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FINAL (NEW COURSE)
~1AY 2010
GROl.JtJ-Il PAPER-8
INDIRECT TAX LAWS
Roll No...............................
Total No. of Questions-8] [Total No. of Printed Pages- 7
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Time Allowed-3 Hours Maximum Marks-100
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Answers to questions are to be given only in English except in the case of candidates
who have opted for Hindi medium. If a candidate who has not opted for Hindi
medium, answers in Hindi, his answers in Hindi will not be valued.
Wherever appropriate, suitable assumption/s should be made by the candidate.
Explanation should be given for treatment of various items, wherever required.
Answer all questions.
SECTION-A
Marks
1. (a) Compute the assessable value and amount of excise duty payable under the 5
Central Excise Act, 1944 and rules made thereunder from the following
information:
Particulars No. of Price at Price at Rate of
Units Factory Depot puty
Per Unit Per Unit Advalorem
(i) Goods transferred from
factory to depot on
8th February 1,000 Rs. 200 Rs. 220 10%
(ii) Goods actually sold at
depot on 18th February 750 Rs. 225 . Rs. 250 8%
(b) Mis Royal Industries started its production activities on 15th March, 2010. In 5
the month of March, 2010, 1,000 units of raw material were purchased at Rs. 150
per unit, paying excise duty @8%. 800 units of raw material were consumed
in manufacturing process and finished output was sold for Rs, 1,40,000 (excluding
excise duty @8%). For simplification, you may ignore the conversion cost and
assume the rates of excise duty to be inclusive of education cess.
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Pass the Journal entries in the books of the assessee and show the balances
in Balance Sheet as on 31.3.2010. ..
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(c) Mahesh Ltd., which is engaged in manufacturing of excisable goods started 5
its business on 1st June, 2009. It availed SSI exemption during the financial
year 2009-10. The following are the details available to you:
Rs.
(i) 12,500 kg of inputs purchased @ Rs. 1,190.64 per kg
(inclusive of Central excise duty @ 8.24%) 1,48,83,000
(ii') Capital goods purchased on 31.5.2009
(inclusive of Excise duty @ 14.42%) 80,09,400
(iii) Finished goods sold (at uniform transaction
value throughout the year) 3,00,00,000
You are required to calculate the ~mount of excise duty payable by lVI/sMahesh
Ltd..in cash, if any, during the year 2009-10. Rate of duty on finished goods
sold may be taken @ 12.36% for the year and you may assume the selling
price exclusive of central excise duty.
There is neither any processing loss nor any inventory of input and output.
Output input ratio may be taken as 2 : 1.
2. (a) An assessee classified his product as per Central Excise Tariff subject to nn 5
rate ofduty. The Department contended that when the entries in the Harmonised
System of Nomenclature (HSN) and the Central Excise Tariff are not aligned,
reliance should be placed upon HSN for the purpose of classification of goods
under the said Tariff. Relying upon the HSN for the purpose of Classification
of the impugned product, the Department classified it under another heading
attracting 8% duty. Do you think that Department's plea is valid in law?
Discuss briefly, with reference to a decided case law, if any.
(b) Mis Evasions Unlimited, manufacturing excisable goods, paid the differenbal 5
duty, suo motu, to the Department as the prices of the said goods were revised
with retrospective effect. The Revenue took the view that the assessee was
liable to pay.interest on differential duty under Sectibn llAB of the Centra}
Excise Act, 1944 and penalty thereof. The assessee replied that there was no
question of cha:r:ging interest and penalty as the payment of differential
duty was made by it at the time of issuing supplementary invoices to the
customers.
Discuss, with reference to a decided case law, if any, whether the view taken
by the Revenue is justifiable.
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(c) An assessee made an application' under Section 32E of the Central Excise 5
Act, 1944 to the settlement commission. The settlement commission was not
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satisfied saying that the applicant had not made a true and full disclosure of
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his duty liability and the manner in which same was arrived at was also not
correct and rejected the application. The assessee contended that obligation
to make truthful disclosure of duty liability would arise only after the application
was admitted and not before that. Is plea taken by the assessee acceptable
in law? Explain in brief, with the help of a decided case law, if any.
3. (a) Differentiate between "non-:excisable goods" and "non-dutiable goods". 3
(b) Under Excise Audit, 2000, the selection of unit for audit is based on 'risk 3
factors'. Explain in brief the term 'risk factors' giving allY two examples.
(c) Explain the validity of the following statements with reference to Central lx4
Excise Laws, as amended:
(i) Records seized by department during investigation but not relied upon in
the show cause notice should be returned within 30 days of issue of show
cause notice.
(ii) Special audit under Section 14A and 14AA can be done by a cost [iccountant
only.
(iii) Authority of Advance Ruling under the Income-tax Act, 1961 will be
authority for purposes of Central excise also.
(iv) High Court is empowered to condone delay in filing appeal and cross
objection filed under Sections 35G and 35H of the Central Excise
Act, 1944, beyond the prescribed period.
SEC'l'ION--B
4. (a) Mr. Happy, a service provider, has provided services ofRs. 1,00,00,000. Out 5
of this, Rs. 70,00,000 are taxable output services and Rs. 30,00,000 are exempt
output services. Mr. Happy has opted not to maintain separate inventory and
accounts and pay prescribedamouI}t on value of exempt output services.
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Service tax paid on his input services, excluding education cess and secondary ..
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and higher education cess (EC & SAHEC) is Rs. 6,00,000 which do not inClude
any service specified in rule 6(5) of the CENV AT Credit Rules, 2004. Rate of
service tax, excluding EC and SAHEC, is 10%. Calculate the total amount
payable including Service tax, EC and SAHEC by Mr. Happy by GAR-7 challan.
(b) The particulars regarding sale, purchase etc. of Shubhail1 Udyog for the last 5
quarter of the year 2009-10 are as under:
Rs.
(1) Purchases of raw material within the State
CD taxable @ 1% 40,00,000
(ii) taxable @ 4% 60,00,000
(iii) taxable @ 12.5% 10,00,000
(2) Sale of goods manufactured from raw material
purchased @ 4% tax rate
(i) Taxable sale within the State (tax rate 4%) 20,00,000
(ii) Exempted sale within the State 10,00,000
(iii) Sale in the course of Inter-State trade or
Commerce (tax rate 4%) 10,00,000
(3) Sale of raw material purchased @ 1% tax rate 44,00,000
(4) Goods manufactured from the raw material purchased
@ 12.5% tax rate were given on lease. The deemed
sale price of such goods is Rs. 12,00,000, taxal?le @ 12.5%.
You may assume that input tax credit oftax on raw material used in manufacture
ofleased goods is available immediately. Compute the amount of Value Added
Tax (VAT) payable by MIs Shubham Udyog for the relevant quarter. There
was no opening or closing inventory.
How can he utilise the balance of input tax credit available, if any?
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5. (a) The term 'business auxiliary service' was inserted by Finance Act, 2003 which 5
came into force on 1.7.2003. The Parliament by Finance Act, 2008 inserted an .
explanation in the relevant sub-clause (ii) of Section 65(19) stating that for. '.
the purpose of this sub-clause -
"Service in relation to promotion or marketing of service provided by the
client includes any service provided in relation to marketing of games of
chance, organised, conducted or promoted by the client, in whatever form or
by wh,atever name called, whether or not conducted online, including lottery,
lotto, bingo."
Discuss, whether the explanation appended to sub-clause (ii) of Section 65(19)
is c1arifactory in nature so as to be construed having retrospective
effect and retroactive operation. You may take help of a decided case law,
if any.,
(b) Mr. Yes is the owner of a collection centre with facilities and trained employees 5
for collection of human blood, urine and stool samples for biological testing.
He sends the samples collected to its principal lab for actual test to be done.
The assessee received 25% ofthe price charged by the principal lab. as commission
for work of collection etc. The Revenue wants to charge service tax on such
collection service as it amounts to promotion or marketing of services provided
by its principal lab. Mr. Yes seeks your advise in this regard witH reference
to a decided case law, if any.
6. (a) State, with reasons in brief, whether the following services are'ta,xable, under 2x2=4
the provisions of the Finance Act, 1994 relating to Service tax:
(i) Services in relation to production of alcoholic liquor on job work basis.
(ii) Service of transport of goods in container by Gove.rnment Railway.
(b) Whether the value of material supplied by the contractee to the contractor for 4
use in the execution of the works contract shall be included in the value of
works contract for payment of Service tax under the composition scheme?
What is the present rate of service tax under this scheme? Can the service
provider avail CENV AT credit also?
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(~) What is the general exemption available to sman service providers? Who are
the persons excluded from this exemption?
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(d) Explain in brief the disadvantages of composition scheme available for slillall 4'
dealers under VAT system.
(e) What is VAT invoice? What are the mandatory provisions to be complied 4
with while issuing a VAT invoice by a registered dealer?
SECTION-C
7. (a) Miss Priya imported certain goods weighing 1,000 kgs. with ClF value 5
=
US $ 40,000. Exchange rate was 1 US $ Rs. 45 on the date of presentation
of bill of entry. Basic customs duty is chargeable @ 10% and education cess
as applicable. There is no excise duty payable on these goods, if manufactured
in India.
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As per Notification issued by the Government of India, anti~dumping duty
has been imposed on these goods. The anti-dumping duty will be equal to
difference between amount calculated @ US $ 60 per kg. and 'landed value'
of goods. You are required to compute custom duty and anti'~dumping duty
payable by Miss Priya.
(b) Mis Marwar Industries imported finishing agents, dye-carriers, printing paste 5
etc. to be used for manufacture oftextile articles. The importer claimed exemption
for Additional duty of customs (CVD) leviable under Section 3 of the Customs
Tariff Act, 1975, on the ground that there was an exemption for excise duty
in respect of said goods used in the 'same factory' for manufacture of textile
~rticles. The Department contended that CVD is payable on the ground that
the goods which were to be used must also be manufactured in the 'same
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factory'. You are requested to comment upon the contention of Department,
with reference to a decided case law, if any.
8. (a) Explain in brief the duty exemption to baggages under Section 79(1) of the 3
Customs Act, 1962.
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(b) Can an application be withdrawn i,n the following cases? If yes, state the 3
time limit for withdrawal of such application:
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(i) application for advance ruling
(ii) application for settlement.
(c) Clearly mention the relevant date in the following cases of goods warehoused 4
under bond:
(i) Rate of exchange, when goods are removed for home consumption.
(ii) Rate of duty, when goods are removed for home consumption.
(iii) Rate of duty if the goods are not removed from warehouse within the
permissible period.
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