Case Studies on Time of Supply under GST Law (Part-2)

Clearmytax.in Editorial Team

Part 1 of Case studies on Time on Supply was published on 30^th May, 2020 wherein five case studies were discussed. In continuation to above, further ten case studies on time of supply are given in this Part-2 for benefit of our readers. The final Part-3 containing further five case studies will also be published tomorrow which will make the total number of case studies to twenty. It is our endeavor to cover all the provisions of determination of time of supply by the case studies and we feel it will help our readers in understanding and in practical application of provisions of time of supply. Now let us start with part 2 of case studies.

Case Studies

Case Study 6:

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

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 art work and invoice should also be issued upon such purchase being concluded.

Case Study 7:

Time of supply of movement of goods to another State for supply on approval basis

It has been clarified vide CBIC Circular No. 10/10/2017-GST, dated 18-10-2017 that where goods are moved within the State or from the State of registration to another State for supply on approval basis i.e. such goods are to be considered as being carried on approval basis and a tax invoice can be issued when the buyer has approved the goods and taken the delivery.The time of supply would accordingly be determined as per provisions of Section 12(2) of the CGST Act,2017 based upon date of issuance of invoice.

Case Study 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.

Case Study 9:

X Ltd is a registered supplier of plastic goods. Determine the time of supply of the plastic goods supplied on ex-works basis by X Ltd to Y Ltd as per the provisions of CGST Act, 2017 based upon the following information.

As per provisions of Section 12(2) of the CGST Act,2017 the time of supply in respect of goods is the actual date of issue of invoice or due date of issue of invoice whichever is earlier. The requirement to pay GST on advances received towards goods has already been dispensed with w.e.f. 15.11.2017 vide Notification No 66/2017-CT dtd 15.11.2017.

In this case the date of issue of invoice is 16^th April, 20XX while the due date of issue of invoice as per Section 31(1) of the CGST Act, 2017 is 25^th April, 20XX i.e. date of removal viz collected by recipient. The earlier of two dates which is 16^th April, 20XX will be the time of supply in the instant case.

Case Study 10:

X Ltd is a registered supplier of plastic goods.Determine the time of supply of the plastic goods supplied on FOR basis by X Ltd to Y Ltd as per the provisions of CGST Act, 2017, based upon the following information:

As per provisions of Section 12(2) of the CGST Act, 2017 the time of supply in respect of goods is the actual date of issue of invoice or due date of issue of invoice whichever is earlier. The requirement to pay GST on advances received towards goods has already been dispensed with w.e.f. 15.11.2017 vide Notification No 66/2017-CT dtd 15.11.2017.

In this case the date of issue of invoice is 18^th April, 20XX while the due date of issue of invoice as per Section 31(1) of the CGST Act, 2017 is 16^th April, 20XX i.e. date of removal viz dispatch of goods by supplier. The earlier of two dates which is 16^th April, 20XX will be the time of supply in the instant case.

It may be also be noted that there would be no impact on determination of time of supply whether the transaction is FOR or on ex works basis.

Case Study 11:

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 4^th 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?

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

Case Study 12:

Determine the time of supply of from the following particulars:

As per the provisions of Section 13(2) of the CGST Act, 2017, the time of supply for services is date of invoice (date of supply of service if invoice not issued within prescribed time) or date of receipt of payment whichever is earlier.

In instant case there would be two time of supply which are derived as under:-

For advance payment: The time of supply for the advance amount of Rs 20,000/- received would be the date of entry in books or credit of amount in bank account, whichever is earlier. Accordingly the time of supply would be 8^th September.

For balance amount:As in the instant case there has been delay in issuance of invoice as same has been issued after 30 days (time limit for issue of invoice as prescribed u/s 31(2) read with Rule 47) from the date of supply. Accordingly time of supply would be earlier of date of supply which in this case is 2^nd November or date of receipt of payment which is 22^nd December (earlier of entry in books and credit in bank account). Accordingly the time of supply for the balance amount of Rs 1,00,000/- would be 2^nd November.

Case Study 13:

Determine time of supply of goods for payment of tax under reverse charge mechanism from the given information:

As per the provisions of Section 12(3) of the CGST Act, 2017, the time of supply in respect of payment of tax under reverse charge mechanism will be earliest of following three dates:

1. the date of receipt of goods (which in this case is 12^th June)  
2. date of payment (date of entry in books or date of debit in Bank Account whichever is earlier) (which in this case is 3^rd July)
3. 31^st day from date of invoice ( which in this case is 4^th June i.e 4^th May + 30 days)

As 4^th June is earliest of the three events, it would be the time of supply of goods for purpose of payment of tax under reverse charge mechanism.

Case Study 14:

Determine time of supply from the given information in regard to payment of tax under reverse charge mechanism on receipt of supply of service:

Normal case:

As per the provisions of Section 13(3) of the CGST Act, 2017, the time of supply in respect of payment of tax under reverse charge mechanism will be earliest of following two dates:

1. date of payment (date of entry in books or date of debit in Bank Account whichever is earlier) (which in this case is 21^st August)
2. 61^st day from date of invoice ( which in this case is 4^th July i.e 4^th May + 60 days)

As 4^th July is earliest of the two events, it would be the time of supply of services for purpose of payment of tax under reverse charge mechanism. In this case date of entry in books not relevant.

Import of Service from Associated Enterprise:

In case import of service is from associated enterprise, Time of Supply as per second proviso to Sec 13(3) of the CGST Act, 2017 will be date of entry in books i.e. 30^th June or date of making the payment i.e. 21^st August,which ever is earlier.

As 30^th June is earliest of the two events, it would be the time of supply of services for purpose of payment of tax under reverse charge mechanism.

Case Study 15:

Determine time of supply from the given information in regard to payment of tax under reverse charge mechanism on receipt of supply of service.

In this case as advance payment is involved and the total value of actual supply is exceeding such advance amount, two time of supplies need to determined here.

Time of Supply of advance of Rs 1,00,000/- :

As per the provisions of Section 13(3) of the CGST Act, 2017, the time of supply in respect of payment of tax under reverse charge mechanism will be earliest of following two dates:

1. date of payment (date of entry in books or date of debit in Bank Account whichever is earlier) (which in this case is 4^th May)
2. 61^st day from date of invoice ( which in this case is not determinable as invoice has not yet been issued)

As 4^th May is earliest of the two events, it would be the time of supply of services for purpose of payment of tax under reverse charge mechanism on the advance amount paid of Rs 1 lakh.

Time of Supply of balance payment of Rs 20,000/- :

The time of supply will be earliest of following two dates:

1. date of payment (date of entry in books or date of debit in Bank Account whichever is earlier) (which in this case is 30^th September)
2. 61^st day from date of invoice (which in this case is 30^th August i.e. 30^th June + 60 days)

As 30^th August is earliest of the two events, it would be the time of supply of services for purpose of payment of tax under reverse charge mechanism on the balance amount paid of Rs 20,000/-

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TW Editorial Team

TW Editorial Team comprises of team of experienced Chartered Accountants and Advocates devoted to spread the knowledge of GST amongst the various stakeholders.