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CA Intermediate · Taxation · Time of Supply

Iyer Infra Ltd., a registered person, provided a taxable service to Nair Pvt. Ltd., a registered recipient, on 1 July. Under the law, the invoice must be issued within 30 days of the provision of service. Iyer Infra issued the invoice on 12 August, and Nair paid on 20 August. Recipient is not liable under reverse charge. What is the time of supply of this service?

The time of supply is 1 July. Because the invoice was not issued within the prescribed 30 days, the time of supply of the service is the earlier of the date of provision of service and the payment receipt date. Provision on 1 July precedes payment on 20 August.

  1. A1 July, the date of provision of serviceCorrect
  2. B12 August, the date of invoice
  3. C20 August, the date of payment
  4. D31 July, the last date for invoicing

Explanation

When the invoice is not issued within the prescribed period, the time of supply of services is the earlier of the date of provision of service and the date of receipt of payment. Here the invoice on 12 August is after the 30-day period (which ended on 31 July), so invoice date does not apply. Between provision on 1 July and payment on 20 August, the earlier is 1 July.

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