Time of supply means the date on which the charging event i.e. supply has occurred. It is the point at which the goods or services are considered supplied. Thus, time of supply helps in determining the due date for discharging the tax liabilities. The CGST Act, 2017 provides separate provisions for time of supply for goods and services in sections 12 and 13 respectively. In this section, we will be understanding the provisions for time of supply in case of goods.
Invoice provisions in respect of time of supply of goods – Section 31
Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in section 31 of the CGST Act, 2017. This section mandates issuance of invoice or a bill of supply for every supply of goods or services or both.
Time limit for issuance of invoice in case of supplier of goods –
A registered person supplying taxable goods shall issue invoice before or at the time of removal of goods for supply to the recipient where the supply involves movement of goods; or delivery of goods or making available thereof to the recipient, in any other case.
Issuance of invoice in case of continuous supply of goods –
Continuous supply of goods means a supply of goods which is provided on a recurrent basis, under a contract and for which the supplier invoices the recipient on a regular or periodic basis. In case of continuous supply of goods, where the successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.
Goods sent on sale on approval basis
Where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or 6 months from the date of removal, whichever is earlier.
Time of supply of goods under Forward charge – Section 12(2)
The time of supply of goods shall be the earliest of the following dates:-
- The date of issue of invoice by the supplier; or
- The last date on which he is required u/s 31 to issue the invoice with respect to the supply; or
- The date on which the supplier receives the payment with respect to the supply i.e. earlier of the date on which the payment is recorded in the books of account of the supplier or date on which the payment is credited to the supplier’s bank account.
However, an exception has been made in the law when the supplier receives an amount of Rs. 1,000/- in excess of the invoice amount, the time of supply for the extra amount shall be the date of issue of invoice at the option of the supplier.
Example –
Date of issue of invoice – 01.06.2023
Date of receipt of payment – 09.06.2023
Date when the supplier recorded the payment in the books of accounts – 10.06.2023
Thus, the time of supply will be 01.06.2023.
Time of supply of goods taxed under Reverse charge mechanism (RCM) – Section 12(3)
The time of supply of goods taxed under Reverse charge mechanism (RCM) shall be the earliest of the following:-
- The date of receipt of goods; or
- The date of payment as entered in the books of accounts of the recipient; or
- The date on which the payment is debited in his bank account; or
- The date immediately following 30 days from the date of issue of invoice or any other document, in lieu thereof by the supplier.
However, if the time of supply of goods cannot be ascertained as above, then the date of entry in the books of accounts of the recipient will be considered as the time of supply.
Example –
Date of receipt of goods – 01.06.2023
Date of payment as per the books of accounts of the recipient – 05.06.2023
Date on which payment was debited from the bank – 04.06.2023
Date of invoice – 02.06.2023
Thus, the time of supply will be 01.06.2023.
Time of supply of goods in case of supply of vouchers – Section 12(4)
Where the supply is identifiable at that point, the time of supply will be the date of issue of voucher. Where the supply is not identifiable, the time of supply will be the date of redemption of voucher.
Time of supply of goods in residuary cases – Section 12(5)
If it is not possible to determine the time of supply as per the above provisions, the time of supply shall be determined as follows:-
- In case where a periodical return has to be filed, the date on which such return is to be filed; or
- In any other case, be the date on which the tax is paid.
Time of supply for special charges like interest, late fees etc. – Section 12(6)
In case of addition in value by way of special charges like interest, late fees, etc. for delayed payment of consideration of goods, the time of supply is the date of receipt of the additional value.
Landmark ruling for time of supply of goods – HP India Sales Private Limited [2018 (10) TMI 1515 – Authority for advance Ruling – Maharashtra]
In this case, the goods delivered by the applicant to the customer through reseller remain the property of the applicant and passed on to the customer through reseller only upon invoicing and receiving the payment. The supplies are made on continuous basis in accordance with the terms and conditions of the contract entered. The applicant is required to raise invoice on periodic basis. Therefore, the supply of goods in this case fulfills the basic tenets of ‘continuous supply’ of goods.
Thus, the Authority for Advance Ruling ruled that the time of supply in the present case will be the earliest date between the date of invoice and date of payments with respect to the impugned supply u/s 12(2).
Landmark ruling for time of supply of goods from principal to agent – M/s Tata Coffee Limited [2019 (10) TMI 943 – Authority for Advance Ruling, Karnataka]
The Advance Ruling Authority ruled that the time of supply in respect of supply from principal to agent is determined u/s 12(2) read with Section 31(1). The time of supply in such case shall be the time of removal from the principal’s premises to the agent’s premises. The time of second supply by agent to the ultimate customer will not have any effect on the value or time of supply of first supply.
Determination of time of supply in case of change in rate of tax – Section 14
Where there is a change in rate of tax in respect of goods or services or both, the time of supply shall be determined in the following manner:-
Where the goods or services have been supplied BEFORE the change in rate of tax
| Condition | Time of Supply | Applicable Rate |
| Where the invoice for the same has been issued and the payment is also received after the change in rate of tax | Date of receipt of payment or date of issue of invoice, whichever is earlier. | New Rate |
| Where the invoice has been issued prior to the change on rate of tax but payment is received after the change in rate of tax | Date of issue of invoice | Old Rate |
| Where the payment has been received before the change in the rate of tax, but the invoice for the same is issued after the change in rate of tax | Date of receipt of payment | Old Rate |
Where the goods or services have been supplied AFTER the change in rate of tax
| Condition | Time of Supply | Applicable Rate |
| Where the invoice has been issued prior to the change on rate of tax but payment is received after the change in rate of tax | Date of receipt of payment | New Rate |
| Where the invoice for the same has been issued and the payment is also received before the change in rate of tax | Date of receipt of payment or date of issue of invoice, whichever is earlier. | Old Rate |
| Where the payment has been received before the change in the rate of tax, but the invoice for the same is issued after the change in rate of tax | Date of issue of invoice | New Rate |
Example – Rate has increased from 12% to 18% w.e.f. 01.06.2023.
| Date of supply | Date of invoice | Date of payment | Time of supply |
| 28.05.2023 | 09.06.2023 | 25.07.2023 | 09.06.2023 |
| 28.05.2023 | 09.06.2023 | 26.05.2023 | 26.05.2023 |
| 10.06.2023 | 09.06.2023 | 28.05.2023 | 09.06.2023 |