12.2.2.1 RP other than Composition dealer shall pay tax only on invoice basis u/s 12(2)(a) but not on advance received

Quesiton-1 [ICAI-I-Ch5-8] [Inv issued before due date]

An order is placed on Ram & Co. on 18th Aug for supply of a consignment of customized shoes. Ram & Co. gets the consignment ready and informs the customer and issues the invoice on 2nd Dec. The customer collects the consignment from the premises of Ram & Co. on 7th Dec and electronically transfers the payment on the same date, which is entered in the accounts on the next day, 8th Dec.

What is the time of supply of the shoes for the purpose of payment of tax?

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 7^th Dec

Due date of Inv to be issued u/s 31 = 7^th Dec

Inv Date = 2^nd Dec

3) Conclusion

In this case, the invoice is issued before the removal of the goods and is thus, within the time limit prescribed u/s 31(1).

Hence time of supply = 2^nd Dec

Question-1A [ICAI-F-N18-1b-5]

Chiku Traders is a registered supplier of plastic goods. On 10th April, 2018, Chiku Traders
received an order from Neelu Traders for supply of a consignment of plastic goods. Chiku
Traders gets the consignment ready by 15th April, 2018. The invoice for the consignment
was issued the next day, 15th April, 2018. Neelu Traders collects the consignment from the
godown of Chiku Traders on 25th April, 2018 and hands over the cheque towards payment
on the same date. The said payment is entered in the books of accounts of Chiku Traders
on 26th April, 2018 and amount is credited in their bank account on 27th April, 2018.

Determine the time of supply of the plastic goods supplied by Chiku Traders to Neelu Traders as per the provisions of CGST Act, 2017. [Ans 15^th Apr]

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 25^th Apr, 2018

Due date of Inv to be issued u/s 31 = 25^th Apr, 2018

Inv Date = 16^th Apr, 2018

3) Conclusion

In this case, the invoice is issued before the removal of the goods and is thus, within the time limit prescribed u/s 31(1).

Hence time of supply = 15^th Apr, 2018

Note: In the question, the date of issue of invoice to be read as 16th April,2018. It can also be
answered by taking date of invoice as given in question, i.e. 15th April, 2018. In that case, the time
of supply will be 15th April, 2018

Question-1B [ICSI-E-D19-O-89-1]

Mani dispatched goods to Prasad on 31-10-2018. The invoice is dated 30-10-2018. The goods were received by Prasad on 3-11-2018. The amount towards supply was received by Mani on 1-10-2018. The time of supply would be :

(A) 31-10-2018

(B) 1-10-2018

(C) 3-11-2018

(D) 30-10-2018

Answer

(B) is answer as per suggested, which appears to be wrong.

Question-2 [ICSI-E-D18-6A(ii)-5] [Invoice issued on due date]

Samodia Trading Company, a registered supplier, is liable to pay GST under forward charge mechanism. Determine the time of supply from the following information furnished by the firm Samodia Trading Company :

(a) Goods supplied on 3rd May, 2018;

(b) Invoice issued on 3rd May, 2018;

(c) Payment received on 9th May, 2018;

Provisions involved are to be explained briefly.

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 03/05/2018

Due date of Inv to be issued u/s 31 = 03/05/2018

Inv Date = 03/05/2018

3) Conclusion

In this case, the invoice is issued on due date, within the time limit prescribed u/s 31(1), hence time of supply = 03/05/2018

Quesiton-2A [ICMAI-I-J18-3a(i)-4]

R, a manufacturer of machines (having a turnover of more than Rs.1.5 crore) received an advance of Rs.1,20,000 along with the purchase order on 15.10.2017 for supply of machine X for Rs.20,00,000 to be manufactured according to the specifications.

Advance payment was entered in the books of account on 16.10.2017 and credited in his bank account 18.10.2017.

The machine is manufactured and after approval has been delivered to the buyer on 25.10.2017 and the invoice was raised at the time of removal.

The balance payment of Rs.18,80,000 was received on 15.11.2017 which was recorded in the books of accounts of R on the same date and was credited in his bank on 17.11.2017. Determine the time of Supply. [Ans 25-10-2017]

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 25/10/2017

Due date of Inv to be issued u/s 31 = 25/10/2017

Inv Date = 25/10/2017

3) Conclusion

In this case, the invoice is issued on due date, within the time limit prescribed u/s 31(1), hence time of supply = 25/10/2017

Answer under old Provision

The time of supply of machine to the extent of Rs.1,20,000 is 16.10.2017 as this payment was received before the date of invoice and entered in the books of account on 16.10.2017.

The time of supply of machine to the extent of the balance amount of Rs.18,80,000 is 25.10.2017 when the invoice was raised which is earlier than the payment received.

Quesiton-3 [ICAI-I-M18-10a-4] [ICAI-I-Ch5-15] [Inv issued after due date]

Mansh & Vansh Trading Company, a registered supplier, is liable to pay GST under forward charge. It has furnished the following information:

(i) Goods were supplied on 3rd Oct

(ii) Invoice was issued on 5th Oct

(iii) Payment received on 9th Oct

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

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 3^rd Oct

Due date of Inv to be issued u/s 31 = 3^rd Oct

Inv Date = 5^th Oct

3) Conclusion

In this case, the invoice is issued after due date, hence time of supply shall be due date of Invoice as per section 31

Hence time of supply = 3^rd Oct

Question-3A [ICAI-I-D21-7a(i)-3]

An order is placed to T & Co;, Sholapur on 18th Aug, 2021 for supply of fabrics to make garments. Company delivered the fabrics on 4th Sep, 2021 and after completion of the order issued the invoice on 15th Sep, 2021. The payment against the same was received on 30th Sep, 2021. Determine the time of supply for the purpose of payment under CGST Act, 2017 with your explanations. [Ans 4^th Sep]

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 4^th Sep, 2021

Due date of Inv to be issued u/s 31 = 4^th Sep, 202

Inv Date = 15^th Sep, 2021

3) Advice

In this case, the invoice is issued after due date, hence time of supply shall be due date of Invoice as per section 31

Hence time of supply = 4^th Sep, 2021

Question-3B [ICSI-E-D20-67-1] [ICSI-E-D19-66-1]

ATOZ Ltd supplied goods from its factory at Bikaner to PQR Ltd under a contract for the goods to be delivered at the factory of PQR Ltd located at Udaipur. The goods were removed on 9th Sep, 2019 from the factory of ATOZ Ltd and were delivered to the factory of PQR Ltd located at Udaipur on 15th Sep, 2019.

The invoice was issued on 18th Sep, 2019 and the payment was credited to the bank account of ATOZ Ltd on 20th Oct, 2019 for which the entry in the books was made on 19th Sept. 2019 when the cheque was received. The time of supply in this case will be ------

(A) 18 September, 2019

(B) 9 September, 2019

(C) 15 September, 201970.

(D) 20 October, 2019

Question-3C [ICSI-E-J19-O-92-1]

ABC Ltd. of Mumbai supplied goods to XYZ Ltd. of Delhi under a contract for the goods to be delivered at the factory of the buyers. Goods removed from the factory of ABC Ltd. on 09-08-2018 and were delivered in the factory of XYZ Ltd. of Delhi on 16-08-2018. Invoice for the supplies was raised by ABC Ltd. on 18-08-2018. Payment of the bill was received on 20-09-2018. The time of supply in this case under GST be taken as :

(A) 09-08-2018; (B) 16-08-2018; (C) 18-08-2018; (D) 20-09-2018

Question-3D [ICSI-E-J21-60-1]

Q Ltd, Kanpur supplied goods to R Ltd. of Delhi. The goods were removed on 20.10.2020 and were delivered on 23.10.2020. The invoice was issued on 02.11.2020 and the payment for supply was received on 31.12.2020. What is the time of supply ?

(A) 31.12.2020; (B) 23.10.2020; (C) 20.10.2020; (D) 02.11.2020

Question-3E [ICSI-E-D21-67-1]

Ajay Chandra an agriculturist supplies raw cotton to Bhilwara Textiles, manufacturers of Shirts. Details of events with date taken place in this transaction are :

Time of supply (TOS) as per provisions of CGST Act, 2017 in this case would be .......

(A) 12.5.21 (B) 15.5.21 (C) 20.5.21 (D) 24.5.21

Question-4 [ICAI-I-Ch5-7] [Inv not raised in books]

Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2nd August but no invoice was raised and the transaction (dispatch of cartons) were not entered in the accounts. There was no evidence of receipt of payment. What is the time of supply of 150 cartons for the purpose of payment of tax?

Answer

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Removal date of goods = 2^nd Aug

Due date of Inv to be issued u/s 31 = 2^nd Aug

Inv Date = Not raised

3) Conclusion

In this case, the invoice is not issued within due date, hence time of supply shall be due date of Invoice as per section 31

Hence time of supply = 2^nd Aug

Question-5 [ICAI-I-Ch5-Ill-1] [Installation of Goods]

A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling the machine at site. The details of the various events are:

Determine the time of supply(ies) in the above scenario for the purpose of payment of tax.

ANSWER

1) Statutory Provision

Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

2) Facts

Date when goods made available to recipient = 20^th Oct

Due date of Inv to be issued u/s 31(b) = 20^th Oct

Inv Date = 23^rd Oct

3) Conclusion

In this case, the invoice is not issued within due date, hence time of supply shall be due date of Invoice as per section 31

Hence time of supply = 20^th Oct

Question-6 [ICAI-I-Ch5-Ill-2] [ICAI-F-Ch6-4] [Continuous supply of goods]

Gas is supplied by a pipeline. Monthly payments are made by the recipient as per contract. Every quarter, invoice is issued by the supplier supported by a statement of the goods dispatched and payments made, and the recipient has to pay the differential amount, if any. The details of the various events are:

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

Answer

(a) Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

(b) As per section 31(4), in case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice is issued before or at the time of each such statement is issued or, as the case may be, each such payment is received.

Therefore, invoice should be issued on Aug 5, Sep 5 and Oct 6 when monthly payments of Rs.2 lakh are received.

Thus, the time of supply for the purpose of payment of tax will be Aug 5, Sep 5 and Oct 6 respectively for goods valued at Rs.2 lakh each. For goods valued at Rs.56,000, the time of supply for the purpose of payment of tax will be Oct 3, the date of issuance of invoice.

Question-7 [ICSI-E-D21-66-1] [Adv adjusted in next inv]

Surya Enterprises received advance amount of Rs.2,00,000 on 12-09-2020 from Ravi Kant against which invoice for the value of goods of Rs.1,90,000 was issued on 16-09-2020. Balance amount of Rs.10,000 on the request of Ravi Kant was to be adjusted in the next bill which was issued by Surya Enterprises on 03-10-2020. The time of supply (TOS) for the amount of Rs.10,000 under GST shall be........

(A) 12-09-2020; (B) 16-09-2020; (C) 03-10-2020; (D) 17-09-2020

Question-8 [ICSI-P-D19-O-5d-3]

Determine by giving brief reason the Time of Supply (TOS) in each of the following independent cases, in accordance with the provisions of section 12 of the CGST Act, 2017, where supply involves movement of goods supplied in one lot:

Answer

(a) Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

(b) Section 31 provides that a registered person supplying taxable goods shall issue a tax invoice, before or at the time of, —

(i) removal of goods for supply to the recipient, where the supply involves movement of goods; or

(ii) delivery of goods or making available thereof to the recipient, in any other case.

In view of the above stated legal position, the time of supply of goods in each of the independent cases shall be as tabulated below:-

Question-8A [ICSI-P-D19-1c-5]

Determine (with brief reason) the time of supply of goods in the following cases, where the supply involves movement of goods (in one lot) :

Answer

(a) Section 12)(2)(a) read with Notification No. 66/2017 CT dated 15.11.2017, time of supply of goods for a registered person (excluding composition supplier) shall be earlier of

date of issue of invoice or

last date on which invoice ought to have been issued as prescribed u/s 31.

Hence payment date is not relevant in this case.

(b) Section 31 provides that a registered person supplying taxable goods shall issue a tax invoice, before or at the time of, —

(i) removal of goods for supply to the recipient, where the supply involves movement of goods; or

(ii) delivery of goods or making available thereof to the recipient, in any other case.

In view of the above stated legal position, the time of supply of goods in each of the independent cases shall be as tabulated below:-

Question-9 [ICSI-E-D22-59-1]

The relief of not paying GST at the time of receipt of advance under forward charges is available in case of:

(A) Supply of Goods

(B) Supply of Services

(C) Supply of Goods and Services

(D) Neither Supply of Goods nor Service

12.2.2.2 Excess payment upto Rs.1000 - Option of taking invoice date as Time of Supply

Quesiton-1 [ICMAI-I-J18-3a(ii)-4]

R issues an invoice of Rs.64,100 for supply of goods 10.10.2017 and received Rs.65,000 in his bank through RTGS on the same date which was credited in his books of account on 11.10.2017 on receipt of intimation from the bank. Determine the time of supply of goods and the time of supply of excess payment.

Answer

Not relevant under new provision wef 15-11-2017

12.3 Time of supply of goods taxable under Reverse Charge

Example-1

The goods are taxable under reverse charge.

Question-1 [ICSI-E-D20-68-1] [ICSI-E-D21-61-1]

The time of supply (TOS) as per CGST Act, 2017 under Reverse Charge Mechanism (RCM) shall be

(A) the date of receipt of goods

(B) the date of payment as entered in books of the recipient or the date on which the payment is debited in his bank account whichever is earlier

(C) the date immediately following 30 days from the date of issue of invoice or any other documents

(D) earliest of (a) or (b) or (c)

Quesiton-2 [ICAI-I-Ch5-3]

Determine the time of supply in the following cases assuming that GST is payable under reverse charge:

Question-2A [ICAI-I-Ch5-Ill-3]

Determine the time of supply from the given information.

ANSWER

As per section 12(3), time of supply taxable on RCM basis shall be the earliest of following dates

Question-2B [ICAI-I-Ch5-Ill-4]

Determine the time of supply from the given information.

Answer

As per section 12(3), time of supply taxable on RCM basis shall be the earliest of following dates

Quesiton-2C [ICSI-P-J22-2a(iv)-1]

Ankit Kumar purchased some goods covered under reverse charge mechanism. The goods received on 19th June, 2021, Date of invoice is 14th May, 2021 and the payment is made on 22nd June, 2021. Determine time of supply.

Answer

(1) Section 12(3) - In case of supplies on which tax is payable on RCM basis, time of supply shall be the earliest of following dates

(a) date of the receipt of goods; or

(b) date of payment as entered in the books of account of the recipient or

debit date of payment in his bank account; or

(c) date immediately following 30 days from the date of invoice or any other document:

(2) Advice

Goods receipts date = 19^th Jun, 2021

Inv date = 14^th May, 2021

Date of payment = 22^nd Jun, 2021

Since the earliest date is 14^th May, hence time of supply is 01th May.

Quesiton-2D [ICSI-E-D21-O-86-1]

Determine the time of supply in the following case assuming that GST is payable under reverse charge : (1) Date of receipt of goods 1st July (2) Date of payment by recipient of goods August 20th (3) Date of issue of invoice by supplier of goods June 29th.

(A) 1st July (B) 20th August (C) 29th June (D) 31st July

Quesiton-3 [ICSI-P-J22-2a(iv)-1] [Supply from URP to RP] [Not a complete question]

When an unregistered dealer supplied goods to a registered dealer, the time of supply under reverse charge shall be earliest of the :

(A) date of receipt of goods

(B) date of supply of goods

(C) date of loading of goods in transport

(D) date of intimation of supply of goods

12.4.1 Time of supply on supply of Voucher

Question-1 [ICSI-P-J21-3e(ii)-1] [Supply is identifiable]

Grocery supplier company issues a voucher only to buy an Electric Fan for Rs.3,500, on 15th September, 2019. Determine time of supply.

Answer

Section 12(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.

Advice

In this case it is an identifiable voucher and hence the date of voucher shall be the time of supply i.e. 15th Sep, 2019.

Question-1A [ICSI-E-D22-60-1]

Domino’s Ltd. sold Pizza voucher worth Rs.5,000 to its customer on 10th Aug, 2021, this voucher is not convertible into cash and only usable at Domino’s pizza outlet within one year. Customer redeems Rs.3,500 of this voucher on 14th Feb, 2022 and balance Rs.1,500 on 31st March, 2022 at Domino’s outlet. The time of supply in this case is :

(A) 10th August, 2021 for Rs.5,000

(B) 14th February, 2022 for Rs.5,000

(C) 14th February, 2022 for Rs.3,500 and 31st March, 2022 for Rs.1,500

(D) 31st March 2022 for Rs.5,000

Quesiton-2 [ICAI-I-Ch5-9] [Supply is not identifiable]

Meal coupons are sold to a company on 9th Aug for being distributed to the employees of the said company. The coupons are valid for six months and can be used against purchase of food items. The employees use them in various stores for purchases of various edible items on different dates throughout the six months.

What is the date of supply of the coupons?

Answer

Section 12(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.

Advice

As the coupons can be used for a variety of food items, which are taxed at different rates, the supply cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of the coupons is the date of their redemption in terms of section 12(4).

Question-2A [ICSI-P-J21-3e(i)-1]

Grocery supplier company issues a voucher of 3,500 for purchase of any item from its stores against bulk purchase. Determine time of supply.

Answer

Section 12(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.

Advice

As the coupons can be used for purchase of any item, which are taxed at different rates, the supply cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of the coupons is the date of their redemption in terms of section 12(4).

Question-2B [ICSI-E-D20-70-1]

Nandita buys a voucher from Shoppers Stop on 14 February, 2020 for a value of Rs.11,000 for giving as a gift to her brother having validity of the voucher for encashment till 03 March, 2020. The gift voucher so given by Nandita to her brother was redeemed by him on 1st March, 2020. The time of supply in this case shall be ---

(A) 1st March, 2020

(B) 3rd March, 2020

(C) 14 February, 2020

(D) None of the above

Answer

Section 12(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.

Advice

As the coupons can be used for purchase of any item, which are taxed at different rates, the supply cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of the coupons is the date of their redemption in terms of section 12(4).

12.6 Time of supply for additional value by way of interest, late fees, penalty = Date of receipts of additional amount

Question-1 [ICAI-I-Ch5-14]

Mr. X supplied goods for Rs.50,000 to its customer Miss Diyana on 1st Jan on the condition that payment for the same will be made within a week. However, Miss Diyana made payment for the said goods on 2nd February and thus, paid interest amounting to Rs.2,000.

What is the time of supply with regard to addition in the value by way of interest in lieu of delayed payment of consideration?

Answer

As per section 12(6), the time of supply with regard to an addition in value on account of interest, late fee or penalty or delayed payment of consideration is the date on which the supplier received such additional consideration.

Thus, time of supply in respect of interest would be the date on which the supplier has received such additional consideration, i.e. 2nd Feb.

Question-1A [ICSI-P-J21-3e(iii)-1]

Ram purchases goods worth Rs.10,000 on 10.01.2021 and later on paid Rs.10,600 with interest on 10.03.2021. Mention the time of supply for the interest payment of Rs.600.

Answer

Section 12(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.

Thus, time of supply in respect of interest would be the date on which the supplier has received such additional consideration, i.e. 10-03-2021.