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CA Final · Indirect Tax Laws · Time of Supply

Nilgiri Foods Ltd, registered in Coimbatore, receives goods from an unregistered supplier on 3 March. They are liable to tax under reverse charge. The supplier issued a document on 20 February, the recipient entered the payment in its books on 15 April and the bank debit was on 18 April. Applying section 12(3), what is the time of supply?

The time of supply is 3 March, the date of receipt of goods. Under section 12(3), reverse charge supplies of goods are taxed at the earliest of goods receipt, payment date, and the day following thirty days from the supplier's invoice. Receipt on 3 March precedes both of the others.

  1. A20 February, the date of the supplier's document
  2. B3 March, the date of receipt of the goodsCorrect
  3. C21 March, the day after thirty days from the document date
  4. D15 April, the date of payment entry in books

Explanation

For reverse charge supplies of goods, section 12(3) takes the earliest of the date of receipt of goods, the payment date (earlier of book entry or bank debit), and the day following thirty days from the invoice date. The goods were received on 3 March. Thirty days from 20 February (a non-leap year) ends on 22 March, so the following day is 23 March. Payment dates are in April. The earliest is 3 March. The 21 March option miscounts the days and would be later anyway.

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