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CA Final · Indirect Tax Laws · Supply under GST

Lakshmi Engineering, a supplier of taxable goods, issued a tax invoice for Rs 50,000 dated 12 July. On 8 July it received Rs 50,800 from the buyer, Rs 800 more than the invoice amount. It also charged interest of Rs 2,000 for delayed payment on another supply, and received this interest on 30 July. Under Section 12 of the CGST Act, which statement is correct?

Interest for delayed payment is taxed on the date the supplier receives it, 30 July. Section 12(6) says so. The excess of Rs 800 is within the Rs 1,000 limit, so the supplier may opt to treat the invoice date as its time of supply.

  1. AThe excess Rs 800 must be taxed on 8 July, with no option available
  2. BInterest is taxed on the date the supplier receives it, 30 JulyCorrect
  3. CInterest is taxed on the date of the original invoice of that supply
  4. DThe excess Rs 800 must be taxed on the date of issue of the credit note

Explanation

Section 12(6) fixes the time of supply for an addition in value by way of interest, late fee or penalty for delayed payment as the date the supplier receives it, here 30 July. The proviso to Section 12(2) lets the supplier opt for the invoice date for an excess of up to Rs 1,000 received over the invoice amount, so the Rs 800 excess is not forced to 8 July.

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