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CMA Intermediate · Direct and Indirect Taxation · Time and Value of Supply

Mehta Steels supplies goods worth ₹5,00,000 (tax invoice value). On 5 March it receives ₹2,00,000 as advance, and on 25 March it issues the invoice for the full ₹5,00,000 (the invoice was due on 25 March). The balance is received on 10 April. For the ₹2,00,000 portion, what is the time of supply?

The time of supply for the ₹2,00,000 portion is 5 March. Supply is deemed made to the extent covered by payment or invoice, and the advance was received before the invoice, so the earlier date applies to that portion under Section 12(2).

  1. A25 March, since the invoice was issued then
  2. B10 April, when the full payment is completed
  3. C5 March, to the extent covered by the paymentCorrect
  4. DThe date of delivery of goods

Explanation

Explanation 1 to Section 12 deems supply made to the extent covered by the invoice or payment. For the ₹2,00,000 advance, payment on 5 March is earlier than the invoice date of 25 March, so the time of supply for that part is 5 March. The remaining ₹3,00,000 is 25 March, the invoice date.

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