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Concept of Time of Supply

Tax is leviable under GST upon occurrence of the Taxable event, Supply. But the tax so levied shall be liable to pay at the time as determined by the Time of Supply provisions. The Tax rates, Exchange rates, exemptions and abatements keep changing from time to time. So it is necessary that uniform or a fixed principles shall be laid down to determine the time when the charging event takes place.

The "Time of Supply" provisions are laid down under the CGST act, 2017 separately for Goods and Services. Section 12 of CGST act, 2017 determines the "Time of supply of goods" and Section 13 determines the "Time of supply of services" 

Time of Supply in case of Goods:
Time of supply of goods shall be determined differently in each of the 5 scenarios as discussed below:

A) General scenario/Forward Charge Scenario:

On a plain reading of section 12(1) one can say that the time of supply can be determined as follows:

  1. If Invoice is issued before due date Earlier of: Date of Invoice  (or) Date of Receipt of Amount
  2. If Invoice is not issued before due date Earlier of: Last Date for issue of Invoice (or) Date of Receipt of Amount

Exception: If an amount upto Rs.1000/- is received in excess of amount in Tax invoice then Time of Supply need not be Date of Receipt. Supplier can even opt Date of Invoice as "Time of Supply".

But a combined reading of section 12(1) along with section 31(1) envisages that the Time of supply in cases of forward Charge can be determined as follows:


Scenario

Time of Supply

Example

When Supply involves movement of Goods

Earlier of

a) Date of  Issue of Tax Invoice

b) Date of Removal of goods

c) Date of Receipt entered in Supplier’s Books

d) Date of credit in supplier’s Bank account

 

Date of Invoice: 12.04.2017

Date of Removal :11.04.2017

Date of receipt entered: 10.05.2017

Date of Credit in Bank: 07.05.2017

Time of supply is 11.04.2017


When Supply doesn't involve movement of Goods

Earlier of

 

a) Date of  Issue of Tax Invoice

b) Date of Delivery or making available to recipient

c) Date of Receipt entered in Supplier’s Books

d) Date of credit in supplier’s Bank account


 

Date of Invoice: 18.04.2017

Date made available to recipient :16.04.2017

Date of receipt entered: 10.05.2017

Date of Credit in Bank: 12.05.2017

Time of supply is 16.04.2017


Continuous Supply of Goods and successive statements involved

Earlier of:

 

a) Date of  Issue of Tax Invoice

b) Date of issuance of successive statements of accounts

c) Date of Receipt entry in Supplier’s Books

d) Date of credit in supplier’s Bank account


 

Date of Invoice: 10.03.2017

Date of statement by supplier :05.03.2017

Date of receipt entered: 10.05.2017

Date of Credit 12.05.2017

Time of supply is 05.03.2017


Continuous Supply of Goods and successive payments involved

 

Earlier of:

a) Date of  Issue of Tax Invoice

b) Date of receipt of successive payment

c) Date of Receipt entry in Supplier’s Books

d) Date of credit in supplier’s Bank account


 

Date of Invoice: 13.04.2017

Date of successive payment :10.04.2017

Date of receipt entered: 10.05.2017

Date of Credit 12.05.2017

Time of supply is 10.04.2017


Sale of goods on approval basis

Earlier of:

 

a) Date of  Issue of Tax Invoice

b) Date of approval by buyer (or) date of removal + 6 months

c) Date of Receipt entry in Supplier’s Books

d) Date of credit in supplier’s Bank account


 

Date of Invoice: not yet issued

Date made approval : awaited   

Date of removal + 6 months: 15.12.2017

Date of receipt entered: 01.01.2017

Date of Credit 01.01.2017

Time of supply is 15.12.2017


Advance Received upto Rs.1000/-

In all the above cases where an amount upto Rs.1000/- is received in excess of the Invoice amount then Time of Supply need not be Date of Receipt. Supplier can opt "Date of Invoice" as Time of Supply i.e.,(in each of the above case supplier can ignore c and d at his option)

Idea Cellular Ltd issued Postpaid Mobile Bill of Rs.1420/- bill to Mr.C on 01.05.2017. (Bill cycle 1st of every month). Mr.C paid Rs.2000/- on 05.05.2017.For this excess of Rs.580/- Date of receipt needn't be considered. Date of issue of next bill i.e., 01.06.2017 or due date of bill whichever is earlier shall be Time of supply.


B) Reverse Charge Scenario:

Usually, the GST liability is to be discharged by the supplier of goods/ services. However, in specific cases, the liability to pay tax is imposed on the recipient of the supply instead of the supplier. This method of charging of tax liability is known as Reverse Charge Mechanism (RCM). The CGST act, 2017 passed in Parliament yesterday provide that in cases of supply by an unregistered supplier to a registered person, GST shall be paid by the recipient under RCM.

The Time of supply shall be Earlier of:

  • Date of Receipt of Goods
  • Date of Payment entered in Recipient's Books
  • Date of debit in Bank account
  • Date of Invoice +30 days

Exception:- If any of the above dates are not identifiable, Date of Entry of transaction in Recipient Books

C) Supply of Vouchers:

In the CGST act, 2017 passed in Parliament yesterday the Definition of vouchers is given as "an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument"

In simpler terms Voucher is a small printed piece of paper that entitles the holder to a discount, or that may be exchanged for goods or services. e.g.: coupons, pass, token etc.,

Time of supply shall be as follows:

  1. If supply is Identifiable at the time of issue then "Date of issue of Voucher"
  2. If supply is not identifiable at the time of issue then"Date of Redemption of Voucher"

An exact replica of the provision is also specified under section 13 in relation to time of supply of services. So, one can infer that ‘vouchers exchangeable for goods’ and ‘vouchers exchangeable for services’ as distinct and separate class of transactions. But there will be certain class of Vouchers which can be exchanged for goods as well as services at the option of holder. In such scenarios supply cannot be identified at the time of issue so date of redemption of voucher is the key.

To summarize if supply is identifiable at the time of issue and related to goods then Time of supply is "Date of issue of Voucher". If supply is not identifiable at the time of issue then date of redemption of Voucher. (If supply is identifiable at the time of issue and related to services then Time of supply is "Date of issue of Voucher" - as governed by sec13).

D) Addition in Value of Supply by way of interest late fee or penalty:

Time of supply in relation to such addition is "Date of Receipt of such amount"

E) Residuary Clause:

Time of supply under this residuary provision is applicable only when the other provisions are found to be inapplicable and not merely when there is some difficulty in determining the facts that are sought for by the relevant provision

  • In case periodical return has to be filed then "Due Date of such return"
  • In case periodical return need not be filed then "Date of payment of tax"

In the next article "Time of supply of services" will be discussed.

This article is an endeavor to share some learnings obtained. The views expressed are of the author and are intended solely for informational purpose only. Though due care is taken while preparing the document, possibility of errors cannot be ruled out Expert guidance, where required and user discretion is highly recommended.

The author can also be reached at cachaitanyakumar@gmail.com


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Category GST, Other Articles by - CA Chaitanya Kumar R 



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