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CA Final · Indirect Tax Laws · Time of Supply

Himalaya Textiles Ltd, Ludhiana, supplies fabric to Kaveri Garments. The invoice for goods worth Rs 5,00,000 was issued on 10 June. Kaveri's payment was debited from its bank on 18 June, and Himalaya's books recorded the receipt on 20 June. The goods were dispatched on 25 June. What is the time of supply of these goods under section 12 of the CGST Act, 2017?

The time of supply is 10 June. For goods under forward charge it is the earlier of the invoice date and the date the supplier receives payment. Here the invoice date of 10 June precedes the supplier's receipt of payment on 20 June, and the recipient's bank debit date is irrelevant.

  1. A10 June, being the date of issue of invoice, as it is earlier than the date of paymentCorrect
  2. B18 June, being the date the payment was debited in the recipient's bank account
  3. C20 June, being the date the receipt was entered in the supplier's books
  4. D25 June, being the date of dispatch of the goods

Explanation

For goods, the time of supply is the earlier of the date of invoice (or the last date for issuing it) and the date the supplier receives payment. The invoice date is 10 June, while payment is treated as received on 20 June at the earliest in the supplier's books or bank, whichever is earlier. The earlier of 10 June and 20 June is 10 June. The 18 June date is the recipient's debit date, which is not relevant for forward charge supplies.

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