Time of Supply – CA Final IDT Study Material is designed strictly as per the latest syllabus and exam pattern.
Time of Supply – CA Final IDT Study Material
Question 1.
Chiku Traders is a registered supplier of plastic goods. On 10th April, 2020, 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, 2020. The invoice for the consignment was issued on 16th April, 2020.
Neelu Traders collects the consignment from the godown of Chiku Traders on 25th April, 2020 and hands over the cheque towards payment on the same date. The said payment is entered in the books of account of Chiku Traders on 26th April, 2020 and amount is credited in their bank account on 27th April, 2020.
Determine the time of supply of the plastic goods supplied by Chiku Traders to Neelu Traders as per the provisions of CGST Act, 2017. [Nov. 2018 Modified, 5 Marks]
Answer:
A registered person (excluding composition supplier) has to pay GST on the outward supply of goods at the time of supply as specified in Section 12(2)(a) of the CGST Act, 2017.
| (a) | Date of issue of actual invoice (Since issued within time limit) | 16-4-2020 |
| (b) | Date of payment entered in the books of account | 26-4-2020 |
| (c) | Date on which amount credited in bank account | 27-4-2020 |
| Time of Supply (Earliest) | 16-4-2020 |
Question 2.
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:
| 17th September | Purchase order with advance of ₹ 50,000 is received for goods worth ₹ 12 lakh and entry duly made in the seller’s books of account |
| 20th October | The machine is assembled, tested at site, and accepted by buyer |
| 23rd October | Invoice raised |
| 4th November | Balance payment of ₹ 11,50,000 received |
Determine the time of supply(ies) in the above scenario for the purpose of payment of tax.
Answer:
Statutory Provision:
As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composi¬tion supplier) has to pay GST on the outward supply of goods at the time of supply as specified in section 12(2)(a) i.e., date of issue of invoice or the last date on which invoice ought to have been issued in terms of section 31.
In the given case:
The time of supply of goods for the entire amount of ₹ 12,00,000 is 20th October which is the date on which the goods were made available to the recipient as per section 31(1)(b), and the invoice should have been issued on this date [Section 12(2)(a)].
Question 3.
Ms. ANTIRA, a registered person, supplied certain goods to Mr. G also a registered person. The tax in respect of the said goods is liable to be paid on Reverse Charges basis.
Other details of the transaction are as under:
| (a) | Date of the receipt of goods by Mr. G | 26.11.2020 |
| (b) | Date on which the payment is made and entered in the books of account by Mr. G | 22.12.2020 |
| (c) | Date when the payment is debited in bank account of Mr. G | 24.12.2020 |
| (d) | Date of issue of invoice by Ms. Antira, the supplier. | 20.11.2020 |
| (e) | Date immediately following 30 days from the date of issue of invoice by the supplier. | 21.12.2020 |
You are required to determine the time of supply of goods under reverse charge basis.
Answer:
As per section 12(3) of CGST Act, 2017
Time of supply of, shall be earlier of the following:
- Date of the recipient of goods
- The Date of payment
- Date immediately following 30 days from the date of issue of invoice by the Supplier
| (a) | Date of the recipient of goods by Mr. G | 26.11.2020 |
| (b) | Date on which the payment is made and entered in the books of account by Mr. G. | 22.12.2020 |
| (c) | Date when the payment is debited in the bank account of Mr. G | 24.12.2020 |
| (d) | Date immediately following 30 days from the date of issue of invoice by the Supplier (Ms. Antira) | 21.12.2020 |
| Time of Supply (Earliest) | 26.11.2020 |
Question 4.
Determine the time of supply from the following particulars:
| 8th September | Community hall booked for a marriage, sum agreed ₹ 1,20,000, advance ₹ 20,000 recorded in the books of account. |
| 10th September | Advance amount credited in bank account. |
| 2nd November | Marriage held in the Community hall. |
| 18th December | Invoice issued for ₹ 1,20,000 indicating the balance of ₹ 1,00,000 payable |
| 22nd December | Balance ₹ 1,00,000 recorded in the books of account. |
| 24th December | Payment ₹ 1,00,000 credited to the bank account |
[May 2018, Old, 4 Marks]
Answer:
Statutory Provision:
| Clause | Case | Time of Supply |
| (a) | If the invoice is issued within the period prescribed under Section 31(2). [As per section 31(2), A tax invoice is to be issued within 30 days of supply of service.] |
The date of issue of invoice by the supplier OR The date of receipt of payment whichever is EARLIER |
| (b) | If the invoice is not issued within the period prescribed under Section 31 (2) | The date of provision of service OR The date of receipt of payment whichever is EARLIER |
| (c) | If Above two clauses (a) and (b) do not apply | The date on which the recipient shows the receipt of services in his books of account |
Time of supply for Advance money received:
The time of supply of service to the extent of advance of ₹ 20,000 is 8th September (date of recording the payment in the books of account) as it is earlier than the date of crediting of payment in the bank account and the date of provision of service.
Time of supply for Advance money received:
The time of supply of service to the extent of the balance ₹ 1,00,000 is 2nd November, which is the date of provision of service as it is earlier than the other two events in this case.
Question 5.
Jindal Consultancy services, provides the following details:
| Case I | Case II | |
| 1. Date of Supply of Services | 19-1-2020 | 16-12-2019 |
| 2. Date of issue of Invoice | 29-1-2020 | 28-1-2020 |
| 3. Date of entering the payment in the books of supplier | 6-2-2020 | 29-1-2020 |
| 4. Date of credit of payment in bank account | 5-2-2020 | 1-2-2020 |
Determine the time of supply of services in both the cases.
Answer:
On the basis of provisions of section 13(2) of CGST Act, 2017, firstly it has to be seen whether the invoice has been issued within the prescribed time limit of 30 days. In the given question, the invoice has been issued within time limit in case I but not in case II. Therefore, in case II, the date of supply of service shall be considered and not the date of invoice. The POS can be determined as follows:
| Case I | Case II | |
| Date of Supply of Services | Not Applicable | 16-12-2019 |
| Date of issue of Invoice | 29-1-2020 | Not Applicable |
| Date of entering the payment in the books of supplier | 6-2-2020 | 29-1-2020 |
| Date of credit of payment in bank account | 5-2-2020 | 1-2-2020 |
| Time of supply (Earliest of all the dates) | 29-1-2020 | 16-12-2019 |
Question 6.
Determine the time of supply from the given information.
| 6th May | Booking of convention hall, sum agreed ₹ 15,000, advance of ₹ 3,000 received |
| 15th September | Function held in convention hall |
| 27th October | Invoice issued for ₹ 15,000, indicating balance of ₹ 12,000 payable |
| 3rd November | Balance payment of ₹ 12,000 received |
Answer:
Statutory Provision
- As per section 31(2) read with rule 47 of CGST Rules, thè tax invoice is to be issued within 30 days of supply of service. In the given case, the invoice is not issued within the prescribed time limit.
- As per section 13(2)(b), in a case where the invoice is not issued within the prescribed time, the time of supply of service is the date of provision of service or receipt of payment, is earlier.
Time of supply for ₹ 3,000 received:
The time of supply of service to the extent of ₹ 3,000 is 6th May as the date of payment of ₹ 3000 is earlier than the date of provision of service.
Time of supply for ₹ 12,000 received:
The time of supply of service to the extent of the balance ₹ 12,000 is 15th September which is the date of provision of service.
Question 7.
Kanu & Kanu Is located in India and holding 69% of shares of Prince Ltd., a Hungarian based company. Prince Ltd. provides Business Auxiliary Services to Kanu & Kanu Ltd.
From the following details, determine the time of supply & Kanu & Kanu Ltd.:
| Agreed consideration | US $ 5,00,000 |
| Date on which services are provided by Prince Ltd. | 15-12-2019 |
| Date on which invoice is sent by Prince Ltd. | 18-12-2019 |
| Date of debit in the books of account of Kanu & Kanu Ltd. | 29-12-2019 |
| Date on which payment is made by Kanu & Kanu Ltd. | 31-12-2019 |
Answer:
Kanu & Kanu of India and Prince Ltd. of US are “associated enterprises” as per Section 92A of Income-tax Act, 1961. Since, Indian Company holds 6996 shareholding of Hungarian based company, Section 13(3) of the CGST Act, 2017 gets attracted. As per Section 13(3) of CGST Act, 2017, in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the earlier of the following:
(a) The date of entry in the books of account of the recipient of supply; or
(b) The date of payment,
Therefore, the time of supply shall be 29-12-20 19
Question 8.
MTNL, a telephone company, provides the following Information In respect of Mr. Sanjay, who is a regular customer of the telephone company:
| Date | Particulars | Amount |
| 1-2-2018 | Supply of telephone Services for the month of Jan. 2018 | 2,250 |
| 1-2-2018 | Issue of Invoice by the service provider | 2,250 |
| 12-2-2018 | Receipt of payment | 3,000 |
Determine the time of supply of excess payment ₹ 750 received by the telephone company.
Answer:
The company has received ₹ 3,000 against an invoice of ₹ 2,250. The excess amount of ₹ 750 can be adjusted against the next invoice. The company has the option to take the date of the next invoice as the time of supply of service in relation to this amount of ₹ 750 received in excess against the earlier invoice.
Question 9.
Varad Enterprises provides three different taxable services with varying rate of GST rates. On the occasion of New Year, the firm issued vouchers of ₹ 2,000 and ₹ 3,000 to Ram and Mohan respectively on 1st January 2020. The voucher issued to Ram can be redeemed for one specific service whereas the voucher issued to Mohan can be redeemed for either of the three services or partly for any combination of three services. The vouchers can be redeemed within one month only. Both redeemed the vouchers on 28th January 2020. Determine the time of supply of these vouchers.
Answer:
| Voucher issued to Ram | Voucher issued to Mohan |
| The voucher issued to Ram can be redeemed for a particular service. It means this voucher is identifiable with a particular supply. | The voucher is not identifiable with a particular supply at the time of issuance of voucher. |
| The time of supply shall be the date of issue of voucher i.e. 1st January 2020. | The time of supply shall be 28th January, 2020, i.e. the date of redemption of voucher |
Question 10.
An income-tax and money laundering case against Mr. XYZ, working in a multinational company, reveals a large volume of undisclosed assets, which he claims as service income. On this basis, the GST authorities investigate the GST liability. Dates of provision of service, whether in the first half or the second half of the financial year being scrutinised by income-tax authorities, are not known. Mr. XYZ voluntarily pays GST during the investigation. What is the time of supply of the services?
Answer:
Where it is not possible to determine the time of supply in terms of date of invoice or date of provision of service or date of receipt of payment or date of receipt of services in the books of account of the recipient, and where periodical return is not to be filed (Mr. XYZ, being an employee in a multinational company, is not a registered person), the date of payment of tax is taken as the time of supply [Section 13(5)(b)].
Therefore, the date when Mr. XYZ pays the GST will be the time of supply.
Question 11.
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 10-08-2020 and payment received was entered in the books of Mr. Mahendra Sharma on 11-08-2020.
With effect from 16/08/2020, applicable GST rate was increased from 5% to 12%. However payment for the service received was credited in his bank account on 17/08/2020 and invoice for the same was raised on 23-08-2020. 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%.
(a) 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.
(b) Would your answer undergo any change in the above case if the payment was credited to the bank account on 14-08-2020 instead of 17-08-2020?
Note: You may assume that all days are working days. [Nov. 2018, 5 Marks]
Answer:
(a) Determine of the time of supply and applicable rate of tax
| Statutory Provision | In the given case | |
| As per section 14 of the CGST Act, 2017
In case of change in rate of tax, date of receipt of payment is earlier of: (i) date of entering payment in the books of account of the supplier |
The payment has been credited in the bank within 4 working days from the date of change in the rate of tax. | |
| Entry in the books of supplier | 11.08.2020 | |
| Date of credit to his bank A/c | 17.08.2020 | |
| Earlier | 11.08.2020 | |
| The date of receipt of payment will be 11-8-2020 | ||
| Section 14 further provides that where goods and/or services have been supplied before the change in rate of tax and 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, the time of supply shall be the date of receipt of payment. | Supply of service before change in rate | 10-8-2020 |
| Payment received before change | 11-8-2020 | |
| Issue of invoice after change | 23-8-2020 | |
| The time of supply will be 11.08.2020 and the applicable rate of tax will be rate prevalent at the time of supply, i.e. IGST @ 5%. | ||
Therefore, the contention of Mahenclra Sharma is correct.
(b) If the payment was credited to the bank account on 14-08-2020 instead of 17-08-2020
Further, if the date on which the payment is credited to bank account of supplier is 14.08.2020, the date of receipt of payment will continue to be 11.08.2020 [i.e., earlier of 11.08.2020 or 14.08.2020] since the payment is credited in the bank account before change in rate of tax. Consequently, with other things remaining the same, the time of supply and the applicable rate of tax will remain the same.
Question 12.
I buy a set of modular furniture from a retail store. Invoice is issued to me and I make the payment. The furniture is to be delivered to me later in the week when a technician is available to assemble and install it. The next day the rate of tax applicable to modular furniture is revised upward, and the store sends me a supplementary invoice with the delivery note accompanying the furniture to collect the differential amount of tax.
Is this correct on store’s part? [MTP Nov. 19, 4 Marks]
Answer:
No, the store is not correct in issuing supplementary invoice with revised rate of tax. The revised rate of tax is not applicable to the transaction, as the issuance of invoice as well as receipt of payment occurred before the supply. Therefore, in terms of section 14(b)(ii), the time of supply is earlier of the two events namely, issuance of invoice or receipt of. payment, both of which are before the change in rate of tax, and thus, the old rate of tax remains applicable.
Question 13.
Mr. A buys a motor car from a card dealer. Mr. A has made payment for the same and car dealer has Issued an invoice In respect of the same on 25th October, 2019. The car was to be delivered on 1st November, 2019 on occasion of his birthday. On 26th October, 2019, the rate of tax applicable to motor car was revIsed upward, and the car dealer is demanding differential amount of tax. Is this correct on dealers part?
Answer:
No, the car dealer is not correct in demanding differential amount of tax. The revised rate of tax is not applicable to the transaction, as the time of supply is earlier of the two events namely, issuance of invoice or receipt of payment, both of which are before the change in rate of tax, and thus, the old rate tax remains applicable.
Question 14.
An online portal, Best Info, raises Invoice for database access on 21st February 2020 on Roy & Bansal Ltd. The payment is made by Roy & Bansal Ltd. by a demand draft sent on 25th February 2020, which is received and entered in the accounts of Best Info on 28th February 2020. Best Info encashes the demand draft and thereafter, gives access to the database to Roy & Bansal Ltd. from 3rd March 2020. In the meanwhile, the rate of tax is changed from 1st March, 2020. What Is the time of supply of the service of database access by Best Info?
Answer:
As issuance of invoice and receipt of payment (entry of the payment in Best Info’s accounts) occurred before the change in rate of tax, the time of supply of service by the online portal is earlier of the date of issuance of invoice (21st February 2020) or date of receipt of payment (28th February 2020) i.e., 21st February 2020. This would be so even though the service commences after the change in rate of tax [Section 14(b)(ii)]