MITTAL COMMERCE CLASSES IPCC – MOCK TEST
BATCH : LI - 21
DATE: 04.11.2015 MAXIMUM MARKS: 70 TIMING: 2:00 PM to 4:00 PM
TAX
Answer: 1 (5 Marks)
Since aerated waters are notified under section 4A of Central Excise Act, 1944, excise duty will be payable on the basis of RSP less abatement.
Particulars (Rs.)
MRP marked on the bottles of aerated water
Less: Abatement @ 40% of MRP [40% of Rs. 30]
30
12
Assessable Value for purpose of excise duty 18
When more than one MRP is declared on the package of excisable goods, the maximum of such price will be deemed to be the MRP. Thus, if Spring Fresh declares two MRPs namely, Rs. 30 and Rs. 40 on each bottle of aerated water, then Rs. 40 would be deemed to be the MRP. The assessable value for the purpose of excise duty will be calculated in the following manner:-
Particulars
MRP marked on the bottles of aerated water
(Rs.)
40
16
24
Less: Abatement @ 40% of MRP [40% of Rs. 40]
Assessable Value for purpose of excise duty
Answer: 2 (6 Marks)
Computation of customs duty payable
Particulars
Assessable value
Add: Basic custom duty @ 10% (Note below)
(Rs.)
10,00,000.00
1,00,000.00
Total
Add: CVD @12%
Add: Education cess @ 2% and Secondary and Higher Eduction
Cess @ 1% (3% of custom duty)
= 3% of (Rs. 1,00,000 + Rs. 1,32,000)
Total for Special CVD [Rs. 11,00,000 + Rs. 1,32,000 + Rs. 6,960]
Special CVD @ 4%
Total duty payable (Rs. 1,00,000 + Rs. 1,32,000 + Rs. 6,960 + Rs. 49,558.40)
11,00,000.00
1,32,000.00
6,960.00
12,38,960.00
49,558.40
2,88,518.40
Total duty payable (rounded off)
Note: The rate of duty shall be:-
(i) the rate in force on the date of presentation of bill of entry
2,88,518 or
(ii) the rate in force on the date of entry inwards whichever is later.
No, the answer will not change if the goods are imported in a vehicle. Prior to 06.08.2014, the relevant date for determination of rate of duty and tariff valuation of imported goods by vehicle was date of presentation of bill of entry.
However, section 15 of the Customs Act, 1962 has been amended by the Finance (No. 2) Act, 2014 w.e.f. 06.08.2014 to provide that the relevant date for determination of rate of duty and tariff valuation for imports through a vehicle would be-
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MITTAL COMMERCE CLASSES IPCC – MOCK TEST
(i) the rate in force on the date of presentation of bill of entry or
(ii) the rate in force on the date of arrival of vehicle whichever is later.
Answer: 3 (6 Marks)
Computation of central sales tax payable
Sales as per bill (including CST)
Less: Weighment dues (Note-1)
Deposits for returnable container (Note-2)
Excise duty (Note-3)
Freight charges (Note-4)
Goods returned within 6 months of sale
Rs.
-
25,000
-
60,000
40,000
Rs.
16,00,000
1,25,000
Turnover including CST 14,75,000
Central sales tax @ 1% Rs.14,75,0 00

1
101
(Note-5) 14,603.96
CST payable (rounded off)
Notes:
14,604.00
1.
If the service of weighing is in respect of goods and incidental to their being sold, it forms part of sale price.
2.
Deposits for returnable container are not includible in the sales price.
3.
Excise duty is a part of sales price.
4.
When freight charges are separately charged by dealer, they should be deducted from the sales price.
5.
CST on transactions covered by valid ‘C’ forms is 2% or the sales-tax rate within the State, whichever is lower. Since, in this case, the State sales-tax rate is lower than 2%, the rate of CST is taken as 1%.
Answer: 4 (6 Marks)
Computation of Turnover, Input VAT and Output VAT
Goods Purchases
[A]
Input
VAT rate
Input VAT
Credit [C]=
Sales
(Turnover)
Output
VAT
Rs.
[B]
%
[A] x [B]
Rs.
[D]
Rs. rate[E]
%
Output VAT
[F]=
[D] x [E]
Rs.
P
Q (See Note)
R
1,75,000
2,00,000
2,00,000
-
12.5
4
-
25,000
8,000
3,50,000
2,40,000
2,50,000
-
12.5
4
-
30,000
10,000
8,40,000 40,000 Total 5,75,000 33,000
Computation of Net VAT payable by Sparsh Enterprises
Opening balance of input VAT credit
Add: Input VAT credit for December, 2014 [C]
Total Input VAT credit available
Less: Output VAT payable on taxable turnover [F]
Net VAT payable
(Rs.)
3,000
33,000
36,000
40,000
4,000
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MITTAL COMMERCE CLASSES IPCC – MOCK TEST
Note:
Purchase value of goods Q (including VAT)
12 .
5
Less: VAT included in above 2,25,000×
112 .
5
(Rs.)
2,25,000
25,000
Purchase price excluding VAT 2,00,000
Answer: 5 (6 Marks)
(a) The compensation for termination of employment will not attract service tax as it is under the terms of employment. Such amount paid by the employer to the employee for premature termination of contract of employment is treatable as amounts paid in relation to services provided by the employee to the employer in the course of employment. Hence, amount so paid would not be chargeable to service tax.
(b) As per section 65B(44) of the Finance Act, 1994, only services provided by an employee to the employer are outside the ambit of services under service tax law; services provided outside the ambit of employment for a consideration would be a taxable service liable to service tax. In the present case, Mr. Deepak Jindal is hired as a legal consultant, and hence Mr. Deepak Jindal is liable to pay service tax.
Further, Mr. Deepak Jindal has to register under service tax law, make quarterly payment of service tax (since he is an individual) and file half yearly returns for the half year ending on 30 th
September and 31 st March.
Answer: 6 (6 Marks)
(a) In case of taxable service provided by a director of a company to said company, service recipient is liable to pay service tax under reverse charge mechanism.
Further, rule 7 of Point of Taxation Rules, 2011 provides that in respect of persons liable to pay service tax under reverse charge mechanism, the point of taxation shall be the date on which payment is made subject to the condition that payment is made within a period of three months of the date of invoice.
However, if payment is not made within a period of 3 months of date of invoice, point of taxation will be first day that occurs immediately after expiry of said 3 months.
Since, in the present case, payment is made in April end, which is beyond 3 months of the date of invoice (invoice is issued in December), the point of taxation would be the first day that occurs immediately after expiry of said 3 months.
(b) Point of taxation in case of import of service by “associated enterprises” where the person providing the service is located outside India is-
(i) date of debit in the books of account of the person receiving the service
OR
(ii) date of making the payment whichever is earlier
Here, date of debit in PQR Ltd.’s books of accounts is 07.02.2015 and date of payment to Dubai firm is 25.02.2015. Therefore, point of taxation is 07.02.2015.
LAW
Ans. 1: Factors leading to Grapevine communication
1.
When employee feels insecurity and lack of direction during hard time of organization.
2.
3.
When employee feels lack of confidence during his working.
When managers favours a particular group of employees then rest of the employees can share their emotions and feelings with each other.
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MITTAL COMMERCE CLASSES IPCC – MOCK TEST
Ans. 2: TIME LIMIT FOR PAYMENT OF BONUS: Section 19 of the Payment of Bonus Act,
1956 prescribes the time limit for the payment of bonus under the following conditions:
1.
Under Section 19(1) (a) of the said Act, where the dispute is between the employer and the employees regarding the payment of bonus and such dispute is under reference to the prescribed authority, the employer is bound to pay his
2.
employee bonus in cash within one month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute.
Under Section 19(1) (b) of the said Act, in all other cases, the payment of bonus is to be made within a period of 8 months from closing of the accounting year.
But this period of 8 months may be extended up to a maximum of 2 years by the Appropriate Government or by any authority prescribed by the Appropriate
Government only on an application to it by the employer and is satisfied that sufficient reasons exist for granting extension. Moreover, the extension can be made only by an order.
Ans. 3: Factor responsible for growth in communication (June 2009)
1.
Growth in Business operations and locations: In recent year, businesses are expanded due to which the communication is necessary to make the
2.
coordination between all the branches & locations.
Growth in trade unions: No business can grow without the communication with trade unions
3.
Public relation: Business has some social responsibilities towards customers, suppliers & govt. Business had to make the sound relation with all those persons.
4.
Human relation: A business has to maintain the relations with human being by motivating human beings and for this communication is necessary.
Ans. 4: SAN RECOURSE: SANS FRAIS (THE NEGOTIABLE INSTRUMENTS ACT, 1881):
SANS RECOURSE: By adding the words ‘Sans Recourse’ after the endorsement the endorser declines to accept any liability on the instrument of any subsequent party.
Sometimes, when an endorser who so excludes his liability as an endorser afterwards becomes the holder of the same instrument. In such a case, all intermediate endorsers are liable to him.
SANS FRAIS: These words when added at the end of the endorsement indicate that no expenses should be incurred on account of the bill.
DIFFERENCE: Any endorser can exclude personal liability by endorsing “sans recourse” i.e. without recourse. However, “Sans Frais” endorsement, indicate that no expenses should be incurred on account of the bill.
Ans. 5: LIABILITY OF A MINOR: According to Section 26 of the Negotiable Instruments
Act, 1881, every person competent to contract (according to the law to which he is subject to) has capacity to bind himself and be bound to making, drawing, accepting, endorsing delivering and negotiating an instrument. A party having such capacity may himself put his signature or authorize some other person to do so.
A minor may draw, endorse, deliver and negotiate an instrument so as to bind all the parties except himself. A minor may be a drawer where the instrument is drawn or endorsed by him. In that case he does not incur any liability himself although
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MITTAL COMMERCE CLASSES IPCC – MOCK TEST other parties to the instrument can be made liable and the holder can receive payment from any other party thereto,
Therefore, in the instant case, the promissory note is valid and it is binding on ‘P’ but not on ‘Q’ a minor.
Ans. 6: Emotional Intelligence: It refers the ability to recognize and understand the feelings and emotions of yourselves and also of other persons.
Emotional intelligence helps to manage & control the emotions of a person’s emotions & also helps to manage & control the emotions of a person and also helps a person to motivate so as to manage & control the emotions.
Competences associated with emotional intelligence:
There are two types of competences associated with emotional intelligence: a) Personal competence: Personal competence deals with the ability to manage
& control his/her own emotions. Following are considered as personal competence: i) Emotional self awareness: It means recognizing his own emotions and feelings. ii) Accurate self Assessment: It means knowing you own strength & weaknesses. iii) Self confidence: It means the ability to judge self worth & capabilities. iv) Adaptability: It means changing ourselves according to the situations. v) Transparency: It means displaying honesty and integrity. vi) Optimism: It means looking at the other side of the problem.
Ans. 7: The problem stated in the question is based on the provision of the Negotiable
Instruments Act, 1881 as contained in Section 53. The section provides: ‘Once a negotiable instrument passes through the hands of a holder in due course, it gets cleansed of its defects provided the holder was himself not a party to the fraud or illegality which affected the instrument in some stage of its journey. Thus any defect in the title of the transferor will not affect the rights of the holder in due course even if he had knowledge of the prior defect provided he is himself not a party to the fraud. (Section 53).
Thus applying the above provisions it is quite clear that S who originally induced T in obtaining the bill of exchange in question fraudulently, cannot succeed in the case. The reason is obvious as S himself was a party to the fraud.
Ans. 8: Socio – psychological barriers: These barriers arises due to attitude, social status, economic status, relationship of a person with his juniors & senior etc. For eg. When a rich person does not communicate with a poor person or a senior does not communicate with his juniors due to his ego problem.
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