Time of Supply of Goods – Section 12 of CGST Act

Time of Supply of Goods – Section 12 of CGST Act

In the pursuit of discharging and calculator tax liability, it is significant to understand the date when the tax liability arises i.e. the date of the taxable event. In GST laws, this date is referred to as the Time of Supply. 

The act has provided us with sections 12, 13, and 14 to explain the relevant provisions of time of supply. Sections 12 and 13 deal with a time of supply of goods and services while section 14 deals with a time of supply in case of a change in the rate of tax. In this article, we are going to understand the Time of supply of goods in depth for different cases and gain better understanding and clarity. 

TIME OF SUPPLY OF GOODS - FORWARD CHARGE

The liability of tax on goods will arise at the time of supply determined as per Sec 12 of the CGST act which states that the time of supply shall be earlier than the following dates:

1. The date of issue of invoice by the supplier or the last date when the invoice would have been issued under Sec 31, or
2. The date on which the payment is received by the supplier. 

For the above, Sec 31 states that the invoice must be issued:

• On or before the removal of goods when supply involves movement 
• On or before delivery of goods when supply does not involve movement
• On or before issuance of statement of accounts in case of continuous supply, and 
• On or before the time of supply subject to a maximum of six months from removal date whichever is earlier in case of supply based on approval for sale or return. 

The date of receipt of payment is to be understood as the earlier of:

• The date on which payment is recorded in the books of the supplier, or
• Date of credit in the supplier's bank account.

A few points to note in this case are:

• Where the value of the supply of taxable goods is up to Rs 1,000 over the amount mentioned on the tax invoice, the time of supply of such excess shall be at the option of the supplier taken as the date of issue of invoice in respect of such excess amount. 
• Supply for the above shall be deemed to have been made to the extent it is mentioned or covered by the invoice or the payment as the case may be. 

TIME OF SUPPLY OF GOODS - REVERSE CHARGE MECHANISM 

Sec 12(3) narrates that in case the supply of goods for which tax is paid or liable to be paid in reverse charge, the time of supply shall be determined at the earliest of the following dates:

1. The date of good receipt, or 
2. The date of debit of payment from a bank account or date of payment debited in books, whichever is earlier, or
3. The date immediately following 30 days from the invoice date in lieu thereof by the supplier. 

Where the time of supply of goods under RCM can not be obtained from the above-said provision, it shall be deemed to be the date of entry in the books of account of the recipient. 

TIME OF SUPPLY OF GOODS - VOUCHERS

In case of supply of vouchers by a supplier in lieu of goods, the time of supply shall be ascertained as:

1. If the supply is identifiable at the time of issue of the voucher, the time of supply here shall be taken as the date of issue of the voucher, and 
2. Where the supply is unidentifiable at the time of issue, the date of redemption of such voucher shall be taken as the time of supply. 

OTHER MISC CASES

Sec 12(5) narrates that where it is not possible to determine the time of supply based on the above-discussed provision, the time of supply shall be taken as:

1. In cases where periodic returns are filed, the date of such return filing, 
2. In any other case, the date on which such tax is paid. 

Sec 12(6) provided that the time of supply to the extent it related to the surplus value of supply by way of late fee, interest, or penalty for delayed payment of any consideration shall be the date on which the supplier has received such surplus value.

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