GUWAHATI UNIVERSITY (Board Question of Indirect Tax Laws for B.COM 6th semester of 2023)

Board Question paper of Indirect Tax Laws for B.COM 6th semester of 2023, SOLVED

Solving B.com 6^th  semester question paper of  Indirect Tax Laws As per CBCS Syllabus with Solutions Answers  in below .2023 Pdf of Indirect Tax Laws Download to understand the pattern of questions ask in the board exam. 

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2023

COMMERCE

(Honours Core)

Paper: COM-HC-6026

(Indirect Tax Laws)

Full Marks: 80

Time: Three hours

The figures in the margin indicate full marks for the questions.

Answer either in English or in Assamese.

(A) Choose the correct answer:                                                                                                                       1×5= 5

(i) Which of the following is not correct with regard to GST?

(a)    It is a value added tax

(b)   It is a destination based tax

(c)    It is collected at multiple stages

(d)   Only Central Government is authorised to collect this tax

ANSWER - (d) Only Central Government is authorised to collect this tax

(ii) Which of the following will not be charged to GST?

(a)    Jewellery

(b)   Electronic goods

(c)    Alcoholic liquor for human consumption

(d)   LIC Policy

ANSWER - (c) Alcoholic liquor for human consumption

(iii) Which of the following is correct with regard to IGST?

(a)    It is levied by the State Governments

(b)   It is sum total of CGST and SGST / UGST

(c)    It is levied on intra state supply

(d)   All of the above

ANSWER - (b) It is sum total of CGST and SGST / UGST

(iv) Which of the following Acts specifies the rates of custom duties?

(a)    The Custom Act, 1962

(b)   The Custom Tariff Act, 1975

(c)    The Central Excise Act, 1944

(d)   None of the above

ANSWER - (a) The Custom Act, 1962

(v) Assam VAT Act, 2003 came into force on:

(a)    July 1, 2017

(b)   September 16, 2016

(c)    May 1, 2005

(d)   April 1, 2003

ANSWER – (c) May 1, 2005

 

(B) Fill in the blanks:                                                                                                                              1X5= 5

(i) The final burden of every indirect tax falls upon the consumer

(ii) One can say GST, a revised edition of VAT (Value Added Tax).

(iii) France was the first country which introduced VAT

(iv) India adopts Dual  GST model.

(v) Goods become liable to Customs Duty when there is import into or export from India

 

 

2. Answer the following questions:                                                                                                    2x5=10

(a) What is valid contract of sale under Sale of Goods Act, 1930?

ANSWER - A valid contract of sale under Sale of Goods Act, 1930, is a legally binding agreement where goods are exchanged for money or other consideration between parties.

(b) Write any two features of integrated GST.

ANSWER - Integrated GST (IGST) combines central and state GST on inter-state transactions, ensuring seamless movement of goods and services across states, promoting uniformity and simplification.

(c) What do you mean by excisable goods?

ANSWER - Excisable goods are products subject to excise duty, a tax levied on specific manufactured items within a country, often for their production, sale, or consumption.

(d) Define the term Territorial Waters of India'.

ANSWER - Territorial Waters of India refer to the area extending up to 12 nautical miles from the coastline, where India exercises sovereign rights and jurisdiction over natural resources and activities.

(e) Write two objectives of GST implementation in India.

ANSWER - GST implementation in India aims to simplify taxation, eliminate cascading effects, promote a common market, and enhance tax compliance, fostering economic growth and development.

 

 

3. Answer any four questions:                                                                                                              5x4=20

(a) Prepare a list of taxes subsumed under GST.

ANSWER - 

Under GST, several taxes were subsumed to create a unified tax system:

1. Central Excise Duty

2. Service Tax

3. Additional Customs Duty (Countervailing Duty)

4. Value Added Tax (VAT)

5. Central Sales Tax

6. Entry Tax

7. Luxury Tax

8. Entertainment Tax (except for local bodies)

9. Taxes on advertisements

10. Purchase Tax

11. Taxes on lotteries, betting, and gambling

By replacing these with a single tax, GST simplifies the tax structure, reduces complexities, and promotes a more efficient and transparent tax regime in India.

(b) How is GST a destination based tax? Explain with illustration.

ANSWER -   GST is a destination-based tax where the tax revenue is collected at the point of consumption rather than at the point of origin. For example, in Assam, if goods are produced in Maharashtra and consumed in Assam, the tax revenue is collected by Assam, where the goods are consumed, rather than Maharashtra, where they were produced. This approach ensures that the taxing authority corresponds with the location of consumption, promoting fair distribution of revenue among states.

(c) Write any five limitations of excise duty.

ANSWER -    The five limitations of excise duty are mention below -

1. Limited Scope: Excise duty applies only to specific manufactured goods, leaving out services and other forms of economic activity.

2. Cascading Effect: Tax is levied at each stage of production, causing a cascading effect where taxes are added on top of each other, leading to higher prices.

3. Compliance Burden: Complex regulations and documentation requirements impose a significant administrative burden on businesses.

4. Inefficient Enforcement: Difficulty in monitoring and enforcing compliance may lead to tax evasion and revenue loss.

5. Inequitable Distribution: Excise duty's impact disproportionately affects lower-income groups due to increased prices of essential goods.

(d) Name the goods which remain out of purview of VAT.

ANSWER -    Goods like alcohol for human consumption, petroleum products, and tobacco are often kept out of the purview of Value Added Tax (VAT) due to their unique nature and complex tax structures. These items are subject to separate taxation systems or excise duties, as they are considered essential commodities with significant societal and health implications. Excluding them from VAT helps in maintaining clarity in tax administration and pricing mechanisms for these specific products.

(e) Write about the constitutional provisions for formation of GST Council.

ANSWER -    The formation of the GST Council is provided for under Article 279A of the Indian Constitution. It consists of the Union Finance Minister (as the Chairperson), the Union Minister of State for Finance, and the Finance Ministers of the states and union territories. This council is responsible for making recommendations on key aspects of GST implementation, including tax rates, exemptions, and administration. It facilitates cooperative federalism by ensuring collaboration between the central and state governments in matters related to the Goods and Services Tax.

(f) Explain in brief the different types of custom duties.

ANSWER -    Customs duties are taxes imposed on goods when they cross international borders. There are four types:

1. Basic Customs Duty (BCD): Levied on imported goods, BCD is a percentage of the item's value, aiming to protect domestic industries and generate revenue.

2. Additional Customs Duty (Countervailing Duty or CVD): Applied on imported goods to counteract excise duties on similar locally produced items, preventing price distortions.

3. Protective Duties: These safeguard domestic industries against cheaper imports, encouraging local production and promoting economic self-sufficiency.

4. Anti-dumping Duty: Imposed when imported goods are priced below fair market value, protecting domestic industries from unfair competition and ensuring a level playing field in trade.

 

 

4. Answer any four of the following questions:                                                                           10×4= 40

 (a) Describe in brief the history of GST in India.

ANSWER -    The history of GST (Goods and Services Tax) implementation in India can be outlined in several key steps:

1. Conceptualization: Discussions about GST began in the early 2000s, aiming to replace the complex indirect tax structure with a unified system to enhance efficiency and reduce tax evasion.

2. Empowered Committee: In 2007, an Empowered Committee of State Finance Ministers was set up to design and develop the GST model, addressing concerns of both central and state governments.

3. Constitutional Amendment: The 101st Constitutional Amendment Act, passed in 2016, granted the necessary legislative powers to introduce GST at the central and state levels.

4. GST Council Formation: The GST Council was established, comprising representatives from the central and state governments, responsible for formulating tax rates, rules, and regulations.

5. Dual Structure: India adopted a dual GST model, with both central (CGST) and state (SGST) components, ensuring shared taxation authority between the two levels of government.

6. Rollout: On July 1, 2017, GST was officially launched, subsuming a range of central and state taxes into a single tax system, aimed at simplifying compliance, reducing tax barriers, and promoting economic integration.

7. Adjustments and Reforms: Over time, the GST system underwent adjustments based on feedback from businesses and stakeholders, striving to improve efficiency, address challenges, and ensure a smoother implementation.

8. Digital Transformation: GST implementation led to a digital transformation in tax administration, with online filing, real-time tracking, and better transparency in the tax collection process.

(b) Discuss the shortcomings of old regime of indirect taxes.

ANSWER -    The old regime of indirect taxes in India had several shortcomings that prompted the need for a more comprehensive and efficient taxation system like GST. Here are some key issues:

1. Complexity: The old regime consisted of a multitude of taxes, including excise, VAT, service tax, etc., leading to confusion and difficulties in compliance for businesses.

2. Cascading Effect: Different taxes were levied at various stages of production and distribution, causing a cascading effect where taxes were piled up, resulting in higher prices for consumers.

3. Tax Evasion: The complex and fragmented tax structure led to opportunities for tax evasion and black market activities, as well as disputes between taxpayers and tax authorities.

4. Inter-State Barriers: Taxes varied across states, creating barriers to the smooth movement of goods and services and hindering the development of a unified market.

5. Double Taxation: Some goods were subject to multiple taxes, both at the central and state levels, leading to double taxation and increased costs.

6. Lack of Input Tax Credit: In certain cases, businesses couldn't claim input tax credit on taxes paid at previous stages, resulting in increased financial burden.

7. Inequitable Distribution: Different states had different tax rates, leading to uneven tax revenue distribution and impacting economic development and investment.

8. Administration Challenges: Tax administration was fragmented, leading to inefficiencies and difficulties in monitoring and enforcement.

9. Distorted Incentives: The tax structure sometimes distorted business decisions, as companies might choose locations or modes of operation based on tax considerations rather than economic efficiency.

(c) Describe in brief the reasons for introduction of GST in India.

ANSWER -    The introduction of GST (Goods and Services Tax) in India was driven by several compelling reasons:

1. Simplify Tax Structure: To replace the complex and multi-layered indirect tax system with a single, unified tax, reducing confusion and compliance challenges.

2. Eliminate Cascading Effects: To remove the cascading effect of taxes, where taxes were levied on top of taxes at various stages of production, leading to inflated prices.

3. Promote Ease of Doing Business: To create a seamless and harmonized national market by removing inter-state barriers, fostering trade and investment.

4. Enhance Tax Compliance: To curb tax evasion and improve tax collection efficiency through better monitoring and digital processes.

5. Boost Economic Growth: To stimulate economic growth by creating a favorable environment for businesses, increasing competitiveness, and attracting investments.

6. Reduce Inflation: By reducing tax burden and streamlining taxation, GST aimed to bring down the overall cost of goods and services, ultimately curbing inflation.

7. Encourage Formalization: To bring unorganized sectors into the formal economy, broadening the tax base and increasing revenue for the government.

8. Simplify Administration: To establish a unified tax administration, minimizing bureaucratic hurdles and simplifying processes for both taxpayers and tax authorities.

(d) Distinguish between GST and VAT.

ANSWER -    

BASIS	VAT	GST
1.       Input Tax Credit	The taxpayer can claim the benefit of Input Tax Credit on the supplies received by them.	The benefit of Input Tax Credit is not available.
2.       Tax Collection	The responsibility for the collection of tax lies with the seller’s state.	The responsibility for the collection of tax lies with the consumer state.
3.       Mode of Payment	VAT is payable only through offline mode.	GST is payable both through the online and offline mode.
4.       Date of Commencement	The Government of India had introduced VAT on 1st April 2005.	The Government of India had introduced GST on 1st July 2017.
5.       Compliance	The compliance system for the movement of goods between states is different from one state to another.	The compliance system for the movement of goods between states is similar across different states.
6.       Authority	Since the state government collects the VAT, they have total authority over the tax proceeds.	The Central GST and State GST gets collected from every sale, and the tax amount then gets bifurcated between the two governments.
7.       Taxation Rates and Laws	The VAT rate and the taxation laws under it are different for each state in India.	The GST rate is uniform for each state in India. When it comes to taxation laws, there are four different Acts – Central GST Act, State GST Act, Integrated GST Act and Union Territory GST Act – applicable for different types of transactions.

 

 

 

(e) Enumerate the need of enacting the state and union territory legislations for GST.

ANSWER -   The enactment of state and union territory legislations for GST was necessary for the following reasons:

1. Defining Taxable Events: To specify the events that trigger GST liability, such as the sale or provision of goods and services.

2. Determining Rates: To set state-specific GST rates for intra-state transactions, aligning with the federal structure.

3. Administering SGST: To establish procedures for collecting and administering State Goods and Services Tax (SGST).

4. Enabling Input Tax Credit: To define rules for availing input tax credit on taxes paid at earlier stages of the supply chain.

5. Regulating Exemptions: To identify goods and services exempted from GST within the state's jurisdiction.

6. Handling Disputes: To outline mechanisms for dispute resolution and appeals related to state-level GST.

7. Prescribing Penalties: To lay down penalties and enforcement measures for non-compliance with state GST regulations.

8. Facilitating Compliance: To provide guidelines for filing returns, maintaining records, and complying with state-specific GST requirements. 

 

(e) Write the meaning of excise duty. Evaluate the position of excise duty in new tax regime of indirect taxes.       2+8=10

ANSWER -   Excise duty is a tax imposed by the government on the production or manufacture of goods within a country, typically levied at the time of production or before distribution.

In the new tax regime of indirect taxes, such as the Goods and Services Tax (GST) implemented in India, the position of excise duty has changed:

1. Subsumed Under GST: Excise duty is merged into GST, streamlining the tax structure and eliminating cascading effects.

2. Manufacturing Stage Tax: It now applies to the manufacturing of goods within the GST framework.

3. Input Tax Credit: Businesses can claim input tax credit for excise paid on raw materials, reducing tax burden.

4. Uniformity: GST ensures consistent tax treatment across states, avoiding disparities in excise rates.

5. Destination-Based: GST is a destination-based tax, unlike excise which was origin-based.

6. Simplified Compliance: GST's unified system simplifies compliance compared to fragmented excise regulations.

7. Broader Tax Base: GST encompasses a broader range of goods and services, expanding the tax base.

8. Cooperative Federalism: GST promotes cooperation between central and state governments, fostering economic integration.

(g) Define the following terms under the Customs Act, 1962:   2x 5 = 10

(i) Baggage - Baggage refers to personal belongings and items carried by a traveler when entering or leaving a country, subject to customs regulations and duties as per the Customs Act, 1962.

(ii) Coastal Goods: Goods transported from one port in India to another, along the coast, without entering any territory outside India, as per the Customs Act, 1962.

(iii) Exporter: A person or entity engaged in sending goods from one country to another, responsible for complying with customs procedures and regulations.

(iv) Imported Goods: Goods brought into a country from a foreign location, subject to customs duties and regulations under the Customs Act, 1962.

(v) Importer: An individual or business entity that brings goods into a country from abroad, responsible for customs clearance and compliance with import laws.

 

(h) Who are persons liable for obtaining registration under GST? Explain the procedure of obtaining registration under GST.  4+6=10

ANSWER -   Persons engaged in the supply of goods or services with an annual turnover exceeding the prescribed threshold, as well as those making inter-state supplies, casual taxable persons, and certain categories specified by the GST authorities, are liable to obtain registration under GST.

Obtaining registration under GST involves these steps:

1. Online Application: Submit an application through the GST portal with required documents.

2. Verification: The application is verified, and clarifications, if needed, are sought.

3. Provisional Certificate: A provisional certificate is issued, allowing you to start business under GST.

4. Submission of Documents: Upload necessary documents within 6 months.

5. Scrutiny: The tax officer verifies documents and may seek more information.

6. Final Certificate: Once satisfied, a final GST registration certificate is issued, making you a registered taxpayer eligible to collect and remit GST.

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