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CA Final · Indirect Tax Laws · Time of Supply

Kaveri Textiles Ltd, Surat, supplies taxable goods to Mehta Traders. Kaveri issues an invoice for Rs 5,00,000 on 10 June. Before that, on 2 June, Kaveri's bank account was credited with Rs 2,00,000 as advance for the same supply, and Kaveri's books recorded the receipt on 4 June. The goods were dispatched on 12 June. Under section 12 of the CGST Act, 2017, what is the time of supply for the Rs 2,00,000 portion?

The time of supply for the Rs 2,00,000 portion is 2 June. For goods, the earlier of the invoice date and the payment receipt date applies, and payment receipt is the earlier of bank credit or book entry. Bank credit on 2 June precedes the book entry on 4 June.

  1. A2 JuneCorrect
  2. B4 June
  3. C10 June
  4. D12 June

Explanation

For goods, time of supply is the earlier of invoice date (or last date for invoice) and the date of receipt of payment. Explanation 2 says the date of payment is the earlier of entry in books and bank credit. Bank credit is 2 June, books 4 June, so 2 June is the date. Choosing 4 June wrongly uses the later of the two dates.

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