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CA Final · Indirect Tax Laws · Time of Supply

Sagar Foods Pvt. Ltd., a registered person, procured goods from an unregistered supplier on which tax is payable under reverse charge. The goods were received on 18 March. The supplier issued a document in lieu of invoice on 1 March. Sagar Foods paid the supplier on 10 April and entered the payment in its books the same day. Under section 12(3), what is the time of supply?

The time of supply is 18 March, the date of receipt of goods. Under section 12(3) the reverse charge time of supply is the earliest of goods receipt, payment date, and the day after thirty days from the invoice date, which falls on 1 April, and 18 March is earliest.

  1. A1 March
  2. B18 MarchCorrect
  3. C10 April
  4. D31 March

Explanation

Under section 12(3), for reverse charge supply of goods the time of supply is the earliest of: date of receipt of goods (18 March), date of payment (10 April), or the date immediately following thirty days from the date of invoice or document (1 March plus 30 days gives 31 March, so 1 April). The earliest of 18 March, 10 April and 1 April is 18 March. Using 1 March mistakes the document date for the time of supply.

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