Time of supply of goods under GST 2017 – 15 Questions Answered

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Time of supply of goods under GST – 15 Questions Answered: Section 12 of CGST Act, made applicable to IGST vide Section 20 of IGST Act and Section 21 of UTGST Hopefully, GST will be implemented by July 1, 2017 and hence the month of May is very critical for our profession as we have to fully geared up with transition to the biggest law reform of India. The Branch is striving to organise more and more workshops and lecture meets on GST. This article explains GST (Goods and service tax) Time of supply of goods, GST effective date, Short term and long term impact on GST & latest updates related to Time of supply of goods under GST Regime. Lets understand what is the Time of supply of goods under GST, Applicability of GST in GST Regime, GST rates, its impact on your business and latest updates about GST Act 2017. Now check more details for Time of supply of goods as per CGST Act 2017..

Time of supply of goods under GST

Q 1. How are the provisions relating to ‘time of supply’ relevant under GST Law?

Ans. The provisions relating to time of supply of goods / services are relevant in ascertaining the time to remit the taxes on a particular transaction involving supply of goods / services under the GST Law. The CGST Act, 2017 provides separate provisions for time of supply of goods and services viz., Section 12 for time of supply of goods and Section 13 for time of supply of services.

Q 2. What will be the time of supply of goods, generally?

Ans. Generally, in terms of Section 12 of CGST Act, 2017, the time of supply of goods shall
be the earliest of the following:

  • (a) Date of issue of invoice; or
  • (b) Due date of issue of invoice; or
  • (c) Date on which supplier receives the payment; or
  • (d) Date on which payment is entered in books of accounts of the supplier; or
  • (e) Date on which payment is credited to the bank account.

Q 3. What will be the date of payment to ascertain the time of supply of goods?

Ans. In terms of the Explanation 2 appended to Section 12, the date of payment shall be the earliest of the following dates:

  • (a) The date on which supplier receives the payment; or
  • (b) Date on which payment is entered in books of accounts of the supplier; or
  • (c) Date on which payment is credited to the bank account.

Q 4. What will be the time of supply where multiple invoices are issued for a single consignment involving supply of goods?

Ans. The time of supply of goods shall be the date of issuance of invoice; or due date for issuance of invoice or receipt of payment by the supplier, whichever is earlier. In the event, the supplier has not received the payment in case of multiple invoices issued for a single consignment of supply, the time of supply shall be earlier of date of issuance of invoice; or due date for issuance of invoice.

Q 5. What is the time period within which invoice has to be issued where the goods being sent or taken on approval for sale?

Ans. The invoice in respect of goods sent or taken on approval for sale or return shall be issued before or at the time of supply or six months from the date of approval, whichever is earlier

Q 6. What will be the time of supply where tax is liable to be paid under reverse charge mechanism?

Ans. In case of tax liable to be paid under reverse charge mechanism, the time of supply shall be the earliest of the following:

  • (a) Date of receipt of goods by the recipient; or
  • (b) Date on which the payment is entered in the books of accounts of the recipient;

or

  • (c) Date on which payment is debited in the bank account of the recipient; or
  • (d) Date immediately following thirty days from the date of issue of invoice by the supplier.

Where the time of supply cannot be ascertained as above, the date of entry in the books of accounts of the recipient shall be the time of supply of goods. To illustrate, Mr. A being registered taxable perso procures goods from Mr. B who is unregistered. The chronology of events are as follows:

Date of receipt of goods by Mr. A July 15, 2017 Time of supply shallbe July 15,2017
Date on which the payment is entered in the books of
accounts of Mr. A
July 20, 2017
Date on which payment is debited in the bank
account of Mr. A
July 22, 2017

In the event, the above details are not available and the date of entry relating to purchase of goods in the books of Mr. A is July 30, 2017, the time of supply of goods will be July 30, 2017.

Q 7. What will be the time of supply in case of supply of vouchers?

Ans. In terms of Section 12(4) of the CGST Act, 2017, time of supply of vouchers shall be the
earliest of the following:

  • (a) date of issue of voucher, if the supply is identifiable at that point; or
  • (b) date of redemption of voucher, in all other cases.

Eg: Mr. A buys vouchers from Lifestyle of worth Rs. 1,000/- for a shirt dated December 01, 2017. Mr. A gifts such vouchers to Mr. B who redeems such vouchers with Amazon India on January 31, 2018. – Time of supply is the date of issue of vouchers viz., December 01, 2017.

Q 8. What is time of supply with respect to escalation in price after the issuance of invoice
(Eg: Invoice is issued for Rs. 5,000 on June 22, 2017 by the supplier. Subsequently, due to variation in price the recipient pays scenario 1: Rs. 5,500/- and scenario 2: 8,000/-)?

Ans. In terms of the proviso to Section 12(2)(b) of the CGST Act, 2017, the time of supply with respect to the amount received in excess up to Rs. 1,000/- of the amount indicated in tax invoice, the time of supply shall be the date of issue of invoice. Where the amount is received exceeds Rs. 1,000/-, the time of supply of goods shall be the earliest of the following (in case where the invoice is already issued):

  • (a) Date on which payment is entered in books of accounts of the supplier; or
  • (b) Date on which payment is credited to the bank account.

Accordingly, the time of supply in each of the scenarios given in the example would be as follows:

Scenario 1: The time of supply of goods with respect to the amount of Rs. 500/- received in excess shall be the date of invoice.

Scenario 2: The time of supply would be as follows:

Date on which payment is entered in books of
accounts of the supplier
July 30, 2017 Time of supply shall be July 28,2017
Date on which payment is credited to the bank 2017
account
July 28, 2017

Q 9. What would be the date of payment for ascertaining time of supply of goods?

Ans. The date of payment as referred in provisions relating to time of supply of goods shall be the earliest of the following:

  • (a) date when the payment entry in relation to supply of goods is recorded in booksof accounts; or
  • (b) date on which the payment is credited to suppliers bank account.

Q 10. What would be the ‘due date of issuance of invoice’ with reference to the provisions relating to time of supply of goods?

Ans. Section 31(1) of the CGST Act, 2017 prescribes the time at which the tax invoice should be issued by a registered taxable person supplying goods. Accordingly, the due date for issuance of invoice would be as follows:

(a) Supply involves movement of goods – It is provided that the tax invoice should be issued before or at the time of removal of goods for supply to the recipient. As such, it is inferred that the date of removal of goods shall be the ‘due date of issuance of invoice’;

(b) Any other case – delivery of goods or making goods available to the recipient. As such, it is inferred that the date on which goods are delivered to the recipient or the date on which goods are made available to the recipient is the ‘due date of issuance of invoice’.  Proviso to Section 31(1) of the CGST Act, 2017 also empowers the Central / State Government prescribe the time limit for issuance of invoice by way of notification in certain categories of supplies. In such a scenario, the invoice should be issued within the time limit as notified.

Q 11. Time of supply in case of Composite supply?

Ans. In terms of Section 2(30) of CGST Act, 2017 ‘composite supply’ is defined to mean a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. The illustration appended to the definition of ‘composite supply’ reads as follows: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply.

Section 8(a) provides that the composite supply whether involves supply of goods or services shall be decided based on the principal supply forming part of ‘composite supply’. In other words, if the composite supply involves supply of services as principal supply, such composite supply would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, if composite supply involves supply of goods as principal supply, such composite supply would qualify as supply of goods and accordingly, the provisions relating to time of supply of services would be applicable.

Q 12. What would be the time of supply where composite supply involves supply of goods as principal supply?

Ans. The general provisions relating to time of supply of goods will be applicable where composite supply involves goods as principal supply. Accordingly, the time of supply of such composite supply shall be the earliest of the following:

  • (a) Date of issue of invoice; or
  • (b) Due date of issue of invoice; or
  • (c) Date on which supplier receives the payment; or
  • (d) Date on which payment is entered in books of accounts of the supplier; or
  • (e) Date on which payment is credited to the bank account.

Q 13. Time of supply in case of continuous supply of goods?

Ans. In terms of Section 2(32) of the CGST Act, 2017, ‘continuous supply of goods’ is defined to mean a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire,  cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. Due date for issuance of invoice in terms of Section 31(4) involving successive statement of accounts (SOA) or successive payments is

  • Before/ at the time of issue of each SOA or
  • Before/ at the time of receipt such successive payment

Accordingly, the time of continuous supply of goods, in terms of Section 12 shall be the earliest of the following:

  • (a) Date of issue of invoice; or
  • (b) Due date of issue of invoice; or
  • (c) Date on which supplier receives the payment; or
  • (d) Date on which payment is entered in books of accounts of the supplier; or
  • (e) Date on which payment is credited to the bank account.

Q 14. Time of supply in case of supply of goods through e-commerce entities?

Ans. The CGST Act, 2017 do not provides separate provisions for ascertaining time of supply of goods by e-commerce entities. Here the supplier of goods is a person who make the supply through an e commerce entity. Accordingly, in terms of Section 12 time of supply shall be the earliest of the following:

  • (a) Date of issue of invoice; or
  • (b) Due date of issue of invoice; or
  • (c) Date on which supplier receives the payment; or
  • (d) Date on which payment is entered in books of accounts of the supplier; or
  • (e) Date on which payment is credited to the bank account.

Q 15. Time of supply in case of addition in value by way of interest, late fee or penalty?

Ans. In terms of Section 12(6) of the CGST Act, 2017 the date on which the supplier receives interest, penalty or late fee which forms part of value will be the time of supply. However, reference can also be drawn to proviso to Section 12(2) where such additional value is received in the form of interest, penalty and late fee. Accordingly, the time of supply with respect to the amount received in excess up to Rs. 1,000/- of the amount indicated in tax invoice, the time of supply shall be the date of issue of invoice. Where the amount received exceeds Rs. 1,000/-, the time of supply of goods shall be the earliest of the following (in case where the invoice is already issued):

  • (a) Date on which payment is entered in books of accounts of the supplier; or
  • (b) Date on which payment is credited to the bank account.

 

On our website we have provided all the details of GST Act 2017. We hope that our article will be helpful for you to understand the GST Act 2017.

 

Check Also:

Impact of GST on Transport Sector, GST Impact on Transport Sector

FAQs on Frontend Business Process on GST Portal (GSTN)

 

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