Time of Supply GST – Advanced Tax Laws and Practice Important Questions
Question 1.
Determine (with brief reason) the time of supply of goods in the following cases, where the supply involves movement of goods (in one lot):
| Date of removal of goods | Date of invoice | Date of Payment |
| 1. 10-06-2020 |
12-06-2020 |
20-05-2020 |
| 2. 10-11-2020 |
20-10-2020 |
29-11-2020 |
| 3. 07-09-2020 |
02-10-2021 |
06-12-2019 |
| 4. 10-12-2020 |
20-11-2020 |
22-09-2020 |
| 5. 27-12-2020 |
29-12-2020 |
22-12-2020 |
Answer:
Time of supply
As per Section 12(2) of CGST Act, 2017, the time of supply of goods shall be the earlier of the following dates, namely:
(a) the date of issue of invoice by the supplier or the last date on which he is required to issue invoice under section 31; or
(b) the date on which the supplier receives the payment with respect to the supply.
However, advance received in respect of supply of goods is not liable to be taxed at the time of receipt vide Notification No. 66/2017-CT dated 15.11.2017. Therefore, the date of payment in respect of supply of goods shall not be relevant for determining the time of supply.
Further, Section 31 of the CGST Act provides that a registered person supplying taxable goods shall issue a tax invoice, before or at the time of,
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case.
In view of the above stated legal position, the time of supply of goods in each of the independent cases shall be as tabulated below:-
Case 1:
In this the earliest date is the date of removal of goods [as date of payment is not relevant] Hence, the time of supply is 10-6-2020.
Case 2:
In this case, the earliest is the date of invoice and whereas the removal of goods is much later. The time of supply hence is 20.10.2020.
Case 3:
In this case, the date of removal of goods is much before date of invoice and therefore the time of supply is 07.09.2020.
Case 4:
Since the date of payment is not relevant for supply of goods and the date of invoice is earlier than the date of removal, the time of supply is 20.11.2020.
Case 5:
In this case, time of supply shall be date of removal of goods, being the due date of issue of invoice or the actual date of invoice, whichever is earlier. Hence, it shall be 27.12.2020.
Question 2.
Ganesh, a registered person, has received the supply of services from non-taxable territory. Accordingly, the tax is liable to be paid by the recipient on reverse charge basis. Ganesh provides the following information in respect of such service received by him:
|
Transaction |
Event Date |
| 1. Date of payment as entered in the books by service receiver (Ganesh) | 10-12-2020 |
| 2. Date on which above payment is debited in Bank account of Ganesh | 17-12-2020 |
| 3. Date on of issue of invoice by supplier of service | 20-11-2020
|
You are required to:
Explain the relevant provision of Section 13(3) of the CGST, Act 2017 regarding determination of time of supply of service under reverse charge basis. Determine the point of supply in respect of service received by Ganesh.
Answer:
Time of supply under reverse charge basis
(i) Under section 13(3) of the CGST Act, 2017, in case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be earliest of the following dates:
(a) The date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or;
(b) The date immediately following 60 days from the date of issue of invoice or any other document, by whatever name called in lieu thereof by the supplier.
In this case, the time of supply shall be the earliest of the following dates:
(a) Date of payment as entered in the books by service receiver (Ganesh) – 10-12-2018
(b) Date on which above payment is debited in Bank account of Ganesh – 17-12-2018
(c) The date immediately following the 60 days from the date of issue of invoice (20.11.2018 + 61days = 20.01.2019) – 20-01-2019
Time of supply: 10.12.2018 (Earliest)
Question 3.
Determine by giving brief reasons the Time of supply in each of the following independent cases in accordance with the provisions of section 12 of CGST Act, 2017 where supply involves movement of goods supplied in one lot:
|
Date of removal |
Date of Invoice | Date when goods made available to recipient |
Date of receipt of payment |
|
1. 01.12.2020 |
02.12.2020 |
03.12.2020 |
15.01.2021 |
|
2. 03.11.2020 |
01.11.2020 |
04.11.2020 |
05.12.2020 |
|
3. 04.11.2020 |
04.11.2020 |
06.11.2020 |
01.10.2020 |
Answer:
As per Section 12(2) of CGST Act, 2017, the time of supply of goods shall be the earlier of the following dates, namely:
(a) the date of issue of invoice by the supplier or the last date on which he is required to issue invoice under section 31; or;
(b) the date on which the supplier receives the payment with respect to the supply.
Further, Section 31 of the CGST Act provides that a registered person supplying taxable goods shall issue a tax invoice, before or at the time of,
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or;
(b) delivery of goods or making available thereof to the recipient, in any other case.
In view of the above stated legal position, the time of supply of goods in each of the independent cases shall be as tabulated below:-
|
Time of supply |
Reasons in brief |
| 1. 1.12.2020 | Invoice is not issued on or before the date of removal of goods, hence TOS is the date of removal of goods |
| 2. 1.11.2020 | TOS is date of issuance of invoice because the invoice is issued prior to the date of removal of goods |
| 3. 4.11.2020 | TOS is date of issue of invoice. Advance received in respect of supply of goods is not liable to be taxed at the time of receipt vide Notification No. 66/2017-CT dated 15.11.2017. |
Question 4.
Harivallabh, a registered supplier, rendered taxable service for ₹2 lakhs on 1-11-2020. The tax invoice was raised on 9-12-2020. Payment was received the next day. Ascertain the time of supply for GST purposes.
Answer:
Tax Invoice should have been issued by Mr. Harivallabh within 30 days from the date of providing of service Le. from 01-11-2020. Tax invoice issued/raised on 09-12-2020, this has been issued beyond the stipulated time limit.
The time of supply as per section 13(2) of CGST Act, 2017 would be 01.11.2020 Le. earliest of the following:
(a) Date of provision of service (01.11.2020)
(b) Date of receipt of payment (10.12.2020)
Question 5.
Padmaja, a registered supplier, rendered taxable service for ₹2 lakhs on 01.12.2020. The tax invoice was raised on 09.12.2020. Payment was received on 22.11.2020. Determine the time of supply for GST purposes.
Answer:
As per section 13(2) of CGST Act, where invoice is issued within 30 days from the date of provision of service, the time of supply shall be earliest of the following:
(a) Date of Invoice; or;
(b) Date of receipt of payment
Hence, in given case, it shall be earlier of 9.12.2020 (Date of issue of invoice) and 22.11.2020 (Date of receipt of payment). Therefore, it shall be 22.11.2020.
Question 6.
Cotton Ltd. being a cloth merchant sold gift voucher to customer for ₹2,000 on 10th November to purchase specific cloth from its showroom, Goods actually purchased by customer on 15th November for ₹2,400. Find the time of supply and value of supply with regard to gift voucher in the hands of Cotton Ltd.
Answer:
Time of supply as per section 12(4) of CGST Act is at the time issue of voucher i.e. 10th November as supply is identifiable at time of issue of voucher. Further, Value of supply = ₹2,000 for gift voucher.
Question 7.
Mr. Muktinath, a service provider registered under GST law under the regular scheme, at Bengaluru (Karnataka), provided taxable service to one of his clients LMN Co. Ltd., registered at Mumbai (Maharashtra). The provision of service was completed on 10.09.2020 and credit for payment received was made in the books of Mr. Muktinath on 11.09.2020. With effect from 16.09.2020, applicable GST rate was raised from 5% to 12%. The payment for the service provided was credited in Mr. Muktinath’s bank account on 18.09.2020, and invoice for the same was raised on 23.09.2020. Mr. Muktinath is of the view that he is liable to pay IGST @ 5% only. However, the Department took the view that he is liable to pay IGST @ 12%. Examine the correctness of the rival contentions. Will your answer be different in the above case if the payment was credited to the bank account on 14.09.2020 instead of 17.08.2020? Note: You may assume that all days are working days.
Answer:
Change in GST rate
As per section 14 of the CGST Act, 2017, in case of change in rate of tax, date of receipt of payment is earlier of:
(i) Date of entering payment in the books of account of the supplier (11.09.2020), or
(ii) Date on which the payment is credited to his bank account (18.09.2020). However, if the payment is credited in the bank account after 4 working days from the date of change in the rate of tax, the date of receipt of payment will be the date of credit in the bank account.
In the given case, since the payment has been credited in the bank within 4 working days from the date of change in the rate of tax, the date of receipt of payment will be 11.09.2020 [i.e., earlier of 11.09.2020 or 18.09.2020].
Section 14 further provides that where goods and/or services have been supplied before the change in rate of tax (10.09.2020) and the payment has been received before the change in rate of tax (11.09.2020), but the invoice for the same is issued after the change in rate of tax (23.09.2020), the time of supply shall be the date of receipt of payment.
Therefore, in the given case, the time of supply will be 11.09.2020 and the applicable rate of tax will be rate prevalent at the time of supply, ie., IGST @ 5%. Therefore, the contention of Muktinath is correct. Department’s view is not tenable in law.
Further, if the date on which the payment is credited to bank account of supplier is 14.09.2020, the date of receipt of payment will continue to be 11.09.2020 [ie., earlier of 11.09.2020 or 14.09.2020] since the payment is credited in the bank account before change in applicable rate of tax. Consequently, with other things remaining the same, the time of supply and the applicable rate of tax will remain the same.
Time Of Supply Notes
- Section 12 and section 13 of CGST Act, 2017 deal with “time of supply of Goods” and “time of supply of services” respectively.
- Following is the arrangement of both the sections:
SUB-SECTIONS & its content:
(1) Introduction
(2) Time of supply in case of forwarding charge mechanism
For Goods: (Read with Notification No. 66/2017)
Earlier of the following :
- Date of issue of invoice; or;
- The last date when such invoice should have been issued
For Services:
Case 1: Invoice is issued within time as prescribed (i.e. within 30 days from provision of service/45 days in case of banking services)
Earlier of the following:
- Date of issue of invoice; or;
- Date of receipt of payment
(i.e. date of entry of the receipt of payment in books of supplier or date of credit in his bank account, whichever is earlier)
Case 2: Invoice is NOT issued within time as prescribed (i.e. with¬in 30 days from provision of service/45 days in case of banking services)
Earlier of the following:
- Date of provision of service; or;
- Date of receipt of payment
(i.e. date of entry of the receipt of payment in books of supplier or date of credit in his bank account, whichever is earlier)
Proviso to section 13(2):-PETTY ADVANCE
In case advance up to ₹ 1,000 is received against an invoice, then Time of Supply with respect to such advance received may be taken, at the option of supplier, as the future date when invoice against the same is raised.
(3) Time of supply in case of Reverse Charge Mechanism (RCM)
For Goods:
Earlier of the following:
- Date of receipt of goods; or;
- Date of making payment (i.e. date of entry of payment in books of the recipient of supply or date of debit in his bank account, whichever is earlier); or;
- Date immediately following 30 days from the date of invoice or any other document.
For services:
Earlier of the following:
- Date of making payment by Recipient of Supply to the supplier (Le. date of entry of payment in books of the recipient of supply or date of debit in his bank account, whichever is earlier); or;
- Date immediately following 60 days from date of invoice or any other document.
Proviso to section 13(3):
Where the services are received from an associated entity outside India, Time of Supply shall be earlier of the following :
- Date of entry (Le. debit of expenses) in books of Recipient of supply; or;
- Date of making payment by Recipient of supply to the supplier (Le. date of entry of payment in books of the recipient of supply or date of debit in his bank account, whichever is earlier)
(4) Time of supply in case of Vouchers
- Where supply is identifiable at the time of issue of vouchers, Time of Supply is date of issue of vouchers.
- Where supply is not identifiable at the time of issue of vouchers, Time of supply is date of redemption of vouchers.
(5) Time of supply in residuary cases i.e. cases not covered in (2), (3) &(4)
- Where a periodical return has to be filed, it shall be the date on which such return is to be filed.
- In any other case, it shall be the date on which the tax is paid.
(6) Time of supply in case of additional consideration received by way of interest, penalty, late fees, etc.
- It shall be the date on which the supplier receives such addition in value.
Note:
Provisions of sub-sections (4), (5), and (6) of section 12 and section 13 are the same in the case of goods as well as services.
- Section 14 deals with “Time of supply when there is a change in the rate of GST”
Clause (a): In case goods or services or both have been supplied BEFORE the change in the rate of tax:
(i) Invoice for the same as well as payment is received after the change in the rate of tax: Earlier of date of receipt of payment, or date of issue of the invoice.
(ii) Invoice has been issued prior to the change in the rate of tax but payment is received after the change in the rate of tax:-Date of issue of the invoice.
(iii) Payment is received before the change in the rate of tax but invoice has been issued after the change in the rate of tax:-Date of receipt of payment.
Clause (b): In case goods or services or both have been supplied AFTER the change in the rate of tax:
(i) Payment is received after the change in the rate of tax but invoice has been issued prior to change in the rate of tax:-Date of receipt of payment.
(ii) Invoice has been issued and payment is received before the change in the rate of tax:- Earlier of date of receipt of payment or date of issue of the invoice.
(iii) Invoice has been issued after the change in the rate of tax but payment is received before changing the change in the rate of tax: – Date of issue of an invoice.
The date of receipt of payment shall be, the date on which the payment is entered in books of account of the supplier; or the date on which payment is credited to his bank account, whichever is earlier. However, the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after 4 working days from