Siddhesh J. Bora, CA, CS, LLB

Siddhesh J. Bora

1) Introduction :

Under the new regime of Revised Model GST Law levy of GST is based upon the term “supply” and accordingly the first step is to know whether a person, who is engaged in the business has made any supply of goods and / or services; and whether these supplies are taxable under GST.

Let us now understand the meaning of term “supply” as per sec. 3(1):

Supply includes all forms of supply (goods and /or services) and includes agreeing to supply when they are –

  • for a consideration ; and
  • in the course or furtherance of business.

Thus from above it can be seen that basic requirements for supply is there must be a consideration and it must be for furtherance of business.

E.g Suppose Mr.A is an employee in XYZ Ltd. He old a car owned by him for Rs.5,00,000/- to Mr.B .Now it can be observed that even though in above case there is consideration but it is not with regards to furtherance of business and accordingly can’t be called as ‘supply’ for the purpose of levy of GST.

Proceeding further it can be observed that supply is divided into two parts viz

Supply of Goods and Services under GST

We now understand the concept of Time of Supply of Services

2) It is the Point of Taxation for GST Law which has been explained in sec. 13(2) as follows :

Time of Supply of service shall be earliest of following dates :

a. Date of Issuance of invoice by the supplier;

b. Last date on which the supplier is required to issue the invoice in terms of sec.28;

c. Date of Receipt of payment by the supplier

( earliest of date of entry in the books of accounts or credit date in the bank account);

Sr.No Situation Date of Completion of services Date of Invoice Date of Receipt / Payment Time of Supply of services
1 Invoice issued within prescribed period of service 16.04.17 20.04.17 28.04.17 20.04.17
2 Invoice issued within prescribed period of service 30.09.17 01.10.17 24.09.17 24.09.17
3 Invoice issued after prescribed period of completion of service 16.04.2017 16.08.2017 28.05.17 15.05.17
4 Invoice issued after prescribed period of completion of service 10.06.17 18.08.17 30.04.17 30.04.17

However, where the supplier of taxable goods receives an amount up to INR 1000/- in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess shall, at the option of the said supplier, be the date of issue of invoice.

e.g. BSNL raises a telephone bill / invoice of Rs.950/- on A Ltd. for the month of February 2017 and A Ltd. pays Rs.1000/- against above invoice on due date. As per general excess amount of Rs.50 /- shall be taxable at the time of receipt .However as per above provisions an option has been given to the BSNL. to pay tax at the time of raising of subsequent invoice ( instead of at the time of receipt).

It can be seen that sec.13(2) is based or in some aspects similar to Rule 3 Point of taxation Rules,2011 of Finance Act,1994. Sec.13(2) states that invoice must be issued by supplier to determine time of supply of service and accordingly we now understand the requirements for issuance of invoice under sec.28 of revised law. As per sec.28(2), a registered taxable person supplying taxable services shall issue a tax invoice, before or after the provision of service, but within a period prescribed. As per rule 1(2) of the draft GST (Invoice) Rules, time limit for issuance of tax invoice is as under :-

Sr.No Situation No.of days
1 Taxable supply of services in the ordinary course of business. Before or within a period of 30 days from the date of supply of service.
2 Continuous supply of service
Ø Due date of payment is ascertainable from the contract Before or after the payment is liable to be made by the recipient but within 30 days.
Ø Due date of payment is not ascertainable from the contract Before or after each such time when the supplier of service receives the payment but within 30 days.
Ø Payment is linked to completion of event Before or after the time of completion of that event but within 30 days
3 Supply of service ceases under a contract before the completion of supply Invoice shall be issued at the time when supply ceases and such invoice shall be issued to the extent of supply effected before such cessation.
4 Banking Company or a financial institution including a non-banking financial company Within 45 days from the date of supply of service.

3) Continous supply of service : As per sec.2(31) of Revised Model GST Law it means ,

  • A supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding 3 months with periodic payment obligations, and
  • Include supply of service as the Central or a State Government may, whether or not subject to any condition, by notification, specify.

4) Time of Supply of services in case of reverse charge .[(Sec.13 (3)]

Time of Supply of services in case of reverse charge shall be earliest of the following dates :

  1. the date on which the payment is made (earliest of credit date in the books of accounts or debit date in the bank account); or
  2. the date immediately following 60 days from the date of issue of invoice by the supplier.

If it is not possible to determine the time of supply as above, then the time of supply shall be date of entry in the books of account of the recipient of supply.

Provisions prescribed u/s. 13(3) are based /similar to Rule 7 Point of Taxation Rules,2011 in case of reverse charge .

e.g. A Ltd.(India) avails consultancy services from Mr.B ( US) on 02.02.2017 and on same day invoice is issued. Mr.A makes the payment of Rs.50000/- on 03.03.2017. In above case time of supply would be earliest of following :

a. 03.03.2017

b. 04.04.2017 ( 60 days from the date of issue of invoice)

Time of supply of service – 03.03.2017 .

In above case tax will be paid by recipient of service i.e. A Ltd.

In case of ‘ associated enterprises’ , where the supplier of service is located outside India, the time of supply shall be earliest of the following dates :-

a. the date of entry in the books of account of the recipient of supply , or

b. the date of payment .

Following is the Illustration in case of Non-Associated Enterprises and Associated Enterprises with regards to reverse charge basis :

Particulars Non-Associated Enterprise Associated Enterprise
Date on which payment is entered in the books of recipient of service 28.09.2017 28.09.2017
Date on which payment is debited to bank account 30.09.2017 30.09.2017
Date of issuance of invoice by supplier 23.08.2017 23.08.2017
Sixty days from issuance of invoice 21.10.2017 21.10.2017
Date of entry in the books of accounts of the recipient 24.08.2017 24.08.2017
Time of Supply 28.09.2017 24.08.2017

5) Time of Supply of services in case of supply of vouchers .[(Sec.13 (4)]

As per the provisions in case of supply of vouchers, by whatever name called, by a supplier, the time of supply shall be –

a. the date of voucher, if the supply is identifiable at that point; or

b. the date of redemption of voucher, in all other cases.

Thus if supply is identifiable on the date of issue of voucher, then time of supply shall be date of issue of voucher; otherwise, time of supply shall be date of redemption of voucher.

Under the provisions of Model GST Act, the term voucher has not been defined however in common parlance it can be of different types such as :-

i) Gift voucher of Rs.1000/- provided by Flipkart on online purchase of Mobile which can be redeemed on its future purchases.

ii) Vouchers provided by supplier to distributor and to retailers such as prepaid talk-time vouchers issued by Airtel or Vodafone.

iii) Food vouchers worth Rs.2000/- provided by Sterling Holidays on taking its vacation package for 25 years.

6) Time of Supply of services in case of change in effective rate of tax .(Sec.14)

Sr.No Date of supply Date of Invoice Date of receipt of payment Time of Supply
1 Before CERT After CERT After CERT Date of issue of invoice or date of receipt whichever is earlier
2 Before CERT Before CERT After CERT Date of issue of invoice
3 Before CERT After CERT Before CERT Date of receipt
4 After CERT Before CERT After CERT Date of receipt
5 After CERT Before CERT Before CERT Date of issue of invoice or date of receipt whichever is earlier
6 After CERT After CERT Before Date of issue of invoice

Notes :

1. “ The date of receipt of payment” shall be 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 to his bank account , whichever is earlier.

2. When such credit in the bank account is after four working days from the date of change in the rate of tax, the date of credit in the bank account shall be date of receipt of payment.

It can be observed sec.14 referred above is based / similar to Rule 4 Point of Taxation Rules,2011 of Finance Act.1994 .

Illustration : Assuming CERT is w.e.f. 01.07.2017 (Old rate -15% and New rate -18%)

1. Service provided before change in rate of tax

Sr.No Particulars Date of providing service Date of Invoice by supplier Date of payment by recipient Time of supply Rate of Tax
1 Case I 12.05.2017 12.05.2017 15.07.2017 12.05.2017 15%
2 Case II 10.06.2017 15.06.2017 18.07.2017 15.06.2017 15%
3 Case III 21.06.2017 21.07.2017 12.06.2017 12.06.2017 15%

2. Service provided after change in rate of tax

Sr.No Particulars Date of providing service Date of Invoice by supplier Date of payment by recipient Time of supply Rate of Tax
1 Case I 20.07.2017 12.06.2017 26.07.2017 26.07.2017 18%
2 Case II 26.07.2017 08.06.2017 11.06.2017 08.06.2017 15%
3 Case III 28.07.2017 28.07.2017 12.06.2017 28.07.2017 18%

7. Time of supply in case could not be determined as per above provisions – Residual Section- [(Sec.13 (5)] :

If time of supply could not be determined as per above provisions in that case it shall be earliest of following dates :

a. in a case where a periodical return has to be filed, the date on which such return is to be filed; or

b. in any other case, the date on which CGST / SGST is paid.

8. Conclusion :

After going through the provisions it can be observed that the concept of time of supply of service is developed / based on the concept of Point of Taxation Rules,2011 under service tax law. Under the new provisions of Government has introduced a new Point of Taxation in section 13(5) as date on which periodical return prescribed under GST is filed or in other cases , the date on which the CGST / SGST is paid.

References : ICAI Revised GST Model Background Material

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2 responses to “Time of Supply of services under Revised GST Model”

  1. sathiskumar says:

    ok

  2. Ashish Sulakshane says:

    Sir it is helpful article to enlight the GST law.

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