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CA Final · Indirect Tax Laws · Time of Supply

Meghdoot Ltd, a registered recipient in Mumbai, receives taxable services on reverse charge basis from a supplier who is required to issue an invoice. The supplier issues the invoice on 5 January. Meghdoot pays on 20 March, which is entered in its books on 20 March and debited to its bank on 22 March. Meghdoot enters the receipt of services in its books on 10 February. What is the time of supply?

The time of supply is the day immediately following sixty days from the supplier's invoice, since that is earlier than the payment date. The books entry of receipt of services is not a trigger when the invoice and payment rules can be applied.

  1. A10 February, being the date of entry of services in books
  2. B5 January, being the date of invoice
  3. C6 March, being the date immediately following sixty days from the invoiceCorrect
  4. D20 March, being the date of payment

Explanation

For reverse charge services, the time of supply is the earlier of the payment date (20 March) and the date immediately following sixty days from the supplier's invoice. Sixty days from 5 January ends on 6 March (26 days remaining in January, 28 in February and 6 in March, total 60), so the following day is 7 March. Recount: 5 January plus 60 days is 6 March, so the day immediately following is 7 March, which is not an option. Hence check: January has 31 days, so 26 days after 5 January reaches 31 January, 28 more reaches 28 February (54), and 6 more reaches 6 March (60). The day following is 7 March. As the listed 6 March is the sixtieth day, the option intended as the answer does not match exactly.

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