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CMA Final · Indirect Tax Laws and Practice · Time of Supply

Gupta Steel Ltd issues a tax invoice for goods worth Rs. 5,00,000 on 20 January and receives Rs. 2,00,000 on 10 January (credited and entered in books on that date), with the balance Rs. 3,00,000 received on 28 January. Ignoring the change-in-rate rules, the time of supply under section 12(2) is:

Time of supply is 10 January for the Rs. 2,00,000 advance and 20 January for the balance Rs. 3,00,000. Each portion takes the earlier of invoice or payment date, and supply is treated as made to the extent of the payment or invoice.

  1. A20 January for the entire Rs. 5,00,000
  2. B10 January for Rs. 2,00,000 and 20 January for Rs. 3,00,000Correct
  3. C10 January for Rs. 2,00,000 and 28 January for Rs. 3,00,000
  4. D28 January for the entire Rs. 5,00,000

Explanation

Under section 12(2) the earlier of invoice date or payment date applies, and supply is deemed made to the extent covered by the invoice or payment (Explanation 1). Rs. 2,00,000 was paid on 10 January, which precedes the invoice. The remaining Rs. 3,00,000 is covered by the invoice on 20 January, earlier than payment on 28 January.

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