a a p & co....37,00,00,000.00 37,00,00,000.00 0.49 18,00,000.00 month turnover shown turnover as...
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Issues -Time Of Supply
A A P & CO.Ashu Dalmia
Coverage
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Impact of Time of Supply on Cash
Flow
Time of Supply vs Payment of Tax
Time of Supply and Accounting
Records
Time of Supply of Goods
Time of Supply of Services
Continuous Supply
Few Case Studies
What is Time of Supply?
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Section 12(1) The liabilityto pay tax on goods shallarise at the time of supply,as determined inaccordance with theprovisions of this section.
Section13(1) The liability topay tax on services shall ariseat the time of supply, asdetermined in accordancewith the provisions of thissection.
The time of supply fixes the point when the liability to pay tax arises.
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Impact of Time of Supply on Cash flow
37,00,00,000.00 37,00,00,000.00 0.49 18,00,000.00
Month Turnover Shown Turnover as per Time of Supply Provision
Remark Delay in Month Amount Interest
April 2,00,00,000.00 3,00,00,000.00
Turnover of April Shown in the month of May 1 1,00,00,000.00 1,50,000.00
May 3,00,00,000.00 2,00,00,000.00
Turnover of April Shown in the month of May
June 3,00,00,000.00 3,00,00,000.00
July 4,00,00,000.00 4,00,00,000.00
August 5,00,00,000.00 5,00,00,000.00
September 2,00,00,000.00 2,00,00,000.00
October 2,00,00,000.00 2,00,00,000.00
November 2,00,00,000.00 4,00,00,000.00
Turnover of November Shown in the month of March 4 2,00,00,000.00 12,00,000.00
December 2,00,00,000.00 3,00,00,000.00
Turnover of December Shown in the month of March 3 1,00,00,000.00 4,50,000.00
January 2,00,00,000.00 2,00,00,000.00
February 2,00,00,000.00 2,00,00,000.00
March 8,00,00,000.00 5,00,00,000.00
Turnover of November and December Shown in the month of March
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Time of Supply vs Time of Payment of Tax
Payment of Tax-Time ?
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Section 39(7) Every registered person, who is required to furnish a returnunder sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5),shall pay to the Government the tax due as per such return not later thanthe last date on which he is required to furnish such return.
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Time of Supply and Accounting
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Time of Supply of Goods
Time of Supply of Goods
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Time of Supply of goods under Forward charge
(whichever is earlier)
Date of issue of invoice by the supplier
Date on which supplier
receives the payment
Last date on which invoicerequired by the supplier
Time of Supply of Goods-No Tax on advance of Goods
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Notification No. 66/2017 – Central Tax dated 15th November, 2017 issued toexempt all taxpayers from payment of tax on advances received in case of supply ofgoods
Notification No. 40/2017 – Central Tax dated 13th October, 2017 issued to exempt,Registered person whose aggregate turnover in the preceding financial year did notexceed one crore and fifty lakh rupees or the registered person whose aggregateturnover in the year in which such person has obtained registration is likely to be lessthan one crore and fifty lakh rupees to pay tax on advance for goods.
Time of Issue Tax Invoice-Goods
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When Movement of Goods Required
Before or atthe time ofremoval ofgoods
When movementof goods notrequired
Before or atthe time ofdelivery ofgoods
Continuous supplyof goods
Earliest of thefollowing;
Time when each payment is received
Time when each statement is issued
Goods taken on approval
Earliest of thefollowing;
On approval
Six month from the date of removal
Continuous Supply of goods
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Supply of goods which is provided or will be provided✓ Continuously or on recurrent basis,✓ Under a contract✓ It may or may not be through means of a wire, cable, pipeline or other
conduit.✓ The supplier sends invoice to the recipient on a periodic basis.
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Time of Supply of Services
Time of Supply of Services
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Time of Supply of Services under Forward charge
(whichever is earlier)
Date of issue of invoice if Issued with in time
Date on which supplier
receives the payment
Date of provision, if invoicenot issued with in time
Time for issue of Tax Invoice-Service
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Normal Supply
With in 30days from thedate of supplyof services
Continuous supply ofServices
On or before the due date of payment, incase of continuous supply of serviceswhere due date is ascertainable.
. On or before the date of payment ,in case of continuous supply of services where due date is not ascertainable
On or before that completion, in case of continuous supply where payment is linked to completion of an event.
Cessation of Service
Time when supply ceases to the extend supply made before such cessation
Continuous Supply of Services
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Supply of services which is provided or will be provided✓ Continuously or on recurrent basis,✓ Under a contract✓ For a period exceeding three months✓ With periodic payment obligation
Time for Supply Services-Reverse Charge
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Other than Associated Enterprises
Date on which payment enteredin books of accounts
Payment Debited in Books of Accounts
Date following 60 days from thedate of issue of invoice bysupplier
When date can not be determined above:
Date of entry in books of account of the recipient of supply
Associated Enterprises and supplier of Service is located outside India
Date of entry in the books ofaccounts of the recipient
Date of payment
Time of Supply-Interest/late fee/Penalty
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FOR DELAYED PAYMENT
Time of supply – Date of receipt of additional value by recipient
Addition in the value of supply
Interest Late Fee Penalty
Time of Supply –Job work
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Circular No. : 38/12/2018 dt. 26.03.2018
Principal should issue an invoice on expiry of three years / one year and should declare such supplies in the return filed for the month in which the time period of three years / one year is expired.
Few Case Studies
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Continuous Supply Supply in Lot
COVID-19 Impact Builder
Supply of Goods or Services ,Continuous Supply or not?
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Contractor has to operate and maintain 12,000 street lighting fixtures & respective feederpanels i.e. installation of LED fixtures, smart electric panels for automation, metering &comprehensive maintenance. The role of the applicant is as under:
a) Removal of the existing street lights and handing over the same to TMC.b) Installation of LED street lights on existing street light polesc) Installation of new smart feeder electrical panels compatible with LED fixtures at itsown cost.d) Operation 86 maintenance of the said LED street lights during the tenure of thecontract.
Contractor remains to be owner of the newly installed LED lights; is responsible forfunctioning of the said lights; has to replace, if required, at free of cost; shall surrender allthe LED lights 86 system installed at no cost to Contractee at the end of the contract.
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The Contractor shall pay the contractor a fee for the energy savings (the “Energy Savings Fee”) in Indian Rupees, as consideration for the energy savings achieved with respect to the energy baseline consumption norm.
KARNATAKA STATE ELECTRONICS DEVELOPMENT CORPORATION LIMITED GIB/KN/KARNATAKA STATE /10.03.2020/AAR-237
Complete AAR is available on following link:
https://www.gstindia.biz/advance-ruling-short-title.php?id=czozOiIzODkiOw==
The Contractor submit the monthly invoices along with the savings calculation as percontract. The payment would be released to the applicant only after the energy savings reportis submitted to third party energy auditor and the same is verified & approved. In view of theabove, the Contractor contends that the due date of payment is not the end of the month butis only after the energy savings report is submitted & verified by auditor. The payments arereleased only after completion of 30 days from the date of submission of energy audit report.
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It is a composite supply where the principal supply is supply of goods. It is anaccepted fact that the consideration is received on monthly basis; invoice israised on energy savings; value of such invoice is equal to 90% of the energysavings. It is pertinent to mention here that the energy savings are directly relatedto the functioning and quality of the LED street lights etc., i.e. the goods suppliedby the applicant. Therefore, the applicant receives the consideration, throught thecontract period i.e. 7 years, on a monthly basis, on the energy savings. Thus themonthly consideration includes the value attributable to the supply of the goodsalso. The time of supply of goods in terms of Section 12(2)(a) of CGST Act 2017is the date of issue of invoice by the supplier. Further, in terms of explanation 1 tothe aforesaid Section 12(2), supply shall be deemed to have been made to theextent it is covered by the invoice. Thus the time of supply in the instant case isthe date of invoice.
Decision
Renting
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Time of supply in relation to the renting of its immovable properties when:
Where the license agreement has expired but licensee continues to be in possession and occupation
of immovable properties.
Where the license agreement is in force but the licensee does not pay periodical license fee as
provided in license agreement.
Where the license agreement is in force but
the licensee pays a portion of the agreed license fee.
Renting
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Lessor only raises a Rent Claim Advice on the tenant in the interim and there was no certainty on the amount that it would receive and the timing of the receipt,
Whether 'Time of Supply' occurs only when payment is received?
CHENNAI PORT TRUST ( GIB/TN/CHENNAI PORT/26.09.2019/AAR-238) DATED 26.09.2019
Complete AAR is available on following link:
https://www.gstindia.biz/advance-ruling-short-title.php?id=czozOiIzOTAiOw==
Decision
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The license has expired and not in force but the licensee continues to be inPossession and occupation of the immovable properties – HELD THAT:- Whenthe license is expired and there are provisions made in the lease agreementregarding continued supply of service as in the case of the lease agreement withCustoms, the supply of service is a ‘continuous Supply of Service’ as defined inSection 2(33). However, if there is no such provision made in the agreement itcan be said that the supply is not ‘under a contract’ and therefore, in such cases,the supply no longer qualifies under the definition of continuous supply.
Decision
28Ashu Dalmia
The license is in force, but the licensee does not pay the periodical license fee tothem as provided in the license agreement – HELD THAT:- If the invoice is issuedafter such due date of payment, the Time of supply is determined by Section13(2)(b), as the earliest of the date of provision of service which is the end of theperiod (monthly/annual etc. ) specified in the contract and the date of receipt ofpayment, whichever is earlier. If payment is not received, the time of supply shall bethe date of provision of service which is the end of recurrent period specified in theagreement after which the rent/license fee is to be paid.
Builder
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• Whether Demand Note raised triggers time of Supply?
• Where the due date of payment for construction of 15 storied building is 10thof each month in agreement: The date on which the payment is liable to bemade by the service receiver ie 10th of each month is treated as date of supplyof service.
• Where the due date of payment is not mentioned in construction agreement:Supplier issues invoice on 24th July 2019 and the payment received on 28th
July 2019. Time of supply of service is 24th July 2019.
• When payment linked to completion of stages of construction of building:When 4th floor slab is completed on 10th Dec 2019, the payment of Rs. 30Lakhs to be made. Time of supply is 10th Dec 2019.
Supply in Lots
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Explanation to Section 12: ---------------------“supply” shall be deemed to have beenmade to the extent it is covered by the invoice or, as the case may be, thepayment.
Rule 55 (5) Where the goods are being transported in a semi knocked down orcompletely knocked down condition or in batches or lots -(a) the supplier shall issue the complete invoice before dispatch of the firstconsignment;(b) the supplier shall issue a delivery challan for each of the subsequentconsignments, giving reference of the invoice;(c) each consignment shall be accompanied by copies of the correspondingdelivery challan along with a duly certified copy of the invoice; and(d) the original copy of the invoice shall be sent along with the last consignment.
COVID-19- Force majeure –Notification CT 35/2020-3rd April 2020
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Where, any time limit for completion or compliance of any action, by any authority or byany person, has been specified in, or prescribed or notified under the said Act, which fallsduring the period from the 20th day of March, 2020 to the 29th day of June, 2020, andwhere completion or compliance of such action has not been made within such time,then, the time limit for completion or compliance of such action, shall be extended uptothe 30th day of June.
but, such extension of time shall not be applicable for the compliances of the provisions of the said Act, as mentioned below –
(a) Chapter IV; (b) sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129; (c) section 39, except sub-section (3), (4) and (5);(d) section 68, in so far as e-way bill is concerned; and (e) rules made under the provisions specified at clause (a) to (d) above;
Factors to determine before looking for Time of Supply:
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• Supply –Section 7• Goods or Service? Section 2(52),2(102)• Composite Supply or Mixed Supply? Section 2(30),2(74)• Who is liable to pay tax-Supplier/Recipient/Ecommerce operator? Section 9• One time Supply or Continuous Supply? Section 2(32),Section 2(33)
