Page 17 - Chap7 ITC

Q.17
V-Supply Pvt. Ltd. is a registered manufacturer of auto parts in Kolkata, West Bengal. The company
has a manufacturing facility registered under Factories Act, 1948 in Kolkata. It procures its inputs
indigenously from both registered and unregistered suppliers located within as well as outside West Bengal as
also imports some raw material from China.
The company reports the following details for a tax period :
Payment (₹) in lakhs Receipts (₹) in lakhs

Raw material 3.5 Sales 15
Consumables 1.25
Transportation charges for bringing the raw material to factory 0.70
Salary paid to employees on rolls 5.0

Premium paid on life insurance policies taken for specified employees 1.60
Audit fee 0.50
Telephone expenses 0.30
Bank charges 0.10

All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the applicable taxes
have also been paid by the company.
Further, following additional details are furnished by the company in respect of the payments and receipts
reported by it:
1) Raw material amounting to ₹ 0.80 lakh is procured from Bihar and ₹ 1.5 lakh is imported from China.
Basic customs duty of ₹ 0.15 lakh, social welfare surcharge of ₹ 0.015 lakh and integrated tax of ₹ 0.2997
lakh are paid on the imported raw material.
Remaining raw material is procured from suppliers located in West Bengal. Out of such raw material,
raw material worth ₹ 0.30 lakh is procured from unregistered suppliers; the remaining raw material is
procured from registered suppliers.
Further, raw material worth ₹ 0.05 lakh purchased from registered supplier located in West Bengal has
been destroyed due to seepage problem in the factory and thus, could not be used in the manufacturing
process.
2) Consumables are procured from registered suppliers located in Kolkata and include diesel worth ₹ 0.25
lakh for running the generator in the factory.
3) Transportation charges comprise of ₹ 0.60 lakh paid to Goods Transport Agency (GTA) in Kolkata and ₹
0.10 lakh paid to horse pulled carts. GST applicable on the services of GTA is 5%.
4) Life insurance policies for specified employees have been taken by the company to fulfil a statutory
obligation in this regard. The life insurance service provider is registered in West Bengal.
5) Audit fee is paid to M/s Goyal & Co., a firm of Chartered Accountants registered in West Bengal, for the
statutory audit of the preceding financial year.
6) Telephone expenses pertain to bills for landline phone installed at the factory and mobile phones given to
employees for official use. The telecom service provider is registered in West Bengal.
7) Bank charges are towards company's current account maintained with a Private Sector Bank registered
in West Bengal.
8) The breakup of sales is as under: Sales in West Bengal – ₹ 7 lakh
Sales in States other than West Bengal – ₹ 3 lakh
Export under LUT – ₹ 5 lakh
9) The opening balance of ITC with the company for the tax period is:
CGST - ₹ 0.15 lakh, SGST - ₹ 0.08 lakh, IGST - ₹ 0.09 lakh
Compute: (i) Total ITC available with V-Supply Pvt. Ltd. for the tax period and
(ii) Net GST payable [CGST, SGST or IGST, as the case may be] from Electronic Cash Ledger by V-Supply
Pvt. Ltd. for the tax period.
Note:
(i) CGST, SGST & IGST rates to be 9%, 9% and 18% respectively, wherever applicable.
(ii) The necessary conditions for availing ITC have been complied with by V Supply Pvt. Ltd., wherever
applicable.
You are required to make suitable assumptions, wherever necessary. [Study mat] [CA Final MTP Sep 23]

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