FINAL LEVEL PAPER 8: INDIRECT TAX LAWS

VIRTUAL COACHING CLASSES ORGANISED BY BOS, ICAI

FINAL LEVEL

PAPER 8: INDIRECT TAX LAWS

Faculty: CA VIGNESH SURESH

© The Institute of Chartered Accountants of India

Date: 08 February 2021

INTRODUCTION

There are many events occurring in the course of Supply. There is a need to

clearly know the point at which the supply is chargeable to tax

Different Events in the course of Supply:

Issuance of Invoice

Receipt of Advance

Supply of Goods or Service

Receipt of complete payment

INTRODUCTION

The CGST Act provides separate provisions for time of supply for goods and

services vide sections 12 and 13 of CGST Act.

Section 14 provides for the method of determining the time of supply in case there

is a change in the rate of tax on supply of goods or services. Sections 12 and 13

employ provisions of section 31 relating to issue of tax invoice as a reference point

When the tax on supply is payable under reverse charge, events like date of

receipt of goods, date of making payment, date of issue of invoice etc. need to be

analysed to determine the time of supply. The provisions relating to time of supply

essentially fix the tax collection event to the earliest possible time

IMPORTANT DEFINITIONS

Associated enterprises shall have the same meaning as assigned to it in section 92A of the

Income-tax Act, 1961 [Section 2(12)].

Document includes written or printed record of any sort and electronic record as defined in

clause (t) of section 2 of the Information Technology Act, 2000 [Section 2(41)].

Invoice or tax invoice means the tax invoice referred to in section 31 [Section 2(66)]

Prescribed means prescribed by rules made under this Act on the

recommendations of the Council [Section 2(87)].

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 are either indicated on the

instrument itself or in related documentation, including the terms and conditions of use of

such instrument (Section 2(118)

The CGST Act provides separate provisions for time of supply for goods and

services vide sections 12 and 13 of CGST Act.

Section 14 provides for the method of determining the time of supply in case there

is a change in the rate of tax on supply of goods or services. Sections 12 and 13

employ provisions of section 31 relating to issue of tax invoice as a reference point

When the tax on supply is payable under reverse charge, events like date of

receipt of goods, date of making payment, date of issue of invoice etc. need to be

analysed to determine the time of supply. The provisions relating to time of supply

essentially fix the tax collection event to the earliest possible time

SECTION 12: TIME OF SUPPLY OF GOODS

(1) The liability to pay tax on goods shall arise at the time of supply as determined in terms of

the provisions of this section.

(2) The time of supply of goods shall be the earlier of the following dates, namely:-

a) the date of issue of invoice by the supplier or the last date on which he is required, under

sub-section (1) of section 31, to issue the invoice with respect to the supply; or

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

Provided that 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.


Explanation 1.––For the purposes of clauses (a) and (b), “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

Explanation 2.––For the purposes of clause (b), “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


(3) 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 the 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 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), (b), or (c),

the time of supply shall be the date of entry in the books of account of the recipient of supply


(4) In case of supply of vouchers by a supplier, the time of supply shall be-

a) the date of issue of voucher, if the supply is identifiable at that point; or

b) the date of redemption of voucher , in all other cases.

(5) Where it is not possible to determine the time of supply under the provisions of sub-

section (2) or sub-section (3) or sub-sect ion (4), the time of supply shall-

a) in a case where a periodical return has to be filed, be the date on which such

return is to be filed; or

b) in any other case, be the date on which the tax is paid.


(6) 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 which the supplier receives such addition in value.

RELEVANT PART OF SECTION 31

(1) A registered person supplying taxable goods shall, before or at the time of,-

a) removal of goods for supply to the recipient, where the supply involves

movement of goods; or

b) delivery of goods or making available thereof to the recipient, in any other

case,

issue a tax invoice showing the description, quantity and value of goods, the tax

charged thereon and such other particulars as may be prescribed:

Provided that the Government may, on the recommendations of the Council, by

notification, specify the categories of goods or supplies in respect of which a tax

invoice shall be issued, within such time and in such manner as may be prescribed .

RELEVANT PART OF SECTION 31

(4) In case of continuous supply of goods, where successive statements of accounts or

successive payments are involved, the invoice shall be issued before or at the time

each such statement is issued or, as the case may be, each such payment is received.

(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or

taken on approval for sale or return are removed before the supply takes place, the

invoice shall be issued before or at the time of supply or six months from the date of

removal, whichever is earlier.

IMPORTANT POINTS IN SECTION 12

Following situations are covered in Section 12:

Supply of goods by supplier where supplier is liable to pay tax;

Receipt of goods that are taxable under reverse charge;

Supply of vouchers that can be used to pay for goods;

Residual cases

Addition to value of supply by way of interest or fee or penalty for delayed

payment.


Supply of Goods where supplier is liable to pay tax- Forward Charge

Time of Supply shall be the earlier of the following dates:

Date of issue of tax invoice or last date on which tax invoice is supposed to be

issued by virtue of Section 31, or

Date of receipt of payment; to the extent the payment covers such goods.

“Date of receipt of payment” refers to date on which payment is recorded in books of

account or date on which bank account is credited; whichever is earlier.

“To the extent the payment covers the goods” signifies that the advance, whatever be

the amount is to be treated as the invoice for the purpose of computing the GST

IMPORTANT POINTS IN SECTION 12 No tax payable at the time of receipt of advance for supply of goods

– Special procedure for payment of tax in case of supply of goods

In exercise of the powers conferred by Section 148, the Central Government, on the

recommendation of the GST Council, has issued Notification No. 66/2017 CT dated

15.11.2017 to specify that:

a registered person (excluding composition supplier) should pay GST on the outward

supply of goods at the time of supply as specified in section 12(2)(a), i.e. date of

issue of invoice or the last date on which invoice ought to have been issued in terms

of section 31, including in the situations attracting the provisions of section 14.

IMPORTANT POINTS IN SECTION 12 No tax payable at the time of receipt of advance for supply of goods

– Special procedure for payment of tax in case of supply of goods

In simple words, all taxpayers under forward charge (except composition suppliers)

are not required to pay GST at the time of receipt of advance in relation to supply of

goods. The entire GST shall be payable only when the invoice for the supply of such

goods is issued or ought to have been issued.

Thus, time of supply of goods for the purpose of payment of tax is the date of issue

of invoice or the last date when the invoice ought to have been issued under section

31

Important to note that this relaxation is only for TOS of Goods


When Supply involves movement of goods; Invoice has to be issued either before

or at the time of removal of goods.

When Supply does not involve movement of goods; Invoice has to be issued when

the goods are delivered or made available to the recipient.

Continuous Supply of Goods; Invoice to be issued before or at the time of issuance

of periodical statement/receipt of periodical payment

Goods sent or taken on approval for sale or return; Invoice to be issued before or

at the time of supply or 6 months from the date of removal whichever is earlier.


EXAMPLES:

B Ltd. sells goods to C Ltd. on 10th June. The invoice for the same is issued on the

same day. Payment for the goods is received on 20th June

B Ltd. sells goods to C Ltd. on 10th June. The invoice for the same is issued on 10th

June. Payment for the goods is received on 5th June

B Ltd. sells goods to C Ltd. on 10th June. The invoice for the same is issued on 12th

June. Payment for the goods is received on 20th June

B Ltd. enters into a contract with C Ltd. for supply of goods over a period of one

year starting from the month of January. As per the contract, C Ltd. makes

payment on 10th day of each month. B Ltd. issues the invoice on the same day


EXAMPLES:

B Ltd. sends goods to C Ltd. for sale on approval basis on 10th January. C Ltd.

approves the goods on 15th August. B Ltd. issue the invoices on 10th July as the

supply gets fructified after six months from the date of removal

IMPORTANT POINTS

Section 12(3): Receipt of goods that are taxable under reverse charge

TOS to be determined to be the earliest of the following dates:

Date on which the goods are received, or

Date on which payment is recorded in the books of account of the entity that receives the

goods, or the date on which it is debited from the entity's bank account, whichever is

earlier, or

Date immediately following 30 days from the date of issue of invoice (or document by

some other name in lieu of invoice) by the supplier.

If it is not possible as per above, then the TOS will be the date of entry of goods in the

books of account of the recipient of supply.

IMPORTANT POINTS

Section 12(3): Receipt of goods that are taxable under reverse charge

Examples:

B Ltd. sells goods to C Ltd. on 4th June. The goods are taxable under reverse charge.

Invoice for the same is issued on 4th June. C Ltd. receives the goods on 12th June. C

Ltd. records the payment in the books of account on 30th June and the same is

debited from the bank account of C Ltd. on 2nd July.

B Ltd. sells goods to C Ltd. on 4th June. The goods are taxable under reverse charge.

Invoice for the same is issued on 4th June. C Ltd. receives the goods on 6th July. C Ltd.

records the payment in the books of account on 21st July and the same is debited

from the bank account of C Ltd. on 31st July

IMPORTANT POINTS

Section 12(4): Vouchers

Vouchers are instruments that certain persons (potential suppliers) are obliged to

accept as consideration, part or full, for goods and/or services;

The instrument or its related documentation sets out the terms and conditions of

use, the goods / services covered, and the identity of the potential suppliers of

these.

As per section 12(4), the time of supply of vouchers exchangeable for goods is-

Date of issue of the voucher, if the supply that it covers is identifiable at that

point, or

Date of redemption of the voucher in other cases.

EXAMPLES

Acmesales Limited sells food coupons to a company, which gives these to its

employees as part of the agreed perquisites. The coupons can be redeemed in

outlets that are part of the program. Determine the TOS

With each purchase of a large pizza during the Christmas week from Perfect Pizza,

one can buy a voucher for Rs. 20 which will be redeemable till 5 Jan for a small

pizza. Determne the TOS

IMPORTANT POINTS

Section 12(5): Residual Case:

If the situation is not covered by any of the provisions discussed above, the time of

supply is fixed under sub-section (5) of section 12, in the following manner:

Due date for filing of the periodical return, or

In any other case, date on which GST is paid.

Section 12(6): Enhancement in value on account of interest/late fee etc. for delayed

payment of consideration

Commercially, all the contract of supplies stipulate payment of interest/late

fee/penalty etc. for payment of consideration beyond the agreed time period. Such

interest etc. is includible in value of taxable supply TOS- Date of receipt

IMPORTANT POINTS

Examples:

A Ltd. sold goods to B Ltd. on 6th June with a condition that interest @ 2% per

month will be charged if B Ltd. failed to make payment within 15 days of the

delivery of the goods. Goods were delivered as also the invoice was issued on 6th

June. B Ltd. paid the consideration for the goods on 6th July along with applicable

interest. Determine TOS

SECTION 13: TIME OF SUPPLY OF SERVICES

(1) The liability to pay tax on services shall arise at the time of supply, as determined in

terms of the provisions of this section.

(2) The time of supply of services shall be the earliest 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:


Provided that where the supplier of taxable service 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 relating to such excess amount.

Explanation. ––For the purposes of clauses (a) and (b)––

the 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 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.


(3) 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 earlier of the following dates,

namely:––

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:


Provided that 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:

Provided further that 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.


Section 13(4): In case of supply of vouchers by a supplier, the time of supply shall be––

(a) the date of issue of voucher, if the supply is identifiable at that point; or

(b) the date of redemption of voucher, in all other cases.

Section 13(5): Where it is not possible to determine the time of supply under the provisions

of subsection (2) or sub-section (3) or sub-section (4), 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.

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

which the supplier receives such addition in value.

PROVISIONS PERTAINING TO TAX INVOICE

Section 31:

(2) A registered person supplying taxable services shall, before or after the provision

of service but within a prescribed period, issue a tax invoice, showing the

description, value, tax charged thereon and such other particulars as may be

prescribed:

Provided that the Government may, on the recommendations of the Council, by

notification and subject to such conditions as may be mentioned therein, specify

the categories of services in respect of which any other document issued in

relation to the supply shall be deemed to be a tax invoice; or tax invoice may not

be issued


Section 31:

(5) In case of continuous supply of services:

where the due date of payment is ascertainable from the contract, the invoice

shall be issued on or before the due date of payment;

where the due date of payment is not ascertainable from the contract, the invoice

shall be issued before or at the time when the supplier of service receives the

payment;

where the payment is linked to the completion of an event, the invoice shall be

issued on or before the date of completion of that event.


Section 31:

(6) In a case where the supply of services ceases under a contract before the completion of

the supply, the invoice shall be issued at the time when the supply ceases and such

invoice shall be issued to the extent of the supply made before such cessation.

Rule 47: Time limit for issuance of invoice for provision of services:

The invoice referred to in rule 46, in case of taxable supply of services, shall be issued within

a period of thirty days from the date of supply of service

Provided that where the supplier of services is an insurer or a banking company or a

financial institution, including a non-banking financial company, the period within which the

invoice or any document in lieu thereof is to be issued shall be forty five days from the date

of supply of service:


Provided further that an insurer or a banking company or a financial institution,

including a non- banking financial company, or a telecom operator, or any other class

of supplier of services as may be notified by the Government on the

recommendations of the Council, making taxable supplies of services between

distinct persons as specified in section 25,

may issue the invoice before or at the time such supplier records the same in his

books of account or before the expiry of the quarter during which the supply was

made.

IMPORTANT POINTS IN SECTION 13 Section 13 stipulates how to determine time of supply in the following situations:

Supply of service on which the supplier is liable to pay tax,

Receipt of service that is taxable under reverse charge basis,

Supply of vouchers that can be used to pay for services,

Residual cases,

Addition to value of supply by way of interest or fee or penalty for delayed payment.

IMPORTANT POINTS IN SECTION 13 As per section 31(2) read with rule 47 of CGST Rules, the tax invoice needs to be

issued either before the provision of service or within 30 days (45 days in case of

insurance companies/ banking companies/ financial institutions including NBFCs)

from the date of supply of service.

In case of cessation of supply of services before completion of supply, the invoice

(to the extent of the supply made before such cessation) should be issued at the

time when the supply ceases.

In case of continuous supply of services, the invoice should be issued either (i)

on/ before the due date of payment or (ii) before/ at the time when the supplier of

service receives the payment (iii) on/ before the date of completion of the

milestone event when the payment is linked to completion of an event..


Time of supply of services under forward charge

For supply of service on which the supplier is liable to pay tax, the time of supply will be the

earlier of the dates arrived at by methods (A) and (B), as follows:

Date of invoice or date of receipt of payment (to the extent the invoice or payment covers

the supply of services), whichever is earlier, if the invoice is issued within the time

prescribed under Section 31

Date of provision of service or date of receipt of payment (to the extent the payment

covers the supply of services), whichever is earlier, if the invoice is not issued within the

time prescribed under section 31

If the above two methods [(A) and (B)] are not applicable, the time of supply will be the

date on which the recipient of service shows receipt of the service in his books of account


Time of supply of services under forward charge

“Date of receipt of payment” in the above situation refers to the date on which the

payment is recorded in the books of account of the entity (supplier of service) that

receives the payment, or the date on which the payment is credited to the entity’s

bank account, whichever is earlier


Time of supply of services under forward charge- EXAMPLES

A Ltd. provides services to B Ltd. on 10th June. A Ltd. issues the invoice for the

services on 15th June. Payment is received in the bank account of A Ltd. on 20th

June and is recorded in the books of account of A Ltd. on 30th June


services on 7th July. Payment is received in the bank account of A Ltd. on 20th June

and is recorded in the books of account of A Ltd. on 30th June


services on 15th July. Payment is received in the bank account of A Ltd. on 20th

June and is recorded in the books of account of A Ltd. on 30th June


Time of supply of services under forward charge- EXAMPLES

In terms of the proviso to sub-section (2) of section 13, for a payment of up to `

Rs. 1,000 received in excess of the invoice value, the supplier can choose to take

the date of invoice issued with respect to such excess amount as the time of

supply of services in relation to this excess value

A telephone company receives Rs. 5000 against an invoice of Rs. 4800. The

excess amount of Rs. 200 can be adjusted against the next invoice

The company has the option to take the date of the next invoice as the time of

supply of service in relation to the amount of ` 200 received in excess against the

earlier invoice


Section 13(3): Reverse Charge

The time of supply for such service will be the earlier of the following:

Date of payment, or

Date immediately following 60 days since issue of invoice (or any other document in lieu

of invoice) by the supplier.

If it is not possible to determine the time of supply by using these parameters, then the time of

supply will be the date of entry of the service in the books of account of the recipient of

supply

In the case of service received from an associated enterprise located outside India, the time

of supply will be the date of payment for the service, or the date of entry of the service in the

books of account of the recipient, whichever is earlier.


EXAMPLES:

A Ltd. provides services to B Ltd. on 10th June. The services are taxable under reverse charge.

A Ltd. issues the invoice for the services on 15th June. Payment is debited from the bank

account of B Ltd. on 20th June and is recorded in the books of account of B Ltd. on 30th June

A Ltd. provides services to B Ltd. on 10th June. The services are taxable under reverse charge.

A Ltd. issues the invoice for the services on 15th June. Payment is debited from the bank

account of B Ltd. on 20th September and is recorded in the books of account of B Ltd. on

15th September

A Inc., a foreign company, and B Ltd., an Indian company, are associated enterprises. A Inc.

provides technical services to B Ltd. Vide an email dated June 4th, A Inc. informs B Ltd. the

cost of technical services provided to it. B Ltd. transfers the payment to A Inc. on 12th August.


Section 13(4): Time of supply of vouchers exchangeable for services

The time of supply of vouchers that are exchangeable for services is stipulated as

the date of issue of the voucher, if the supply is identifiable at that point, or the

date of redemption of the voucher in other cases.

Example: A Ltd., a company providing hospitality services, enters into agreement

with B Ltd. by which B Ltd. markets A Ltd.’s hotel rooms and sells coupons /

vouchers redeemable for a discount against stay in the hotel


Section 13(5): Time of supply of services in residual cases

If the situation is not covered by any of the provisions discussed above, the time

of supply is fixed under sub-section (5) of section 13, in the following manner:

Date on which periodical return for the period is required to be filed, or

In any other case, date on which GST is paid

Section 13(6) prescribes that time of supply in case of addition in value by way of

interest/ late fee/penalty for delayed payment of consideration for a service is the

date on which the supplier receives such addition in value

SECTION 14- CHANGE IN RATE OF TAX

This section deals with cases where there is a change in rate of tax in respect of Supply of

Goods or 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 goods or services or both, shall be determined

in the following manner, namely:-

(a) In case where goods or services or both have been supplied before change in rate of

tax:

(i) 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





(a) In case where goods or services or both have been supplied before change in rate of

tax:

(ii) 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

(iii) 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) In case where goods or services or both have been supplied after change in rate of tax:

(i) where payment has been received after change in tax but invoice has been issued

prior to change in tax rate, TOS shall be the date of receipt of payment

(ii) 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

(iii) 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


Provided that 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.

Explanation - For the purposes of 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.


Whenever there is a change in the effective rate of tax, the date of change in rate of tax, date

of supply of goods/services, date of issue of invoice and date of receipt of payment needs to

be identified

When the rate of tax is changed, and a transaction of supply of goods or services is not yet

completed in all its documentary and financial aspects, the law makes specific provisions for

fixing the time of supply of the goods or service for the purpose of payment of tax.

Where the payment is credited in the bank account after 4 working days from the date of

change in the rate of tax, the date of receipt of payment will be the date of credit in the bank

account. In other words, in such a case, the date of recording the payment in the books of

account will not be considered as the date of receipt of payment even though if the same

precedes the date of crediting of payment in the bank account.


It can be seen from a study of these provisions, that the timing of two of the three markers

(supply, invoice, payment) determines the time of supply. If any two of them occur before the

change in rate of tax, the time of supply will fall in the period prior to change in rate of tax

i.e., old rate will be applicable.

However, if any two of them occur after the change in rate of tax, the time of supply will fall

in the period after the change in rate of tax i.e., new rate will be applicable.



be identified





Date of supply

of goods or

services

Date of

invoice

Date of

receipt of

payment

Time of supply Rate of tax

(1) (2) (3) (4) (5)

Before After After Earlier of (2) and (3) New

Before Before After (2) Old

Before After Before (3) Old

After Before After (3) New

After Before Before Earlier of (2) and (3) Old

After After Before (2) New


It can be seen from a study of these provisions, that the timing of two of the three markers

(supply, invoice, payment) determines the time of supply. If any two of them occur before the

change in rate of tax, the time of supply will fall in the period prior to change in rate of tax

i.e., old rate will be applicable.

However, if any two of them occur after the change in rate of tax, the time of supply will fall

in the period after the change in rate of tax i.e., new rate will be applicable.



be identified




TEST QUESTIONS

K Pvt. Ltd. supplies taxable goods to S Pvt. Ltd. for Rs. 2,50,000 on 23rd June and issues the

invoice on 25th June. Payment for the goods is made by Sutlej Pvt. Ltd. on 15th July.

Determine the time of supply of goods for the purpose of payment of tax.

I buy a set of modular furniture from a retail store. Invoice is issued to me and I make the

payment. The furniture is to be delivered to me later in the week when a technician is

available to assemble and install it. The next day the rate of tax applicable to modular

furniture is revised upward, and the store sends me a supplementary invoice with the delivery

note accompanying the furniture to collect the differential amount of tax. Is this correct on

store’s part? Explain

TEST QUESTIONS

An online portal, Best Info, raises invoice for database access on 21st February on Roy

& Bansal Ltd. The payment is made by Roy & Bansal Ltd. by a demand draft sent on 25th

February, which is received and entered in the accounts of Best Info on 28th February. Best

Info encashes the demand draft and thereafter, gives access to the database to Roy & Bansal

Ltd from 3rd March. In the meanwhile, the rate of tax is changed from 1st March. Determine

the time of supply of the service of database access by Best Info

TEST QUESTIONS

Trust Industries Ltd. has entered into a contract with VST Ltd. to supply gas by a pipeline to

VST Ltd. for a period of one year. As per the terms of the contract-

VST Ltd. shall make monthly payments [Payment for a month shall be made by 7th day of

the next month]

Every quarter, Trust Industries Ltd. shall issue a statement of account showing the

quantity and value of goods dispatched, payments received and payment due.

The differential amount, if any, as mentioned in the statement of account shall be paid by

VST Ltd.

TEST QUESTIONS

The details of various events are:

August 5, September 5 and October 6 Payments of Rs. 2 lakh made in each

month for the quarter July-September

October 3 Statement of accounts for the quarter

July – September issued by the supplier

showing amount of Rs.2,56,000 as

unpaid

October 17 Balance payment of Rs. 56,000

received by supplier for the quarter July

– September

Determine TOS

TEST QUESTIONS

Mint Industries Ltd., a registered supplier, imports business support services from

Green Inc. of USA on 13th August. The relevant invoice for $ 1,20,000 is raised by

Green Inc on 18th August. Mint Industries Ltd. makes the payment against the said

invoice as follows:

Case-1: September 22

Case-2: December 27

TEST QUESTIONS

Renudhoot Ltd. enters into a contract with XYZ Ltd. on 2nd July 2019 for a period of 2 years for

construction of a new building - to be used for commercial purposes - for a total consideration of

Rs. 150 lakh. As per the terms of contract, Renduhoot Ltd. is required to make payment at

different stages of completion of the building namely, 50%, 75% and 100%.

Determine the time of supply using relevant details given as under:

Stage Date of various

stages

Date of issuance of

invoice

Date of payment Amount paid

Initial Booking 02-07-2019 02-07-2019 02-07-2019 15 lakh

50% completion 15-03-2020 22-03-2020 29-03-2020 60 lakh

75% completion 20-06-2020 24-07-2020 23-07-2020 35 lakh

100% completion 30-09-2020 30-09-2020 20-09-2020 40 lakh

TEST QUESTIONS

Kothari Ltd., Mumbai, holds 51% of shares of Wilson Inc., a USA based company.

Wilson Inc. provides business auxiliary services to Kothari Ltd. From the following

details, determine the time of supply of service provided by Wilson Inc:

PARTICULARS AMOUNT

Agreed Consideration USD 100000

Date on which services are provided by Wilson Inc June 16th

Date on which invoice is issued by Wilson Inc. August 19th

Date of debit in the books of account of Kothari Ltd. September 30th

Date on which payment is made by Kothari Ltd. December 23

9 February 2021 © THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 59

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FINAL LEVEL PAPER 8: INDIRECT TAX LAWS