Time of supply where there is Change in Rate of Tax in respect of Supply Of Goods or Services or both [Section 14 of CGST Act, 2017]

1. In case of Supply of ’Services’

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 services, shall be determined in the following manner, namely:—

(A) Where the services have been supplied Before the Change in Effective Rate of Tax

1. 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

2. 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

3. 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.

(B) Where the Services have been supplied after the Change in Rate of Tax

In case the services have been supplied after the change in rate of tax,—

1. 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

2. 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; or

3. where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice.

The above provisions may be summarized as under:

Case 1: Where a taxable supply of services has been provided beforethe change in effective rate of tax

Case 2: Where a taxable supply of services is provided after the change in effective rate of tax

Important notes :

(1) For determination of Rate of GST

If any two of the following three events take place before the change in the effective rate of tax, the old rate of GST shall apply:

(a) supply of service

(b) issue of invoice

(c) receipt of payment

On the other hand, if any two of the above three events take place after the change in the effective rate of tax, the ness rate of GST shall apply.

(2) For Determination of Time Of Supply

(a) If two out of the above three events (including the first event of supply of scrvicc) take place bcforc the change of effective rate of GST, the second event shall be taken as the time of supply.

(b) If two out of the above three events (including the first event of supply of service) take place after the change of effective rate of GST, the second event shall be taken as the time of supply.

(c) In any other case, the time of supply shall be issue of invoice or receipt of payment whichever is earlier.

Example :

Tax Rate—upto31.8.20l8— 12%

Tax Rate—from 1.9.2018—18%

Notes.—
1. In situation 1 above :, only one event has taken place before 1.920 IX i.e. taxable service provided.

Hence, new rate shall be applicable and the time of supply shall be date of invoice or date of payment whichever is earlier.

2. In situation 2 above : , the following two events have taken place before 1.9.2018:

(I) Date of Service provided

and

(ii) Date of invoice.

Hence, old rate shall be applicable and the time of supply shall be date on which invoice has been issued.

3. In situation 3 : , all the events have taken place before 1.9.2018.

Hence, old rate shall be applicable and the time of supply shall be date of invoice or date of payment

whichever is earlier.

4. In situation 4 : , only one event has taken place before 1.9.2018 i.e. the date of invoice.
Hence, new rate shall be applicable and the time of supply shall be date of payment, even though the payment is subsequent to date of invoice.

5. In situation 5 : , the following two events have taken place before 1.9.2018 :

(i) Date of invoice raised

(ii) Date of payment

Hence, old rate shall be applicable and the time of supply shall be date when invoice was issued or the payment was received, whichever is earlier.

6. In situation 6 : only one event has taken place before 1.9.2018 i.e. the date of payment
Hence, now rate shall be applicable and the time of supply shall be date on which invoice is issued even though the payment is received before the date of invoice.

2.  In case of Supply of ‘Goods’

Although the above provisions of section 14 were also applicable for supply of goods, but in view of Notification No. 66/2017-CT, in which the date of advance payment of goods is not relevant for determining the time of supply, and as such where there is a change in rate of tax in respect of supply of goods, the time of supply shall be determined as per section 12(2)(a).

(i.e. on the date of issue of invoice by the supplier or the last date of on which he is required under section 31(1) with respect of the supply of goods and not at the time of receipt of advance of such supplies)