Demystifying Registration under the Model GST Law

Registration numbers of the existing taxpayers under Central Excise, Service Tax, Value Added Tax, and Central Sales Tax will be migrated to the new system before the appointed day. All the tax payers will be issued a provisional certificate and once the required information is furnished registration certificate will be issued. This process is covered under the transitional provisions of the Model Act under Section 142 and Chapter VI covers about the registration number registering process, cancellation of registration number, an amendment to registration number and revocation of registration number from section 19 to section 22.

Section 19 lays down the guidelines who should obtain a registration number. Schedule III of the Model Act lists the persons who should obtain the registration number irrespective of the person crossing the threshold limits or not.

The intentions of the government is very clear, it wants to increase the tax base and reduce the tax evasion, in this context only it has

  1. reduced the threshold levels drastically, the threshold limit as per model is Rs 10 Lacs except in Northeast which turns out to be around Rs 2740 per day,  which can be easily achieved
  2. schedule III has ensured that all the persons dealing in supply of services are required to be registered

Similar to the existing provisions, in the Model GST law also there is a provision for registering as a dealer and paying a fixed rate of tax if the turnover is less than Rs 50 lacs. These provisions are given under Section 8 of the model GST law.  The transitional provisions are providing the facility for the taxpayer to either opt for regular registration under GST while he is registered as a composite dealer or vice versa. The details are laid down in the sections 146 & 147 of the Model GST Act. The composite dealer has to file a quarterly return called GSTR -4.

The following persons have to be registered as a taxable person based on the model law

  • Every Supplier who makes a taxable supply of goods or services in a previous financial year exceeds Rs 9.00 Lacs in states other than northeastern
  • Every, Supplier, who makes a taxable supply of goods or services in a previous financial year, exceeds Rs 4.00 Lacs, in northeastern
  • All taxpayers registered under the current tax regimes
  • Any person who is required to pay tax under reverse charge mechanism
  • Any person marking interstate supplies
  • Casual taxable person
  • Non-Residential taxable person
  • Person required to deduct tax under Sec 37
  • A person who supplies goods or services on behalf of a principal has to be obtain irrespective of the threshold
  • Input service distributor
  • Every e-commerce operator irrespective of threshold limit
  • Any aggregator who renders services
  • Any person or class of persons notified by the Central / State Government based on the recommendations of the GST Council

 

Based on the business process document for registration and the Model GST Act, the following are the features of the registration number

  1. Only one registration number is required per state for all the taxes e., CGST / SGST / IGST
  2. If the taxable person has presence is more than one state, has to obtain GST registration numbers in that many states
  3. The registration number under GST is called GSTIN
  4. The registration number is based on PAN number similar to the existing Central Excise’s ECC number
  5. There is also a provision to obtain registration number based on the business verticals in the state based on AS 17 requirements.

Format of the GST Registration Number

As per the business process documents, the GSTIN is a fifteen digit registration number.

GSTIN

The first two digits, determine the state in which the GSTIN in being obtained, the list of the states is based on 2011 Indian Census. Under this, each state will be allocated a two digit number.

Next, 10 digits are PAN number of the entity issued by the Income Tax Department.

The thirteenth digit is alphanumeric, and it is based on the users requirement to get registration based on the business vertical. There can be 35 sequences maximum for this 1-9 numbers and alphabets a – z. If the taxpayer is going for a single registration then it will be 1 in the thirteenth field but if he goes for more than one registration like one two business vertical say for example one for consumer durables and another for automobiles then the second one will be having 2 in the thirteenth number and the third registration number will be having 3 in the thirteenth field.

The 14th digit is a being reserved by the GSTN for the future use, and the 15th digit is the check digit.

Amendment to Registration Number

Section 20 of the Model GST Act, provides provision for amendment of the registration number. Amendment of the registration number is required whenever there is a change in the address of the place of provision of business, or new place of provision of supplies has been added to the existing once.

Cancellation of the Registration Number

Section 21 of the Model GST Act lays down the conditions under which the registration number can be cancelled.

The officer can initiate the cancellation of the registration number on his own or based on the application filed by the taxpayer himself in the following cases

  1. Death of the registered taxpayer in case of individual
  2. Change in the constitution of the registered taxpayers e from partnership firm to a company etc
  3. No longer required to be registered taxpayers based on the provisions of the law
  4. The person has not commenced business within 6 months from the date of registration
  5. The taxable person has not furnished returns for 3 consecutive months
  6. Where registration is obtained under fraud or will full misstatement or suppression of facts
  7. The business has been discounted on account of merger or takeover etc
  8. The person has not followed the provisions of the law

If the tax office is initiating the cancellation of the registration number, the registered person will be given an opportunity to present the case.

Every taxable person who is obtaining cancellation of registration number shall pay the input tax credit on the closing stock of goods as on date of cancellation either by way of electronic fund transfer or online banking.  Same as in the case of capital goods based on the relevant provisions of the law in place for the deferred credit.

Revocation of the Registration Number

A person can apply for revocation of the registration number based on the conditions detailed in Section 22 of the Model GST Act.

Transitional Provisions

Section 142 of the Model GST Act details about the migration of the existing taxpayers under transitional provisions. All the taxpayers as on the appointed date will be issued a provisional registration certificate.

The taxpayer is required to furnish all the required information and obtain the registration certificate within a period of 6 months else provisional certificate of registration stands cancelled.

Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

These examples are based on the model law and may change based on the actual law passed.

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Demystifying Time of Supply of Services under Model GST Law – Part I

Section 13 of the Model GST Law states clearly the time of supply of services under the CGST / SGST. Now let’s see the explanation of each sub-section for the supply of services with examples.

Sub-Section 2

(2) The time of supply of services shall be:-

(a) the date of issue of invoice or the date of receipt of payment, whichever is earlier, if

the invoice is issued within the prescribed period; or

(b) the date of completion of the provision of service or the date of receipt of payment,

whichever is earlier, if the invoice is not issued within the prescribed period; or

(c) the date on which the recipient shows the receipt of services in his books of account,

in a case where the provisions of clause (a) or (b) do not apply.

The time of supply for services will be earliest of the above dates.

Sub-section 2(a)

(a) the date of issue of invoice or the date of receipt of payment, whichever is earlier, if

the invoice is issued within the prescribed period; or

The time of supply is the date of issue of invoice or date of receipt of payment if the invoice is issued within the prescribed period. The prescribed period will be notified at a later point of time.

Example 1

A Ltd agrees to provide security services to B Ltd. A Ltd renders the services for the month of April 2017 and issues an invoice on 5th of May 2017 and B Ltd pays the invoice on 20th of May 2017.

In the above example, of the invoice date and the date of payment, the earliest date is 5th May 2017. The time of supply for security services is 5th of May 2017.

Sub-section 2(b)

(b) the date of completion of the provision of service or the date of receipt of payment,

whichever is earlier, if the invoice is not issued within the prescribed period; or

The time of supply is the date of completion of the service or on the date of receipt of payment whichever is earlier.  In case, if the invoice is not issued for the completed service within stipulated time period.

Example 2

A Ltd agrees to install hot oil boiler in B Ltd’s factory. As per contractual agreement A Ltd installs the hot oil boiler on 25th April 2017 and as per contract B Ltd pays on 29th of April 2017 based on the contract. A Ltd Issues invoice on 28th of June 2017.

In the above example, the date of completion of service is 25th April and date of receipt of payment is 29th April 2017 and invoice date is 28th May 2017. The earliest date of completion of service and receipt of payment is 25th of April 2017, i.e the time of supply of service.

Example 3

A Ltd agrees to install hot oil boiler in B Ltd’s factory. As per contractual agreement A Ltd receives full payment for installation of hot oil boiler on 14th of May 2017 from B Ltd and A Ltd completes the installation of the same on 17th June 2017 and issue an invoice on 20th July 2017.

In the above example, the date of receipt of payment is 14th May 2017 and date of completion of service is 17th June 2017 and invoice date is 20th July 2017. The earliest date of completion of service and receipt of payment is 14th of May 2017, i.e the time of supply of service.

Sub-section 2 ( c )

(c) the date on which the recipient shows the receipt of services in his books of account,

in a case where the provisions of clause (a) or (b) do not apply.

In case if the service receiver shows the completion of contract in his books before the actual completion of service or issue of the invoice by the service provider or date of making of the  payment.

Example 4

A Ltd agrees to install hot oil boiler in B Ltd’s factory. As per contractual agreement B Ltd in its books shows completion of the work on 14th May 2017, A Ltd completes the execution of the work on 25th of June, and issue the invoice on 17th of Aug 2017. B Ltd issues payment on 25th Nov 2017.

B Ltd in its books have shown the contract completion as 14th May 2017, the time of completion of the contract, for the time of supply the same has to be considered.

 

Note : 1. If the invoice shows completion of work partially, for the time of supply the extent to which the service is provided will be considered.

  1. The date of payment as per this is to be considered the earliest of the dates of entry of receipt of payment or date on which the payment got credited into the bank of the service provider.

Sub-section 3

Sub-section 3 of section 13 deals with the continuous supply of services similar to sub –section 3 of section 12 for the time of supply for continuous supply of goods.

The definition for the continuous supply of service is given very clearly in sub-section 31 of section 2 “(31) “continuous supply of services” means a supply of services which is provided,

or agreed to be provided, continuously or on recurrent basis, under a contract, for a

period exceeding three months with periodic payment obligations and includes supply of

such service as the Central or a State Government may, whether or not subject to any

condition, by notification, specify;”

Any service which is being provided for more than a period of three months will be considered as a  continuous supply of services and also the list of services will be notified by the Central / State Governments accordingly.

Sub-section 3 (a)

 (a) where the due date of payment is ascertainable from the contract, the date on which

the payment is liable to be made by the recipient of service, whether or not any invoice

has been issued or any payment has been received by the supplier of service;

The time of supply is the date on which the payment is made by the service receiver.

Example  

R Ltd is an ISP and has agreed into a contract with I Ltd for providing uninterrupted internet supply for its office use. As per the contractual agreement, I Ltd has to pay 10th of every for the data usage a fixed amount and the bill will be generated by R Ltd based on the actual data usage on 20th of every month and the differential is adjusted in the bill.

As per the time of supply of services for continuous supply services, the time of supply if 10th of the month on which the payment is being made.

Sub-section 3 (b)

where the due date of payment is not ascertainable from the contract, each such

time when the supplier of service receives the payment, or issues an invoice, whichever

is earlier;

In some of the contracts, the date of payment may not be mentioned and it only describes on when to raise the invoice for the continuous supply and on the invoice the payment terms are mentioned or in some critical business cases, the service provider may ask for some advance payment to manage his cash flows, in such cases the time of supply is date of issue of invoice or the date of receipt of payment by the service provider.

Example

ABC Ltd is an ISP and has agreed into a contract with PQR Ltd for providing uninterrupted internet supply for its office use. As per the contractual agreement, PQR Ltd has to issue an invoice on 10th of every for the data consumed by PQR Ltd based on the slabs for data consumption. PQR makes an online payment to ABC Ltd based on the payment terms 30 days, i.e 10th of June for the invoice issued on 10th of May 2017 for the data services from 1st April to 310th April 2017.

The time of supply will be 10th of May 2017 as it is earlier than the payment date i.e 10th of June 2017.

Example

ABC Ltd is an ISP and  agrees into a contract with PQR Ltd for providing uninterrupted internet supply for its office use. As per the contractual agreement, PQR Ltd has to issue an invoice on 10th of every for the data consumed by PQR Ltd based on the slabs for data consumption. During the month of Aug 2017, ABC requests for advance payment on an ad-hoc basis to meet it cash flows. PQR Ltd does online transfer for a sum of Rs 3 Lacs on 5th of Aug 2017. ABC Ltd issues an invoice on 10th Aug 2017 and adjusts the same in the invoice.

The time of supply will be 5th of Aug 2017 as it is earlier than the invoice date 10th Aug 2017.

Sub-section 3(c )

where the payment is linked to the completion of an event, the time of completion of

that event;

Mostly in cases of repairs and maintenance of machinery, the service provider is paid only on completing or fixing the reported issued and invoice is issued subsequently. In such cases, the time of completion of the service has to be considered for determining the time of supply for services under GST.

Sub-section 5

In order to bring the small service providers in the tax base and avoid revenue leakage, reverse charge has been increased under Service Tax in 2012 in India and the same is applicable, under the proposed Goods and Service Tax also. In the case of reverse charge, the tax burden for payment is shifted to service receiver just to keep away the small time service providers from the complex tax administration.

Sub-section 5 of section 13 of the Model GST Acts describes the conditions for ascertaining the time of supply under reverse charge. The time of supply under reverse charge is similar to other process and it determined based on the earliest date of the following dates related to the transaction.

(a) the date of receipt of services, or

(b) the date on which the payment is made, or

(c) the date of receipt of invoice, or

(d) the date of debit in the books of accounts.

Example

The time of supply for reverse charge under various conditions under the sub-section 5 are explained in a tabular format below

Time of supply

Sub-section 6

In a case where the supply of services ceases under a contract before the completion

of the supply, such services shall be deemed to have been provided at the time when the

supply ceases.

There can be cases where the service providers complete’s the execution of the work or maintenance of the machinery before the scheduled date, in such cases, the time of supply will be deemed to be the date of completion of the work.

Example

ABC Ltd enters into a contract to do the annual maintenance for the 3MW captive power plant in one of the steel plants of XYZ Ltd. According to contract, the maintenance work is supposed to start from 15th April 2017 and complete by 25th June 2017. ABC completes the contract by 20th of June 2017 and issues an invoice for the same on 21st of June 2017.

In the above case, the deemed time of supply is the completion of the work i.e 20thof June 2017.

Sub-section 7

Where it is not possible to determine the time of supply of services in the manner

specified in sub-sections (2), (3), (5) and (6), the time of supply shall

(a) in a case where a periodical return has to be filed, be the date on which such return

is to be filed; or

(b) in any other case, be the date on which the CGST/SGST is paid.

There could be certain cases where the time of supply cannot be determined based on any of the conditions prescribed in any of the sub-sections of section 13. In such cases, the time of supply is the time of supply is to be taken as the  earliest date of the filing of returns or date of payment of GST / SGST.

Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

These examples are based on the model law and may change based on the actual law passed.

 

Demystifying Time of Supply of Goods under Model GST Law

The rollout of Goods and Service Tax in India is still a dream in the short run if not in the long-term. The last couple of weeks there was a lot buzz in the media on the same and placing of the Model GST law under public domain is a major step. Still we have the following steps to climb

  1. One Hundred and Twenty-Second Constitutional Amendment Bill has to be passed in the Rajya Sabha as the current ruling party still does not have the absolute majority here unlike in the Lok Sabha. The Only silver lining for the NDA government is it has the support of all the regional parties.
  2. Once the bill is approved in the upper house at least two-thirds of the states, have to adopt the same in their assemblies.
  3. Model ACT for CGST, SGST & IGST has to be passed in both the houses
  4. All the states have to adopt the above model laws in their state assemblies
  5. The most important point is strong IT infrastructure for the tax departments as the registration and reporting (transaction level) is dubbed to be fully IT driven as per the official documents. Any delay or issues in the IT infrastructure as we have seen recently for the MCA website can derail the whole process.

The draft law released contains 125 chapters, 162 sections, 4 Schedules and 1 Rule i.e Valuation Rules. Much simpler to follow and understand compared to the current laws under Central Excise, Service Tax.

Chapter IV of the Model Law clearly defines and explains about the time of supply of goods and services. The conditions for the time of supply of goods is clearly given in Section 12 and the same is applicable for goods under the CGST Act, SGST Act as well as for IGST Act.

(1) The liability to pay CGST / SGST on the goods shall arise at the time of supply as determined in terms of the provisions of this section.

(2) The time of supply of goods shall be the earliest of the following dates, namely,-

(a)      (i) the date on which the goods are removed by the supplier for supply to the

recipient, in a case where the goods are required to be removed or

(ii) the date on which the goods are made available to the recipient, in a case where the goods are not required to be removed; or

(b) the date on which the supplier issues the invoice with respect to the supply; or

(c) the date on which the supplier receives the payment with respect to the supply; or

(d) the date on which the recipient shows the receipt of the goods in his books of

account.

If we read the above lines, it talks about a paradigm shift from the existing tax provisions under Central Excise or Value Added Tax.

As per Section 12, the time of supply for goods is the earliest of the sub-sections which are similar to the existing Tax Deducted at Source provisions i.e tax has to be recovered debit or credit whichever is earlier. This process is entirely different from the VAT / GST implementations across the globe. India has its obvious reasons for the same.

Now let’s understand each of the above provision with examples

 

Sub Section2, (a) (i)

Sub Section2, (a) (i) the date on which the goods are removed by the supplier for supply to the recipient, in a case where the goods are required to be removed or

This will be the most followed rule for the time of supply, and it is applicable for the moveable goods.

Example 1

ABC Ltd ships goods from it factory located in Hyderabad to a customer, XYZ Ltd in Bangalore and loads it on  the truck on 14th of April 2017 and XYZ receives the goods on 17th of April 2017.

ABC Ltd subsequently issues an invoice for the said shipment on 16th of April 2017.

Based on the above example, the goods are removed on 14th of April, received by XYZ on 17th of April and invoice is issued on 16th of April. Of these three dates, the earliest date is the removal of goods date i.e.  14th of April 2017 and the tax point is 14th April 2017 and liability of CGST / IGST has to be accounted on this date.

Sub-Section 2 (a) (ii)

Sub-Section 2 (a) (ii) the date on which the goods are made available to the recipient, in a case where the goods are not required to be removed;

This is applicable for immovable goods, and the usage of this will not be a regular or day to day.

Explanation 1. – The provisions of sub-clause (ii) of clause (a) shall apply in cases where

the goods

(a) are physically not capable of being moved; or

(b) are supplied in assembled or installed form; or

(c) are supplied by the supplier to his agent or his principal.

Explanation 2. – For the purposes of sub-clause (ii) of clause (a), the expression ’made

available to the recipient’ shall mean when the goods are placed at the disposal of the

recipient.

Example 2

ABC Limited agrees to supply PQR Ltd, a pre-installed water treatment plant. ABC installs the same in its factory 15th April 2017, ships the same on 25th April 2017 and issues an invoice on 26th of April 2017.

In the above example, the installation date is 15th April, and shipment date is 25th April, and invoice date is 26th April, of all the dates, the earlier date is installation date i.e 15th April and for the time of supply this date should be considered.

Sub-Section 2 (b)

2 (b) the date on which the supplier issues the invoice with respect to the supply; or

Example 3

ABC Ltd ships goods from it factory located in Hyderabad to a customer, XYZ Ltd in Bangalore and loads it on the truck on 14th of April 2017 and XYZ receives the goods on 17th of April 2017. ABC Ltd issues an invoice on 12th of April 2017.

Based on the above example, the goods are removed on 14th of April, received by XYZ on 17th of April and invoice is issued on 12th of April. Of these three dates, the earliest date is the issue of invoice i.e. 12th of April 2017 and the time of supply is 12th April 2017 and liability of CGST / IGST has to be accounted on this date.

Sub-Section 2 (c)

2 (c) the date on which the supplier receives the payment with respect to the supply; or

Example 4

ABC Ltd, receives an advance from XYZ Ltd for the supply of goods on 10th of April 2017 (amount credited in ABC Ltd’s bank account). ABC Ltd ships goods from it factory located in Hyderabad to a customer, XYZ Ltd in Bangalore and loads it on the truck on 14th of April 2017 and XYZ receives the goods on 17th of April 2017 and invoice is issued by ABC Ltd on 15th April 2017.

Based on the above example, advance credited on 12th April, and the goods are removed on 14th of April, received by XYZ on 17th of April and invoice is issued on 15th of April. Of these four dates, 12th April 2017 is the earliest date i.e advance amount credited in A Ltd.’s account so, the liability of CGST / IGST has to be accounted on this date.

Sub-Section 2 (d)

2 (d) the date on which the recipient shows the receipt of the goods in his books of account.

Either in the Central Excise or the Value add tax we never had this provision, this is altogether a new regulation in India. The above statement means that the time of supply is the date on which the buyer shows the purchases in his books after he receives the goods and follows the quality inspection in most of the factories and he accepts the goods.

Example 5

ABC Ltd supplies highly expensive chemicals for water treatment to YXZ Ltd. ABC Ltd ships the chemicals on an annual basis, and XYZ consumes the material on the periodic basis based on its necessity. XYZ issues the consumptions statement as and when it consumes and based on this ABC Ltd issues the invoice. Chemicals are shipped on 14th April 2017, and XYZ receives them on 21st of April 2017. On 2nd May 2017, it consumes part of the material i.e 2kgs and informs the same to ABC Ltd. ABC Ltd issues an invoice for 2kgs on 3rd May 2017. It is similar to that of consignment sales where taxes are not be paid on the removal of goods.

Based on the above example, the goods are removed on 14th of April, received by XYZ on 21st of April, material consumed on 2nd May and invoice is issued on 3rd May 2017. The date on which the material is consumed should be taken into account for the time of supply i.e 2nd May 2017 when the goods are consumed on this day and accounted in the books of XYZ Ltd.

Sub-Section 3 – Continuous Supply of Goods 

In the case of continuous supply of goods, the date of time of supply will be the time of supply shall be the date of expiry of the period to which such successive statements of accounts or successive payments relate. If there are no successive statements of account, the date of issue of the invoice (or any other document) or the date of receipt of payment, whichever is earlier, shall be the time of supply.

Example 6

PQR Enters into a contract for the supply of HSD to ABC Ltd through a dedicated pipeline, this amounts to a continuous supply of goods,  PQR Issues an invoice to ABC Ltd based on its consumption of the HSD on 5th of every month based on the meter installed in ABC Ltd’s premises. Payment is made within 15th days from the date of issue of invoice typically by 20th of the same month.

In the above case, the time of supply will be 5th of the month if the invoice is issued by PQR Ltd or in case if ABC’s make ad-hoc payment without invoice on 20th of the month, the time of supply will be 20th.

 Reverse Charge

 In India under the current provisions, the reverse charge is applicable only services only but now under the proposed Goods and Service Tax the same has been extended to goods also as per the model law. Similar to the service tax provisions the time of supply will be the earlier of the dates as given below

Sub-Section 5

 (5) In case of supplies in respect of which tax is paid or liable to be paid on reverse

charge basis, the time of supply shall be the earliest of the following dates, namely—

  • the date of the receipt of goods, or

(b) the date on which the payment is made, or

(c) the date of receipt of invoice, or

(d) the date of debit in the books of accounts.

Example 7

  • the date of the receipt of goods, or

ABC Ltd purchases goods from PQR Ltd and on the purchases reverse charge is applicable. ABC receive the goods on 17th of April and invoice issued by PQR is received on 20th of April, 2017.

The earliest date is 17th April, the time of supply to be accounted for the reverse charge treatment is 17th April 2017.

Example 8

(b) the date on which the payment is made, or

ABC Ltd places an order for goods from PQR Ltd and on the purchases reverse charge is applicable. Advance payment for the full order value is made on 15th of April, and the same got credited in PQR’s bank account on 16th April 2017.  ABC receive the goods on 17th of April and invoice issued by PQR is received on 20th of April, 2017.

Payment date in books of account of ABC Ltd is 15th April, bank account credit date in books of PQR is 16th April, receipt of goods by ABC Ltd is on 17th April and Invoice received date is 20th April, of the dates, the earliest date is the date on which the payment is made i.e debited in the books of ABC Ltd., as per the rule the time of supply is 15th April 2017.

Example 9

(c )the date of receipt of invoice, or

ABC Ltd purchases goods from PQR Ltd and on the purchases reverse charge is applicable. Invoice is received on 17th of April 2017 and goods are received subsequently on 20th of April 2017.

In the above case, the date of receipt of invoice is earlier than receipt of goods, the time of supply for taxation under GST is 17th April 2017.

Example 10

(d) the date of debit in the books of accounts.

ABC Ltd issues a standing order for regular supply of gaskets to PQR Ltd and on gaskets the reverse charge is applicable on the same. The gaskets were received by PQR Ltd on 14th April 2017 and accounted for the same on 14th April 2017.

In the above example, it is debited on 14th April 2017, the time of supply for reverse charge will be 14th of April 2017.

Sub-Section 6

(6) If the goods (being sent or taken on approval or sale or return or similar terms) are

removed before it is known whether a supply will take place, the time of supply shall be

at the time when it becomes known that the supply has taken place or six months from

the date of removal, whichever is earlier.

Example 11

ABC Ltd is an electronic goods manufacturer and appoints XYZ Ltd as its dealer for selling its goods in the city of New Delhi. ABC Ltd places it goods in XYZ’s showroom, and XYZ is to pay for the goods when it sells the goods. ABC Ltd has shipped 10 Refrigerators to XYZ on 2nd April 2017, and XYZ sells 3 refrigerators on 5th May 2017, 4 on 15th May 2017 and 2 on 20th May 2017 as on 2nd September there is still 1 refrigerator in stock with XYZ Ltd in its showroom.

The time of supply for the sales of 3 refrigerators will be 5th May 2017, for 4 refrigerators on 15th May, 2 refrigerators on 20th May 2017 and based on that invoice will be issued by ABC Ltd and taxes will be accounted on that date. In the case of 1 refrigerator lying in stock, for taxation purpose, the time of supply for this would be 2nd September 2017 (6 calendar months from April, not 180 days should not be considered here as it is clearly stated as months).

Sub-Section 7

 (7) In case it is not possible to determine the time of supply under the provisions of subsection (2), (3), (5) or (6), the time of supply shall

(a) in a case where a periodical return has to be filed, be the date on which such return

is to be filed, or

(b) in any other case, be the date on which the CGST/SGST is paid.

There can be certain cases, where the time of supply cannot be determined based on conditions given in sub-sections 2, or 3 or 5 or 6 and in such cases, we have to follow sub section 7.

Example 12

 ABC Ltd is an electronic goods manufacturer and appoints XYZ Ltd as its dealer for selling its goods in the city of New Delhi. ABC Ltd places it goods in XYZ’s showroom, and XYZ is to pay for the goods when it sells the goods. ABC Ltd has shipped 10 Refrigerators to XYZ on 2nd February 2017, and XYZ sells 3 refrigerators on 5th February 2017, 4 on 15th February

2017 and 2 on 20th February 2017 as on 31st March there is still 1 refrigerator in stock with XYZ Ltd in its showroom. ABC Ltd opts for a  composite dealer under Section 8.

The time of supply for the sales of 3 refrigerators will be 5th February 2017, for 4 refrigerators on 15th February, 2 refrigerators on 20th February 2017 and based on that invoice will be issued by ABC Ltd and taxes will be accounted on that date. In the case of 1 refrigerator lying in stock, for the taxation purpose, the time of supply for this would be 18th April 2017. A compounding dealer has to file GST – 4 on a quarterly basis by 18th of the next month of the quarter ending. It is based on the sub section 7 (a) “in a case where a periodical return has to be filed, be the date on which such return is to be filed,”. For a compounding dealer, the return for the Q4 i.e from Jan to March has to be submitted by 18th of April.

 Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

These examples are based on the model law and may change based on the actual law passed.