05. Time of Supply
This article is part of the book named " Comprehensive Guide to GST" authored by CA. Brijesh Thakar. You can access the full book on following link.
It is quite normal in a business that date of delivery, date of invoice, date of receipt of payment, etc. are different. In this situation, it becomes important to decide which date should be considered as time of supply to levy GST.
Section 12 to Section 14 of the CGST Act, 2017 contains provisions to address time of supply.
Time of Supply of Goods
Section 12 of the CGST Act provides for determination of time of supply of Goods. Detailed provisions are as discussed below
The time of supply of goods for supplier (i.e. supplies not attracting reverse charge) Section 12(2)
Section 12(2) of the CGST Act provides for Time of supply of Goods for supplier i.e. supply of goods not attracting reverse charge. As per this section Time of supply shall be the earlier of the following dates, namely:
the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply or
the date on which the supplier receives the payment with respect to the supply (not applicable from 13-10-2017, see notification 66/2017-CT below in note-3)
Further as per proviso to section 12(2), where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount. (This proviso has also become redundant due to notification 66/2017-CT explained in note-3 below)
NOTES:
“Supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.
“The date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.
Vide Notification No. 66/2017 – Central Tax dated 15th November, 2017 and notification 40/2017-central tax dated 13th October 2017
The registered person who did not opt for the composition levy under section 10 of the said Act as the class of persons who shall pay the central tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12 of the said Act including in the situations attracting the provisions of section 14 of the said Act, and shall accordingly furnish the details and returns as mentioned in Chapter IX of the said Act and the rules made there under and the period prescribed for the payment of tax by such class of registered persons shall be such as specified in the said Act.
Hence now all registered persons supplying goods and not opting for composition scheme are not required to pay GST on advances received by them. Hence after issuance of notification 66/2017-CT, TOS for supply of Goods will be the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply
The time of supply of goods for recipient (i.e. supplies attracting reverse charge)
As per section 12(3) time of supply of goods for recipient when the supply attracts reverse charge shall be the earlier of the following dates
The date of the receipt of goods; or
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
The date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.
There are four dates that we need to consider for determining time of supply under reverse charge for goods-
Date of receipt of Goods
The date of payment as entered in books of accounts of the recipient
The date on which payment is debited in bank account of recipient
The date immediately following thirty days from the date of issue of invoice
Example : Determine the time of supply from the given information:
Determine the TOS if the supply of goods is covered under RCM.
2nd July, 2018 Date of issuance of invoice
15th July, 2018 Date of Receipt of Goods
25th July, 2018 Date of payment
Answer:
TOS will be earlier of the following dates
the date of the receipt of goods (15th July, 2018)
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 (25th July, 2018)
the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier (1st August, 2018)
Hence TOS shall be 15th July, 2018
The Time of Supply in case of supply of vouchers by a supplier Section 12(4)
Now-a-days transaction in terms of supply by issuance of vouchers and their redemptions are numerous. Hence it is important to understand the time of supply in case of supply of vouchers. Section 12(4) covers provision for determining time of supply in case of supply of vouchers by supplier. This provision is applicable only for goods. In case of services similar provisions are given under section 12(5) As per section 12(4), the time of supply shall be:
The date of issue of voucher, if the supply is identifiable at that point; or
The date of redemption of voucher, in all other cases.
Example:
X stores issues voucher of Rs. 1,000/- on 12th January, 2018 to Mr. A against which specified goods say a Shirt shall be supplied if redemption is made within one month. Mr. X redeems the voucher and gets a shirt of Rs. 1,000/- on 5th February, 2018.
Here as the supply (shirt) is identifiable at the time of issue of the voucher on 12th January, 2018, Time of Supply will be 12th January, 2018.
Suppose in the above example, Mr A is allowed to purchase any goods from the Stores X then time of supply will be date of redemption. I.e. 5th February, 2018.
Example:
Sodexo meal coupons are sold to a company on 9th September for being distributed to the employees of the said company. The coupons are valid for six months and can be used against purchase of food items. The employees use them in various stores for purchases of various edible items on different dates throughout the six months.
What is the date of supply of the coupons?
Answer: As the coupons can be used for a variety of food items, which are taxed at different rates, the supply cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of the coupons is the date of their redemption in terms of section 12(4)
Where it is not possible to determine the time of supply Section 12(5)
As per section 12(5), when it is not possible to determine time of supply under section 12(2), 12(3) or 12(4), the time of supply shall be as under
in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
in any other case, be the date on which the tax is paid.
Example: Investigation reveals clandestine removal of goods by a supplier who is not registered under GST. The evidence is in the form of noting, often undated, and some corroborative material. The supplier voluntarily pays tax during the investigation, to close the case. The time of supply will be the date on which the tax is paid, as being unregistered; the supplier is not required to file periodical returns.
Time of supply in case of addition to value of supply by way of interest, late fees or penalty for delayed payment Section 12(6)
As per section 15(2)(d), interest or late fees or penalty for delayed payment of any consideration for any supply is also required to be included in the value of supply.
Hence question arises as to what will be the time of supply for such additional payment because at the time of supply of goods, person may not be aware of future receipt of such additional payment. Hence as per section 12(6), TOS for such additional consideration shall be the date on which the supplier receives such addition in value.
Illustration: Mr. A sold goods worth Rs. 1,00,000/- to Mr. B on 20th January, 2018 on credit of one month. As per terms of the sale if payment is not received within a period of one month from the date of issue of invoice, interest at the rate of 15% per annum shall be charged. Mr. A receives payment of Rs. 1,00,000/- on 26th February, 2018. He demanded interest of Rs. 246/- from Mr. B for delayed payment of consideration. Mr. B pays this interest on 15th March, 2018. Here time of supply for interest of Rs. 246/- is the date of receipt of this amount. i.e. 15th March, 2018.
Time of Supply of Services
Provisions of section 13 is applicable for time of supply of services under different situations:
The time of supply of services for supplier (i.e. supplies not attracting reverse charge) Section 13(2)
As per section 13(2), the time of supply of services for supplier for supplies not attracting reverse charge shall be the earlier of the following dates, namely
the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply
Further as per proviso to section 13(2), where the supplier of taxable services receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.
NOTES :
“Supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.
“The date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.
Example : Determine the time of supply from the following Details provided by Mr. A
5th May, 2018
Advance of Rs. 9,000/- paid for Booking of convention hall. Consideration agreed is Rs. 20,000/-
20th June, 2018
Function held in convention hall.
28th July, 2018
Invoice issued for Rs. 20,000/- indicating balance of Rs.11,000/- payable after adjusting Advance of Rs. 9,000/-
5th August, 2018
Balance payment of Rs.11,000/- received
Answer:
As per section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply of service. Time of Supply in above case will be as under
Amount
Time of Supply
Rs. 9,000/-
5th May, 2018
Rs. 11,000/-
20th June, 2018
Example
Suppose in the above example invoice is issued on 30th June instead of 28th July, 2018, what will be the change in your answer
Answer:
As the invoice is issued within 30 days from the date of provision of services, TOS for Rs. 11,000/- will be the date of invoice i.e. 30th June. TOS for Rs. 9,000/- received on 5th may will remain same.
Example: Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an apartment complex, for which the Apartment Owners' Association showed a payment in cash on 4th April to them against work of this description. The dates of the work are not clear from the records of ABC & Co.
ABC & Co have not issued invoice or entered the payment in their books of account.
Answer:
The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13(2) as neither the invoice has been issued nor the date of provision of service is available as also the date of receipt of payment in the books of the supplier is also not available. Therefore, the time of supply will be determined vide clause (c) of section 13(2) i.e. the date on which the recipient of service shows receipt of the service in his books of account. Thus time of supply will be 4th April, the date on which the Apartment Owners' Association records the receipt of service in its books of account
The time of supply of services for recipient (i.e. supplies attracting reverse charge) Section 13(3)
As per section 13(3) of CGST Act, the time of supply of services for recipient for supplies attracting RCM shall be the earlier of the following dates:
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
The Date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:
Where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply. Date of issuance of invoice 4th July 2018 Date of receipt of payment 9th September,2018. In case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.
Example : What will be the time of supply in following case if the supply of service is covered under RCM
Answer: Here, 60 days from the date of invoice expires on 2nd September 2018. The date following the expiry of 60 days is 3rd September, 2018. TOS will be earlier of 3rd September and 9th September. i.e 3rd September, 2018
Date of issuance of invoice
4th July, 2018
Date of receipt of payment
9th September, 2018
The Time of Supply in case of supply of vouchers by a supplier Section 13(4)
Provisions are similar to those explained in Section 12(4)
Section 13(5)
Where it is not possible to determine the time of supply as per 1,2 and 3 above, the time of supply shall –
in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
in any other case, be the date on which the tax is paid.
Section 13(6)
Time of supply in case of addition to value of supply by way of interest, late fees or penalty for delayed payment Provisions are similar to hose explained in Section 12(6)
Time of Supply in case Change in Rate of Tax
Section 14
Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner namely––
In case the goods or services or both have been supplied before the change in rate of tax
where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment
In case the goods or services or both have been supplied after the change in rate of tax
where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or
where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier
NOTES :
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 four working days from the date of change in the rate of tax
As per Explanation to this Section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date, on which the payment is credited to his bank account, whichever is earlier.
As per notification 66/2017-CT, in case of supply of Goods, time of supply will be as mentioned in section 12(2)(a) and provisions of section 14 will not be applicable.
Provisions of section 14 are summarized as under:
Example:
Suppose GST rate is changed from 1st June, 2018, what will be the TOS in following cases?
Bill No.
Value of Taxable service
Date of actual provision of Service
Date of issue of invoice
Date of receipt of payment
A-l
11,00,000
01-04-2018
12-04-2018
01-06-2018
A-2
6,00,000
01-05-2018
01-05-2018
01-05-2018
A-3
12,00,000
31-05-2018
14-06-2018
24-06-2018
A-4
25,50,000
30-05-2018
13-06-2018
31-05-2018
A-5
40,00,000
01-06-2018
30-05-2018
31-05-2018
A-6
20,00,000
09-06-2018
31-05-2018
10-06-2018
A-7
15,00,000
18-06-2018
19-06-2018
31-05-2018
A-8
5,00,000
20-06-2018
20-06-2018
20-06-2018
Applying section 14, following will be the TOS:
Bill No.
Value of Taxable service
A-l
12/04/2018
A-2
01/05/2018
A-3
14/06/2018
A-4
31/05/2018
A-5
30/05/2018
A-6
10/06/2018
A-7
19/06/2018
A-8
20/06/2018
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