax in respect of the following services – (i) Services provided for personal use or use by the family members of a foreign diplomatic agent in a foreign diplomatic mission (ii) Services provided for issuing fitness certificate of vehicles by Regional Transport Office (iii) Services received from outside India and consumed in India (iv) Services rendered to a friend free of cost (4 marks)
Q 7(b) State the service tax provisions regarding adjustment of service tax paid when service was not provided either wholly or partly (4 marks)
Q7(b) (Alternate question) Briefly explain the important points to be kept in mind while paying service tax (4 marks)
CA PCC, May 2011
Question 1(d) – ABC & Co. furnishes the following information for the half-year ending March 31, 2012 : (i) Amount received for services provided to UNICEF (an international organization): ` 2,00,000. (ii) Advance money received from customers ` 4,00,600 in respect of which services were not rendered till March 31, 2012 (iii) Services billed during the half-year excluding items (i) and (ii) above, was ` 15,00,000 [+ service tax and cess @ 10.3 per cent]. It consists of the following : (a) One customer ‘X’ to whom a bill of ` 2,20,600 [+ service tax and cess @ 10.3 per cent] raised, did not pay service tax and cess (b) Customer ‘Y’ to whom a bill was raised for ` 1,00,000 [+ service tax and cess] has not paid the amount till March 31, 2012 (c) The balance amounts billed during the year were realized fully. Compute the value of taxable service on which service tax is payable (CA PCC May, 2011 adopted)
Question 2(b) – Ahmed & Co. of Srinagar rendered taxable services both within and outside the State of Jammu and Kashmir. It received ` 26,12,000 for the services rendered inside the State of Jammu and Kashmir and ` 18,00,000 for the services rendered outside the State of Jammu and Kashmir. Compute its taxable service value and service tax liability. In case, Ahmed & Co. was situated in Mumbai what would be value of its taxable service and service tax liability ? (CA PCC May 2011)
Answer - Service provided within the State of Jammu and Kashmir is not subject to service tax. Hence, ` 26,12,000 (for services rendered in the State of Jammu and Kashmir) is not chargeable to service tax. Services rendered outside J&K are ` 18,00,000. These will be subject service tax. Hence, value of taxable service is ` 18,00,000 (assuming that A and Co. have charged service tax separately on value of taxable service). Service tax @ 10.3% on this amount is ` 1,85,400. The liability would be same even if Ahmed & Co. were located in Mumbai. Since service ax is destination based, service provided within J&K will be exempt, even if service provider is from outside J&K.
Question 3(c)(i) – State with reasons whether the following are liable for service tax – Services rendered to Reserve Bank of India (CA PCC May 2011)
Question 3(c)(ii) – State with reasons whether the following are liable for service tax – Services rendered by a sub-contractor (CA PCC May 2011)
Question 3(c)(iii) – State with reasons whether the following are liable for service tax – Services provided to developer of special economic zone (CA PCC May 2011)
Question 3(c)(iv) – State with reasons whether the following are liable for service tax – Services rendered to associated enterprise (CA PCC May 2011)
Question 4(c) - A manufacturer sold goods to distributor for ` 20,000. The distributor sold the goods to the wholesaler for ` 24,000. The wholesaler sold the goods to the retailer for ` 30,000. The retailer sold the goods to the final consumer for ` 40,000. The VAT rate is 12.5 per cent which is charged separately. Compute VAT liability under invoice method. State why this method is preferable ? (CA PCC May 2011)
Turnover (Net Sale Price)
Vat @ 12.5%
Less – Input Tax Credit
Net Tax paid
Thus, total tax paid is 2,500 + 500 + 750 + 1,250 = ` 5,000. You will find that if entire tax was paid by retail, it would have been still ` 5,000. Thus, Vat is paid on destination basis on final price, but in stages.
Question 5(c) - When does e-payment and e-filing of service tax return become mandatory? Explain (CA PCC May 2011)
Question 6(d) – How excess payment of service tax would be adjusted against service tax liability of subsequent periods? State the applicable conditions (CA PCC May 2011).
Question 7(b) – Briefly state the contents of VAT Invoice (any eight items) (CA PCC May 2011)