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CA Final · Indirect Tax Laws · Time of Supply

Sundaram Traders (Chennai) supplies taxable goods to Kavya Retail under an invoice for Rs 50,000 (excluding tax). On 10 March it receives, and enters in its books, Rs 20,000 as an advance for this supply. The goods are dispatched and the invoice for Rs 50,000 is issued on 25 March. Under section 12, what is the time of supply for the Rs 20,000 portion?

The time of supply for Rs 20,000 is 10 March. For goods, time of supply is the earlier of invoice date and payment receipt date, and supply is deemed made to the extent covered by the payment. The balance falls on the invoice date, 25 March.

  1. A10 March, the date the advance is entered in the books, as the supply is deemed made to the extent covered by paymentCorrect
  2. B25 March, the date of invoice for the whole supply
  3. CThe date on which the periodical return for March is filed
  4. DThe date of receipt of goods by Kavya Retail

Explanation

Under section 12(2) the time of supply of goods is the earlier of the invoice date (or last date for invoice) and the date of receiving payment. Explanation 1 deems supply made to the extent covered by payment. So the Rs 20,000 is supplied on 10 March, and the balance Rs 30,000 on 25 March. Treating the whole supply at 25 March ignores the advance.

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