Time of Supply Rules under GST Law

7/26/2019 Time of Supply Rules under GST Law

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Time of Supply Rules under Model GST Law:

Under the new GST Model Law the incidence of taxation is supply of Goods and Services. It

becomes important to determine the point of taxation i.e. the time of supply in order to levy

the GST upon the assessee.

Section 3 of the Model Law defines Supply as:

(1) Supply includes

(a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange,

license, rental, lease or disposal made or agreed to be made for a consideration by a person

in the course or furtherance of business,

(b) importation of service, whether or not for a consideration and whether or not in the

course or furtherance of business, and

(c) a supply specified in Schedule I, made or agreed to be made without a consideration.

(2) Schedule II, in respect of matters mentioned therein, shall apply for determining what

is, or is to be treated as a supply of goods or a supply of services.

(2A) Where a person acting as an agent who, for an agreed commission or brokerage,

either supplies or receives any goods and/or services on behalf of any principal, the

transaction between such principal and agent shall be deemed to be a supply.

(3) Subject to sub-section (2), the Central or a State Government may, uponrecommendation of the Council, specify, by notification, the transactions that are to be

treated as

(i) a supply of goods and not as a supply of services; or

(ii) a supply of services and not as a supply of goods; or

(iii) neither a supply of goods nor a supply of services.

(4) Notwithstanding anything contained in sub-section (1), the supply of any branded

service by an aggregator, as defined in section 43B, under a brand name or trade name

owned by him shall be deemed to be a supply of the said service by the said aggregator.


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Analysis of the definition of term- Supply

Following are the important constituents of Supply:

A.

In case of Normal Supply:

1. There must be actual provisions of goods/services by either sale, barter , Exchange

etc. ; for

2. A Consideration by a person;

3.

In the course of furtherance of business as defined in section 2 (17) of Model GST

Law.

B. Where the Goods/Services are Imported, GST would be applicable irrespective

of consideration or used in furtherance of business or not.

In this scenario where the point of taxation is Supply, it is important to consider the

Time of Supply in order to determine the time at which such supply will be taxable underGST.

A. Time of Supply of Goods:

1. As per section 12 the liability to pay CGST/SGST shall arise at the time of supply

as determined in terms of the provisions of this section:

2. Time of Supply of Goods shall be the earliest of :

In case of normal supply of goods.

a)

(i) Date of removal of goods, if the goods are required to be removed; or

(ii)

Date of availability of goods to recipient, where the goods are not

required to be removed.

b)

The date on which the supplier issues the invoice with respect to supply; or

c) The date on which the supplier receives the payment with respect to supply ; or

d)

The date on which the recipient shows the receipt of goods in his books of

accounts.

Time of Supply of Goods can be understood by following illustration:

Date ofRemoval

Date ofInvoice

Date ofPayment

Date of entryin books

Time ofSupply

30.06.2016 15.07.2016 25.06.2016 07.07.2016 25.06.2016

20.06.2016 15.07.2016 25.06.2016 07.07.2016 20.06.2016

30.06.2016 28.06.2016 01.07.2016 07.07.2016 28.06.2016

30.06.2016 15.07.2016 25.06.2016 20.06.2016 20.06.2016


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In case of continuous supply of Goods

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

successive payments are involved, the time of supply shall be the date of expiry of

the period to which such successive statements of accounts or successive payments

relate.

If there are no successive statements of account, the date of issue of the invoice (or

any other document) or the date of receipt of payment, whichever is earlier, shall be

the time of supply.

Time of Supply in case of Reverse Charge:

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 on which the payment is made, or

(c) the date of receipt of invoice, or

(d) the date of debit in the books of accounts.

B.

Time of Supply of Services:

1.

As per section 13 the liability to pay CGST/SGST shall arise at the time of supply

as determined in terms of the provisions of this section:

2.

Time of Supply of Services shall be:

(i) In cases where Invoice is issued in prescribed time

Earliest of:

(a)

the date of issue of invoice; or

(b) the date of receipt of payment; or

(ii)

In cases where Invoice is issued in prescribed time

Earliest of:

(a)

the date of completion of the provision of service; or

(b)

the date of receipt of payment, ; or

(iii)

the date on which the recipient shows the receipt of services in his

books of account, in a case where the provisions of clause (i) or (ii)

do not apply.


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Time of Supply of Services can be understood by following illustration:

S. No Description Date of

Invoice

Date of

Completion

of service

Date of

Payment

Date of

entry in

books

Time of

Supply

1. Invoice issued inprescribed time.

25.06.2016 20.06.2016 28.06.2016 27.06.2016 25.06.2016

2. Invoice issued in

prescribed time.

25.06.2016 20.06.2016 24.06.2016 27.06.2016 24.06.2016

3. Invoice issued

later than

prescribed time.

25.06.2016 20.06.2016 28.06.2016 27.06.2016 20.06.2016

4. Invoice issued

later than

prescribed time.

25.06.2016 20.06.2016 18.06.2016 27.06.2016 18.06.2016

3. Invoice not

issued at all

--- 20.06.2016 28.06.2016 27.06.2016 27.06.2016

In case of continuous supply of Services

(a) where the due date of payment is ascertainable from the contract:

Earliest of:

(i) the date on which the payment is liable to be made by the

recipient of service, whether or not any invoice has been issued;

or

(ii)

any payment has been received by the supplier of service;

(b) where the due date of payment is not ascertainable from the contract:

Earliest of:

(i) each such time when the supplier of service receives the payment,

or

(ii) issues an invoice;

(c)

where the payment is linked to the completion of an event, the time ofcompletion of that event;


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Time of Supply in case of Reverse Charge:

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 services, or

(b) the date on which the payment is made, or

(c) the date of receipt of invoice, or

(d) the date of debit in the books of accounts.

By:

Keshav R Garg

(B.Com, CA, CS, ISA(ICAI))

Member of:

Indirect Tax Committee of PHD Chambers

Indirect Tax Committee of CII

Indirect Tax Committee of MyGst.MyTax Foundation

Co-Author A Handbook on Goods & Service Tax

Author with Service Tax Review by R K Jain

3328, Sector 27 D, Chandigarh

Ph: +91-172-461-3328

Mob: +91-9888-090-008

Mail: [email protected]@outlook.com

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Time of Supply Rules under GST Law