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CA Final · Indirect Tax Laws · Supply under GST

Bhatia Pharma, a registered supplier, sold goods under a contract that allows interest on delayed payment. The invoice dated 1 September was for Rs 1,00,000. The buyer paid the invoice amount on 20 October together with Rs 2,000 interest for late payment. Under Section 12(6), what is the time of supply of the Rs 2,000 interest?

The time of supply of the Rs 2,000 interest is 20 October. Section 12(6) provides that for interest, late fee or penalty for delayed payment, the time of supply is the date on which the supplier actually receives that addition in value.

  1. A20 October, the date the supplier receives the addition in valueCorrect
  2. B1 September, the invoice date
  3. CThe last date on which the invoice was required to be issued
  4. DThe date of the periodic return in which the supply is reported

Explanation

Section 12(6) states that the time of supply to the extent it relates to an addition in value by way of interest, late fee or penalty for delayed payment is the date on which the supplier receives such addition. Interest was received on 20 October. The invoice date applies to the principal supply, not to this addition.

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