EXAMPLE

Mr. X agreed to supply goods to Y for Rs 4 lakh and received advance payment of Rs.2 lakh by cheque on 31.10.2017 and issued receipt voucher on that date. The cheque deposited in Bank on 5.11.2017 and credited on 7.11.2017. Goods supplied on 2.11.2017 for Rs 4 lakh with invoice to Y and balance payment received on 12.12.2017. Which date is treated as Time of Supply?

ANSWER

According to section 12 Time of Supply of Goods is Issue of invoice or last date of issue of invoice or Date of receipt of payment, whichever is earlier.                              

Advance Receipt of 2 Lakh

Advance payment entered in books of account of X on 31.10.2017 when cheque received by X   but payment credited in bank account on 7.11.2017.

Date of receipt of payment according to section 12 is earlier of entry in books or payment credited in bank.

Date of receipt of payment = 31.10.2017

Date of issue of invoice is 2.11.2017

Point of Time of supply for advance of Rs. 2 lakh is earlier of the above i.e. 31.10.2017 and shown in October return

 For Balance supply of 2 lakh

Date of receipt of payment = 12.12.2017

Date of issue of invoice is 2.11.2017

Point of Time of supply   for Rs 2 lakh supply is earlier of the above i.e. 2.11.2017 and shown in Nov. Return .


Note: If the amount of advance has been received on or after 15.11.2017 then the time of supply of goods in respect of such amount shall be date of  issue of invoice Vide Notification No.66/2017-Central tax dt.15/11/2017.

So as per the above notification if the supplier receives advance in respect of supply of goods to be made in future,such sum shall be taxable for the month in which invoice relating to such amount will be issued or the last date of issue of invoice whichever is earlier,such notification is applicable from 15.11.2017 i.e advance received on or after 15.11.2017.