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PSSSB Excise Inspector study materials
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PSSSB Excise Inspector practice questions

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Question 1Punjab Excise Laws and Regulatory Framework

The Punjab Excise Act, 1914 is the principal statute governing the manufacture, possession, transport and sale of liquor in Punjab. In which year was this Act enacted?

  1. 1944
  2. 1961
  3. 1914 Correct answer.
  4. 1935

Explanation

The Punjab Excise Act, 1914 (Punjab Act I of 1914) is the principal excise statute in force in Punjab, and the Punjab Excise Rules framed under it supply the licensing and vend machinery. Though amended repeatedly, its year of enactment remains 1914. Candidates should distinguish it from central customs and narcotics laws, which came later.

Question 2Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, which officer is appointed by the State Government to control the excise administration of the State, subject to the control of the State Government?

  1. Divisional Commissioner of the concerned division
  2. Excise and Taxation Commissioner, Punjab Correct answer.
  3. Financial Commissioner (Revenue), Punjab
  4. Director General of Police, Punjab

Explanation

The Act provides for appointment of an Excise Commissioner to control the excise administration of the State, subject to the control and direction of the State Government. In Punjab this office is designated as the Excise and Taxation Commissioner. The police chief, revenue Financial Commissioner and divisional commissioners exercise different statutory functions.

Question 3Punjab Excise Laws and Regulatory Framework

In the Punjab Excise Act, 1914, the expression 'excisable article' is defined to mean:

  1. any manufactured good transported without a valid transit pass
  2. any alcoholic liquor for human consumption and any intoxicating drug Correct answer.
  3. any article on which customs duty is levied at the land border
  4. any agricultural produce brought to a regulated market for sale

Explanation

The definition confines excisable articles to alcoholic liquor for human consumption and intoxicating drugs, so that the Act's licensing, transport and penal provisions attach to liquor and narcotics alone. General merchandise, agricultural produce and imported goods are dealt with under separate fiscal statutes such as the customs and GST laws.

Question 4Punjab Excise Laws and Regulatory Framework

The power to levy excise duty on alcoholic liquors for human consumption, which the Punjab Legislature exercises through the Punjab Excise Act, 1914, is derived from which entry of the Constitution?

  1. Entry 8 of List II (State List)
  2. Entry 33 of List III (Concurrent List)
  3. Entry 51 of List II (State List) Correct answer.
  4. Entry 52 of List I (Union List)

Explanation

Entry 51 of List II empowers the State to levy duties of excise on alcoholic liquors for human consumption and on opium, Indian hemp and other narcotics. Entry 8 of List II is the related regulatory entry covering production, manufacture, possession, transport, purchase and sale of intoxicating liquors, but it is not the taxing entry. The two entries together support the licensing and revenue scheme of the Act.

Question 5Punjab Excise Laws and Regulatory Framework

A retail vend licensee in Punjab keeps his shop open and sells liquor beyond the closing hour fixed in his licence. What is the correct legal consequence?

  1. The sale is valid, but excise duty becomes payable at double rate
  2. No action lies, because closing hours are only administrative guidance
  3. The sale is void, and only the customer is liable to prosecution
  4. He is liable to penalty, and his licence may be suspended or cancelled Correct answer.

Explanation

The timings, premises and conditions written into a licence are statutory conditions of the licence, not mere guidance. A breach exposes the licensee to penalty under the Act and to suspension or cancellation of the licence by the competent authority. The transaction does not become valid merely because duty is offered at a higher rate, nor does liability shift entirely to the purchaser.

Question 6Punjab Excise Laws and Regulatory Framework

In the Punjab Excise Act, 1914, 'excise revenue' is defined to include:

  1. only the annual licence fee collected from retail liquor vends
  2. the resale value of vehicles and goods confiscated during excise raids
  3. excise duty, licence fees and other sums payable under the Act Correct answer.
  4. only the excise duty collected from licensed distilleries in the State

Explanation

Excise revenue is defined inclusively to cover revenue derived from duties, fees, penalties and other payments under the Act. It is therefore wider than distillery duty or vend licence fees taken separately. Confiscated property is dealt with under the confiscation provisions and its value is not the measure of excise revenue.

Question 7Punjab Excise Laws and Regulatory Framework

In Punjab, a licence for the retail sale of liquor is ordinarily granted for which period, in line with the annual excise policy of the State?

  1. The period from 1 July to 30 June
  2. A three-year block coinciding with the term of the State Government
  3. The calendar year, from 1 January to 31 December
  4. The financial year, from 1 April to 31 March Correct answer.

Explanation

Punjab frames its excise policy and settles liquor licences for the financial year, so the licence period ordinarily runs from 1 April to 31 March. Fees, quotas and vend conditions are fixed for that same period. The other dates do not match the State's budgetary and policy cycle.

Question 8Punjab Excise Laws and Regulatory Framework

The State Government issues a notification declaring a new synthetic compound to be 'liquor' for the purposes of the Punjab Excise Act, 1914. Which statement best explains the legal effect?

  1. Valid, since the Act lets the State Government declare any substance to be liquor Correct answer.
  2. Valid only after approval by the Union Ministry of Home Affairs
  3. Invalid, because only Parliament can enlarge the definition of liquor in a State statute
  4. Valid, but it can regulate possession only and not sale of the substance

Explanation

The statutory definition of liquor is inclusive and expressly enables the State Government, by notification, to declare any substance to be liquor for the purposes of the Act. Once so declared, the full machinery of licensing, transport control and penalties applies to that substance, including sale. Parliamentary approval or Union Ministry clearance has no role in this State legislative function.

Question 9Punjab Excise Laws and Regulatory Framework

A person holds a permit to possess twelve bottles of foreign liquor for personal use. Excise staff find sixty bottles, some concealed, at his unlicensed shop. Which statement is most accurate?

  1. He is liable for exceeding the permitted quantity and for storing it at an unlicensed place Correct answer.
  2. He commits no offence until he is found actually selling the liquor to a customer
  3. He is liable only for the excess bottles, since the permit covers the first twelve wherever kept
  4. He is liable only if the bottles are proved to be counterfeit or spurious

Explanation

A permit authorises only the stated quantity and ordinarily only at the place specified in it. Possession beyond the permitted quantity and storage at an unlicensed premises are distinct contraventions, and the excess stock is liable to confiscation in addition to penalty. An actual sale is not necessary for the offence of unlawful possession to be complete.

Question 10Punjab Excise Laws and Regulatory Framework

A distillery in Punjab wants to move five thousand cases of country liquor to a bottling plant in another district. Which document must accompany the consignment?

  1. A copy of the distillery's annual audited balance sheet
  2. A no-objection certificate from the district police chief
  3. A sale invoice issued by the receiving bottling plant
  4. A transport pass specifying quantity, route and destination Correct answer.

Explanation

The Act empowers the competent authority to grant licences, permits and passes, and movement of excisable articles outside licensed premises must be covered by a transport pass. The pass records the quantity, the route and the destination so that the consignment can be checked at barriers and at the receiving plant. Police clearances or commercial invoices do not substitute for it.

Question 11Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, 'denatured spirit' means spirit that has been:

  1. Spirit manufactured exclusively from molasses in a licensed distillery
  2. Spirit purified and reduced to potable strength for retail sale
  3. Spirit made unfit for drinking by adding prescribed denaturants Correct answer.
  4. Spirit imported under a transport permit for industrial use

Explanation

The Act defines denatured spirit as spirit rendered unfit for human consumption by the addition of denaturants prescribed by the rules. Denaturing permits industrial or technical use while preventing the spirit from being used as drinking liquor.

Question 12Punjab Excise Laws and Regulatory Framework

In the Punjab Excise Act, 1914, the statutory 'Collector' for excise purposes in a district is ordinarily:

  1. The Superintendent of Police of the district
  2. The Excise and Taxation Commissioner, Punjab
  3. The Deputy Commissioner of the district Correct answer.
  4. The Sub-Divisional Magistrate of the subdivision

Explanation

Under the Act, 'Collector' means the Deputy Commissioner of the district and includes an officer authorised to discharge the Collector's functions. The Collector is the principal district-level licensing and adjudicating authority for excise matters.

Question 13Punjab Excise Laws and Regulatory Framework

In Punjab excise practice, a bonded warehouse is a licensed place where:

  1. Confiscated liquor is kept before its destruction
  2. Defaulting licensees are detained for recovery of licence fee
  3. Excisable articles are stored without payment of duty until clearance Correct answer.
  4. Retail liquor is sold to the public at prices fixed by the department

Explanation

A bonded warehouse is licensed premises in which excisable articles may be stored under bond without prior payment of excise duty. Duty becomes payable when the goods are cleared for consumption or removed under the prescribed procedure.

Question 14Punjab Excise Laws and Regulatory Framework

A retail vend licensee in Punjab wants to shift his licence to his brother. Under the Punjab Excise Act, 1914, and the rules, the licence:

  1. Requires the prior sanction of the licensing authority for transfer Correct answer.
  2. Is a proprietary right and may be transferred at the licensee's will
  3. May be transferred only after the excise duty on the stock is refunded
  4. Is automatically transferred to the legal heir upon the licensee's death

Explanation

A licence is personal to the holder and is not freely transferable property. Any transfer, including by sale or devolution, requires the sanction of the licensing authority under the Act and the rules.

Question 15Punjab Excise Laws and Regulatory Framework

An Excise Inspector seizes bottles of illicit liquor from a shop in Punjab. What is the immediate procedural requirement under the Punjab Excise Act, 1914?

  1. Obtain prior approval of the Magistrate before touching the stock
  2. Report the seizure forthwith to the Collector Correct answer.
  3. Send the sample to the Excise and Taxation Commissioner for opinion
  4. Return the stock after taking a personal bond from the shopkeeper

Explanation

An excise officer who seizes excisable articles believed liable to confiscation must report the seizure forthwith to the Collector. The Collector then passes orders regarding custody, release, or confiscation under the Act.

Question 16Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, an appeal against an order of the Collector ordinarily lies to:

  1. The Excise and Taxation Commissioner, Punjab
  2. The Sessions Judge of the district
  3. The High Court of Punjab and Haryana
  4. The Financial Commissioner Correct answer.

Explanation

The Act provides that a person aggrieved by an order of the Collector may appeal to the Financial Commissioner within the prescribed period. The Financial Commissioner also exercises revisional powers under the excise legislation.

Question 17Punjab Excise Laws and Regulatory Framework

The Collector accepts a sum of money from a person suspected of an excise offence and agrees not to prosecute. This power is known as:

  1. Commutation
  2. Remission
  3. Compounding Correct answer.
  4. Confiscation

Explanation

Compounding is the acceptance of a sum of money in lieu of prosecution for an excise offence. It is permitted under the Act with the prescribed sanction and does not amount to a conviction by a court.

Question 18Punjab Excise Laws and Regulatory Framework

Which statement correctly describes the nature of a retail vend licence under Punjab excise law?

  1. A permit that must be renewed as of right if no excise offence has been proved
  2. A commercial contract between the licensee and the distillery that supplies the liquor
  3. A privilege granted by the State on conditions and revocable for breach Correct answer.
  4. A fundamental right that every eligible citizen can claim on payment of the prescribed fee

Explanation

Excise licences are privileges granted by the State, not rights inherent in a citizen. The licensee must comply with the conditions, and breach can lead to suspension, cancellation, or other departmental action.

Question 19Punjab Excise Laws and Regulatory Framework

Which statement best distinguishes licence fee from excise duty under the Punjab Excise Act, 1914?

  1. Licence fee is consideration for the licence privilege; excise duty is a tax on excisable articles Correct answer.
  2. Licence fee is fixed by the licensee, while excise duty is fixed by the Collector for each vend
  3. Both are levied only at the retail sale stage and are interchangeable in excise accounts
  4. Licence fee is a tax on liquor, while excise duty is a fee charged for issuing the licence

Explanation

Licence fee is the consideration paid for the privilege of holding a licence, whereas excise duty is a tax on the manufacture, import, export, transport, or sale of excisable articles. The two have different legal bases and are accounted for separately.

Question 20Punjab Excise Laws and Regulatory Framework

A retail vend licensee in Punjab keeps part of his duty-paid stock in a godown not mentioned in his licence. Under the Punjab Excise Act, 1914, this storage is:

  1. Unlawful, because excisable articles must be kept in licensed premises only Correct answer.
  2. Lawful, if the godown is within one kilometre of the licensed shop
  3. Lawful, because excise duty has already been paid on the entire stock
  4. Lawful, if the licensee informs the Excise Inspector after shifting the stock

Explanation

Excisable articles must remain in premises covered by the licence; storage elsewhere is unauthorised possession. Payment of duty does not cure the absence of a licensed premises for keeping the stock.

Question 21Punjab Excise Laws and Regulatory Framework

In the Punjab Excise Act, 1914, the term 'toddy' is defined to mean:

  1. Spirit produced by distilling sugarcane molasses
  2. Liquor obtained by fermenting grapes
  3. Spirit rendered unfit for human consumption by denaturants
  4. Fermented juice of palm trees Correct answer.

Explanation

Section 3 defines toddy as the fermented juice of palm trees, and it is treated as liquor for excise purposes. Distilled molasses spirit, grape wine and denatured spirit are separate categories, not toddy.

Question 22Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, which authority is empowered to make rules for carrying out the purposes of the Act?

  1. The Punjab and Haryana High Court
  2. The Collector of the district
  3. The State Government Correct answer.
  4. The Excise Commissioner

Explanation

Section 45 confers the rule-making power on the State Government. The Excise Commissioner and Collectors administer the Act and the rules, but they cannot create statutory rules; the High Court has no rule-making role under the Act.

Question 23Punjab Excise Laws and Regulatory Framework

Under Section 17 of the Punjab Excise Act, 1914, the exclusive privilege of manufacturing, supplying wholesale or selling retail liquor within a local area may be granted by:

  1. The Municipal Corporation concerned
  2. The Excise Commissioner
  3. The Collector of the district
  4. The State Government Correct answer.

Explanation

Section 17 reserves the exclusive privilege to the State Government, which may grant it to a person on prescribed conditions. The Commissioner and Collector exercise delegated powers but do not own or grant the privilege; municipal bodies have no role under this section.

Question 24Punjab Excise Laws and Regulatory Framework

A retail vend licensee in Punjab is convicted of selling liquor without maintaining the prescribed register. What statutory consequence may follow for his licence?

  1. The licence automatically lapses without any order.
  2. The licence becomes freely transferable to another person.
  3. Only a fine may be imposed; the licence is untouched.
  4. The Collector may cancel or suspend the licence. Correct answer.

Explanation

Section 22 permits the Collector to cancel or suspend a licence for breach of its conditions or for conviction of an offence under the Act. Cancellation is not automatic, and the power is exercised by the Collector, not by the court or the licensee.

Question 25Punjab Excise Laws and Regulatory Framework

A truck carrying 200 cases of illicit country liquor is seized in Punjab and the driver is convicted. What may the court do with the truck under the Punjab Excise Act, 1914?

  1. Auction the truck and credit the proceeds to the driver
  2. Order confiscation of the truck used to carry the liquor Correct answer.
  3. Return the truck to the owner without any condition
  4. Release the truck to the driver as his personal property

Explanation

Section 38 empowers the court, on conviction, to confiscate the excisable article and any receptacle or conveyance used in carrying it. The truck is therefore liable to confiscation; it is not automatically returned to the driver or owner.

Question 26Punjab Excise Laws and Regulatory Framework

Under the Punjab excise regulatory framework, a retail vend licensee must refuse sale of liquor to a customer who has not completed which age?

  1. 18 years
  2. 30 years
  3. 21 years Correct answer.
  4. 25 years

Explanation

The Punjab excise policy and licence conditions set 21 years as the minimum age for purchase and consumption of liquor. Sale to a person below that age is a breach of licence conditions and attracts action against the licensee.

Question 27Punjab Excise Laws and Regulatory Framework

An Excise Inspector in Punjab, acting in good faith under the Punjab Excise Act, 1914, seizes liquor and is later sued by the licensee for damages. What protection does the Act provide?

  1. The Inspector is personally liable because seizure always requires prior court sanction
  2. The licensee may sue the Inspector without proving bad faith or malice
  3. No suit or prosecution lies against him for acts done in good faith under the Act Correct answer.
  4. Only the State Government can be sued, and the Inspector must deposit the stock value

Explanation

Section 44 protects excise officers against suits and prosecutions for acts done in good faith under the Act. The protection is not a blanket immunity for malicious or ultra vires acts, but it covers bona fide seizure and similar official action.

Question 28Punjab Excise Laws and Regulatory Framework

A retail vend in Punjab is directed to remain closed on 2 October. Which regulatory reason best explains this closure?

  1. It is a declared dry day under excise policy Correct answer.
  2. The municipal corporation has declared a local holiday
  3. The vend is observing annual stock-taking
  4. The licence is due for renewal on that date

Explanation

2 October, Gandhi Jayanti, is observed as a dry day under Punjab excise policy, when retail liquor sale is prohibited. Stock-taking, licence renewal and municipal holidays do not by themselves create a statutory ban on sale.

Question 29Punjab Excise Laws and Regulatory Framework

The State Government grants an exclusive privilege for retail liquor sale in a district to a licensee. A disappointed applicant claims a fundamental right to carry on liquor trade. Which statement is correct under Punjab excise law and settled constitutional principles?

  1. No fundamental right to trade in liquor exists; the licence is a privilege Correct answer.
  2. The applicant must be granted a licence because he offered the highest fee
  3. The exclusive privilege is void because it creates a monopoly in a lawful trade
  4. An unrestricted fundamental right to sell liquor exists under Article 19(1)(g)

Explanation

Trade in liquor is treated as res extra commercium, so Article 19(1)(g) does not confer a fundamental right to sell it. The State may create an exclusive privilege and grant a licence as a privilege subject to statutory conditions.

Question 30Punjab Excise Laws and Regulatory Framework

A rule framed under the Punjab Excise Act, 1914 imposes a penalty not provided in the Act for storing liquor beyond the licensed quantity. How should an Excise Inspector treat the rule?

  1. Ignore the Act and apply only the rule in the field
  2. Treat the rule as invalid to the extent it exceeds the parent Act Correct answer.
  3. Enforce the rule because a notified rule always prevails over the Act
  4. Refer the rule to the High Court for mandatory approval before taking any action

Explanation

Delegated legislation must remain within the parent statute; a rule cannot create a penalty that the Act does not authorise. To that extent the rule is ultra vires and cannot be enforced, although the Act itself may still support action for the underlying breach.

Question 31Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, which of the following best describes an 'excisable article'?

  1. Only foreign liquor imported into India from a country outside India.
  2. Only country liquor manufactured in Punjab and sold within the district.
  3. Any article containing alcohol, whether or not notified by the State Government.
  4. Alcoholic liquor for human consumption and articles notified by the State Government. Correct answer.

Explanation

Section 3 defines an excisable article in two limbs: alcoholic liquor for human consumption, and any other article that the State Government notifies as excisable. Notification is therefore essential before a non-liquor article can be treated as excisable.

Question 32Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, which of the following activities requires a licence, permit or pass?

  1. Import, export, transport, manufacture, possession or sale of excisable articles. Correct answer.
  2. Only the sale of foreign liquor by a retail vend licensee in Punjab.
  3. Only the possession of denatured spirit in a licensed bonded warehouse.
  4. Only the manufacture of country liquor in a licensed distillery in Punjab.

Explanation

The Act prohibits import, export, transport, manufacture, possession and sale of excisable articles unless covered by a licence, permit or pass. The requirement is activity-wide, not limited to sale or manufacture alone.

Question 33Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, who is the chief controlling authority in excise matters in the State?

  1. The Board of Revenue, Punjab.
  2. The Financial Commissioner (Taxation).
  3. The Commissioner of Excise. Correct answer.
  4. The Deputy Commissioner of the district.

Explanation

The Commissioner of Excise is the chief controlling authority in excise matters, while the Collector exercises district-level powers. The Board of Revenue and Financial Commissioner are not the statutory chief excise authority under this framework.

Question 34Punjab Excise Laws and Regulatory Framework

A retail vend licensee in Punjab has his licence cancelled by the Collector for breach of licence conditions. Is he entitled to compensation under the Punjab Excise Act, 1914?

  1. Yes, compensation for the unexpired period of the licence.
  2. Yes, refund of the licence fee for the remaining period.
  3. No, the Act creates no right to compensation for cancellation. Correct answer.
  4. Yes, but only if the cancellation is without prior notice.

Explanation

A licence under the Act is a privilege subject to statutory conditions, and the Act does not create a right to compensation when it is cancelled or suspended. Cancellation for breach is therefore not compensable merely because the licensee loses business.

Question 35Punjab Excise Laws and Regulatory Framework

A licensed wholesaler in Punjab wants to move 50 cases of Indian Made Foreign Liquor from Ludhiana to Amritsar. What document is primarily required under the Punjab Excise Act, 1914?

  1. Only a goods carriage receipt issued by the transporter.
  2. A consumer declaration signed by the consignee.
  3. A transport permit or pass from the excise authority. Correct answer.
  4. A no-objection certificate from the local municipal committee.

Explanation

Movement of excisable liquor is controlled by a transport permit or pass issued by the excise authorities. A carriage receipt or municipal certificate does not substitute for the statutory permit.

Question 36Punjab Excise Laws and Regulatory Framework

Under the Punjab Excise Act, 1914, which of the following is 'foreign liquor'?

  1. Liquor imported into India from a country outside India. Correct answer.
  2. Liquor blended in Punjab with imported concentrate.
  3. Liquor manufactured in Punjab from imported raw material.
  4. Liquor manufactured in another Indian state and brought to Punjab.

Explanation

The Act defines foreign liquor by origin: it must be imported into India from a country outside India. Liquor made in Punjab, even with imported ingredients, remains Indian-made liquor.

Question 37Punjab Excise Laws and Regulatory Framework

The State Government issues a notification declaring a new alcoholic preparation as an excisable article. What is the legal effect under the Punjab Excise Act, 1914?

  1. It can be sold only by the State Government.
  2. It can be manufactured without a licence until rules are framed.
  3. It becomes exempt from all excise control until further orders.
  4. It becomes excisable and subject to duty and licensing. Correct answer.

Explanation

A notification under the definition brings the notified article within the Act's excise controls. It then attracts excise duty, licensing and other regulatory requirements just like other excisable articles.

Question 38Punjab Excise Laws and Regulatory Framework

An Excise Inspector finds a retail vend licensee in Punjab selling liquor after the permitted closing hour. What is the correct course of action under the Punjab Excise Act, 1914?

  1. Only a warning, because the licensee holds a valid licence.
  2. No action, because closing-hour restrictions are only advisory.
  3. Report the breach to the Collector for suspension or cancellation. Correct answer.
  4. Immediate cancellation of the licence by the Excise Inspector without inquiry.

Explanation

Selling outside permitted hours breaches a licence condition. The Excise Inspector should report the matter; the Collector, as licensing authority, may suspend or cancel the licence after inquiry and take other lawful action.

Question 39Punjab Excise Laws and Regulatory Framework

An Excise Inspector in Punjab arrests a person without warrant on suspicion of illicit distillation. What is the immediate requirement after arrest?

  1. Produce him before the nearest Magistrate within 24 hours. Correct answer.
  2. Release the arrested person on bail after recording his statement.
  3. Obtain a warrant of arrest from the Collector within seven days.
  4. Send the arrested person to judicial custody without any order.

Explanation

Excise officers may arrest without warrant in specified excise cases, but the arrested person must be produced before the nearest Magistrate within 24 hours. This safeguard flows from the Act and Article 22(2) of the Constitution.

Question 40Punjab Excise Laws and Regulatory Framework

A private citizen in Punjab wants the court to take cognizance of an alleged illicit liquor sale by his neighbour. Under the Punjab Excise Act, 1914, can the court act on the citizen's complaint?

  1. Yes, any citizen can file a complaint for an excise offence.
  2. No, because excise offences are civil in nature and not triable by a criminal court.
  3. Yes, but only after the citizen deposits security with the court.
  4. No, cognizance is generally taken only on the complaint of an authorised excise officer. Correct answer.

Explanation

The Act restricts court cognizance of excise offences to complaints made by authorised excise officers. A private citizen's complaint is therefore not ordinarily maintainable, though the citizen may inform the excise authorities.

Question 41Taxation: Excise Duty, VAT and GST Fundamentals

The levy of goods and services tax in India derives its constitutional authority from which amendment?

  1. The One Hundred and First Constitutional Amendment Act, 2016 Correct answer.
  2. The Ninety-Ninth Constitutional Amendment Act, 2014
  3. The One Hundred and Third Constitutional Amendment Act, 2019
  4. The One Hundred and Second Constitutional Amendment Act, 2018

Explanation

The Constitution (One Hundred and First Amendment) Act, 2016 inserted Article 246A, giving Parliament and the State legislatures concurrent power to levy GST, and Article 269A for apportionment of IGST. It also created the GST Council. The new regime came into force on 1 July 2017 with CGST, SGST and IGST.

Question 42Taxation: Excise Duty, VAT and GST Fundamentals

The GST Council, which recommends rates, exemptions and threshold limits, was constituted under which Article of the Constitution?

  1. Article 280
  2. Article 269A
  3. Article 265
  4. Article 279A Correct answer.

Explanation

Article 279A, inserted by the 101st Constitutional Amendment, provides for a GST Council chaired by the Union Finance Minister with State Finance Ministers as members. The Council makes recommendations on rates, exemptions and model laws that guide both the Centre and the States.

Question 43Taxation: Excise Duty, VAT and GST Fundamentals

A dealer in a normal category State supplying only goods becomes liable for compulsory GST registration when aggregate turnover in a financial year exceeds:

  1. Rs. 40 lakh Correct answer.
  2. Rs. 75 lakh
  3. Rs. 60 lakh
  4. Rs. 20 lakh

Explanation

For suppliers exclusively of goods in normal category States, the registration threshold is Rs. 40 lakh of aggregate turnover in a financial year. For suppliers exclusively of services the threshold is Rs. 20 lakh, and special category States apply lower limits.

Question 44Taxation: Excise Duty, VAT and GST Fundamentals

Which statement correctly describes input tax credit under GST?

  1. It is a cash subsidy paid by the Centre to registered exporters.
  2. It is a deduction claimed on supplies made to unregistered buyers.
  3. It is a rebate granted only to taxpayers under the composition scheme.
  4. It is credit for tax paid on business purchases, set off against output tax. Correct answer.

Explanation

Input tax credit lets a registered person deduct GST paid on inward supplies of goods and services used for business from the GST payable on outward supplies. The credit is available only where the supplier has paid the tax, a valid invoice or debit note exists, and the goods or services are used for business.

Question 45Taxation: Excise Duty, VAT and GST Fundamentals

A dealer registered under the composition scheme is not permitted to:

  1. pay tax at a flat rate on aggregate turnover
  2. quote the registration number on business documents
  3. collect tax from buyers or make inter-state outward supplies Correct answer.
  4. file quarterly statements in the prescribed form

Explanation

A composition taxpayer pays tax at a flat percentage of turnover and files simplified returns, but cannot collect tax from customers or issue a tax invoice. The scheme also bars inter-state outward supplies of goods, keeping it confined to small local businesses.

Question 46Taxation: Excise Duty, VAT and GST Fundamentals

Under the Central Excise Act, 1944, the levy of central excise duty is attracted by:

  1. transport of excisable goods outside the factory
  2. sale of manufactured goods by the factory owner
  3. manufacture or production of excisable goods in India Correct answer.
  4. storage of excisable goods in a bonded warehouse

Explanation

The taxable event for central excise is the manufacture or production of excisable goods in India, not their sale. Duty is quantified and paid at the time of removal of the goods from the factory or warehouse, but removal is only the point of collection and not the point of levy.

Question 47Taxation: Excise Duty, VAT and GST Fundamentals

The principal advantage of VAT over a single-point sales tax is that it:

  1. shifts the entire tax burden to the manufacturer
  2. taxes every dealer at the same rate without any adjustment
  3. removes tax-on-tax by allowing credit for purchase tax Correct answer.
  4. taxes only imports and leaves domestic trade untaxed

Explanation

VAT is levied at each stage of sale, but credit is given for tax already paid on purchases, so the tax finally rests only on the value added at each stage. This uninterrupted credit chain eliminates the cascading effect of tax on tax.

Question 48Taxation: Excise Duty, VAT and GST Fundamentals

Which statement about alcoholic liquor for human consumption under the GST regime is correct?

  1. It is taxed under IGST at the highest slab rate.
  2. It is taxed equally under CGST and SGST.
  3. It is outside the ambit of GST and is taxed by the States under State excise law. Correct answer.
  4. It is exempt from tax but requires compulsory GST registration.

Explanation

The Constitution amendment expressly kept alcoholic liquor for human consumption outside the ambit of GST, so neither CGST nor IGST is levied on it. The States continue to tax its manufacture, transport and sale under their own excise laws, such as the Punjab Excise Act, 1914.

Question 49Taxation: Excise Duty, VAT and GST Fundamentals

For notified goods that must be sold in packaged form bearing a retail sale price, central excise duty is assessed on:

  1. the highest price at which the goods are sold in the open market
  2. the transaction value agreed with each buyer
  3. the declared retail sale price less the abatement notified by the Government Correct answer.
  4. the cost of production plus a fixed margin of ten per cent

Explanation

Section 4A of the Central Excise Act, 1944 applies to goods notified as requiring a retail sale price on the package. The assessable value is the declared retail sale price reduced by the abatement notified by the Central Government, which is meant to account for trade margins and taxes embedded in the MRP.

Question 50Taxation: Excise Duty, VAT and GST Fundamentals

A registered supplier in Punjab transports goods and delivers them to a registered buyer in Haryana. Under the IGST Act, 2017, the place of supply of these goods is:

  1. the location of the transporter's registered office
  2. Punjab, where the goods are manufactured by the supplier
  3. the State where the goods are handed over to the transporter
  4. Haryana, where the movement of goods terminates on delivery Correct answer.

Explanation

Under Section 10 of the IGST Act, 2017, where a supply involves movement of goods, the place of supply is the location where the movement terminates for delivery to the recipient. Because the supplier and the place of supply are in different States, the transaction is an inter-state supply on which IGST is charged.