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CA Final · Indirect Tax Laws · Time of Supply

Vardhan Textiles Ltd., a registered supplier of taxable goods, issued a tax invoice on 10 June for Rs 2,00,000 (plus GST) for goods supplied to Kanpur Garments. On 25 June it received Rs 2,00,600 in its bank account, i.e., Rs 600 more than the invoice value (excluding any tax difference). No invoice was issued for the excess. Under the proviso to section 12(2), what is the time of supply for the excess Rs 600?

The time of supply for the Rs 600 excess is the date of issue of the invoice relating to that excess, at the supplier's option. The proviso to section 12(2) allows this where excess receipt over the invoice is up to Rs 1,000, so the general payment-date rule need not apply.

  1. A25 June, being the date of receipt, as the supplier has no option
  2. B10 June, because the excess forms part of the same invoice
  3. CThe date of issue of invoice for the excess amount, at the supplier's optionCorrect
  4. DThe date on which the periodical return is to be filed, as it cannot be determined otherwise

Explanation

The proviso to section 12(2) says that where a supplier of taxable goods receives an amount up to Rs 1,000 in excess of the invoice amount, the time of supply to the extent of the excess is, at the supplier's option, the date of issue of invoice for that excess. Here the excess is Rs 600, which is within the limit, so the option is available. Treating 25 June as mandatory ignores the option.

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