GST Sections 130 vs 73/74: Adjudication vs. Confiscation Analysis

Analysis of Section 12 and Section 13 of the CGST Act: Time of Supply of Goods and Services

 

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Overview

The liability to payGST Sections 130 vs 73/74: Adjudication vs. Confiscation Analysis GST arises upon the "time of supply". Sections 12 and 13 of the CGST Act separately govern the time of supply for goods and for services, respectively. These provisions establish the specific point of taxation, dictating when tax liability crystallises on a supply.

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Section 12: Time of Supply of Goods

Statutory Provisions

Section 12(1)-(2): General Cases

• The liability to pay tax on goods arises at the time of supply, which is the earliest of:

  • Date of issue of invoice by supplier, or last date on which invoice is required to be issued under Section 31(1)

  • Date on which the supplier receives payment with respect to the supply.

Explanation:

• "Date of receipt of payment" means the earlier of:

  • Date entered in supplier's books

  • Date credited in bank account

Table: Time of Supply of Goods (Forward Charge)

Event

Time of Supply (Earliest of)

Invoice issued

Date of invoice or last date to issue (u/s 31(1))

Payment received

Date of payment (books or bank, whichever is earlier)

 

Proviso: For excess payment received up to ₹1,000 over the invoice, the supplier can opt for the invoice date for such excess.

 

Section 12(3): Reverse Charge Supplies (Post amendments)

• Earliest of:

  • Date of receipt of goods; OR

  • Date of payment (as entered in books OR debited in bank, whichever is earlier)

Section 12(4): Supply of Vouchers

• If supply is identifiable at issue: Date of issue of voucher

• Other cases: Date of redemption of voucher

Section 12(5): Residual Provisions

• Periodical return to be filed: Due date of such return

• Other cases: Date of payment of tax

Section 12(6): Special Charges (Interest, late fee, penalty for delay)

• Date on which supplier receives such additional consideration

 

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Key Explanations and Commentary

• Invoice is a record—not the event—of sale or supply (see commentary).

• Barter, lease, rental, etc., also require consideration for the time of supply, not just the sale.

• Provisional entries in the recipient’s books: If the time of supply cannot be determined by clauses (a/b/c), it is the date of such entry in the books of account (commentary).

 

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Section 13: Time of Supply of Services

Statutory Provisions

Section 13(1)-(2): General Cases

• Liability to pay tax on services arises at the time of supply, which is the earliest of:

  • Date of issue of invoice (if within prescribed time of Section 31(2)) or date of payment, whichever earlier

  • If invoice not issued in time: Date of provision of service or payment receipt date, whichever earlier

  • If neither above applies: Date on which recipient records supply in his books

 

Table: Time of Supply of Services (Forward Charge)

Scenario

Time of Supply (Earliest of)

Invoice issued in time

Date of invoice or Date of payment

Invoice not issued in time

Date of provision of service or payment

If above don't apply

Date of entry in recipient’s books

Explanation:

• “Date of receipt of payment” means the earlier of entry in books of account or credit in bank.

Proviso: Up to ₹1,000 excess can be taxed as per option.

Section 13(3): Reverse Charge

• Earliest of:

  • Date of payment (entered in recipient's books OR debited in bank)

  • Date immediately following 60 days from date of supplier's invoice

• If both above not applicable: Date of entry in books of recipient

Section 13(4): Supply of Vouchers

• Identifiable supply: Date of issue of voucher

• Other cases: Date of redemption

Section 13(5): Residuary

• Periodical return to be filed: Due date of return

• Other cases: Date of payment of tax

Section 13(6): Special Charges

• Interest, late fee, penalty (for delayed payment): Date of receipt of such addition in value

 

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Summary Table: Comparative Key Points

Provision

Goods (Section 12)

Services (Section 13)

Forward charge

Invoice/payment (earliest)

Invoice/provision/payment (earliest)

Reverse charge

Receipt of goods/payment

Payment/60 days from invoice/recipient's entry

Vouchers

Issue/redemption

Issue/redemption

Residual provision

Return due date/payment of tax

Return due date/payment of tax

Special charges

Receipt date

Receipt date

 

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Special Provisions: Changes in Rate of Tax

Rule: Time of supply in case of rate change

• Specific rules apply (see Rules and Section 14) if the rate of GST changes between invoice/payment/supply.

• Determine sequence (supply, invoice, payment)—the point of taxation varies depending on which happened before/after the rate change.

 

Tabular Example: (Rate Change Scenario)

Scenario

Time of Supply

Supply before rate change, invoice/payment after

Date of invoice or payment, whichever is earlier

Invoice before, payment after rate change

Date of invoice

Payment before, invoice after rate change

Date of payment

Supply after, payment post-rate change, invoice before

Date of payment

Both invoice and payment before rate change

Earliest of invoice or payment

Invoice after, payment before rate change

Date of invoice

 

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Practical Implications

A. Why is Time of Supply Critical?

• Determines:

  • When to pay GST

  • Applicable tax rate

  • Interest/Penalty for late payment

B. Implications for Businesses

• Timely maintenance of records and strict adherence to invoice/payment timelines is essential.

• For vouchers and special charges, note the distinct rules for time of supply.

• Reverse charge compliance remains important for ITC and correct payment dates.

C. Ambiguities & Cautions

• Default to recipient’s books/return date only if primary rules fail

• New amendments/notifications should always be reviewed for latest compliance requirements

 

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Recent Amendments & Notifications

• No major changes in core mechanics of Section 12/13 up to June 2024

• Numerous notifications (e.g. Notification Nos. 12/2019, 32/2018, etc.) periodically extended due dates for return filings, not the core rules for time of supply.

• Circular No. 222/16/2024-GST (dated 26 June 2024): Specific clarification on time of supply for special cases (e.g., spectrum usage services).

 

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Relevant Circulars & Latest Clarifications

• Circular No. 222/16/2024-GST (26 June 2024):

  • Provides special clarification on time of supply for spectrum allocation with deferred payment option, reaffirming the statutory position of Section 13 in complex cases.

 

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Case-Law Reference

• Tata Advanced Systems Ltd. – AAR Gujarat [(2024) 83 GSTL 88]

Supply - Time of supply of goods - GST levy on advance - Applicant-company has entered into a contract with company 'Airbus' to produce and supply 40 C-295 aircrafts - Applicant receives advances and seeks advance ruling on what is time of supply for payment of GST - HELD : Conjoint reading of section 12, reproduced supra, with Notification No. 66/2017-CT, clearly leads one to a conclusion, that provision on payment of tax on advances received on supply of goods, stands deleted vide Notification No. 66/2017-CT dated 15-11-2017 - Applicant is not required to pay GST on receipt of advance in case of supply of goods - Further, time of supply shall be calculated as per section 12.

• Pink City Steel Rolling Mills Pvt. Ltd. – AAR Rajasthan [(2024) 91 GSTL 109]

Supply - Time of supply of goods - Interest on delayed payment of price - Applicant-assessee is a manufacturer who sold goods to purchaser but purchaser did not paid invoice amount in time and thereafter assessee demanded interest on said delayed payment as per terms of invoice and debited interest in account of purchaser - HELD: As per Section 12(6) time value of supply to extent it relates to an addition in value of supply by way of interest, late fee, penalty for delayed payment of any consideration shall be date on which supplier receives such addition in value - Therefore, in view of Section 12(6) GST is to be paid on date on which supplier of goods receives such addition in value through interest of delayed payments [Section 12 read with Section 15 of Central Goods and Services Tax Act, 2017/Rajasthan Goods and Services Tax Act, 2017].

• Mintoo Das – AAR Gauhati [(2024) 20 CENTAX 329]

Supply - Time of supply of goods - Deduction of tax - Circular No. 3/2017-GST dated 24.08.2017 - Assessee contractors challenged deduction of 12% GST instead of 5% VAT on works contracts entered into prior to GST implementation - HELD: Circular No. 3/2017-GST valid and in accordance with Sections 12, 13 and Schedule II of CGST/SGST Acts - GST @ 12% applicable on invoices raised on or after 01.07.2017 - Assessees liable to pay GST on such invoices - However, Assessees allowed to claim reimbursement of additional tax burden by making representation to contract awarding authorities, subject to terms of contract and Section 64A of Sale of Goods Act - Matter remanded for consideration of reimbursement claims [Section 12 read with Sections 13 and 171 of Central Goods and Services Tax Act, 2017/Assam Goods and Services Tax Act, 2017].

 

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Conclusion

• Section 12 (Goods) and Section 13 (Services) of the CGST Act lay down parallel but distinctly nuanced provisions for determining the time of supply, which is crucial for proper GST compliance.

• Adherence to prescribed timelines under these sections is fundamental for correct GST reporting, tax payment, and avoidance of interest and penalties.

• Businesses must align accounting practices with these legal requirements and stay alert for any changes via notifications or circulars impacting compliance timelines.