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CA Final · Indirect Tax Laws · Time of Supply

Kaveri Machinery Ltd. supplies taxable goods under a contract. It issued a tax invoice for ₹5,00,000 on 10 August, within the time allowed under section 31. On 20 August the customer paid ₹5,00,700, which is ₹700 more than the invoiced amount. Kaveri issued a further invoice for the excess ₹700 on 5 September and opted to use the proviso to section 12(2). What is the time of supply of the excess ₹700?

The time of supply of the excess ₹700 is 5 September. The proviso lets a goods supplier treat an excess receipt of up to ₹1,000 over the invoiced amount as supplied on the date of the invoice for that excess. The supplier has opted for this, so the payment date does not apply.

  1. A10 August, the date of the original invoice
  2. B20 August, the date the excess payment was received
  3. C5 September, the date of the invoice for the excess amountCorrect
  4. DThe date following thirty days from 10 August

Explanation

Where a supplier of taxable goods receives up to ₹1,000 more than the invoiced amount, the time of supply for the excess is, at the supplier's option, the date of the invoice for that excess. The excess here is ₹700, which is within the limit, and the option is exercised. So the date is 5 September. Treating 20 August as the date ignores the option. The main ₹5,00,000 stays at 10 August.

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