2 - SUPPLY – MEANING, TIME AND VALUATION

SHORT ANSWER QUESTIONS WITH ANSWER

Q.1. How are the provisions relating to `time of supply’ relevant under GST Law?

Ans: The provisions relating to time of supply of goods/services are relevant in ascertaining the
time to remit to the Government the taxes on a particular transaction involving supply of
goods/services under the GST Law.

Q.2. What will be the time of supply of goods, generally?

Ans: Generally, the time of supply of goods shall be the earliest of the following: (a) Date of
issue of invoice; or (b) Due date of issue of invoice; or (c) Date on which payment is entered in
books of accounts of the supplier; or (d) Date on which payment is credited to the bank
account.

Q.3. What would be the ‘due date of issuance of invoice’ with reference to time of supply of
goods?

Ans: The time at which the tax invoice should be issued by a registered taxable person
supplying goods, the due date for issuance of invoice would be as follows:

(a) Supply involves movement of goods – The tax invoice should be issued before or at the
time of removal of goods for supply to the recipient. As such, it is inferred that the date
of removal of goods shall be the ‘due date of issuance of invoice’.
(b) Any other case – Before or at the time of delivery of goods or making goods available to
the recipient. As such, it is inferred that the date on which goods are delivered to the
recipient is the ‘due date of issuance of invoice’.

Q.4. What will be the date of payment to ascertain the time of supply of goods?

Ans: The date of payment shall be the earliest of the following dates:
(a) Date on which payment is entered in books of accounts of the supplier; or
(b) Date on which payment is credited to the bank on account.

Q.5. What will be the time of supply of goods under Reverse Charge Mechanism (RCM)?

Ans: In case of tax liable to be paid on goods under ‘Reverse Charge Mechanism’, the time of
supply shall be the earliest of the following:

(a) Date of receipt of goods by the recipient; or

(b) Date on which the payment is entered in the books of accounts of the recipient; or
(c) Date on which payment is debited in the bank account of the recipient; or
 (d) Date immediately following 30 days from the date of issue of invoice.

Q.6. What will be the time of supply in case of continuous supply of goods?

Ans: `Continuous supply of goods’ means a supply of goods which is provided, continuously of
on a recurrent basis, under a contract, whether or not be means of a wire, cable, pipeline or
other conduits, and for which the supplier invoices the recipient on a regular or periodic basis.

Q.7. What will be the time of supply in case of supply of goods through e-commerce entities?

Ans: The CGST Act, 2017 does not provide separate provisions for ascertaining time of supply of
goods through/by e-commerce entities. Accordingly, the same provisions as to the time of
supply of goods will be applicable whether a supplier makes supply through e-commerce entity
or the e-commerce entity himself makes the supply.

Q.8. How to ascertain the time of supply of services?

Ans: If the invoice is issued before the supply of service or within a period of thirty days from
the date of supply of service, the time of supply of services shall be the earliest of the following:

(a) Date of issue of invoice; or

(b) Date when the payment entry is recorded in books of accounts of the supplier; or
(c) Date on which the payment is credited to supplier’s bank account.

Q.9. What would be the time of supply of services taxable under Reverse Charge Mechanism?

Ans: The time of supply of services for remittance of tax under Reverse Charge Mechanism
shall be the earliest of the following:

(a) Date of payment recorded in the books of accounts of the recipient;

(b) Date of debit in the bank account of the recipient;
(c) 60 days from the date of issue of invoice or any other document in lieu thereof by the
supplier
If it is not possible to determine the time of supply under the aforesaid clauses, the time of
supply shall be the date of entry in the books of account of the recipient of supply.

Q.10. What would be the `due date of issuance of invoice’ with reference to the provisions
relating to the time of supply of services?

Ans: A registered person supplying services shall issue the tax invoice before or after the
provision of service but within a period prescribed in this behalf. Accordingly, the last date
within which the invoice should be issued will be the `due date of issuance of invoice’.
The time limit for issuing a tax invoice is thirty days from the date of provision of service.
Q.11. What would be the time of supply in case of `works contract’?
Ans: The works contract in relation to immovable property under the GST should be treated as
a supply of service. Accordingly, the same provisions as applicable to determine time of supply
of services will apply to works contracts.

Q.12. What is the meaning of the term “Price is not the sole consideration”?

Ans: Under the GST law, consideration can be in “money or otherwise”, and also includes the
monetary value of an act or forbearance, in relation to a supply. Consideration may also flow
from any person other than the recipient. In cases, where the money received in respect of the
supply is not the solo consideration, e.g. buyer of capital goods discharges the loan of seller,
goods purchased on exchange offer, etc.

Q.13. Will the out-of-pocket expenses charged by professionals to claim reimbursement of

expenses incurred by them for rendering services to their clients be included in the transaction
value?

Ans: Yes. Any expenses incurred by the supplier relating to supply until the services are
delivered, and which are charged to the recipient, will have to be included in the transaction
value.

OTHER IMPORTANT QUESTION/ANSWER ON SUPPLY

Q.1 What will be the place of supply where the goods or services are supplied on board a
conveyance, such as a vessel, an aircraft, a train or a motor vehicle?

Ans: In respect of goods, the place of supply shall be the location at which such goods are
taken on board. However, in respect of services, the place of supply shall be the location of the
first scheduled point of departure of that conveyance for the journey.

Q.2. The place of supply in relation to immovable property is the location of immovable
property. Suppose a road is constructed from Delhi to Mumbai covering multiple states. What
will be the place of supply?

Ans: Where the immovable property is located in more than one State, the place of supply
shall be treated as made in each of the States in proportion to the value for supply separately
collected or determined.

Q.3. What will be the place of supply of goods/services by way of transportation of goods,
including mail or courier?

Ans: In case of Domestic Supply: If the recipient is registered, the location of such person shall
be the place of supply. However, if the recipient is not registered, the place of supply shall be
the place where the goods are handed over for transportation.
For International Supplies: The place of supply of transport services, other than the courier
services, shall be the destination of goods. For courier, the place of supply of services is where
goods are handed over to courier.

Q.4. What will be the place of supply of passenger transportation service, if a person travels
from Mumbai to Delhi and back to Mumbai?

Ans: If the person is registered, the place of supply shall be the location of recipient. If the
person is not registered, the place of supply for the forward journey from Mumbai to Delhi shall
be Mumbai the place where he embarks.

However, for the return journey, the place of supply shall be Delhi as the return journey has to
be treated as separate journey.

Q.5. What will be the place of supply for mobile connection?

Ans: For Domestic Supplies: The location of supplier of mobile services cannot be the place of
supply as the mobile companies are providing services in multiple states and many of these
services are inter-state.
In case of postpaid connections, the place of supply shall be the location of billing address of
the recipient of services.
Incase of pre-paid connections, the place of supply shall be the place, where payment for such
connection is received or such pre-paid vouchers are sold.

Q.6. A person in Goa buys shares from a broker in Delhi on NSE. What will be the place of
supply?

Ans: The place of supply shall be the location of the recipient of services on the records of the
supplier of services. So Goa shall be the place of supply.

Q.7. A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in
Manali. What will be the place of supply?

Ans: If the service is not linked to the account of person, place of supply shall be Manali i.e. the
location of the supplier of services. However, if the service is linked to the account of the
person, the place of supply shall be Mumbai, the location of recipient on the records of the
supplier.

Q.8. A person from Gurugram travels by Air India flight from Mumbai to Delhi and gets his
travel insurance done in Mumbai. What will be the place of supply?

Ans: The location of the recipient of services on the records of the supplier of insurance
services shall be place of supply. So Gurugram shall be the place of supply.
Q.9. Are there separate valuation provisions for CGST, SGST and IGST and for Goods and
Services?

Ans: No, Section 15 is common for all three taxes and also common for goods and services.

Q.10. Whether post-supply discounts or incentives are to be included in the transaction value?

Ans: Yes. Where the post-supply discount is established as per the agreement which is known
at or before the time of supply and where such discount specifically linked to the relevant
invoice and the recipient has reversed input tax credit attributable to such discount, the
discount is allowed as admissible deduction.