Tax Book 2023

Preliminary Chapter- 01

CA CAF- 6 PAST PAPERS THEORETICAL QUESTIONS

Q. NO. 5 (a) Spring 2022

Following are the independent transactions carried out by different enterprises during
the month of February 2022:

(i) Taxable goods of Rs. 800,000 were sold to one of the dealers. The amount was net of 20% trade

discount which was in accordance with market norms. The discounted price was not shown on the

tax invoice.

(ii) Taxable goods of Rs. 1,500,000 were used for internal testing and evaluation purposes. 40% of

these goods were locally procured while remaining 60% of these goods were own manufactured.

(iii) Advance of Rs. 600,000 was received for goods to be delivered in April 2022.

(iv) 1,000 units of taxable goods listed in the Third Schedule were sold at a unit price of Rs. 5,000.

Retail price of each unit was Rs. 6,000.

(v) New parts of Rs. 1,200,000 were issued free of cost to replace the defective parts under warranty.

(vi) Taxable goods of Rs. 400,000 were sold at credit terms of 2/10, n/30. Customer paid the amount

within ten days and availed the discount.

Required:
In the light of the provisions of the Sales Tax Act, 1990 and Rules made thereunder, state the value of
supply chargeable to tax for the month of February 2022. Also state the reason for your treatment.

Q. NO. 6 (a) Spring 2019
Briefly discuss the situations under which the following are required to be registered under the Sales Tax
Act, 1990 and Rules made there under:

(i) Cottage industry

(ii) Retailer

Q. NO. 6 September 2015

(a) Under the provisions of the Sales Tax Act, 1990 explain the following:

(i) Input tax in relation to a registered person

(ii) Supply

Q. NO. 11 Spring 2014 Under the Sales Tax Act, 1990, ‘Taxable activity’ means any economic activity
carried on by a person whether or not for profit. You are required to specify the activities that are
specifically included and excluded from the above definition.

Q.2 (a) Spring 2011 Samad Corporation (SC) supplies specialized material to various industrial concerns.
The company has entered into following transactions during the month of February 2011.

(i) Supply of material costing Rs. 3 million to AB Limited (ABL). It has been agreed that ABL would
settle the transaction by paying Rs. 1.5 million in cash and the balance amount by way of allowing
SC to use ABL’s import quota. The market price of the supply is Rs. 3.5 million.

(ii) Supply of material to DM Limited (DML) at a discounted price of Rs. 6.8 million. Due to particular
relationship, DML has been allowed a special discount of 15% as against the normal business
practice of 8%.

(iii) Supply of 20 tons of material, falling under third schedule, to BML at a wholesale price of Rs.
138,000 per ton. The retail price of the material is Rs. 150,000 per ton.

Required: In each of the above situation, advise the management about the value of supply on which sales
tax would be levied.

Q. NO. 9(a) Spring 2005 Define the following with reference to the Sales Tax Act, 1990:-