Unit 2

Time of supply (TOS)

Q1) Define times of supply. State the provisions related to times of supply under GST.                                                                 10

A1) Time of supply is a relevant measure under the GST law for every transaction entered into by the supplier of goods and services. It means the point in time when goods have been deemed to be supplied or services have been deemed to be provided for determining when the taxpayer is liable to pay taxes.

TOS of Goods & Services

The time of supply of goods are provided under the section 12 of the GST Act, 2017. Such provisions are-

(1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section

(2) The time of supply of goods shall be the earlier of the following dates, namely:—

a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or

b) the date on which the supplier receives the payment with respect to the supply:

Provided that where the supplier of taxable goods receives an amount up to 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 in respect of such excess amount.

(3) In case of 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 dates, namely:—

a) the date of the receipt of goods; or

b) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.

(4) In case of supply of vouchers by a supplier, the time of supply shall be—

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

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

(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––

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

b) in any other case, be the date on which the tax is paid.

(6) The 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.

Section 13 of the GST act provided provisions related to TOS of services. Such provisions are-

(1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.

(2) The time of supply of services shall be the earliest of the following dates, namely:—

a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:

Provided that where the supplier of taxable service receives an amount up to 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.

(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely:––

The date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

The date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:

Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

(4) In case of supply of vouchers by a supplier, the time of supply shall be––

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

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

(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––

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

b) in any other case, be the date on which the tax is paid.

(6) The 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.

Q2) Define times of supply in case of goods.  2

A2) In case of reverse charge, the time of supply for goods shall be the earliest of the following dates:

• The date of receipt of goods
• The date of payment
• The date immediately after 30 days from the date of issue of an invoice by the supplier

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

Q3) Define time of supply in case of services.            2

A3) In case of reverse charge, the time of supply shall be the earliest of the following dates:

• The date of payment
• The date immediately after 60 days from the date of issue of invoice by the supplier

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

Q4) What is reverse charge system under mechanism?           2

A4) As per provisions of GST law, the person supplying the goods must mention in the tax invoice whether tax is payable under the RCM. 

The following points should be kept in mind while making GST payments under RCM: 

• The recipient of goods or services can avail of the ITC on the tax amount paid under RCM only if such goods or services are used for business or furtherance of business. 
• A composition dealer should pay tax at the normal rates and not the composition rates while discharging liability under RCM. Also, they are ineligible to claim any input tax credit of tax paid. 
• GST compensation cess can apply to the tax payable or paid under the RCM.

Q5) Write a note on mechanism of time of supply.           4

A5) Time of supply is a relevant measure under the GST law for every transaction entered into by the supplier of goods and services. It means the point in time when goods have been deemed to be supplied or services have been deemed to be provided for determining when the taxpayer is liable to pay taxes.

Time of supply under normal charge

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

Time of supply under reverse charge

Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the supplier. In case of reverse charge, the time of supply shall be the earliest of the following dates— 

(a) the date of receipt of goods 

OR

(b) the date of payment 

OR 

(c) the date immediately after 30 days from the date of issue of invoice by the supplier (60 days for services). 

If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the recipient. 

Q6) What do you mean by tax invoice under GST regime. Also state the contents of tax invoice.                8

A6) Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017. This section mandates issuance of invoice or a bill of supply for every supply of goods or services. It is not necessary that only a person supplying goods or services need to issue invoice. The GST law mandates that any registered person buying goods or services from an unregistered person needs to issue a payment voucher as well as a tax invoice. The type of invoice to be issued depends upon the category of registered person making the supply.

For example, if a registered person is making or receiving supplies (from unregistered persons), then a tax invoice needs to be issued by such registered person.

Contents of invoice

There is no format prescribed for an invoice, however, Invoice rules makes it mandatory for an invoice to have following fields (only applicable field are to be filled):

(a) name, address and GSTIN of the supplier;

(b) a consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and GSTIN or UIN, if registered, of the recipient;

(e) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered and where the value of taxable supply is fifty thousand rupees or more;

(f) HSN code of goods or Accounting Code of services;

(g) description of goods or services;

(h) quantity in case of goods and unit or Unique Quantity Code thereof;

(i) total value of supply of goods or services or both;

(j) taxable value of supply of goods or services or both taking into account discount or abatement, if any;

(k) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);

(l) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);

(m) place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce;

(n) address of delivery where the same is different from the place of supply;

(o) whether the tax is payable on reverse charge basis; and

(p) signature or digital signature of the supplier or his authorized representative.

Q7) When a tax invoice or a bill of supply should be issued by a registered person?               5

A7) In case of Goods

The time for issuing invoice would depend on the nature of supply viz whether it is a supply of goods or services. A registered person supplying taxable goods shall, before or at the time of removal of goods (where supply involves movement of goods) or delivery or making available thereof to the recipient, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars has been prescribed in the Invoice Rules. 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.

In case of service

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 has been prescribed in the Invoice Rules. 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. Thus it can be seen that in case of goods, an invoice has to be issued before or at the time of supply. In case of services, however, invoice has to be issued before or after provision of services. If the invoice is issued after provision of service, it has to be done within the specified period of 30 days from the date of supply of service, as per invoice rules.

Q8) What is revised invoice? Also state the provisions related to invoice in case of continuing supply of goods and services.                        5

A8) A registered person may, within one month from the date of issuance of certificate of registration and in such manner as has been prescribed in the Invoice Rules, 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. This provision is necessary as a person who becomes liable for registration has to apply for registration within 30 days of becoming liable for registration. When such an application is made within the time period and registration is granted, the effective date of registration is the date on which the person became liable for registration. Thus there would be 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 invoice, so that ITC can be availed by the recipient on such supplies.

Invoice in case of continuous supply of goods

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.

Invoice in case of continuous supply of services

In case of continuous supply of services, where,

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

(b) 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) 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.

Q9) State the manner of issuing invoice.           4

A9) The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner:–

(a) the original copy being marked as ORIGINAL FOR RECIPIENT;

(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and

(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.

The invoice shall be prepared in duplicate, in case of supply of services, in the following manner: -

(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and

(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER. The serial number of invoices issued during a tax period shall be furnished electronically through the Common Portal in FORM GSTR-1.

Q10) What is tax invoice in case of tax invoice in case of special case?   2

A10) An ISD invoice or, as the case may be, an ISD credit note issued by an Input Service Distributor shall contain the following details:

(a) name, address and GSTIN of the Input Service Distributor;

(b) a consecutive serial number containing alphabets or numerals or special characters hyphen or dash and slash symbolised as , “-”, “/”, respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and GSTIN of the recipient to whom the credit is distributed; (e) amount of the credit distributed; and

(f) signature or digital signature of the Input Service Distributor or his authorized representative.

Q11) State the provisions related to changes in GST rate.               5

A11) The provisions related to charges are provided under section 14 of the GST act.

Change in rate of tax in respect of supply of goods or services (Section 14)

Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:––

a) in case the goods or services or both have been supplied before the change in rate of tax,––

(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or

(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or

(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;

b) in case the goods or services or both have been supplied after the change in rate of tax,––

(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or

(ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or

(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:

Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.

Q12) Define point of supply with example.           2

A12) Place of supply refers to the location of service provider and the place of supply. It is significant to determine the levy of GST whether it is a IGST/CGST.

For example,

Q13) Write a note on point of supply of goods and services.    4

A13)

Place of supply of goods under GST defines whether the transaction will be counted as intrastate or interstate, and accordingly levy of SGST, CGST & IGST will be determined. For example, Intra-state sales Mr. Raj of Mumbai, Maharashtra sells 10 TV sets to Mr. Vijay of Nagpur, Maharashtra. Here, the place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST will be charged.

Place of Supply When There is Movement of Goods

Place of Supply – No Movement of Goods

On the other hand, the place of supply of services is the location of the service recipient. In cases where the services are provided to an unregistered dealer and their location is not available the location of service provider will be the place of provision of service. Special provisions have been made to determine the place of supply for the following services:

• Services related to immovable property
• Restaurant services
• Admission to events
• Transportation of goods and passengers
• Telecom services
• Banking, Financial and Insurance services.

Q14) Write a note on value of supply.                      5

A14) The value of supply for a transaction is the price or consideration paid by the customer to the supplier. It includes extra charges like shipping and handling, but it does not include GST. The GST to be applied on a transaction will depend on the value of these goods and services sold or transferred. 

The value of supply is the amount that was paid for the goods or services, minus GST. Because some transactions are paid in cash while others are in trade or barter, there are two sets of rules for calculating the value of supply.

• The General Valuation Rules apply to transactions where the buyer pays the whole price of the products or services in cash.
  • In this case, the value of supply is the total price or consideration paid, minus the GST on that amount.
  • Value of Supply = Consideration - GST on Consideration
• The Special Valuation Rules apply to transactions where some or all of the payment is in trade instead of cash.
  • Completely non-cash payment 
    • If the buyer pays entirely in trade and no cash, the value of supply is the open market value of the products or services, minus the GST on that amount.
    • Value of Supply = OMV - GST on OMV
  • Partially non-cash payment
    • If the buyer pays partially in cash and partially in trade, the value of supply is the cash price paid plus the open market value of the traded products or services, minus the GST on that total amount.
    • Value of Supply = (Monetary Consideration + In-kind Consideration) - GST on Total Consideration      Note: The value of supply includes cess, billable expenses, subsidies, penalties, and all taxes except GST (and any other charges that may or may not be included in the price of the goods and services supplied). 

Q15) State the provisions related to determination of value of supply of goods and services.              8

A15) Section 15 of the act provides provisions for value of taxable supply-

(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.
(2) The value of supply shall include–––

a)     any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;

b)    any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both;

c)     incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

d)    interest or late fee or penalty for delayed payment of any consideration for any supply; and

e)     subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.

(3) The value of the supply shall not include any discount which is given––

a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and

b) after the supply has been effected, if—

(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and

(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.

(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.

(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.

Q16) How GST liability is determined?                      5

A16) Step 1: Find the GST Rate Applicable for the Goods or Service

The first step in calculating GST is to find the GST Rate applicable for the Goods or Service under the GST Act. Over the past month, the GST Council has conveyed GST rates for almost all goods and services in India.

• Find HSN Code or SAC Code
• Determine the GST Rate applicable for the HSN or SAC Code

Step 2: Determine the Applicability of IGST or CGST and SGST

Once the GST rate is determined, then the applicability of IGST or CGST and SGST must be determined. To determine if IGST or CGST and SGST would be applicable, the individuals should have to determine the place of supply. In most cases, the place of supply of goods or services would be the address where the goods were delivered or the service was provided. For some types of transactions involving e-commerce or OIDAR services, the determination of place of supply is a more complex issue.

• Inter-State Supply
• Intra-State Supply
• Calculating IGST, CGST and SGST

Step 3: Determine if GST is Chargeable on Reverse Charge Basis

Normally under GST, the supplier of the goods or service is liable to collect tax from the recipient and remit the same with the Government. However, the recipient shall become liable if the services provided to the user notified as reverse charge services. Hence, the user and the service provider should know whether the transaction involves reverse charge under GST.

Step 4: Enrolling under GST Composition Scheme by Suppliers

Typically, GST compliance requires the supplier to maintain extensive accounts, records and file 3 GST filing a month. However, many SMEs in India would find GST compliance tough and would require a simpler mechanism. Such businesses having a turnover of less than Rs.75 lakhs, can enrol under the GST Composition Scheme and pay a flat GST based on their aggregate turnover. Suppliers enrolled under GST composition scheme should provide proper documents detailing the recognition as composition Suppliers and hence not eligible to collect tax. Hence, before the transaction, the user should verify if the supplier had enrolled under GST Composition Scheme.

Step 5: Determine Type of Transaction

Under GST, transactions can be broadly specified under the following three categories:

• Business to Business,
• For Business to Consumer – Value of supply more than Rs.2.5 lakh,
• Business to Consumer – Value of supply less than Rs.2.5 lakh.

For a supply to be termed as a B2B transaction under GST and made available for GST input tax credit, both the supplier and the recipient of the goods or service must have a GSTIN. GSTIN is provided when a business obtains GST registration.

Q17) State the importance of GST provisioning.       2

A17) Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017. This section mandates issuance of invoice or a bill of supply for every supply of goods or services. It is not necessary that only a person supplying goods or services need to issue invoice. The GST law mandates that any registered person buying goods or services from an unregistered person needs to issue a payment voucher as well as a tax invoice. The type of invoice to be issued depends upon the category of registered person making the supply.

For example, if a registered person is making or receiving supplies (from unregistered persons), then a tax invoice needs to be issued by such registered person.

Importance of tax invoice under GST

Under GST a tax invoice is an important document. It not only evidences supply of goods or services, but is also an essential document for the recipient to avail Input Tax Credit (ITC). A registered person cannot avail input tax credit unless he is in possession of a tax invoice or a debit note.

Q18) Who is liable to pay tax under reverse system?              2

A18) A registered person liable to pay tax under reverse charge (both for supplies on which tax is payable under reverse charge mechanism and supplies received from unregistered persons) has to issue an invoice in respect of goods or service or both received by him. Such a registered person in respect of such supplies also has to issue a payment voucher at the time of making payment to the supplier.

Q19) What is GST invoice in case of special case?        2

A19) An ISD invoice or, as the case may be, an ISD credit note issued by an Input Service Distributor shall contain the following details:

(a) name, address and GSTIN of the Input Service Distributor;

(b) a consecutive serial number containing alphabets or numerals or special characters hyphen or dash and slash symbolised as , “-”, “/”, respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and GSTIN of the recipient to whom the credit is distributed; (e) amount of the credit distributed; and

(f) signature or digital signature of the Input Service Distributor or his authorized representative.

Q20) What do you mean by intra state and inter-state supply?     4

A20) The location of the supplier and the place of supply determine whether a supply is treated as an intra-State supply or an inter-State supply. Determination of the nature of supply is essential to ascertain whether integrated tax is to be paid or Central plus State tax are to be paid. Inter-State supply of goods means a supply of goods where the location of the supplier and place of supply are in different States or Union territories.

Whereas, intra-State supply of goods means supply of goods where the location of the supplier and place of supply are in the same State or Union territory. Imports, Exports, Supplies from and to SEZs, etc. are treated as deemed inter-State supplies.