TIME OF SUPPLY OF SERVICES

[CA Akash Phophalia]

Introduction

With the immense effort in the present service tax regime, finally the government was able to form the refined principles for determination of point of taxation of services. The government in the GST regime has tried to continue its legacy of Point of Taxation principles for identification of time of supply of services.

Time of Supply of Services

The provisions related to time of supply of services are contained in Section 13 of the revised Model GST Act which reads as under :-

“13. Time of supply of services

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

(2) The time of supply of services shall be the earlier of the following dates, namely:-

(a) the date of issue of invoice by the supplier or the last date on which he is

required, under section 28, to issue the invoice with respect to the supply; or

(b) the date on which the supplier receives the payment with respect to the supply:

PROVIDED that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess shall, at the option of the said supplier, be the date of issue of invoice.

Explanation 1.- For the purposes of clauses (a) and (b), the supply shall be

deemed to have been made to the extent it is covered by the invoice or, as the

case may be, the payment.

Explanation 2.- For the purpose of clause (b), “the date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of accounts or the date on which the payment is credited to his bank account, whichever is earlier.

(3) 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 earlier of the following dates, namely-

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

(b) the date immediately following sixty days from the date of issue of invoice by the supplier:

PROVIDED that where it is not possible to determine the time of supply under clause (a) or (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:

PROVIDED FURTHER that in case of ‘associated enterprises’, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

Explanation.- For the purpose of clause (a), “the date on which the payment is made” shall be the date on which the payment is entered in the books of

accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.

(4) In case of supply of vouchers, by whatever name called, by a supplier, the time of supply shall be-

(a) the date of issue of voucher, if the supply is identifiable at that point; or

 (b) the date of redemption of voucher, in all other cases;

(5) Where it is not possible to determine the time of supply of services in the manner specified in sub-sections (2), (3) or (4), 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.”

Considering the peculiar nature of the supply of services being intangible in nature, the manner of determination of time of supply of services should be different from that of time of supply of goods. However, as the GST law is attempting to fill up the gap between goods and services and aims in providing smoother regulation of the same, the provisions related to identification of time of supply of services are similar to that of time of supply of goods. Accordingly the time of supply of services is earlier of the following dates :-

(a) The date of issue of invoice in case when invoice is issued and in case where the invoice is not issued then the last date on which invoice is required to be issued under section 28 of model GST Act.

(b) Date of receipt of payment by supplier with respect to the supply.

Here, section 28 of the Model GST Act provider for the time of issue of invoice, manner, format and the contents to be mentioned in the invoice issued in relation to supply of services.

Thus as per above provisions of law the time of supply of services is the earliest of the two dates viz date of issue of invoice or the date of receipt of payment whichever is earlier. However, it may happen that the registered taxable person does not issue invoice at all, then in such case instead of taking the date of issue of invoice, the last date when the invoice should be issued in accordance with the law shall be taken.

The law further provides that in case supplier receives advance beyond the amount of invoice then for an advance upto an amount of 1000 rupees the time of supply of service can be taken as, at the option of the assessee, date of issuance of invoice or the date of receipt of such avance.

Time of Supply – Reverse Charge

In case supplier of service is is required to pay tax on reverse charge basis then the time of supply shall be earlier of the following :-

(a) date of making payment

(b) date occurring after expiry of 60 days from date of invoice(DOI) in simple words DOI+60 DAYS

Hopwever, if it is not possible to determine the time of supply under point (a) or (b) the time of supply of service shall be date of entry in the books of accounts of recipient of supply of services i.e. service receiver.

Further in case of associated enterprises, where supplier of services i.e. service provider is located outside India, time of supply shall be book entry or date of payment whichever is earlier.

Time of supply of vouchers

In case of supply of vouchers, time of supply shall be:-

(a) date of issue of voucher, if supplier is identifiable.

(b) date of redemption of vouchers, if supplier is not identifiable.

Residual Provision

Where it is not possible to determine time of supply of services under any of the above stated provision of law then it shall be calculated as -

(a) in  case where periodical return has to be filed, due date of filling return.

(b) in case no periodical return has to be filed, date of payment of CGST/SGST.

Date of Payment

The meaning of ‘date of payment’ for time of supply of services is explained in the said provisions itself and the same is applicable in the same sense throughout the provision. Date on which payment is made for the purposes of identification of time of supply of servcie is the earlier of the following :-

(a) Book entry in the books of recipient of supply i.e. buyer

(b) Debit in bank account

Conclusion

The government is positive in its effort to implement GST quickly and effectively. At the same time a positive move of the government to carry on the existing, simple and ‘in practice’ provisions in the GST regime is also evident. With the simple ways of identification of time of supply of services, one can expect a smooth non litigative GST era.

CA Akash Phophalia

9799569294

ca.akashphophalia@gmail.com