TEST QUESTIONS

Question 1. Answer the following questions:(i)

ABC Manufacturers Ltd. imported some goods from Japan through a vessel. After the ship entered Indian port, the goods were
unloaded and were lying with the custodian. The said goods were pilfered before the proper officer made an order for clearance for
home consumption. Is ABC Manufacturers Ltd. liable to pay duty on such goods? Further, what would be the customs duty
implications if such goods are restored to ABC Manufactures Ltd.

(ii) Amino Industries imported certain goods from Norway. The said goods were warehoused in a public warehouse for a period of 3
months after which it is cleared for home consumption on payment of applicable customs duty. While transporting the goods from
customs warehouse to the factory of the importer, the said goods were damaged. Can duty be paid on such goods be remitted to
Amino Industries?
(4 marks)

Question 2. Examine whether central excise duty is leviable in the following situations:
a)
b)

Mohan builders have constructed an office building for M/s XYZ & Co.
ABC Maintenance Services Ltd. provided maintenance services for refrigerators and air - conditioners.

(4 marks)

Question 3. Briefly examine the validity of the following statements with the reference to the Central Sales Tax Act,1956:i.
ii.
iii.

Sale includes a mortgage or hypothecation of or a charge or pledge on goods.

Central sales tax is leviable on the inter-State sale of goods by any unincorporated association or body of persons to a member.
Penultimate sales for exports is not liable to central tax.
(6 marks)

Question 4. Briefly explain whether following purchases are eligible for availing input tax credit:
a)
b)
c)
d)
e)
f)

Rohan purchased goods from registered dealer. He claims to have paid VAT on the said goods but the invoice pertaining to said
purchase has been lost on account of negligence of a clerk in his office.
Jain & Co. purchased goods from Tide Enterprises. Tide Enterprises is an unregistered dealer.
Ankit purchased some capital goods. The final product manufactured by Ankit using these capital goods is exported.
Mohan purchased goods for being used in execution of a work contract.
Singla & Co. purchased goods from Malhotra Enterprises, a registered dealer. Malhotra Enterprises has opted for composition scheme
under the provisions of respective State VAT Act.
Sahil purchased goods from Ganesh. Ganesh has not shown VAT charged on the purchase value, separately in the invoice. (6 marks)

Question 5.
Compute net VAT liability of Mr. J from the following information:
Raw Material from foreign market (includes duty paid on imports @ 20%)
Raw material purchased from local market: Cost of raw material
Add: Excise Duty @ 16%
Add: VAT @ 4%
Raw material purchased from neighboring State (includes CST @ 2%)

1,20,000
2,50,000
40,000
11,600

3,01,600
51,000

Storage and transportation cost

9,000

Manufacturing expenses
Mr. J sold goods to Mr. D and earned profit @ 12% on cost of production. VAT rate on sale of such goods is 4%

30,000
(4 marks)

Question 6.
Bajrangi Ltd.s total inter-State sales for the financial year 2016-17 is Rs. 40,00,000 (inclusive of central sales tax). In this
regard following additional information is available:
Particulars
Freight (Rs. 50,000 is not shown separately on invoices)
Goods sold to Mr. Vibishan on 5/5/2016 and returned on 22/10/2016.
Mr. Bharat, a buyer to whom goods were dispatched on 4/4/2016, rejected such goods.
The said goods were received back on 24/11/2016

Rs.
2,00,000
35,000
40,000

Determine the taxable turnover and CST payable by Bajrangi Ltd. for financial year 2016-2017, assuming that all the
transactions were covered by valid "C" forms and sales tax rate within the State is 5%.
(4 marks)

Question 7:
Super Lasting Ltd. sold a machine, manufactured by it, to God Steel Ltd. (GSL) at a price of Rs.10,00,000 (excluding taxes and
duties). Further, following additional amounts were also charged from GSL:
Rs.
Particulars
Outward handling charges (from factory to GSLs premises)

5,000

Protective packing charges

12,500

Expenses pertaining to installation and erection of the machine at premises of GSL (machine was
permanently affixed to earth)
Testing and inspection charges (testing done by Super Lasting Ltd.)
Delayed payment charges

26,000
40,000
3,000

10,000
Dharmada (charged in the invoice and recovered from GSL)
Determine the assessable value and total amount of central excise duty payable on the machine from the aforesaid
information assuming that the machinery has been sold at the factory gate.
(6 marks)

Question 8:
Mr. X, a dealer in Mumbai submits the following information pertaining to the month of March 2017:
a) Exempt goods A purchased for Rs.2,00,000 and sold for Rs.2,50,000.
b) Goods B purchased for Rs.2,25,000 (including VAT) and sold at a margin of 10% profit on purchases (VAT rate 12.5%)
c) Goods C purchased for Rs.1,00,000 (excluding VAT) and sold for Rs.1,50,000 (VAT rate 4%).
d)
His unutilized balance in VAT input credit on 1/3/2017 was Rs.1,500
Compute the turnover, Input VAT, Output VAT and Net VAT payable by Mr. X.
(6 marks)