EXAMPLE

Mr. Amit sold goods of Rs. 400000 to Sumit. Followings is the detail of events relating to Activity.

Date of event

 

Event

 

Amount

 

10.08.17

 

20.09.17

 

25.10.17

 

10.11.17

 

 

 

INVOICE

 

PAYMENT

 

GOODS SUPPLIED

 

PAYMENT

 

200000

 

300000

 

400000

 

100000

 

 

Determine time of supply in this situation?

ANSWER

In this case

           For the month of August, Rs. 2 Lacs is taxable. Time of supply shall be considered on 10.08.17, as per section 12(2) as the date of invoice or payment whichever is earlier.  In this case supply deemed to have been to the extent of Rs.200000 on 10.08.17 as it is covered by the invoice and the balance on payment as per explanation 1of section 12(2).

         For the month of September, Rs. 1 lac will be taxable. Time of supply shall be considered on 20.09.17, on the basis of payment as per Section 12(2) invoice or payment whichever is earlier.

(a)                For the month of October, balance supply of Rs. 1 lac has become taxable on the basis of last date on which invoice required to be issued as per section 12(2). Last date for issuing invoice as per section 31 is one of the events in section 12(2). Thus, when last date on which invoice required to be issued is earlier than the date of payment and date of issue of invoice. In this situation last date for issuing invoice shall be considered as time of supply. As per section 31(1) time of removal shall be considered as last date on which invoice required to be issued. On this basis 25.10.17 shall be treated as time of supply for Rs.1 lac and nothing will be taxable in November.


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.