Time of Supply of Goods – Under Reverse Charges - GST Ready Reckoner - GST

Time of Supply of Goods Under Reverse Charges (RCM) Time of Supply Section 12 of CGST Act 2017 provides for the determination of time of supply in the situations of Supply of goods tax paid under reverse charge mechanism. Before starting the analysis of about time of supply of goods under RCM, we should read time limit of issue of invoice as per section 31 of CGST Act 2017 . Time limit for issuance of invoice for supply of goods under section 31 of CGST Act 2017 A registered person supplying taxable goods shall, before or at the time of, - Removal of goods for supply to the recipient, where the supply involves movement of goods ; or Delivery of goods or making available thereof to the recipient, in any other case (in other words movement of goods not involve ) , [section 31(1)] Example ABC placed order to supply of mobile phone to ZYX, who agrees to supply within 10 days from the date of order. It is a case of supply involving movement of goods. VPL a manufacturer asks hi supporting manufacturer Goodluck to develop a mould for PQR for separate consideration. The said mould will kept and used by ABC for manufacture of components for 5 year. In this case, there is no movement of mould. In case of continuous supply of goods , where successive statements of accounts or successive payments are involved - The invoice should be issued before or at the time of issuance of periodical statement or receipt of periodical payment [Section 31(4)]. In case of goods sent or taken on approval for sale or return , are removed before the supply takes place Invoice should be issued before or at the time of supply or 6 months from the date of removal, whichever is earlier [Section 31(7)]. We consider below how the time of supply is determined in each of these situations Time of supply of goods subject to reverse charge, Section 12(3) of CGST Act 2017 Time of supply, earliest of the following dates Date of receipt of goods, or 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 Date immediately following 30 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier. If time of supply not determined according to mentioned above if it is not possible to determine the time of supply as per clause of (a),(b) and (c) of section 12(3), prescribed manner in then the time of supply is the date of entry of the transaction in the books of accounts of the recipient of supply. Payment of GST on receipt of Advance towards supply of Goods In view of the above Notification No. 66 / 2017 , the supplier of goods is not liable to pay GST on receipt of advance against future supply. However, the relief of not paying GST at the time of receipt of advance is available only in case of supply of goods, the tax on which is payable under forward charge. If advance receipt in case of reverse charge, GST is payable at the time of payment, if payment is recorded or made before receipt of goods. Example - Mint Industries Ltd., a registered supplier, give order of material from Green INC, USA on 13 th August (goods order date). The relevant invoice for $ 1,20,000/- is raised by Green Inc on 18 th August. Mint Industries Ltd. Makes the payment against the said invoice 22 nd September but goods received as on 27 th December In this case - As per term sec. 12(3), Time of supply, earliest of the following dates :- Date of receipt of goods 27 th December Date immediately following 30 days from the date of issue of invoice 17 th September Date of receipt of payment by the supplier- 22 nd September Therefore, time of supply of goods 17 th September. Time of supply of goods subject to reverse charge under section 9(3) Section 9(3) of the CGST Act provides that the government, on the recommendations of the council will notify specific categories of goods and services on which tax has to be on reverse charge basis. Vide Notification No. 4/2017- CT - (Rate) dated 28 June 2017, the government has notified goods which shall be subjected to reverse charge mechanism in case of specified category of recipients and suppliers. Some of such Time of supply of goods subject to reverse charge Section 9(4) of the CGST Act in case of Promoter in the Real Estate Industry Inputs and Input Services (other than cement and capital goods) Where value of inputs (including cement) and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of project, whichever is earlier) falls short of said threshold of 80% , tax paid by promoter on value of input and inputs services comprising such shortfall on reverse charge basis. The calculation of tax payment on the shortfall at the end of the financial year. the tax liability on shortfall on inward supplies from unregistered person so determined shall be added to this output tax liability in the month not later than the month of June following the end of the financial year. In case of Cement Where cement is received from unregistered person, in the month in which month in which it is received. In case of capital goods Where capital goods is received from unregistered person, in the month in which month in which it is received.