Maharashtra National Law University, Aurangabad

Law of Taxation- GST Project

The Scope and Importance of Time of Supply

Submitted By:

SOUMIKI GHOSH

Roll No. 2018/BALLB/10

[B.A. LL.B (H). 4th Year, VIIIth Semester]

In

April, 2022

Under The Guidance Of

Mr. Ajinkya Reddy & Mr. Umesh Sharma

Faculty of Law of Taxation- GST

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DECLARATION

I hereby declare that the project work in the B.A.LL.B (Hons.) Sem VIII Law of Taxation-
GST Project entitled ― “The Scope and Importance of Time of Supply” submitted at
Maharashtra National Law University, Aurangabad is an authentic record of my work
completed under the supervision of Mr. Ajinkya Reddy sir & Mr. Umesh Sharma sir . This
work has not been submitted for any other degree or diploma. I am solely responsible for the
information contained in my Project work. This work has not previously been submitted to
any other university, and it is not copied from any book or website.

SOUMIKI GHOSH

2018/BALLB/10

Maharashtra National Law University, Aurangabad

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INDEX

TOPICS PAGE NO.

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INTRODUCTION

The supply of goods or services, or both, is a taxable event under GST. Various taxable
events, such as manufacture, sale, provision of a service, purchase, admission into a state's
territory, and so on, have been eliminated in favour of a single taxable event, supply. Except
for taxes on the supply of alcoholic liquor for human consumption, the constitution defines
"Commodities and Services Tax" as any tax on the supply of goods, services, or both. The
GST will be imposed on intra-state supplies by both the federal and state governments at the
same time. However, only the Parliament has the authority to enact laws relating to the
imposition of the Goods and Services Tax on interstate supplies.

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SIGNIFICANCE OF THE STUDY

The study is helpful to understand the ins and outs of the scope and importance of time and
supply. It also analyses the relevant sections of The Central Goods and Services Tax Act and
other relevant acts regarding time of supply.

OBJECTIVE OF THE STUDY

This research project attempts to explain the current laws and the relevant judicial decisions
regarding time of supply under law of taxation. The objective is to find out, understand and
elaborate the applicability of the time of supply in current judicial scenario.

METHODOLOGY

The research is descriptive and qualitative. The techniques comprised of utilizing different
textbooks, journals, research papers, database and websites. Various books on law of taxation
helped to understand the topic. Secondary and Electronic resources have been used to gather
information and data. SCC online and Manupatra have been used to look up on relevant
cases.

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TIME OF SUPPLY

The term "supply" is defined in the Act in a broad sense. The following six factors can be
used to classify a transaction as a supply to understand the meaning and scope of supply
under GST: 1. The provision of commodities or services. GST is not charged on anything
other than goods and services. 2. A supply for a consideration should be made. 3. The supply
must be made in the course of or in advancement of business; 4. The supply must be made by
a taxable person; and 5. The supply must be taxable. 6. The supply must occur within the
taxable territory.

While these six elements explain the idea of supply, there are a few exceptions to the need
that supplies be provided for a consideration and in the course of business. Except in a few
cases where a transaction is regarded to be a supply even without consideration, any
transaction involving the supply of goods or services without consideration is not a supply.
Furthermore, whether or not in the conduct or furtherance of business, the importation of
services for a consideration is recognised as supply.

SIGNIFICANCE OF TIME, LOCATION, AND SUPPLY VALUE

The point in time when goods/services are considered supplied is referred to as the time of
supply. Knowing the 'time' assists the seller in determining the tax payment due date.

The location of supply is necessary for deciding whether IGST or CGST/SGST should be
applied to the invoice.

Because GST is calculated on the sale price, the value of the supply is critical. If the value is
wrongly determined, the amount of GST charged will be incorrect as well.

Supply Period

The point in time when goods/services are considered supplied is referred to as the time of
supply. Knowing the 'time' assists the seller in determining the tax payment due date.

At the time of supply, CGST/SGST or IGST must be paid. Goods and services each have
their own foundation for determining when they will be delivered. Let's take a closer look at
them.

Time of Goods Supply

The earliest of the following is the time of goods supply:

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1. The invoice's date of issuance

2. The deadline by which an invoice should have been sent out

3. Date of advance/payment receipt*

Illustration:

Mr. X sold products worth Rs 1,000,000 to Mr. Y. The invoice was sent out on January 15th.
On the 31st of January, the payment was received. On January 20th, the things were
delivered.

In this situation, let us evaluate and arrive at the moment of supply.

The earliest time of supply is –

The invoice was issued on January 15th.

The invoice should have been issued by the 20th of January at the latest.

As a result, the deadline for supply is January 15th.

If Mr. X receives a Rs 50,000 advance on January 1st-

The deadline for supplying the Rs 50,000 advance is January 1st (since the date of receipt of
advance is before the invoice is issued). The remaining Rs 50,000 will be delivered on
January 15th.

Supply Time for Services

The earliest of the following is the time when services are provided:

Date of invoice issuance

Date on which the advance/payment was received.

Date of service provided (if invoice is not issued within prescribed period)

Illustration-

On January 1st, Mr. A offers Mr. B with services worth Rs 20000. The invoice was sent out
on January 20th, and payment was received on February 1st.

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In this scenario, we must first determine whether the invoice was issued inside the specified
time frame. The deadline is 30 days from the date of supply, which is January 31st. The
invoice was sent out on January 20th. This indicates that the invoice was sent out within a
certain amount of time.

The earliest of – will be the time of supply.

The invoice was issued on January 20th.

Payment due date is February 1st.

This indicates that services will be provided on January 20th.

Time of Supply in the Reverse Charge Situation

The period of supply for the service receiver in the case of reverse charge is the earliest of:

Date of payment* 30 days from the date of invoice issuance for goods (60 days for services)
*Effective 15.11.2017, 'Date of Payment' does not apply to products and only relates to
services as per Central Tax Notification No. 66/2017.

Illustration-

On the 15th of January, M/s ABC Pvt. Ltd hired Mr. X as a director for Rs. 50,000. The
invoice was sent out on February 1st. The payment was paid on May 1st by M/s ABC Pvt
Ltd.

In this situation, the earliest of – will be the time of supply.

Payment due date: 1st May, 60 days from invoice date – 2nd April

As a result, the date of service provision is April 2nd.

SUPPLY CLASSIFICATION AND TYPES

Mixed supply vs. composite supply:

There are a few products that are manufactured from two or more other ones. Composite
supply and Mixed supply are two types of such supplies.

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A supply that consists of two or more goods/services that must be delivered together in
accordance with common business procedures in that area. To put it another way, these goods
can't be ordered separately. In the entire transaction, there is a primary supply and a
secondary supply. The tax rate on the major supply will apply to the total supply in such
instances. Purchasing a Dry Fruit Gift Box for Diwali, for example. Dry fruits, a box, and a
wrapper are included. Without the main substance, which is dry fruit, the box and wrapper
cannot be sold separately. This is a mix of supplies.

A mixed supply is a supply that consists of two or more items or services that are not
necessary required to be sold together and are independent of one another. "It should not be a
composite supply," is the first criteria for mixed supply to be met. The tax rate that is higher
of the two supplies will be applied to the full supply in such instances. For example,
purchasing a Christmas package that includes cakes, aerated drinks, chocolates, Santa hats,
and other gifts. Each of these goods can be sold independently and are not interdependent.

Non-supply activities are classified as follows:

The Panchayat's activities are governed by Article 243G, while the Municipality's activities
are governed by Article 243W of the Constitution.

The government provides services in the form of an alcoholic liquor licence.

By way of clarification, activities are classified as non-supplies.

Trains, buses, trucks, planes, containers, trailers, vessels, and tankers travel between states to
transport products or passengers, or for repairs and maintenance.

Activities or transactions that should be classified as either a supply of goods or a supply of

After determining whether a transaction is a GST Supply, the next step is to classify it as a
Supply of Goods or a Supply of Service. Here are a few examples to help you grasp the
concept.

Transaction

Transfer of ownership of items

Goods Availability

Transfer of ownership of assets without transferring title

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Provision of Services

Land or equipment lease, tenancy, rental, easement

Provision of Services

Goods are given a treatment or put through a process.

Business goods are moved or disposed of such that they are no longer a part of the business.

Goods Availability

Goods are made available to another individual for any reason other than carrying on a
business under that person's direction.

Transfer of immovable property rights on a temporary basis

Furthermore, any activity done by the Central Government, a State Government, or any local
body while acting as a public authority shall be interpreted as business. It should be
emphasised that any activity covered in the definition for the purpose of furthering or
promoting a business could be considered a supply under GST law. The timing of supply is
another significant topic in GST. The point at which GST liability begins is determined by the
time of supply. It also shows when a supply is believed to have occurred. The GST law
establishes a distinct period of supply for goods and services.

The earlier of the following dates shall be used to determine the time of supply of goods: I the
date on which the supplier issues an invoice for the supply or the last date on which he is
required under Section 31 to issue an invoice for the supply; or (ii) the date on which the
supplier receives payment for the supply. In the case of vouchers, the time of supply for
goods and services shall be: a) the date of issue of the voucher, if the supply can be identified
at that moment; or b) the date of redemption of the voucher in all other circumstances.

The period of provision of goods in the event of reverse charge will be the earliest of the
following dates: a) the date on which the products are received; b) the date on which payment
is made; or c) the date that is 30 days after the supplier's invoice is issued. The time of
delivery of services in the case of reverse charge will be the earlier of the following dates: a)
the date on which payment is made; or b) the date immediately succeeding sixty days from
the date on which the supplier issues an invoice.

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It is crucial to note, however, that when a supply is completed before or after a change in tax
rate, the date of the supply will be determined according to section 14. In such cases, the time
of supply will be I the date of receipt of payment or the date of issue of invoice, whichever is
earlier; or (ii) where the invoice has been issued prior to the change in rate of tax but the
payment is received after the change in rate of tax, the time of supply will be the date of issue
of invoice;

or (iii) when the money is received before to the change in tax rate, but the invoice is issued
after the change in tax rate, the time of supply is the date of receipt of payment; In the case of
a continuous delivery of services, the following schedule will be followed: (a) Where the
payment due date is determined by the contract, the invoice shall be provided before or after
the recipient is required to make payment, but within a specified time period, whether or not
payment has been received by the service provider;

c) where the payment is linked to the completion of an event, the invoice shall be issued
before or after the time of completion of that event but within a period prescribed in this
behalf; d) where the payment is linked to the completion of an event, the invoice shall be
issued before or after the time of completion of that event but within a period prescribed in
this behalf; e) where the payment is linked to the completion of an event, the invoice shall be
issued before or after the time of completion of that event but within Issuance of an invoice I
for items supplied A registered taxable person shall issue a tax invoice specifying the type,
amount, and value of goods, the tax charged thereon, and other prescribed particulars, before
or at the time of delivery, as per Section 31 of the CGST/SGST Act.

a) removal of items for supply to the receiver in circumstances where supply entails
movement of goods; b) delivery of goods or making them available to the recipient in other
cases. (ii) For the provision of services A registered taxable person must provide a tax invoice
specifying description, value of goods, tax payable thereon, and other necessary particulars
before or after the performance of service, but within a period prescribed in this regard,
according to Section 31 of the CGST/SGST Act. In the case of a continuous supply of
products, the time period for issuing an invoice is: When there is a continuous supply of
goods and subsequent statements of accounts or payments are involved, the invoice must be
issued before or at the time each such statement is issued or, as the case may be, as the case
may be.

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In the case of a continuous provision of services, the time period for issuing an invoice is: (a)
Where the due date of payment is ascertainable from the contract, the invoice shall be issued
before or after the recipient is liable to make the payment but within a period prescribed in
this regard whether or not any payment has been received by the supplier of the service; (b)
Where the due date of payment is not ascertainable from the contract, the invoice shall be
issued before or after the supplier of the service receives the payment but within a period
prescribed in this regard whether or not any payment has been received by the supplier.

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CONCLUSION

After the introduction of GST, a new era has started in the area of law of taxation with respect
to our daily useable goods and services. Various GST slabs are there to categorize goods and
services. Time of supply is crucial in case of deciding a GST for any goods or services. One
of the most significant aspects of supply is that it must be for the "promotion of business."
The word "business advancement" is not defined under the GST. However, the following
criteria can be used to determine whether a certain supplier transaction is conducive to
business growth: a. Is the activity being pursued as a serious undertaking? b. Is the action
being carried out in a reasonable or identifiable manner? c. Is the activity carried out on a
regular basis in accordance with strong and well-established business principles? Section
2(17) defines "business" as "any trade, commerce, manufacture, profession, vocation, or other
activity, whether or not for a monetary gain." Any activity or transaction that is
supplementary or auxiliary to the aforementioned specified activities is also considered
business.

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