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CA Final · Indirect Tax Laws · Supply under GST

Mehta Electricals, a supplier of taxable goods, issued a tax invoice dated 10 June for Rs 1,00,000. It had received an advance of Rs 40,000 on 25 May, credited to its bank account on 26 May but entered in its books on 27 May. The balance was received on 20 June. Under Section 12 of the CGST Act, what is the time of supply for the Rs 40,000 and for the remaining Rs 60,000?

The time of supply is 26 May for Rs 40,000 and 10 June for Rs 60,000. Payment date is the earlier of the books entry and the bank credit, which is 26 May. The balance is taxed on the invoice date, 10 June, because that is earlier than 20 June.

  1. A27 May for Rs 40,000 and 20 June for Rs 60,000
  2. B26 May for Rs 40,000 and 10 June for Rs 60,000Correct
  3. C25 May for Rs 40,000 and 10 June for Rs 60,000
  4. D10 June for the whole Rs 1,00,000

Explanation

Under Section 12(2) the time of supply is the earlier of the invoice date or the payment receipt date, to the extent covered by each. Under Explanation 2, the date of receipt of payment is the earlier of the date it is entered in the books and the date it is credited to the bank. Here that is 26 May, not 27 May. The balance of Rs 60,000 is covered by the invoice of 10 June, which is earlier than the payment on 20 June.

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