14.3 Misc Question

Quesiton-1 [ICSI-E-D18-O-80-1] [Supplies made before change in rate of tax]

The time of supply ‘‘where goods or services or both have been supplied in a situation where the invoice issued before the change in the rate of tax but payment received after the change in rate of tax’’ as per section 14 of the CGST Act, 2017 shall be :

(A) Date of issue of invoice (B) Date of receipt of payment or the date of issue of invoice whichever is earlier (C) Date of receipt of payment (D) None of the above

Question-2 [ICSI-E-D21-O-78-1] [ICSI-E-D20-O-81-1]

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, then what is the time of supply as per section 14 of the CGST Act, 2017?

(A) The time of supply will be date of receipt of payment or the date of issue of invoice, whichever is earlier (B) Date of issue of invoice (C) Date of receipt of payment (D) None of the above.

Question-3 [ICAI-F-N18-2b-5]

Mr. Mahendra Sharma, an interior decorator registered at Ahmedabad (Gujarat), provided service to one of his clients XYZ Company Ltd., registered at Pune (Maharashtra). The provision of service was completed on 10-08-2018 and payment received was entered in the books of Mr. Mahendra Sharma on 11-08-2018.

With effect from 16/08/2018, applicable GST rate was increased from 5% to 12%. However payment for the service received was credited in his bank account on 17/08/2018 and invoice for the same was raised on 23-08-2018.

Mr. Mahendra Sharma claimed that he is liable to pay IGST @ 5%. But the department took the view that he is liable to pay IGST @12%.

Examine the correctness of Mr. Mahendra Sharma's contention and determine the time of supply and applicable rate of tax as per the statutory provisions.

Would your answer undergo any change in the above case if the payment was credited to the bank account on 14-08-2018 instead of 17-08-2018?

Note: You may assume that all days are working days.

(1) Statutory Provision

(a) Section 14(a) – If supplies made before change in rate of tax, TOS shall be earlier of

Date of invoice

Date of receipt of payment

(b) Proviso to Section 14 - Date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after 4 working days from the date of change in the rate of tax.

In the given case, since the payment has been credited in the bank within 4 working days from the date of change in the rate of tax, the date of receipt of payment will be 11.08.2018 [i.e., earlier of 11.08.2018 or 17.08.2018

(2) Facts and advice

Date of supply = 10-08-2018

Date of change in rate = 16-08-2018

Date of Invoice = 23-08-2018

Date of receipts of payment = 11-08-2018

Date of credit of payment in bank a/c = 17-8-2018

Time of supply shall be = 11-08-2018

Question-3A [ICMAI-F-D19-3b-7]

Question-4 [ICSI-E-D22-63-1] [Supplies made after change in rate of tax]

There was increase in GST rate from 12% to 18% with effect from 1st January, 2022. Which of the following rate is applicable when service supplied and invoice raised after change in rate in January 2022, but payment received in November 2021.

(A) 12% as it is lower of the two

(B) l8% as it is higher of the two

(C) 12% as payment was prior to change in effective rate of tax

(D) 18% since invoice was issued and supply was made after change in effective rate of tax

Question-5 [ICSI-E-D20-71-1]

A machine which is taxable under GST at the rate of 18% was supplied on 10-06-2019 for which invoice was issued by the supplier on 03-08-2019 and payment was received on 10-08-2019. The rate of tax on the machine meanwhile was changed to 12% wef 01-08-2019. The supply of machine shall be charged to tax under GST at the rate of ---------

(A) 12%; (B) 15%; (C) (18-12) = 6%; (D) 18%

Question-6 [ICAI-F-Ch6-3]

An online portal, Best Info, raises invoice for database access on 21^st Feb on Roy & Bansal Ltd. The payment is made by Roy & Bansal Ltd. by a demand draft sent on 25^th Feb, which is received and entered in the accounts of Best Info on 28^th Feb. Best Info encashes the demand draft and thereafter, gives access to the database to Roy & Bansal Ltd from 3^rd March. In the meanwhile, the rate of tax is changed from 1st March.

Answer

(1) Statutory Provision

Section 14(b)(ii) – If supplies made after change in rate of tax, TOS shall be earlier of

Date of invoice

Date of receipt of payment

(2) Facts

Date of Invoice = 21^st Feb

Date of receipts of payment = 28^th Feb

Date of supply = 3^rd Mar

Date of change in rate = 1^st Mar

(3) Conclusion

In given case, supply made after change in rate of tax, hence TOS shall be 21^st Feb earlier of Date of invoice and Date of receipts of payment