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CMA Intermediate · Direct and Indirect Taxation · Introduction to GST Law

A dealer makes two supplies, both attracting integrated tax. Supply P is chargeable to the goods and services tax compensation cess under the Compensation Act; Supply Q is not chargeable to that cess. Which supply is a "taxable supply" as defined in that Act?

Only Supply P is a taxable supply. The Compensation Act defines taxable supply as a supply of goods or services or both that is chargeable to the cess under that Act, so liability to integrated tax alone does not qualify Supply Q.

  1. AQ only, because it carries only integrated tax
  2. BNeither, because taxable supply is defined only in the IGST Act
  3. CBoth P and Q, because both attract integrated tax
  4. DP only, because it is chargeable to the cess under the ActCorrect

Explanation

Section 2(1)(p) defines taxable supply as a supply of goods or services or both chargeable to the cess under this Act. Only P meets that test. Attracting integrated tax does not make Q a taxable supply under this Act.

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