Provisions of Time of Supply under CGST Act 2017

1. Relevance  – Time of supply decides when the supplier or recipient is liable to pay GST for goods or services or both. It is the most crucial part in the GST law.

2. Time of Supply of Goods (Section 12 of CGST Act)

a) General Provision – The date of issue of invoice by the supplier or the last date he is required to issue invoice under sec 31 [Note-1] or the date on which supplier receives payment with respect to such supply [whichever is earlier]. As per Explanation 2 to sub-section (2), the date on which supplier receives payment shall be the date earlier of the date on which payment is entered in the books of accounts or the date on which it is credited in the bank account.

b) Payment received in excess upto Rs. 1,000 – In case where the supplier receives the amount exceeding the amount indicated in the tax invoice upto Rs. 1,000, the time of supply in respect of such excess amount should be at the option of supplier the date of issue of invoice in respect of which such excess amount is received. 

c) Supplies on which tax is to be paid on Reverse Charge basis by the recipient – In case of specified goods on which tax is to be paid by the recipient, the time of supply is the date of the receipt of goods or the date of payment entered in books of accounts or the date on which amount is debited in the bank of recipient or the date immediately following 30 days from the date of issue of Invoice or any other document in lieu thereof by the supplier [whichever is earlier]. In case it is not possible to determine the above mentioned three dates, the date of entry in books of accounts of recipient shall be the time of supply.

d) Supply of voucher by the Supplier – In case the supply for which voucher is issued is identifiable, the time of supply will be the date of issue of voucher otherwise the date of redemption will be the time of supply.

e) Other cases – Where the time of supply is not identifiable in the above mentioned scenarios, then in case where the periodical return has to be filed, the time of supply will be the date on which such return is filed otherwise the date on which tax is paid will be the time of supply.

f) Addition in value on account of Interest, Late Fees or Penalty for delayed payment – The time of supply in such case will be the date on which such additional amount is received by the supplier.   

3. Time of Supply of Services (Sec 13 of CGST Act)

a) General Provision 

i) The date of issue of invoice by the supplier [ if the invoice is issued within the time limit under sec 31 & rule 47 (Note-2)] or the date of receipt of payment [whichever is earlier].

ii) The date of provision of service, [ if the invoice is not issued within the time limit under sec 31 & rule 47] or the date of receipt of payment [whichever is earlier]. 

iii) If the above two provisions are not applicable, then the date of receipt of service as entered in the books of accounts of the recipient will be the time of supply.

Note – As per Explanation 2 to sub-section (2), the date on which supplier receives payment shall be the date earlier of the date on which payment is entered in the books of accounts or the date on which it is credited in the bank account.

b) Payment received in excess upto Rs. 1,000 – In case where the supplier receives the amount exceeding the amount indicated in the tax invoice upto Rs. 1,000, the time of supply in respect of such excess amount should be at the option of supplier the date of issue of invoice in respect of which such excess amount is received. 

c) Supplies on which tax is to be paid on Reverse Charge basis by the recipient – In case of specified services on which tax is to be paid by the recipient, the time of supply is the the date of payment entered in books of accounts or the date on which amount is debited in the bank of recipient or the date immediately following 60 days from the date of issue of Invoice or any other document in lieu thereof by the supplier [whichever is earlier]. In case it is not possible to determine the above mentioned three dates, the date of entry in books of accounts of recipient shall be the time of supply.

d) Supplies by Associated Enterprises [Note-3] – In case supply is made by associated enterprises where the supplier is located outside india, the time of supply will be the date of entry in the books of accounts of the recipient or the date of payment [whichever is earlier].

e) Supply of voucher by the Supplier – In case the supply for which voucher is issued is identifiable, the time of supply will be the date of issue of voucher otherwise the date of redemption will be the time of supply.

f) Other cases – Where the time of supply is not identifiable in the above mentioned scenarios, then in case where the periodical return has to be filed, the time of supply will be the date on which such return is filed otherwise the date on which tax is paid will be the time of supply.

g) Addition in value on account of Interest, Late Fees or Penalty for delayed payment – The time of supply in such case will be the date on which such additional amount is received by the supplier.        

Note 

1. As per sec 31(1) of CGST Act, a registered person supplying taxable goods shall before or at the time of 

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

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

2. As per rule 47 of CGST Rules, the invoice referred to in rule 46 in the case of taxable supply of services, shall be issued within a period of 30 days from the date of supply of service.

3. As per sec 2(12) of CGST Act, ‘associated enterprise’ shall have the same meaning as assigned to it in sec 92A of the Income-tax Act, 1961 which is mentioned below for the convenience of the reader. 

92A. (1) For the purposes of this section and sections 92, 92B, 92C, 92D, 92E and 92F, “associated enterprise”, in relation to another enterprise, means an enterprise—

(a) which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise; or

 (b) in respect of which 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.

(2) For the purposes of sub-section (1), two enterprises shall be deemed to be associated enterprises if, at any time during the previous year,—

 (a) one enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent of the voting power in the other enterprise; or

 (b) any person or enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent of the voting power in each of such enterprises; or

 (c) a loan advanced by one enterprise to the other enterprise constitutes not less than fifty-one per cent of the book value of the total assets of the other enterprise; or

 (d) one enterprise guarantees not less than ten per cent of the total borrowings of the other enterprise; or

 (e) more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of one enterprise, are appointed by the other enterprise; or

 (f) more than half of the directors or members of the governing board, or one or more of the executive directors or members of the governing board, of each of the two enterprises are appointed by the same person or persons; or

 (g) the manufacture or processing of goods or articles or business carried out by one enterprise is wholly dependent on the use of know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; or

 (h) ninety per cent or more of the raw materials and consumables required for the manufacture or processing of goods or articles carried out by one enterprise, are supplied by the other enterprise, or by persons specified by the other enterprise, and the prices and other conditions relating to the supply are influenced by such other enterprise; or

  (i) the goods or articles manufactured or processed by one enterprise, are sold to the other enterprise or to persons specified by the other enterprise, and the prices and other conditions relating thereto are influenced by such other enterprise; or

  (j) where one enterprise is controlled by an individual, the other enterprise is also controlled by such individual or his relative or jointly by such individual and relative of such individual; or

 (k) where one enterprise is controlled by a Hindu undivided family, the other enterprise is controlled by a member of such Hindu undivided family or by a relative of a member of such Hindu undivided family or jointly by such member and his relative; or

  (l) where one enterprise is a firm, association of persons or body of individuals, the other enterprise holds not less than ten per cent interest in such firm, association of persons or body of individuals; or

(m) there exists between the two enterprises, any relationship of mutual interest, as may be prescribed.