INDIRECT TAXATION MODULE 3

TIME AND VALUE OF SUPPLY

Time of Supply, Change in Rate of Tax in respect of Supply of Goods or Services, Place of
Supply and Value of Supply. (Simple problems on Time of supply, place of supply and
value of supply) (Theory and Problems)

TIME OF SUPPLY (TOS)

Time of supply determines the date on which liability to pay tax arise.
It means the date on which the charging event has occurred. As a result, the rate of
CGST/SGST or IGST or UTGST will be decided in accordance with the time of supply.
Based on time of supply we will also determine the due date of payment of GST.

Time Of Supply of goods

Date of issue of invoice
or
Due date to issue invoice
or
Date of payment Whichever is earlier
**** Date of receipt of payment = Date of payment entered in the books or date on
which amount credited into bank or date on which cheque is received whichever is
earlier

Example:

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Supply of goods or services or both to a Special Economic Zone developer or a Special

Economic Zone unit, is a “zero rated supply”. Credit of input tax may be availed for making
zero-rated supplies

Time of supply for Composition Levy (Section 10 of the CGST Act, 2017): A
composition dealer will not have to pay any tax on advances received, if such advances
pertain to his outward supplies. The advances received and goods returned do not form part
of taxable supplies and do not form part of the turnover in a State at the end of the quarter

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(i.e. tax period) for the purpose of computing turnover (Section 2(112) of the CGST Act,
2017).
(a) Manufacturer is liable to pay CGST 0.5% of the Turnover in State or
(b) Supplier supplies restaurant services has to pay CGST @2.5% of the turnover in State or
(c) Dealer is liable to pay CGST 0.5% of the turnover of taxable supplies of goods in State or
In the above three cases Advance payment for outward supplies not taken into account.
Goods sent for approval:

Time of supply =
• Time when it becomes known that supply is taken place.
OR
• Six months from the date of removal.
Whichever is earlier
Time of Supply of Vouchers for Goods & Services [Section 12(4) & 13(4) of CGST Act,
2017]: If the supplies are identifiable at that point: • Time of supply = Date of issue of
voucher. If the supplies are not identifiable at that point: • Time of supply = The date of
redemption of voucher.

PLACE OF SUPPLY
‘Place of Supply’ under GST is an important factor as it defines whether the transaction will
be counted as intra-state (i.e within the same state) or inter-state (i.e. between two states) and
accordingly the changeability of tax, i.e levy of SGST, CGST & IGST will be determined.
While determining the levy of taxes based on place of supply, two things are considered:
Location of Supplier: It is the registered place of business of the supplier
Place of Supply: It is the registered place of business of the recipient
REASONS WHY AN ACCURATE DERTERMINATION OF PLACE OF SUPPLY IS
IMPORTANT :
• Wrong classification of supply between interstate or intra-state and vice-versa may lead to
hardship to the taxpayer as per section 19 of IGST Act and section 70 of CGST Act.
• Where wrong taxes have been paid on the basis of the wrong classification, refund will
have to be claimed by the taxpayer
• The taxpayer will have to pay the correct tax along with interest for delay on the basis of
revised/correct classification
• Also, correct determination of place of supply will help us in knowing the incidence of tax.
As if place of supply is determined as a place outside India, then tax will not have to be paid
on that transaction

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Following topics under it are as follows: 1. Movement of Goods 2. No movement of Goods 3.

Goods are assembled or installed at Site 4. Goods supplied on a vessel/ conveyance 5. Place
of Supply of goods cannot be determined 6. Imports and exports
Supply involves movement of goods [Section 10(1)(a) of the IGST Act, 2017]

Place of supply of goods = Hyderabad. IGST will be levied

VALUE OF SUPPLY
Valuation of supply under GST: GST will be charged on the ‘transaction value’. Transaction
value is the price actually paid (or payable) for the supply of goods/services between
unrelated parties (i.e., price is the sole consideration).
The value of supply under GST shall include:
- Any taxes, duties, cess, fees and charges levied under any act, except GST. GST
Compensation Cess will be excluded if charged separately by the supplier.
- Any amount that the supplier is liable to pay which has been incurred by the recipient
and is not included in the price.

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- The value will include all incidental expenses in relation to sale such as packing,
commission etc.
- Subsidies linked to supply, except Government subsidies will be included.
- Interest/late fee/penalty for delayed payment of consideration will be included.
Value of supply in common terms is nothing but the amount paid by the recipient of supply to
the supplier as consideration for supply (also known as transaction value). It means Value of
supply is the figure upon which tax is levied and collected.
It is important to know to ascertain correct value of supply for correct levy of GST.
Valuation rules determine value of goods or services or both on which tax under GST has to
be charged. Valuation rules have been prescribed under CGST Rules, 2017 for the purpose of
determination of fair market value of goods or services or both supplied by the registered
person. It means valuation rules are helpful to determine the value of supply where value not
determined under Sec. 15(1) as mentioned under Sec. 15(4) of CGST Act, 2017.

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Deemed Inter State Supply:

• A supply of goods and/or services in the course of import
• An export of goods and/or services

Discounts: Discounts will be treated differently under GST. Discounts given before or at the
time of supply will be allowed as deduction from transaction value. Discounts given after
supply will be allowed only if certain conditions are satisfied

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