GST Invoice, Debit /Credit Note | Section 31-34 | CGST Act 2017

Simplified GST Series -Section 31-34/CGST ACT 2017/PART-16- Article covers Section 31- Tax Invoice under GST, Section 31 A- Facility of digital payment to recipient, Section 32- Prohibition of unauthorised collection of tax, Section 33- Amount of tax to be indicated in tax invoice and other documents  under GST and Section 34- Credit and debit notes under GST.

Section 31- Tax Invoice-

 (1) A registered person supplying taxable goods shall, before or at the time, of, —

(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or

(b) delivery of goods or making available thereof to the recipient, in any other case,

issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed:

 Provided that the Government may, on the recommendations of the Council, by notification, specify the categories of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed

Analysis- Tax invoice on supply of goods or services: Every registered person is required to issue a tax invoice on effecting a taxable outward supply of goods or services. 

There are two cases – Supply involves movement of goods and supply does not involve movement of goods.

Timelines for issuance of a tax invoice in such case are as follows:

(i) Where the supply involves movement of goods: Before or at the time of removal of goods;

(ii) Where the supply does not involve movement of goods: Before or at the time of delivery of the goods / making them available to the recipient. I have already discussed this in my article ‘Time of supply of goods/services’’

(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period; issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:

Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which––

(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or

(b) tax invoice may not be issued.

Analysis-

Timelines for issuance of tax invoice on the supply of taxable services –

(i) Before the provision of services; or

(ii) After the provision of services but within 30 days (or 45 days in case of suppliers of services being an insurer / banking company / financial institution, including a NBFC) from the date of supply of the service; or

(iii) Before or at the time the supplier records the supplies in his books of account or before the expiry of the quarter during which the supply was made, in case of supply of taxable services between distinct person by an insurer or a banking company or a financial institution, a NBFC, or a telecom operator, or any other class of supplier of services as may be notified by the Government on the recommendations of the Council.

(3) Notwithstanding anything contained in sub-sections (1) and (2) ––

(a) 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; 

(b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed;

(c) a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed:

Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed;

(d) a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment; 

(e) where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment 

(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;

(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier. 

Analysis-

♣ Revised Invoice under GST ??

A person should apply for registration within 30 days of becoming liable for registration under Section 25(1) of the CGST Act. i.e crossing threshold limit . When such an application is made within such time and registration is granted, the effective date of registration is the date on which the person became liable for registration, thereby resulting in a time lag between the date of grant of certificate of registration and the effective date of registration. For supplies made by such person during this intervening period, the law enables issuance of a revised tax invoice, so that ITC can be availed by the recipient on such supplies.

♣ Exception to the rule that every supply must be supported by a tax invoice –

A registered person (Other than an exhibitor of cinematograph films in multiplex screens) is not required to issue a separate tax invoice in respect of supply of goods and / or services where the value of supply is lower than Rs. 200/-, subject to the following conditions:

• the recipient is not a registered person; and
• the recipient does not require such invoice; and
• the supplier issues a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.

♣  Bill of supply: A bill of supply as per section 31(3)(c) is required to be issued in the following two cases:

(a) Where the supplier is a registered person who has opted for composition tax under section 10 of the Act (and shall not charge tax on the bill of supply); or

(b) Where the goods / services being supplied by any registered person are wholly exempted.

The registered person may not issue a bill of supply if the value of the goods and/or services supplied is less than Rs. 200/-.

♣ Documents required to be issued in respect of receipt and refund of advances [Section 31(3)(d) & (e)]

> In case of receipt of advance by a registered person, a ‘receipt voucher’ or any other document is required to be issued, and not a tax invoice, and it is required to contain all the particulars as are prescribed in Rule 50 of CGST Rules, 2017. Based on this receipt voucher, the registered person will be required to pay tax on the advances received.

> Receipt voucher would also carry the details of tax applicable on the transaction when the advance so received is liable to tax (as in case of services)

> In addition to such receipt voucher, the supplier will be required to issue a tax invoice on effecting the supply, containing all the particulars as are required in a case where no advance had been received.

> Whenever a transaction envisages issue of receipt voucher, and the same is not followed by the issuance of a tax invoice, since it does not translate into a transaction of supply, the receipt voucher issued will need to be reversed (meaning without cancellation of the receipt voucher) by issuing a ‘refund voucher’ containing particulars, as required under Rule 51 of the CGST Rules, 2017.

♣ Documents required to be issued in respect of supplies liable to tax under reverse charge mechanism [Section 31(3)(f) & (g)]

(a) Where tax is payable on reverse charge basis in terms of Section 9(3) or 9(4), or the corresponding provisions of the IGST Act, 2017, the recipient of supply is required to pay tax on reverse charge basis. In this regard, the following may be noted:

There are two cases-

• • Supplier is registered – Tax Invoice not required and payment voucher required.
  • Supplier is not registered – Tax Invoice required and payment voucher required.

Note-Payment of tax by registered recipients on effecting inward supplies from unregistered, in terms of Section 9(4) of the Act, has been exempted up to 30.09.2019, vide Notification no 8/2017-Central Tax (rate) dated 28.06.2017 as amended time to time, however the said notification is rescinded by notification no 1/2019-Central Tax (Rate) dated 29-01-2019 w.e.f 01.02.2019 vide the Central Goods and Services Tax Amendment Act, 2018. After amendment of section 9(4), the Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both.

Notification No. 07/2019-CT(Rate) dated 29.03.2019 issued in this respect specifies ‘Promoter’ as a class of registered persons who shall on receipt of specified goods or services as specified in the said notification from an unregistered supplier, shall pay tax on reverse charge basis.

(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received. 

(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––

(a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment;

(b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment;

(c) 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.

 (6) 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.

 (7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.

 Analysis- Special cases-

1. Continuous supply of goods [Sec 31(4)]: In case of a continuous supply of goods as defined in Section 2(32), where successive statement of accounts or successive payments are involved, the tax invoice is required to be issued before or at the time:

— When each such statement or a running-claim is issued; or

— When each such payment is received.

2. Continuous supply of services [Section 31(5)]:

In case of a continuous supply of services as defined in Section 2(33) of the Act, a tax invoice is required to be issued as follows:

(i) When payment date is ascertainable as per the contract:

On or before the due date for payment.

(ii) When payment date is not ascertainable from the contract:

 On or before the time when the supplier of services receives the payment.

(iii) When payment is linked to completion of an event:

On or before the date of completion of the event.

3. Cessation of service [Sec 31(6)]: On cessation of a contract for supply of services, a tax invoice is required to be issued to the extent of supply effected upto the point of cessation, and due tax shall be remitted thereon.

4. Goods sent on approval (Section 31(7) Where goods are sent on approval basis, an invoice would not be required at the time of removal of goods, and shall be issued only at the time of receipt of approval from the recipient. However, if the goods so dispatched have neither been accepted nor been returned within 6 months from the date of their removal, the tax invoice is required to be issued on the date immediately succeeding the date on which the 6-month period expires.

Note- Rule 55 of the CGST Rules, 2017 provides for issuance of delivery challan, and also the mandatory contents in a delivery challan. A delivery challan is required to be issued by a registered person every time he moves any goods for any reasons other than by way of supply (say supply for job work, goods sent for sale on approval basis, dispatch of demo-goods, disposal by way of gift or free samples, shipment of goods for an exhibition, etc.)

Section 31 A- Facility of digital payment to recipient

The Government may, on the recommendations of the Council, prescribe a class of registered persons who shall provide prescribed modes of electronic payment to the recipient of supply of goods or services or both made by him and give option to such recipient to make payment accordingly, in such manner and subject to such conditions and restrictions, as may be prescribed.

Analysis-With a view to increase digital payment, the Government on the recommendation of GST Council, shall prescribe a class of registered person who will provide recipient with an option to make payment through various modes of electronic payment. The recipient can opt any mode of payment as per his choice. The manner of payment and the conditions and restrictions in regard thereto shall be prescribed. This provision has been inserted vide FINANCE (NO. 2) ACT, 2019. However, the date of its introduction has not yet been notified.

Section 32-Prohibition of unauthorised collection of tax

(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act.

(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made there under. 

Analysis-This provision casts an obligation on each – unregistered person and registered person with regard to collection of tax on supply:

— Unregistered person is not to collect tax or any sum ‘by way of’ tax; and

— Registered person is to collect tax only in the manner prescribed.

Section 33- Amount of tax to be indicated in tax invoice and other documents

Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made 

Analysis- This provision says-Price charged by supplier to be ‘’çum tax’’ price of the supply. Tax included in the price is that actually assessed on the supply. It means that if the supply price is `1000/- which is inclusive of tax then every document must state that “the price of `1000 includes – say IGST of `180/- or alternatively say supply price is `820 and IGST `180 total `1000.

Section 34- Credit and debit notes – 

(1) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed. 

(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person. 

Analysis-

A credit note or a debit note, for the purpose of the GST Law, can be issued by the registered person who has issued a tax invoice i.e supplier. Any other document by whatever name called, when issued by the recipient to the registered supplier, is not a document recognized under the GST Law.

Conditions on issue of credit note-

1. The supplier may issue one or more credit notes for supplies made in a financial year through one or more tax invoices which have been issued by him earlier;

2. The credit note cannot be issued at any time after either of the following 2 events

• Annual return has been filed for the FY in which the original tax invoice was issued; or
• September of the FY immediately succeeding the FY in which the original tax invoice was issued

(3) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient one or more debit notes for supplies made in a financial year containing such particulars as may be prescribed

(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted such manner as may be prescribed. 

Analysis-

The GST Law mandates that a registered supplier may issue one or more debit notes for supplies made in a financial year through one or more tax invoices which has been issued by him earlier under the following circumstances:

a. Actual value of supply is higher than that stated in the original tax invoice;

b. Tax charged in the original tax invoice is lower than that applicable on the supply;

c. The debit note needs to be linked to the original tax invoice(s);

d. The debit note contains all the applicable particulars as specified in Rule 53(1A) of the CGST Rules, 2017;

e. A debit note issued under Section 74, 129 or 130 would not entitle the recipient to avail credit in respect thereof, and the supplier shall specify prominently, on such debit note the words “INPUT TAX CREDIT NOT ADMISSIBLE”; as provided in Rule 53(3).

f. It may also be noted that no time limit has been prescribed for issuing debit notes. Meaning, a debit note may be raised and uploaded subsequently, with no restriction as to the time period for doing so.

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