TIME OF SUPPLY (GOODS & SERVICES), GST LAW

[Praveen Nair]

Meaning: Time of Supply of (Goods):

Time of Supply of Goods means the Point of Time when the liability to pay tax arises, on the Taxable goods, on the Proper value of such Goods either on the part of Supplier or Recipient, as the case may be.

Liability to pay Tax, on a Transaction or Supply of Goods, where the Tax is payable under Forward charge would arise on the following dates, whichever is earlier;

1. Date of Invoice of the Supplier of Goods or
2. Date of Payment received by the Supplier of Goods from the recipient.

Ex: Date of Tax Invoice is 06.03.2018 and payment was received from the Recipient of goods in advance on 01.02.2018 then the liability to pay Tax, on the Goods, in the said transaction has arisen in the month of February, 2018 and Tax will be payable by the Supplier of Goods.

 Note: Under GST Law, Liability to pay Tax on receipt of Advance payment whether under Forward or Reverse charge has been postponed up to 31st March 2018.

Ref: Section 12(2) of the CGST Act, 2017,which is also applicable to SGST Act, UTGST Act & IGST Act, 2017.

 Time of Supply of Goods under Reverse Charge:

Liability to pay tax arises in case of Transaction or Supply of Goods, where the Tax is payable under Reverse Charge or Tax Shift Mechanism by the Recipient of Goods on conditions mentioned below, whichever is earlier;

• Date of receipt of Goods by the Recipient; or
• Date of payment, made by the Recipient to the Supplier of Goods; or
• 31st day from the date of Tax Invoice.

Ex: If the goods are received on 01.02.2018, by the Recipient and in respect whereof, Tax is required to be paid under Reverse Charge and the payment of the goods has been made by the Recipient to the Supplier of goods on 06.03.2018, the provisions of 31st day, specified in the hereinabove conditions, as Time of Supply, no more applies and the Liability to pay the Tax under Reverse Charge would rise upon the Recipient of Goods on 01.02.2018 and accordingly, the Tax would be payable on Due Date, on which, the Recipient is required to file Monthly or Quarterly return for February 2018.

Alternatively, if the goods is received by the Recipient on 06.03.2018 and payment for the supply is not made then the Liability to pay Tax, under Reverse Charge, would arise on 31.03.2018 and accordingly, the Tax would be payable on Due Date, on which, the Recipient is required to file Monthly or Quarterly return for March 2018.

Ref: Section 12(3) of the CGST Act, 2017,which is also applicable to SGST Act, UTGST Act & IGST Act, 2017.
 

Meaning: Time of Supply of (Services):

Time of Supply of Services is the Point of Time when the liability to pay Tax, under GST Law, arises in case of Supply of Services arises, either on the part of the Supplier of Services or Recipient of Services as the case may be.

Liability to pay Tax, under the GST Law, on transaction related to Supply of Services, where the Tax is payable by the Supplier of services under Forward Charge would arise on the following dates, whichever is earlier;

1. Date of Invoice of the Supplier of Services or
2. Date of Payment received by the Supplier of Services from the recipient.

• If the Time of Supply of Services cannot be determined by the aforestated conditions then one can find out the Date of Provision or Completion of the Services, by the Supplier of the Services and the Date of receipt of payment by the Supplier, whichever is earlier would be the Time of Supply.
• Further if the above conditions doesn't help then for determining the Time of Supply of Services one has to take the Date as the Time of Supply of Services, on which he said Services have been accounted in the Books of Accounts by the Recipient of Services.

Ex:

• If the date of Invoice of the Supplier of Services is 01.01.2018 and the Date of payment, received by the Supplier is 06.03.2018, the earlier being the Date of Invoice, 01.01.2018, is the Time of Supply. Liability of payment of Tax has arisen and therefore Tax is payable under Forward charge on the date of filing of Monthly or Quarterly return, for the month of January, 2018.
• If Invoice is not raised, then it is the date of provision or completion of the services, by the Supplier of Services or the Date of receipt of payment, whichever is earlier, would be the Time of Supply of such services. If the date of completion is 01.02.2018 and if the payment is received by the Supplier of Services by 06.03.2018, then the Time of Supply is 01.02.2018. Liability of payment of Tax has arisen and therefore Tax is payable under Forward charge on the date of filing of Monthly or Quarterly return, for the month of February, 2018.
• If none of the above information's are available for the Supply of services then date of booking the bill in accounts will be the Time of Supply of Services.

Ref: Section 13(2) of the CGST Act, 2017,which is also applicable to SGST Act, UTGST Act & IGST Act, 2017.

 Time of Supply of Services under Reverse Charge:

Liability to pay tax arises in case of Transaction or Supply of Services, where the Tax is payable under Reverse Charge or Tax Shift Mechanism by the Recipient of Services on conditions mentioned below, whichever is earlier;

• Date of payment, made by the Recipient to the Supplier of Services as per the Books of Accounts; or
• 61st day from the date of Tax Invoice.

Ex: If the payment has not been made by the Recipient of Services to the Supplier of Services but Invoice has been issued & 61st day has arrived from the Date of Invoice then that would be the Time of Supply when the Recipient of Services is liable to pay Tax, under GST Law, on the said Services under Reverse Charge. 

Ref: Section 13(3) of the CGST Act, 2017,which is also applicable to SGST Act, UTGST Act & IGST Act, 2017.

For the Attention of the Reader about the Current Taxability - For Information Only

1. Advance Payment:

As per the provisions of Section 31(3)(d), read with Section 12(2)(b) of the CGST Act, 2017 as applicable to SGST, UTGST & IGST Act, 2017, receipt of Advance payment, attracts Tax, at appropriate rate, the hands of the Supplier (Forward Charge) or Recipient (Reverse Charge) of Goods or Services or both.

Notification No. 66/2017-Central Tax dtd. 15.11.2017 for the time being has kept the GST applicability on Advance at Abeyance on Supply of Goods & Services upto 31.03.2018 and accordingly, when Advance Payment is received by the Supplier of Services (where tax is payable under Forward charge) or such Advance Payment is made by the Recipient of Services (where tax is payable under Reverse Charge), Advance payment would Not attract Tax under GST Law, in respect of Supply of Goods or Services.

2. Supply by Unregistered Person to a Registered Person:

As per the provision of Section 9(4) of the CGST Act, 2017 and similar provisions under SGST, UTGST & IGST Act, 2017, Goods or Services or Both would attract Tax, in the hands of the Registered Person, when such Goods or Services or Both are supplied by an Unregistered person, where Tax would be payable by a Registered Person under Reverse Charge. Time of Supply will accordingly be applicable as explained above.

Vide Notification No. 8/2017-Central Tax (Rate) dtd. 28.06.2017, which has amended the basic Notification No. 38/2017-Central Tax (Rate) dtd. 13.10.2017, the said Reverse Charge in respect of Goods or Services or Both supplied by Unregistered person to a Registered Person has been postponed.

• Note: The aforesaid postponement of Reverse Charge Operations is not applicable for 9+2 Specified Services and 5 Categories of Goods.