BLOG on Income Tax Management for - AY 2022-23 & 2023-24

Time of Supply of Goods under CGST/SGST Act, 2017 (Section 12)

The taxable event under GST is supply. The time of supply fixes the point when the liability to charge GST arises. It also indicates when a supply is deemed to have been made. Even if the supply has taken place, GST would not become payable unless the time of supply is properly determined. Hence, determination of specific time of supply is crucial. The CGST/SGST Act provides separate provisions for—

— Time of supply of goods:

and

— Time of supply of services.

(1) When shall the Liability to Pay Tax on Goods Arise [ Section 12(1) of CGST Act, 2017]

The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.

(2) Time of Supply of Goods, where Supplier is liable to Pay Tax under forward charge [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 actual issue of invoice by the supplier or the last date on which he is required, under section 31(1), to issue the invoice with respect to the supply ;

The last date for issuance of an invoice under section 31 shall be determined in the following manner:

Where Supply involves Movement of goods	Where Supply does not involve movement of goods
Before or at the time of removal of goods for supply to the recipient	Before or at the time of delivery of goods or making the goods available to the recipient

(b) the date on which the supplier receives the payment with respect to the supply.

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.

Thus, events like of date of actual issue of invoice, date of receipt of payment and the last date on which supplier is required to issue the invoice of such supply shall be the relevant factors to determine the time of supply.
Example
Mr.X supplies certain material to Mr. Y on 10.5.2019 and raises the invoice on the same date. The payment was received on 25.5.2019 and it was entered in his books of account on the same date and credited in his bank account on 27.5.2019. In this case, the time of supply shall be 10.5.2019 (i.e. date of actual issue of invoice).

If m the above case, the invoice was raised on 15.6.2019. the time of supply shall still be 10.5.2019. as the last date on which the invoice was required to be issued as per section 3 1(1) was before or at the time of removal of goods.

(3) Time of Supply of Goods where Tax is Levied on Reverse Charge Basis [Section 12(3) of 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 the earliest of the following dates, namely:—

(a) the date of the receipt of goods; or

(b) 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

(c) the date immediately following 30 days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier.
It means that the 31st. day from the date of issuance of invoice by the supplier shall be the third date.

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.

Example :
Mr. X a registered person, supplied certain goods to Mr.Y also a registered person. The tax in respect of aforesaid goods is liable to be paid on Reverse Charge Basis. Other details in respect of the above transaction are as under:

(a)	Date of the receipt of goods by Mr.Y	26.11.2019
(b)	Date on which the payment is made and entered in the books of account by Mr.Y	22.12.2019
(c)	Date when the payment is debited in the bank account of Mr.Y	24.12.2019
(d)	Date of issue of Invoice by Mr. X , the supplier	20.11.2019
(e)	Date immediately following 30 days from the date of issue of invoice by the supplier	21.12.2019

Determine the time of supply of goods under reverse charge basis.

Solution :

Time of supply in the above case, shall be earlier of the following dates :

(a)	Date of the receipt of goods by Mr.Y	26.11.2019
(b)	Date on which the payment is made and entered in the books of account by Mr.Y	22.12.20 19
(c)	Date when the payment is debited in the bank account of Mr.Y	24.12.2019
(d)	Date immediately following 30 days from the date of issue of invoice by the supplier	21.12.2019

Thus, the time of supply of goods shall be 26.11.2019. being the earliest of the above dates and Mr.Y shall have to pay GST under reverse charge basis.

(4) Time of Supply in case of Vouchers [Section 12(4) of CGST Act, 2017]

*Clauses*	*Situation*	*Time of Supply*
(a)	If the supply is identifiable at the point at which voucher is issued	The date of issuance of the voucher (Not relevant for advance payment in view of Notification No. 66/2017-CT)
(b)	In all other cases i.e. the supply is not identifiable at the point at which voucher is issued	The date of redemption of voucher

As per Notification No. 66/2017-CT, only section 12(2)(a) (i.e. date of actual issue of invoice by the supplier or the last date on which be is required, under section 31(1), to issue the invoice with respect to the supply) is relevant for determining the time of supply. In case of vouchers, where the supply was identifiable at the point at which the voucher was issued, amounted to advance payment and was thus time of supply in such case was the date of issuance of voucher (i.e. advance payment)

Thus in both the above cases, the time of supply shall be the date of redemption of voucher.

Meaning of ”Voucher" [Section 2(118) of CGST Act, 2017] :

‘Voucher” means 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 arc either indicated on the instrument itself or in related documentation. including the terms and conditions of use of such instrument e.g. gift vouchers. pro-paid vouchers, etc.

(i) Example of clause (a) above

R receives Vouchers for Rs. 10.000 on 11.5.2019 from Raymonds Ltd. for inward supply of a woolen suit. The woolen suit was purchased on 10.6.2019 by redeeming the said voucher. In this case, the time of supply shall be as under –

(1) Position before issue of notification no 66/2017-CT dated 15/11/2017 -

The date of issue of voucher (i.e. 11.5.2019), because the item of supply i.e. woolen suit is identifiable at that point. As the item of supply is identifiable, tax liability of Raymonds Ltd. can be determined at the time of issuance of voucher as payment for the woolen suit was received at that time.

(2) Position after issue of Notification No. 66/2017-CT dated 15/11/2017 –

The date of redemption of voucher (i.e. 10.6.2019), as the payment received at the time of issuance of voucher is in the nature of advance payment which is no longer relevant in view of the above notification.

(ii) Example of clause (b) above

R purchases gift voucher for Rs. 10,000 on 11.5.2019 from a trader M/s Dirty, which deals in variety of products. The aforesaid voucher is valid for a period of three months. In this case, the time of supply shall be the date of redemption of voucher by R because the item of supply is not identifiable on the date of issue of voucher. In the absence of this tax liability of M/s Dirty cannot be determined or calculated.

(5) Residuary Provision [Section 12(5) of CGST Act, 2017]

Where it is not possible to determine the time of supply under the provisions of section 12(2) or (3) or (4), the time of supply shall be as under

*Clauses*	*Situation*	*Time of Supply*
(a)	Where a periodical return has to be filed	The date on which such return is required to be filed
(b)	In any other case	Date on which GST is paid

(6) Time of Supply in relation to Value of Supply by way of Interest, etc. [Section 12(6) of CGST Act, 2017]

In many cases, the supplier of goods or services or both specifics in the invoice the credit period within which the recipient has to make the payment. Simultaneously, the aforesaid supplier also specifics in the invoice, the separate charges, described as interest or late fee or penalty that shall be charged, if the recipient fails to make the payment within the stipulated credit period.

Section 15(2)(d) of the CGST Act / SGST Act provides that the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply.

As per section 12(6) of CGST Act, the time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on hich the supplier receives such addition in value.

If the supplier does not receive the foregoing addition in value, the same shall not be subject to tax.

Example :
S supplies goods to R for Rs. 2,00,000 on 01.10.2019 on one month credit. It is also specified in the invoice that if the recipient fails to make payment within aforesaid one month, then interest @ Rs. 2.000 shall be charged for every delay of one month or part thereof. R makes the payment of Rs. 2,00,000 on 22.11.2019. However, in respect of interest, he requests S for complete waiver, But S agrees for waiving only 50% of Rs. 2,000. Consequently. R makes payment of Rs. 1,000 as interest on 30.11.2019.

Determine the time of supply of goods and time of supply in relation to value of supply by way of interest.

Solution :

(1) Time of supply of goods

Date of invoice	1.10.2019
Date of receipt of payment (Not relevant for advance payment in view of Notification No. 66/2017-CT)	22.11.2019

whichever is earlier

Thus time of supply of goods shall be 1.10.2019.

(ii) Time of supply in relation to value of supply by way of interest

It shall be 30.11.2019 i.e. the date of receipt of the interest amounting to Rs. 1,000.

Note:

In case S agrees to waive the full amount of interest then nothing will be subject to tax as there is no addition in the value of supply.

Composition Rule under GST Law

Time of Supply of Services under CGST/SGST Act, 2017 (Section 13)