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GST Certification Course
Study Material

Chapter 5
When to Pay Tax on Supply of Goods/Services
 Chapter 5
GST – When to Pay Tax on Supply of
Goods/Services
1. Time of Supply of Goods

In order to calculate and discharge tax liability it is important to know the date when the tax liability
arises i.e., the date on which the liability to pay GST occurs. In GST it is known as Time of Supply.
Section 12 of CGST Act, 2017 provides the time of supply of goods in different situations which is
mentioned below:

Sub- Nature of supply of goods

section
1. Supply of goods under forward charge
2. Supply of goods under reverse charge situation
3. Supply of goods in case of supply through vouchers
4. Residual situations
5. TOS of goods in case addition to value of supply of goods by way of interest, or late fee
or Penalty for delayed payment of consideration

2. Time of Supply of Goods under forward charge (Section 12(2))

The time of supply of goods shall be the earlier of the following dates:

(a) The date of issuing of invoice (or the last day by which invoice should have been issued) or

(b) The date of receipt of payment

2.1 No GST on receipt of advance in case of Supply of Goods

In the pre-GST scenario, there is no tax on advance receipt for supply of good, however in post-GST
advances received by the supplier of goods are liable to be taxed. Thus, the Government has provided
the relaxation to the registered person (excluding the composition supplier) from payment of GST
on advance received for future supply of goods.

Thus w.e.f. 15-11-2017, the time of supply of goods by registered person (other than composition
supplier) will be as specified under section 12(2)(a) i.e. the date of issue of invoice or the last date by
which the invoice has to be issued under section 31. No GST is payable on advance money received
for supply of goods.

In simple words, all taxpayers under forward charge (except composition suppliers) are exempted
from paying GST at the time of receipt of advance in relation to supply of goods. The entire GST shall
be payable only when the invoice for the supply of such goods is issued or ought to have been issued.

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 A composition supplier has to pay, in lieu of tax payable by him, an amount calculated at the
prescribed rate applied on his ‘turnover in the State/Union Territory’ for a quarter. Therefore, the
composition supplier is not required to pay any tax on advance received as the same does not form
part of taxable supplies and, in turn, also does not form part of the ‘turnover in a State/Union
Territory’ at the end of the quarter (tax period).

2.2 Time of supply of goods, where supply involves movement of goods (Section 12
read with Section 31 of the CGST Act):

The time of supply in case of transfer of goods by the registered person, where supply involves
movement of goods shall be the earliest of the following:

1. Date of Issue of the invoice or

2. the date of removal of goods for supply to the recipient or
3. Date of receipt of payment

However, here it is worthwhile to note that the GST is applicable on advance received towards supply
of goods up to the 14-11-2017.

“Removal’’ in relation to goods, means—

(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf
of such supplier; or

(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such
recipient.

Example 1:

Mr. ABC, is an electronic appliances dealer sold a refrigerator to Mr. Y for Rs. 45,000 and dispatched
it on 21 December 2020, while the invoice was dated as 25-December 2020 for the said sale
transaction. Mr. Y made the full payment for the refrigerator on 30-December 2020. Determine the
time of supply for the transaction.

Solution:

As per Notification No. 66/2017 CT dated 15.11.2017, 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) i.e., date of issue of invoice or the last date on which invoice ought to have been issued in
terms of section 31.

Therefore, the time of supply of goods for the entire amount of Rs. 45000 is 21st December 2020, on
which goods are removed for dispatched, to the recipient as per section 31(1)(a), and the invoice
should have been issued on this date [Section 12(2)(a)].

 What would be the time of supply of movement of artwork from artist to art galleries?

Solution:

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 In this regard, vide CBIC Circular No. 22/22/2017-GST, dated 21-12-2017, it has been
clarified by CBIC that the movement of artwork from artist to art galleries shall not be
constituted as supply as the same is sent on approval basis and the supply takes place when buyer
selects a particular art work displayed at the gallery. Accordingly, time of supply in this case would
be when buyer purchases the artwork and invoice should also be issued upon such purchase being
concluded.

2.3 Time of supply of goods, Where supply does not involve movement of
goods (Section 12 read with Section 31 of the CGST Act):

The time of supply in case of transfer of good by the registered person where supply does not involve
movement shall be the earliest of the following:

1. Date of Issue of the invoice or

2. Date of delivery of goods or making goods available to the recipient
3. Date of receipt of receipt of payment

However, here it is worthwhile to note that the GST is applicable on advance received towards supply
of goods up to the 14-11-2017.

Example 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 agreed price of machinery is Rs. 12 Lakh plus applicable GST.
The details of the various events are:

17th September Purchase order with advance of Rs. 50,000 is received for goods worth Rs.
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 Rs. 11,50,000 received

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

Solution:

The given supply transaction is one which is not involving movement of goods, rather it is involving
direct delivery of goods as soon as machinery is coming into existence.

So far as invoicing requirement is concerned, supplier of machine is required to raise invoice at the
stage of delivery i.e. 20th October. The invoice raised by the supplier on 23 rd October is a case of
belated invoicing.

As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) is not required to pay GST at the time of receipt of advance payment. Therefore, the part
payment of Rs.50000 received on 17th September is in the nature of advance and will not give rise to
time of supply.

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 Therefore, the time of supply of goods for the entire amount of Rs. 12,00,000 is 20th October which
is the date on which the goods were made available to the recipient as per section 12(2)(a) read with
31(1)(b).

 Clarification on time of supply in principle- agent scenario:

AAR Karnataka in Re: Tata Coffee Ltd [upheld by AAAR in order no KAR/AAAR-
18/2019 dated 19-03-2020] – 2020 (37) G.S.T.L. 97 (App. A.A.R. – GST – Kar.)

As regards the time of supply, Section 12 of the CGST Act, lays down that the time of supply of goods
would be the earliest of:-

 Date of Issue of Invoice

 Due Date for Issue of Invoice

These provisions must be contemplated considering that where there is a movement of goods, the
invoice must be issued on or before the time of removal of goods. Therefore, in this case, the time of
supply will be the date of issue of invoice which will be at the time of removal of the timber by the
Appellant to the Depot. Further, time of second supply by agent to ultimate customer will not have
any effect on value or time of supply of first supply.

2.4 Time of supply will be date of issue of invoice when the goods are not in possession
at that time but delivered later on:

AAR- Haryana in Pasco Motors LLP [2018-19 dated 30-08-2018]- 2019 (22) G.S.T.L.
312 (A.A.R. – GST)

The provisions of Section 12 clearly stipulate that in case the invoice has been issued by the supplier,
the date of issue of invoice is the date of supply, hence, in such cases where the goods are delivered
by the applicant later on, but invoice is raised earlier, the date of issue of invoice will the time of
supply for the purpose of determining the tax period for filing of return and payment of tax for such
supplies. Accordingly, the liability to pay tax on goods arises at the time of the supply as determined
in accordance with sec 12.

2.5 Revised Invoice

As per Section 31(3)(a) of CGST Act, A registered person may, within one month from the date of
issuance of certificate of registration and in such manner as may be prescribed, issue a revised
invoice against the invoice already issued during the period beginning with the effective date of
registration till the date of issuance of certificate of registration to him

Thus, as per Section 12 read with Section 31(3)(d) of CGST Act, the time of supply in case of a newly
registered person shall be the earliest of the following:

1. Date of Issue of the invoice or one month from the date of issuance of certificate of
registration for issue of revised invoice against already issued invoices from effective date of
registration till date of issuance of certificate of registration
2. Date of receipt of receipt of payment

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 However, here it is worthwhile to note that the GST is applicable on advance received towards supply
of goods up to the 14-11-2017.

Example:

M/s Rana enterprises commenced business of supply of goods on 10.05.2019 in the state of Gujarat.
Its turnover exceeded the threshold limit on 10.08.2019 and he applied for registration on
03.09.2019. Accordingly, the certificate of registration was granted to M/s R enterprise on
08.09.2019. Determine the time by when M/s Rana enterprise should issue revised invoices.

Answer:

M/s Rana enterprise became liable to get registered on 10.08.2019 and applied for the same within
30 days of becoming liable. Therefore, the effective date of registration shall be 10.08.2019. Hence,
M/s R enterprise can raise revised invoice within one month from the date of issuance of certificate
for the period starting from effective date of registration till date of issuance of certificate of
registration i.e., revised invoice from 10.08.2019 to 08.09.2019 by 08.10.2019.

2.6 Time of supply of goods in case of Continuous Supply of goods

As per Section 2(32) of the CGST Act,2017, continuous supply of goods means “supply of goods
which is provided or agreed to be provided, continuously or on recurrent basis, under a contract,
whether or not by means of a wire, cable, pipeline or other conduit, and for which supplierinvoices
the recipient on a regular or periodic basis and includes supply of such goods as the Government
may, subject to such conditions, as it may, by notification, specify.”

As per Section 31(4) of the CGST Act, 2017, in case of continuous supply of goods, where successive
statement of accounts or successive payments are involved, the invoice is required to be issued
before or at the time:

 Issuance of periodical statement or,

 Receipt of periodical payment

Thus, the time of supply in case of continuous supply of goods by the registered person shall be the
earliest of the following:

1. Date of Issue of the invoice or

2. Date of issue of periodical statement or account or
3. Date of receipt of periodical payment

However, here it is worthwhile to note that the GST is applicable on advance received towards supply
of goods up to the 14-11-2017.

Example:

ABC Industries Ltd. Entered into a contract to supply gas through pipeline As per the terms of the
contract

1. Monthly payments are made by the recipient.

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 2. Every quarter, ABC Ltd. shall issue a statement of accounts showing the quantity and value
of the goods dispatched and payments made and due, and
3. the recipient has to pay the differential amount, if any, as mentioned in the statement of
accounts. The details of the various events are:

August 5,
Payments of Rs. 2 lakhs made in each month
September 5,

October 6

October 3 Statement of accounts issued by supplier, with invoice for the quarter July –
September
Differential payment of Rs. 56,000 received by supplier for the quarter July –
October 17 September as per statement of accounts

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

Solution:

As per Notification No. 66/2017 CT dated 15.11.2017, 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) i.e., date of issue of invoice or the last date on which invoice ought to have been issued in
terms of Section 31.

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 August 5, September 5 and October 6 when monthly payments of Rs. 2 lakhs are
received.

Thus, assuming that the invoice is issued on August 5, September 5 and October 6, the time of supply
will be August 5, September 5 and October 6 respectively for goods valued at Rs. 2 lakh each. Time
of supply for goods valued at Rs. 56,000 will be October 3, the date of issuance of invoice.

2.7 Time of supply of Goods sent or taken on approval for sale or return basis

There are situations where customer would want a supplier to send goods to him so that the same
may be examined/tested as to whether his (customer’s) requirements are being fulfilled. Where such
goods are returned, no supply shall be deemed to have taken place, whereas in case of approval for
sale, supply shall be said to have taken place.

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 Section 31(7) of the CGST Act provides for provisions pertaining to timelines for issuance of invoice
where goods sent or taken on approval for sale or return basis. In terms of the said section, invoice
shall be issued before or at ;

1. The time of supply or

2. 6 months from the removal of such goods, whichever is earlier

However, the time of supply of goods in such cases shall be earliest of the following;

1. Date of issuance of invoice or

2. Date of acceptance by the buyer or
3. 6 months from the date if removal of such goods

2.8 Time of supply in case of goods sent on job work not returned in prescribed time

As per Section 143 of the CGST Act, 2017 the sending of goods for job work is not regarded as supply.
However, this is subject to condition that capital goods and inputs should be returned back within
three years and one year respectively.

It has been clarified vide Circular No. 38/12/2018 dated 26.03.2018 that the principal should
issue an invoice on expiry of three years (for capital goods) / one year (for inputs) and should declare
such supplies in the return filed for the month in which the time period of three years / one year is
expired. Time of Supply in this case would be the time of removal of goods while sending the inputs
/ capital goods to job worker and therefore interest for the intermittent period of one year / three
years would have to be paid.

2.9 Time of Supply in case excess received of an amount up-to Rs. 1000/- (Proviso to
Section 12(2) of the CGST Act)

where the supplier of taxable goods receives an amount upto one thousand rupees in excess of the
amount indicated in the tax invoice, the supplier can choose to take the date of invoice issued with
respect to such excess amount as the time of supply of goods for such excess value.

Since w.e.f. 15.11.2017, GST on supply of goods is payable only on the basis of issuance of invoice,
this provision is practically irrelevant for the supply of goods

Example:

A wholesaler receives Rs. 4,000 on 27th July 2018 against an invoice of Rs. 3,700 on 23rd July 2018
in respect of the goods provided. The excess amount of Rs. 300 can be adjusted against the invoice
to be issued in the next month. Time of supply will arise only for Rs. 3700 on 23rd July 2018. For
the balance amount of Rs. 300, the time of supply may not arise on 27th July 2018 at the option of
the supplier and may be adjusted against the next month’s invoice

3. Time of supply of goods under reverse charge (Section 12(3))

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 , supply of goods in respect of which tax is paid or liable to be paid on reverse charge basis, the time
of supply shall be the earliest of the following:

1. Date of receipt of goods or

2. Date on which payment is entered in the books of account of recipient or
3. the date on which payment is debited in his bank account, whichever is earlier, or
4. the date immediately following the 30days from the date of issue of Invoice by the supplier.

In case it is not possible to determine time of supply under above clauses, time of supply shall be the
date of entry in book of account of the recipient of supply.

In case of reverse charge, GST is payable at the time of payment, if payment is made before receipt
of goods i.e. the advance payment. The relaxation 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.

Example:

Determine the time of supply from the given information.

May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days f
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment

Solution:

Here, May 12 will be the time of supply, being the earliest of the three stipulated dates namely,
receipt of goods, date of payment and date immediately following 30 days of issuance of invoice
[Section 12(3)]. (Here, date of invoice is relevant only for calculating thirty days from that date.)

4. Time of Supply in case of Vouchers exchangeable for goods (section 12(4)):

Section 2(118) “voucher” means an instrument where there is an obligation to accept it as

consideration or part consideration for a supply of goods or services or both and where the goods or
services or both to be supplied or the identities of their potential suppliers are either indicated on
the instrument itself or in related documentation, including the terms and conditions of use of such
instrument”

As per section 12(4) of CGST Act, 2017 in case of supply of vouchers by supplier the time of supply
shall be:

1. the date of issue of voucher if supply is identifiable at that point

2. the date of redemption of voucher, where supply is not identifiable.
 Prepaid Payment Instruments (PPI) falls under the definition of Voucher

5. Time of Supply in Residual cases (not determinable) (Section 12(5)):

In case it is difficult to determine the time of supply as per any of the above discussed provisions,
time of supply shall be:
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 1. In case where periodicals return has to be filed, be the date on which such returns is to be
filed In any other case, be the date on which the tax is paid.

6. Time of Supply for additional value by way of interest, late fee, or penalty for
delayed payment of consideration (Section 12(6))

Generally, most of the contract of supplies provides for payment of interest/late fee/penalty for
delayed payment of any consideration beyond the agreed time period. As per Section 15(2) of CGST
Act, any interest, late fee or penalty for delayed payment of consideration of supply shall form part
of supply. As per section 12(6) of the CGST Act, 2017 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 for goods shall be the date on which the supplier receives such addition in value. Thus,
the value of supply by way of interest, late fee or penalty for delayed payment of any consideration
shall be taxable on receipt basis.

Example:

Radha Traders sold goods to Shyam Sales on 6th June with a condition that interest @ 2% per month
will be charged if Shyam Sales failed to make payment within 15 days of the delivery of the goods.
Goods were delivered as also the invoice was issued on 6th June. Shyam Sales paid the consideration
for the goods on 6th July along with applicable interest.

Solution:

Time of supply for the goods sold is the date of issue of invoice i.e., 6th June and the time of supply
for addition in value by way of interest is the date when such addition in value is received by Radha
Traders i.e., 6th July

7. Time of Supply of Services

Section 13 of CGST Act, 2017 provided time of supply of services in different situations which is
mentioned below:

Sub-section Nature of Supply of Goods

1. TOS of services in normal situations/ forward charge

a(i) TOS in case invoice is issued within due date
a(ii) TOS in case invoice is not issued within due date
a(iii) TOS in case where provision of clause (a) or (b) do not apply (i.e. in absence of
date of supply, invoice or payment in the records)

(b) Time of Supply in case excess received of an amount up-to Rs. 1000/-

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 (c) TOS in case of continuous supply of services
(d) TOS in case supply of services cease under contract before completion of supply
(e) TOS of services in case of revised invoice
2(a) TOS of services in Reverse charge situation
2(b) TOS of services under reverse charge received by Associated Enterprises
3 TOS of services in case of supply through vouchers
4 TOS of services in residual situations
5 TOS of services in case value of supply by way of interest, Late fee, and Penalty
6 TOS of development rights or Floor Space Index (FSI) of long-term lease of land
on or after 1.04.2019 in hand of promoters

By virtue of section 20 of the IGST Act, 2017, these provisions are also applicable
to inter-State supplies leviable to Integrated tax.

8. Time of Supply of services under forward charges (Section 13(2) read with Section
31 and Rule 47 of the CGST Rules):

The time of supply in case of services where the supplier is liable to pay tax shall be earlier of the two
dates arrived at by methods (A) and (B), as follows:

A. If the invoice is issued within 30/45 days (Refer: Note:1), TOS is earliest of
 Date of Invoice
 Date of receipt of payment (Refer: Note:2)
B. If the invoice is not issued within 30/45 days (Refer: Note:1), TOS is earliest of
 Date of supply of services
 Date of receipt of payment (Refer: Note:2)
C. Where the above provisions do not apply, TOS is earliest of
 Date on which the recipient of services in his books of accounts

Note 1: As per Rule 47 of CGST Act, invoice should be issued within 30 days from the date of
supply of services. However, if the supplier is an insurer or a banking company or a financial
institution, including a non-banking financial company, the invoice or any document in lieu
thereof should be issued within 45 days.

Note 2: Receipt of payment is earliest of the

a. date on which the payment is entered in the books of account of the supplier or
b. the date on which the payment is credited to his bank account

Note 3: Special attention:

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 GST is applicable on advance received for supply of services (unlike as in Supply of goods where it
has been exempted vide notification no 66/2017 dated 15-07-2017) which means supply to the
extent it is covered by the advance receipt voucher, is deemed to be made. However, the ITC of
same is only allowed when all the conditions in sec 16(2) of the CGST Act are satisfied which inter
alia also mandates the receipt of services by the recipient. Thus no credit can be taken on the
advance payment made in respect of taxable supply of services on basis of advance receipt.

Example:

Determine the time of supply from the given information.

6th May Booking of convention hall, sum agreed Rs. 15000, advance of Rs. 3000
received
15th September Function held in convention hall
27th October Invoice issued for Rs. 15000, indicating balance of Rs. 12000 payable
3rd November Balance payment of Rs. 12000 received

Solution:

As per section 31(2) read with rule 47 of CGST Rules, the 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, whichever is earlier.

Therefore, the time of supply of service to the extent of Rs. 3,000 is 6th May as the date of
payment of Rs. 3000 is earlier than the date of provision of service. The time of supply of service to
the extent of the balance Rs. 12,000 is 15th September which is the date of provision of service.

Example:

Investigation shows that ABC & Co. carried out service of cleaning and repairs of tanks in an
apartment complex, for which the RWA showed a payment of cash on 4th April to them against
work of this description. The dates of work are not clear from records of ABC & Co who has also
not issued any invoice or entered the payment in their books of accounts. What would be the time
of supply?

Solution:

As in this case time of supply cannot be determined by clause (a) / (b) of Sec 13(2) of the CGST Act,
2017, in absence of date of supply, invoice or payment in the records of ABC & Co, clause (c) of
Section 13(2) shall come into play and the time of supply for this supply shall be the date on which
the recipient of service shows receipt of service in his books of account.

Thus, the time of supply in this case will be 4th April, i.e., the date on which the RWA records the
receipt of service in its books. It may be noted here that clause (c) is a tool in hands of Department
to raise demand on the transactions of supply not recorded in the books of accounts of the supplier

9. Time of Supply in case excess received of an amount up-to Rs. 1000/-

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 As per proviso of 13(2) of CGST Act, where the supplier of taxable service receives an amount upto
one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the
extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice
relating to such excess amount.

Example: [Proviso of Section 13(2)]

A wholesaler receives Rs. 4,000 on 27th July 2018 against an invoice of Rs. 3,700 on 23rd July
2018 in respect of the supply of services. The excess amount of Rs. 300 can be adjusted against the
invoice to be issued in the next month. Time of supply will arise only for Rs. 3700 on 23rd July
2018. For the balance amount of Rs. 300, the time of supply may not arise on 27th July 2018 at the
option of the supplier and may be adjusted against the next month’s invoice

10. Time of supply in case of Continuous Supply of Services

As per 2(33) of CGST Act 2017 “Continuous supply of service” means a supply of service which is
provided or agreed to be provided continuously or on recurring basis under a contract for a period
exceeding three months with periodic payment obligations and includes supply of such services as
the government may subject to such conditions as it may by notification specify”

As per section 31(5) of CGST Act in case of continuous supply of service invoice shall be issued on
or before

 the due date of payment, where the due date of payment is ascertainable from the contract
 Receipt of payment, where the due date of payment is not ascertainable from the contract.
 Completion of event, where the payment is linked to the completion of an event

As per section 13(2) read with section 31(5) of CGST Act the time of supply of service for
continuous supply of service shall be the earliest of the following dates: –

 If the invoice is issued within the prescribed period under section 31(5), the date of issue of
invoice by the supplier or the date of receipt of payment whichever is earlier. or
 If the invoice is not issued within the prescribed period under section 31(5), then the date
of provision of service or the date of receipt of payment whichever is earlier.
 If it is not possible to determine time of supply under above clause, date on which the
recipient shows the receipt of services in his books of account.

Illustration:

A ltd enters into a contract with Mr. B for construction service for a period of one year to complete
the project. In terms it was agreed that in each month Mr. A will pay 100,000 on 15th. Then as per
this case invoice shall be issued by Mr. B on or before 15th of each month.

 Where the due date of payment is not ascertainable or not predetermined from the contract
then the invoice shall be issued before or at the time when the supplier of service receives
payment.
 Where the payment is linked to the “Completion of an event” the invoice shall be issued on
or before the date of completion of that event.

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 Example:

Mr. ABQ is getting construction services from a developer against buying of an under-construction
flat for the period 01.07.2017 to 31.03.2020 for Rs. 180,00,000. The transactions are structured as
follows:

Situation 1: where due date of payment is ascertainable:

Equal instalments to be paid at the end of every quarter

Periodic completion Date of invoice Actual payment dates Amount

of service
30-09-19 5-10-19 14-10-2019 60,00,000
31-12-19 12-12-19 04-02-2020 60,00,000
31-03-20 7-4-20 03-02-2020 60,00,000

Solution:

In this situation, the due date of payment can be ascertainable from the contract, thus the last date
of issuance of invoice will be the due date of payment.

The due date of payment will be end of each quarter. So, the time of supply will be determinable as
follows:

Periodic Date of Date of Amount Invoice Time of supply

completion invoice payment issued within
of service time
limit (on or
before due
date of
payment)
30-9-2019 5-10-2019 14-10-2019 60,00,000 No 30-9-2019
31-12-2019 12-12-2019 04-02-2020 60,00,000 Yes 12-12-2019
31-3-2020 7-4-2020 03-02-2020 60,00,000 No 03-02-2020

Situation 2: where due date of payment is not ascertainable

Payment to be made as per mutual understanding

Periodic completion of service Date of invoice Actual payment date

31-12-2019 8-1-2020 12-1-2020
31-3-2020 22-4-2020 2-4-2020

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 Solution:

In this situation, due date of payment is not ascertainable from the contract. So, the invoice is to be
issued before or at the time when the supplier of services receives the payment. So, the time of
supply will be determinable as follows:

Periodic Date of Actual date Value Invoice Time of supply

completion invoice of payment issued within
of service time limit
(on or before
payment
date)
31-12-2019 08-1-2020 12-1-2020 90,00,000 Yes 08-1-2020
31-3-2020 22-4-2020 02-4-2020 90,00,000 No 31-3-2020

Situation 3: where payment is linked to completion of event

40% payment on 40% completion and balance 60% payment on 100% completion

Period of Date of invoice Actual payment date Value

completion
1-10-2019 28-9-2019 8-10-2019 72,00,000
31-3-2020 22-4-2020 27-4-2020 108,00,000

Solution:

In this situation, the payment is linked to the completion of event. The invoice should be raised on
or before the completion of that event (i.e. 40% or 100% completion as the case may be). So, the
time of supply will be as follows:

Period of Date of Actual Value Invoice Time of supply

completion invoice payment issued within
date time (on or
before
completion
of event)
01-10-2019 28-9-2019 08-10-2019 72,00,000 Yes 28-9-2019
31-3-2020 22-4-2020 27-4-2020 108,00,000 No 31-3-2020

Case Study: Time of Supply of service in case of renting of immovable property

11. Cessation of Supply of service:

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 In a case where the supply of services ceases under a contract before the completion of the supply,
the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to
the extent of the supply made before such cessation. [sec 31(6)]

12. Revised Invoice-

A registered person may, within one month from the date of issuance of certificate of registration
and in such manner as may be prescribed, issue a revised invoice against the invoice already issued
during the period beginning with the effective date of registration till the date of issuance of
certificate of registration to him [sec 31(3)(a)]

 Time of Supply when amount is received from the members in sinking fund
for supply of future services like up-keep of the structure of the building by
painting the exterior/common areas; replacement/repair of major equipment
such as lifts, generators etc.

13. Where supply of services covered under reverse charge:

As per Section 13(3), supplies in respect of which tax is paid or liable to be paid on reverse charge
basis, the time of supply shall be the earliest of the following:

1. Date on which payment is entered in the books of account of recipient or

2. The date on which payment is debited in his bank account, whichever is earlier, or
3. the date immediately following the 60th days from the date of issue of Invoice

In case it is not possible to determine time of supply under above clauses, time of supply shall be
the date of entry in book of account

Example:

Determine the time of supply from the given information. (Assuming that service being supplied is
taxable under reverse charge)

May 4 The supplier of service issues invoice for service provided. There is a dispute
about amount payable, and payment is delayed.
August 21 Payment made to the supplier of service

Solution:

Here, July 4 will be the time of supply, being the earliest of the two stipulated dates namely, date of
payment and date immediately following 60 days since issue of invoice

14. Time of Supply by associated Enterprises:

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 According to section 2(12) of CGST Act, the term ‘Associated Enterprises’ shall have the same
meaning as assigned to it in section 92A of the Income Tax Act, 1961.

In summarized manner, as per section 92A (1) of the Income Tax Act, an enterprise would be
regarded as an associated enterprise, if:

(a) it participates, directly or indirectly, or through one or more intermediaries, in the

management or control or capital of the enterprise; or

(b) in respect of it, one or more persons who participate, directly or indirectly or through one or
more intermediaries, in its management or control or capital, are the same persons who
participate, directly or indirectly, or through one or more intermediaries, in the management or
control or capital of the other enterprise.

Section 92A (2) provides that two enterprises shall be deemed to be associated enterprise of for the
purpose of section 92A (1), the two enterprises satisfy, at any time during the previous year, any of
the specified conditions as above.

There can be two situations when we talk about GST implications for transactions
with associated enterprises.

 Firstly, if the associated enterprise is located in India, no separate provision has been made
under GST laws. Normal GST provisions shall apply.
 Secondly, if the associated enterprise is located outside India, any supply of service
received from such enterprise shall be liable for GST under reverse charge. This rule is
applicable only for import of services from associated enterprises. For import of goods from
associated enterprises, it is otherwise also liable for GST under RCM under normal GST
provisions.

The ‘Time of Supply’ in reverse charge for supplies from associated enterprises
located outside India

In case of supply by associated enterprises, located outside India and provide taxable services, the
time of supply shall be the earliest of the following

1. date of entry in the books of accounts of the recipient of supply or

2. the date of payment.

Example:

PAZ ltd. A UK based company supplied technical services to ABC ltd located in India on
15.02.2020 for INR 1,80,000/-. PAZ ltd. Holds 100% shares of ABC ltd registered in India. The
invoice for the said services was raised by PAZ ltd on 03.03.2020 and ABC ltd made payment on
25.03.2020. But, owing to accounting policies adopted by ABC ltd in India, entry for the said
services was booked as provision in the month of 28.02.2020 itself. What is time of supply?

Solution

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 In the instant case the PAZ Ltd located in UK supplied the technical services to ABC Ltd. Also, PAZ
Ltd hold 100% share of ABC Ltd, thus they are associate enterprise. The time of supply in this case
shall be date of entry in books of account of recipient or date of payment whichever is earlier.
Thus, time of supply is 28.02.2020.

Example:

Determine the time of supply from the given information:

May 7 A German company issues Email informing its associate company PQR ltd. Of the cost
of services provided to it.
July 12 PQR ltd. Transfers the amount to the account of the German company.

Solution:

As there is no point of entry in the books of accounts of services by PQR ltd, July 12 will be the time
of supply being the date of payment by the recipient.

15. Time of Supply in case of Vouchers:

“Section 2(118) “voucher” means an instrument where there is an obligation to accept it as

consideration or part consideration for a supply of goods or services or both and where the goods
or services or both to be supplied or the identities of their potential suppliers are either indicated
on the instrument itself or in related documentation, including the terms and conditions of use of
such instrument”

As per section 13(4) of CGST Act, 2017 in case of supply of vouchers by supplier the time of supply
shall be:

1. the date of issue of voucher if supply is identifiable at that point

2. the date of redemption of voucher, where supply is not identifiable.

16.Time of Supply in Residual cases (not determinable):

As per section 12(5) or 13(5) of CGST Act, 2017 in case it is difficult to determine the time of supply
as per any of the above discussed provisions, time of supply shall be:

1. In case where periodicals return has to be filed, be the date on which such returns is to be
filed
2. In any other case, be the date on which the tax is paid

Example:

An income tax case against Mr. A, working in a multinational company, reveals a large volume of
undisclosed assets, which he claims as service income. On the basis, the GST authorities
investigate the GST liability. Date of provision of service, whether in first half or in second half of

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 the financial year being scrutinized by Income tax authorities, are not known. Mr. A voluntarily
pays GST during the investigation. Determine the time of supply.

Solution:

As per Section 13(5) of CGST Act, 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 accounts of the recipient and where periodical return is not filed, the time
of supply is date of payment of tax. Therefore, the date when Mr. A pays the GST will be the time of
supply.

17. Time of Supply for additional value by way of interest, late fee, or penalty for
delayed payment:

Generally, in agreement, there is a condition for payment of interest/late fee/penalty for delayed
payment of any consideration beyond the agreed time period. As per Section 15(2) of CGST Act,
any interest, late fee or penalty for delayed payment of consideration of supply shall form part of
supply. As per section 13(6) of CGST Act, 2017 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, the
value of supply by way of interest, late fee or penalty for delayed payment of any consideration
shall be taxable on receipt basis.

 What would be the time of supply of development rights before 1.04.19 ?

Solution:

As per Notification no. 4/2018-Central Tax (Rate) in case:

 registered persons who supply development rights to a developer, builder,

construction company or any other registered person against consideration, wholly or
partly, in the form of construction service of complex, building or civil structure; and
 registered persons who supply construction service of complex, building or
civil structure to supplier of development rights against consideration, wholly or partly,
in the form of transfer of development rights,

then the time of supply of services is at the time when the said developer, builder, construction
company or any other registered person, as the case may be, transfers possession the right in
the constructed complex, building or civil structure, to the person supplying the development
rights by entering into a conveyance deed or similar instrument (for example
allotment letter).

 What would be the time of supply of development rights or Floor Space Index
(FSI) of long term lease of land on or after 1.04.2019 in hand of promoters?

Solution:

As per Notification No. 06/2019-Central Tax (Rate), in exercise of power conferred by Section
148 of CGST Act, 2017 on recommendation of council notifies that in case promoters receives the

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 development rights or Floor space index or long-term lease of land on or after 1.04.2019 against
the:

1. the consideration paid by him in the form of construction service of commercial or

residential apartments in the project, for supply of development rights or FSI (including
additional FSI);
2. the monetary consideration paid by him, for supply of development rights or FSI (including
additional FSI) relatable to construction of residential apartments in project;
3. the upfront amount (called as premium, salami, cost, price, development charges or by any
other name) paid by him for long term lease of land relatable to construction of residential
apartments in the project; and
4. the supply of construction service by him against consideration in the form of development
rights or FSI (including additional FSI),

Then, time of supply shall be the earliest of the

If the invoice is not issued within 30/45 days (Refer: Note:1), TOS is earliest of

1. date of issuance of completion certificate for the project by the competent authority or
2. on its first occupation

Section 14

Analytical Review

Change in rate of tax in respect of supply of goods or services

GST Rates for goods and/or services keep changing from time to time. When supply happens during
such a change in tax rates, the time of supply shall be determined in accordance with the provisions
of

Section 14 of the CGST Act.

There are two scenarios under this. The first scenario deals with the one where goods or services
have been supplied before the change in the rate of tax and the second scenario deals with the one
where goods or services have been supplied after the change in the rate of tax.

Determination of the time of supply in both the scenario has been explained below in a tabulated
manner:

Section Services Provided Date of issue of invoice Date of Receipt of

Payment
Section 14(a) Before Change in Rate of After change in rate(A) After change in rate (A
Tax(B)

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 Before change in rate(B) After change in rate (A
After change in rate (A) Before change in rate (
Section 14(b) After Change in Rate of Tax(A) Before change in rate(B) After change in r
Before change in rate (B) Before change in

After change in rate(A) Before change in

The liability to pay tax arises at the time of supply. Hence the GST Rate applicable at the time of supply sh

It can be concluded that:

(a) If two out of the above three events (including the first event of supply of services) take place
before the change of the effective rate of GST, the second event shall be taken as the time of supply.

(b) If two out of the above three events (including the first event of supply of service) take place after
the change of the effective rate of GST, the second event shall be taken as the time of supply.

(c) If Date of invoice and Date of payment falls on one side the time of supply shall be the issue of
invoice or receipt of payment whichever is earlier.

Note:

Meaning of “Date of receipt of payment”

Here, “date of receipt of payment” refers to the date on which the payment is entered in the books
of accounts of the supplier, or the date on which the payment is credited in his bank account,
whichever is earlier.

Date of crediting of payment in bank account to be the “date of receipt of payment” if such crediting
takes place after 4 working days of change in rate of tax

Where the payment is credited in the bank account after 4 working days from the date of change in
the rate of tax, the date of receipt of payment will be the date of credit in the bank account. In other
words, in such a case, the date of recording the payment in the books of account will not be
considered as the date of receipt of payment even though if the same precedes the date of crediting
of payment in the bank account.

Example:

Determine the time of supply in the following cases assuming that rate of GST changes from 12% to
18% w.e.f. 5th June:

SI No. Date of Supply of Service Date of issue of Invoice

1. June 10
May 30
2. May 27

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 3. June 6

4. June 2
June 12
5. May 28

6. June 12

Solution:

SI No. Date of Supply of Service Date of issue of Invoice Date of receipt of paym
1. June 10 July 23
2. May 30 May 27 June 25
3. June 6 May 28
4. June 2 June 25
5. June 12 May 28 May 20
6. June 12 May 28
 Case Study

Service was provided in June, 2017 of value of Rs 1,00,000/-. However, invoice as well as payment
was received in July 2017. Which tax shall be levied on above viz service tax or GST?

Solution:

In this case although the service was provided in pre-GST regime but as neither the invoice was
issued nor the payment was received in June 2017, the point of taxation was not attracted and
liability for payment of service tax was not crystallized and thus provision of Section 142(11)(b) of
the CGST Act,2017 is not triggered here. The invoice as well as payment received in GST regime and
accordingly the time of supply gets attracted under GST regime and thus said transaction will be
subject to GST.

 Case Study

Advance of Rs 1,00,000/- (plus service tax Rs 15,000/-) towards a service was received in June 2017
and service tax thereon was paid. Service rendered in July 2017 along with issue of invoice of Rs
1,20,000/-. Suppose GST now is 18%. How much tax and which tax is to be charged in the tax invoice
raised?

Solution:

In this case the liability for payment of service tax on advance of Rs 1,00,000/- was crystallized
under service tax regime. As per Section 142(11)(b) of the CGST Act,2017, notwithstanding anything
contained in Section 13, no tax shall be payable on services under this Act to the extent the tax was
leviable on the said services under Chapter V of the Finance Act,1994. As tax on the advance amount
of Rs 1,00,000/- was leviable under service tax regime, said amount cannot again be taxed under
GST regime even in case the actual supply and issuance of invoice is issued in GST regime. However,
GST will be payable on the balance invoice amount of Rs 20,000/-.

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 In this regard it is important to note that in case VAT as well as service tax was applicable on above
advance then Section 142(11)(c) of the CGST Act,2017 will be triggered which mandates that where
tax was paid on any supply under Vat Act and Chapter V of the Finance Act, 1994, tax shall be leviable
under this Act and the taxable person shall be entitled to take credit of the VAT or service tax paid
under the existing law to the extent of supplies made after the appointed date by filing Table 11 of
TRAN-1 as per Rule 118 of the CGST Rules,2017.

Recently the Tamil Nadu AAR has in the case of Shapoorji Pallonji and Company Private
Limited, 2020 (37) GSTL 75 (A.A.R. – GST – Tamil Nadu) vide Order No.03/ARA/2020
Dated 31.01.2020 has adjudged that the Mobilization advance to the extent received prior to the
implementation of GST towards supply of Works Contract Service is not to be subjected to GST as
per the provisions of Section 142(11)(b) of the CGST Act 2017. The Transitional Provisions under
Section 142(11) (c) is not applicable to the case at hand.

Q. FAQ. What will be the time of supply in respect of services rendered up to 30th
June, 2017 where the invoices are raised or payments are received after 30th June,
2017? (S. No. 3)

Ans: Where the services are rendered up to 30th June 2017 and invoices in respect thereof are also
raised on or before 30th June 2017, the point of taxation would be as per the earlier service tax law
and the services will be subject to service tax. Where the services are rendered up to 30th June 2017
and the services are liable to be taxed under the reverse charge mechanism, the point of tax for such
services as per the Point of Taxation Rules, 2011 shall be the date of payment. If the payment is made
on or after 1st July, 2017, the supply of services shall be liable to GST.

Q. FAQ. Which tax is to be applied by the service provider on invoice issued on or after
1st July 2017 for services rendered up to 30th June 2017? (S. No. 4)

Ans: The time of supply being issuance of invoice under the CGST Act, 2017, the supplier of services
must charge GST in this case. However, where the payment for such supplies has been made (prior
to issuance of invoice) as advance before the 1st of July, 2017, the tax would be payable under the
law prevalent prior to 1st July, 2017, as the point of taxation had arisen before this date to the extent
of advance.

 Case Study: Whether TOS required to be determined in following cases?

(a) Services by an employee to the employer

As per para 1 of Schedule III of the CGST Act, 2017 services by an employee to the employer in the
course or in relation to his employment is treated neither as a supply of goods nor supply of services.
As there is no supply in transaction, the question of determining time of supply does not arise.

(b) Sale of land and completed building

As per para 5 of Schedule III of the CGST Act, 2017 sale of land and completed building is treated
neither as a supply of goods nor supply of services. As there is no supply in transaction, the question
of determining time of supply does not arise.

(c) Service provided without consideration

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 As per Section 7(1)(a) of the CGST Act, 2017 for any activity to be regarded as supply, presence of
consideration is must. This is subject to exceptions provided in Section 7(1)(c) read with Schedule I
of the CGST Act.

Thus, any service which is provided without consideration (not covered in Schedule I) will not be
regarded as supply and accordingly question of determining its time of supply does not arise.

(d) Sale of Securities

GST is a tax on supply of goods or services or both. Securities has been excluded both from the
definition of goods (Sec 2(52)) as well as services (Sec 2(102)) and therefore there is no supply when
securities are sold. Thus, in such a case time of supply is not required to be determined. However,
brokerage charges etc. on sale of securities would be subject to GST and its time of supply would be
required to be derived.

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