Question arises at what point of time, gst should be levied.

GST is to be levied at the time of supply of goods or services as per section 12 and 13 of CGST Act.

Section 12 provides for the determination of time of supply (TOS) of goods in the following situations:

Supply of goods under forward charge [S-12(2)]

Supply of goods under reverse charge; [S-12(3)]

Supply of vouchers; [S-12(4)] [Deleted wef 01-10-2025]

Residual cases; [S-12(5)]

Addition to value of supply of goods by way of interest or late fee or penalty for delayed payment; [S-12(6)]

Provisions of TOS under CGST Act have also been made applicable to IGST Act vide section 20 of the IGST Act.

Section 12(1)

The liability to pay tax on goods ^[2(52)] shall arise at the time of supply,

as determined in accordance with the provisions of this section.

As per section 12(1), GST becomes payable on goods at the time of its supply.

Time of supply indicates the point of time when the liability to pay tax arises.

Section 12(2)

TOS of goods shall be the earlier of following dates namely;

(a)

date of issue of invoice^[2(66)] by the supplier^[2(105)] or

last date on which he is required u/s 31 to issue the invoice with respect to the supply; or

(b) date on which the supplier receives the payment with respect to the supply:

Practical Example

Explanation 2 to Section 12(2)

For the purpose of clause (b)

“the date on which the supplier receives the payment” shall be earlier of

date of entry in his books of account or

date of credit to his bank account.

Practical Example

For knowing due date of issue of invoice, please refer complete guide on section 31

Section 31(1)

RP supplying taxable goods shall, before or at the time of,—

(a) removal^[2(96)] of goods for supply to the recipient, if supply involves movement of goods; or

(b) delivery of goods or making available thereof to the recipient, in any other case,

issue a tax invoice

showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed^[R-46]

Practical Example

Section 31(4)

In case of continuous supply of goods,

where successive statements of accounts or successive payments are involved,

the invoice shall be issued before or at the time

each such statement is issued or,

each such payment is received.

Practical Example

Section 31(7)

Notwithstanding anything contained in ss(1)

where the goods being sent or taken on approval for sale or return

are removed before the supply takes place,

invoice shall be issued earlier of

before or at the time of supply or

6 months from the date of removal

Practical Example

As per Section 12(2)(b) above, if any person receives advance payment before issue of invoice, then time of supply shall be date of receipts of payment and he shall be liable to pay tax on the advance received even if he has not issued invoice in respect of that advance.

However in following cases, tax is not payable on advance receipts

N No. 66/2017-CT dt. 15-11-2017

Central Government notifies that

RP other than

composition dealer u/s 10

person making supply of specified actionable claims as defined in clause 2(102A)]

shall pay the central tax on the outward supply of goods

at the TOS as specified in section 12(2)(a)

including in the situations attracting the provisions of section 14, and

shall accordingly furnish the details and returns as mentioned in Chapter IX of the said Act and the rules made thereunder and the period prescribed for the payment of tax by such class of RPs shall be such as specified in the said Act.

All taxpayers under forward charge except

composition suppliers and

RP making supply of specified actionable claims

are not required to pay GST on advance received in relation to supply of goods.

Practical Example

TOS shall be the earlier of

The date of issue of invoice by the supplier or

the last date on which he is required u/s 31 to issue the invoice for such supply

Proviso to Section 12(2)

If supplier receives an amount up to Rs.1,000 in excess of the amount indicated in the tax invoice,

TOS to the extent of such excess amount shall, at the option of the said supplier,

be the date of issue of invoice in respect of such excess amount.

Irrelevance of 1^st Proviso to section 12(2)

After issue of N No. 66/2017-C Tax i.e. wef 15.11.2017, GST on supply of goods is payable only on the basis of issuance of invoice, this provision is practically irrelevant for supply of goods.

Explanation 1 to Section 12(2)

For the purpose of clauses (a) and (b),

“supply” shall be deemed to have been made to the extent it is covered by the invoice or the payment.

Suppose, a part of the consideration is paid in advance or invoice is issued for part payment, the time of supply will not cover the full supply. The supply is deemed to have been made to the extent it is covered by the invoice or the part advance payment.

Ex

A Ltd. enters into an agreement with B Ltd. to supply 100 kg of raw material. However, A Ltd. supplies only 80 kg of raw material and issues the invoice for the same.

Here, the supply would be deemed to have been made in respect of 80 kg of raw material, i.e. to the extent covered by the invoice. Therefore, the provisions relating to time of supply will also be applicable to supply of 80 kg of raw material and not for entire 100 kg of raw material.

Section 12(3)

In case of supplies on which tax is paid or liable to pay on reverse charge^[2(98)] basis,

TOS shall be the earlier of following dates

(a) date of the receipt of goods; or

(b) Date of payment

entered in the books of account of the recipient^[2(93)] or

debited to his bank account;

whichever is earlier or

(c) date immediately following 30 days from the date of invoice or any other document^[2(41)] by whatever name called, in lieu thereof by the supplier::

The relief of not paying GST at the time of receipt of advance is available only in case of supply of goods, the tax on which is payable under forward charge.

In case of reverse charge, GST is payable at the time of payment, if payment is recorded/made before receipt of goods (advance payment).

Practical Example

Proviso to Section 12(3)

where it is not possible to determine the TOS under clause (a) or (b) or (c),

It shall be the date of entry in the books of the recipient of supply.

Vouchers are instruments that can be exchanged as payment for goods or services of the designated value. As per the definition, they are instruments, that certain persons (potential suppliers) are obliged to accept as consideration, part or full, for goods and/or services.  The instrument or its related documentation sets out the terms and conditions of use, the  and/or services covered, and the identity of the potential suppliers of such goods and/or services.

Section 12(4)

In case of supply of voucher^[2(118)] by a supplier, the

.

Practical Example

Section 12(5)

Where it is not possible to determine the TOS u/ss (2) or (3) or (4), TOS shall be determined as follows:

.

Practical Example

Section 12(6)

The TOS to the extent it relates to an addition in the value of supply

by way of interest, late fee or penalty

for delayed payment of any consideration

shall be the date on which the supplier receives such addition in value.

Commercially, most of the contract of supplies stipulate payment of interest/late fee/penalty etc. in case of payment of consideration beyond the agreed time period.

Such interest/late fee/penalty etc. is includible in value of taxable supply.

Practical Example