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CA Final · Indirect Tax Laws · Time of Supply

Meenakshi Engineering, a registered supplier of taxable goods, issued an invoice for Rs 80,000 on 12 August. Along with payment, it received Rs 80,700 from the buyer on 20 August, with the excess of Rs 700 unexplained. Meenakshi exercises its option under the proviso to section 12(2). What is the time of supply for the excess Rs 700?

The time of supply for the excess Rs 700 is the date of issue of the invoice in respect of that excess amount. The proviso to section 12(2) allows this at the supplier's option when the excess received over the invoice is up to Rs 1,000.

  1. A20 August, the date of receipt of the excess
  2. B12 August, the date of the original invoice
  3. CThe date of issue of the invoice in respect of the excess amountCorrect
  4. DThe date on which the periodical return is filed

Explanation

The proviso to section 12(2) applies where the supplier receives up to Rs 1,000 in excess of the invoiced amount. At the supplier's option, the time of supply for that excess is the date of issue of the invoice for that excess amount. Rs 700 is within the limit and the option has been exercised. The 20 August option applies only if the option is not exercised.

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