Answers to Unsolved Practical Examples in ‘Indirect Taxes'

Question 1 M/s Jani Manufacturing Co. Ltd., Delhi are despatching 100 ‘Mixing Machines’ to their dealer in U.P. The dealer in U.P is not registered under Central Sales Tax Act. Sales Tax on ‘mixing machine’ in State of Delhi is 6%. The retail price of the machine is Rs. 800 (exclusive of sales tax and excise). Dealers get discount of 15% on this price. Excise duty is 16% plus education cess @ 2%. Packing cost is Rs 50 per piece. Manufacturer normally sales the goods with the packing. Transport charges are Rs. 1,500 extra. What will be total value of Invoice? Prepare an Invoice showing copy which will be useful for transport purposes. [Student will learn in section on ‘Sales Tax’ that central sales tax charged in aforesaid case is 10%.]

Answer 1 – Net price to dealer per piece is Rs 680 (List price Rs 800 less discount of Rs 120 @ 15% of Rs 800). Thus, invoice for 100 pieces will be as follows –

Question 2 During July, 2000, an assessee deposited Rs. 30,000 in bank for credit in PLA, when opening balance was Rs. 5,600. He cleared goods by paying excise duty of Rs. 31,400. Show entries in General Ledger of the assessee.

Answer 2 – Opening balance in excise deposit account is Rs 5,600. When Rs 30,000 are deposited in bank, debit ‘Excise Deposit Account’ and credit Bank Account. When duty of Rs 31,400 is paid, debit Excise Duty paid account and credit ‘Excise deposit’ account. Thus, at month end, balance in Excise Deposit Account will be Rs 4,200.