THE IDT CONCISE BOOK (NOV/DEC 2022) – CA MAYANK TRIVEDI

NON-SUPPLIES NOTIFIED VIDE NOTIFICATION

Activity in relation to Panchayat/Municipality functions:

GRANT OF ALCOHOLIC LIQUOR LICENCE: Services by way of grant of

alcoholic liquor licence by the State Governments are treated neither as a
supply of goods nor as a supply of service
(It may be noted that services provided by the Government to business
entities including by way of grant of privileges, licences, mining rights, natural
resources such as spectrum etc. against payment of consideration in the form
of fee, royalty etc. are taxable under GST. Tax is required to be paid by the
business entities on such services under reverse charge)

NON-SUPPLIES CLARIFIED BY WAY OF CLARIFICATION

Inter-State movement of various modes of conveyance, between distinct

persons for
(i) carrying goods or passengers or both;
(ii) for repairs and maintenance,
shall be treated ‘neither as a supply of goods or supply of service’ and
therefore not be leviable to IGST [EXCEPT IN CASES WHERE SUCH
MOVEMENT IS FOR FURTHER SUPPLY OF THE SAME CONVEYANCE]
HOWEVER, APPLICABLE CGST/SGST/IGST, AS THE CASE MAY BE, SHALL
BE LEVIABLE ON REPAIRS AND MAINTENANCE DONE FOR SUCH
CONVEYANCE

Inter-State movement of rigs, tools and spares, and all goods on wheels [like
cranes] such inter-State movement shall be treated ‘neither as a supply of
goods or supply of service,’ and consequently no IGST would be applicable on
such movements. [EXCEPT IN CASES WHERE SUCH MOVEMENT IS FOR
FURTHER SUPPLY OF THE SAME CONVEYANCE]
HOWEVER, APPLICABLE CGST/SGST/IGST, AS THE CASE MAY BE, SHALL
BE LEVIABLE ON REPAIRS AND MAINTENANCE DONE FOR SUCH GOODS

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5. Composite & Mixed Supply

Composite supply Mixed supply

Composite supply means a supply made Mixed supply means:

by a taxable person to a recipient and: • two or more individual supplies of
goods or services, or any
• comprises two or more taxable
combination
supplies of goods or services or
• made in conjunction with each
both, or any
other by a taxable person
combination thereof.
• for a single price where such
• are naturally bundled and supplied supply does not constitute a
in conjunction with each other, in composite supply
the
• one of which is a principal supply
[Section 2(30)].

Example & Clarification - Composite supply

1. Mobile phone is always sold with battery.

2. Service of stay in a hotel is often combined with provision of breakfast and dinner
provided free of cost during the stay. Such service is an ancillary service to the
provision of hotel accommodation and the resultant package would be treated as
services naturally bundled in the ordinary course of business.
3. Rati Computers supplies laptop (worth Rs. 52,000) along with laptop bag (worth Rs.
3,000) to a customer for Rs. 55,000. Being naturally bundled, supply of laptop bag
along with the laptop is composite supply which is treated as the supply of the
principal supply [viz. laptop]. Assuming that the rate of tax applicable on laptop is
18% and on laptop bag is 28%, in the given case, rate of principal supply, i.e.
laptop @ 18% will be charged on the entire value of Rs 55,000.

1. CIRCULAR NO.11/11/2017 GST DATED 20.10.2017

• Where ONLY CONTENT IS SUPPLIED by the publisher while the physical inputs
including PAPER used for printing BELONG TO THE PRINTER, supply of printing [of
the content supplied by the recipient of supply] is the principal supply and therefore
such supplies would CONSTITUTE SUPPLY OF SERVICE.
• In case of SUPPLY OF ENVELOPES, letter cards, printed boxes, tissues, napkins,
wall paper etc. by the printer using its physical inputs including paper to print the
design, logo etc. SUPPLIED BY THE RECIPIENT OF GOODS, predominant supply is
SUPPLY OF GOODS and the supply of printing of the content [supplied by the
recipient of supply] is ancillary to the principal supply of goods and therefore such
supplies would constitute supply of goods.

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Example & Clarification - Mixed supply

1. A shopkeeper selling storage water bottles along with refrigerator. Bottles and the
refrigerator can easily be priced and sold independently and are not naturally
bundled. So, such supplies are mixed supplies.

2. Sringaar Enterprises supplies 10,000 kits (at Rs. 50 each) amounting to Rs.
5,00,000 to Raghav General Store. Each kit consists of 1 face cream, 1 face
tissue packet and 1 nail paint. It is a mixed supply and is treated as supply of
that particular supply which attracts highest tax rate. Assuming that the rate of
tax applicable on face cream is 18%, on face tissue packet is 28% and on nail
paint is 12%, in the given case, highest tax rate [viz. face tissue packet] @ 28%
will be charged on the entire value of Rs. 5,00,000

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3. TIME OF SUPPLY
1. Last Date of issue of Invoice - Section 31

No. Cases Last Date of issue of Invoice

Before or at the time of

1 In case of Goods removal of goods/ or making
available

Before or after the provision

of service but not beyond 30
In case of Service
2 DAYS (in case of BANKS 45
DAYS) from the date of supply
of service

In case of Continuous supply of Goods

Continuous supply of goods is a

 Supply of goods provided or agreed Successive Statement or

3 to be provided continuously or Payment - Whichever is
 on recurring basis,
EARLIER
 under a contract, and
 for which the supplier issues an
invoices to the recipient
 on a regular or periodic basis.
(A) where the DUE DATE OF
PAYMENT IS ASCERTAINABLE
the invoice shall be issued - ON
In case of Continuous supply of
OR BEFORE THE DUE DATE OF
Services
PAYMENT
Continuous supply of services is a
(B) where the DUE DATE OF
 Supply of services are provided, or PAYMENT IS NOT
4 agreed to be provided,
ASCERTAINABLE from the
 continuously or on recurrent basis,
 under a contract, contract, the invoice shall be
 for a period exceeding 3 months
issued - BEFORE OR AT THE
 with periodic payment obligations
and includes supply of such services TIME WHEN THE SUPPLIER OF
as the Government may notify SERVICE RECEIVES THE
PAYMENT
(C) where the PAYMENT IS

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LINKED TO THE COMPLETION

OF AN EVENT, the invoice shall
be issued - ON OR BEFORE THE
DATE OF COMPLETION OF
THAT EVENT.

(a) Supply Confirmed by Recipient

WITHIN 6 MONTH- Date of
Confirmation
In case of “Goods Sent on Approval
5 OR
or Return Basis”.
(b) Not confirmed within 6
months - Date when 6 MONTHS
GET OVER

2. Time of Supply

Sec 12 : TOS for supply of goods Sec 13 :- TOS for Supply of Service

12(2)- Forward charge 13(2)- Forward charge

• Date of issue of Invoice or (a) If Invoice is issued within time

• Last Date of issue of Invoice • Date of issue of Invoice or
Whichever is EARLIER • Date of Payment
NO GST at the time of receipt of Whichever is EARLIER
ADVANCE for supply OF GOODS: In case (b) If Invoice is not issued within time
of supply of goods by a registered person • Date of Payment or
under forward charge (Excluding
• Date of Completion
composition supplier), GST is to be paid
on the outward supply of goods on the Whichever is EARLIER
date of issue of invoice or the last date
on which invoice ought to have been
issued in terms of section 31
[Notification No. 66/2017 CT dated
15.11.2017].

Sec 12(3) - RCM Sec 13(3) - RCM

• Date of Receipt of goods, or • Date of Payment, or

• Date of Payment, or • 61st Day from Supplier's Invoice

• 31st Day from Supplier's Invoice Whichever is EARLIER

Whichever is EARLIER

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Vouchers

(a) If Supply is IDENTIFIABLE - Date of ISSUE of Vouchers

(b) In OTHER Cases - Date of REDEMPTION of Vouchers

Interest/ Late Fees or Penalty for delay payment of consideration

Date on which Supplier RECEIVES the addition in value

Date of Payment
Date on which the payment is entered in his Books of Accounts

Date on which the payment is credited to bank account,

Whichever is earlier

Example & Circulars

1. A Ltd. enters into an agreement with B Ltd. to SUPPLY 100 KG OF RAW

MATERIAL. However, A Ltd. SUPPLIES ONLY 80 KG OF RAW MATERIAL and
issues the invoice for the same. Here, the supply would be deemed to have been
made in respect of 80 kg of raw material, i.e., to the extent covered by the
invoice. Therefore, the PROVISIONS RELATING TO TIME OF SUPPLY will also
be applicable to supply of 80 KG OF RAW MATERIAL and not for entire 100 kg
of raw material.

2. B Ltd. SELLS GOODS to C Ltd. on 10TH JUNE. The INVOICE for the same is
issued on 10TH JUNE. Payment for the goods is received on 5th June. TIME OF
SUPPLY of goods for the purpose of payment of tax is 10TH JUNE being the
date of issue of invoice in terms of section 31.

3. B Ltd. enters a contract with C Ltd. for supply of goods over a PERIOD OF ONE
YEAR starting from the month of January. As per the contract, C LTD. MAKES
PAYMENT ON 10TH DAY OF EACH MONTH. B Ltd. issues the invoice on the
same day. TIME OF SUPPLY of the goods for the purpose of payment of tax will
be 10TH DAY OF EACH MONTH.

4. B Ltd. sends goods to C Ltd. for SALE ON APPROVAL BASIS on 10TH

JANUARY. C Ltd. APPROVES the goods on 15TH AUGUST. B Ltd. should issue
the invoice on 10th July as the supply gets fructified after six months from the
date of removal. TIME OF SUPPLY of the goods for the purpose of payment of
tax is 10TH JULY being the last date on which invoice ought to have been issued
in terms of section 31.

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5. B Ltd. SELLS GOODS to C Ltd. on 4TH JUNE. The goods are taxable under
REVERSE CHARGE. INVOICE for the same is issued on 4TH JUNE. C Ltd.
RECEIVES THE GOODS on 27TH JUNE. C Ltd. records the PAYMENT in the
books of account on 10TH JUNE and the same is debited from the BANK
ACCOUNT of C Ltd. on 2ND JULY. TIME OF SUPPLY of the goods is 10TH
JUNE being the earliest of the three stipulated dates namely, date of receipt of
goods, date of payment and date immediately following 30 days of issuance of
invoice.

6. A Ltd. sells FOOD COUPONS to B Ltd. The company gives these coupons to its
employees as part of the agreed perquisites. The
COUPONS CAN BE REDEEMED FOR PURCHASE OF ANY
ITEM OF FOOD /provisions in the outlets that are part
of the program. As the supply against which the coupon
will be redeemed is NOT KNOWN ON THE DATE OF THE
SALE OF THE COUPON, the TIME OF SUPPLY OF the
coupon will be the DATE on which the employee REDEEMS it against food /
provision items of his choice.

7. A Ltd. provides SERVICES to B Ltd. on 10TH JUNE. A Ltd. Issues THE

INVOICE for the services on 15TH JUNE. PAYMENT is received in the bank
account of A Ltd. on 20TH JUNE and is recorded in the BOOKS OF ACCOUNT of
A Ltd. on 30TH JUNE. Date of receipt of payment is 20th June being the earlier
of two stipulated dates namely, date on which the payment is recorded in the
books of account of the supplier and date on which the payment is credited to the
supplier’s bank account. Since the invoice is issued within 30 days from the date
of supply of service, TIME OF SUPPLY OF SERVICES is 15TH JUNE being the
earlier of the two stipulated dates namely, date of issuance of invoice and date
of receipt of payment.

3. Change in Rate of Tax (CERT) - Section 14

Change in Rate of Tax (CERT)

Change in Rate of Tax (CERT)

Goods And Service Supplied BEFORE the • Invoice or,

Change in Effective Rate • Payment whichever is EARLIER

Goods And Service Supplied AFTER the Change in Effective Rate

(A) Completion After CERT • Invoice or,

• Payment whichever is LATER

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(B) Completion After CERT but Invoice • Invoice or,

AND Receipt (both), occurred before CERT • Payment whichever is EARLIER

Date of payment (CERT) - Deposited in Bank

Within 4 Working Days from After 4 Working Days from

CERT CERT

Date of book entry

or Date of credit into bank
Credited to Bank - considered as date of payment
Whichever is Earlier

Example & Circulars

1. Mr. A, an interior decorator, designs and renovates the office of XYZ in JUNE.
The invoice is to be raised after approval of the work. In the meantime, the RATE
OF TAX IS CHANGED ON 5TH JULY. INVOICE is raised and PAYMENT made later
in JULY. Here, the TIME OF SUPPLY is AFTER THE CHANGE IN RATE OF TAX,
though the service was completed prior to the change.

2. A Ltd. makes custom-made precision tools for which it takes full advance with the
purchase order. One such order is received on 13TH APRIL AND FULL AMOUNT IS
PAID WITH THE ORDER. The tools are manufactured and delivered on 22nd May.
INVOICE is also issued on the SAME DAY. In the meanwhile, RATE OF TAX WAS
INCREASED on the tools of this description from 20TH MAY ONWARDS. Here,
INCREASED RATE OF TAX WILL BE APPLICABLE as goods are supplied and invoice
issued after 20th May.

3. RATE OF TAX IS CHANGED ON 10TH JULY. Receipt of payment is recorded in the

BOOKS OF ACCOUNT of the supplier on 8TH JULY. The payment is credited in the
supplier’s BANK ACCOUNT ON 15TH JULY. The BANK WAS OPEN ALL DAYS
between 10th and 15th July. Here, the DATE OF RECEIPT OF PAYMENT IS 15TH
JULY.

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4. Proviso to Section 12(2) - EXTRA RS. 1000 Jo

Mila over Invoice Value
Advance

upto 1000 more than 1000

Option to
Supplier Service - TOS on Advance
Goods - No TOS on Advance

TOS on Advance

TOS - Date of
issuse of Next
Invoice

Example

A telephone company RECEIVES RS. 5000 AGAINST AN INVOICE OF RS. 4800. The
excess amount of RS. 200 CAN BE ADJUSTED AGAINST THE NEXT INVOICE. The
company has the OPTION to take the date of the NEXT INVOICE as the time of
supply of service in relation to the amount of Rs. 200 received in excess against the
earlier invoice.

5. Miscellaneous Points.
1. TOS in case of Associates Enterprises
(A) Date of Entry in BOA of Associated Enterprise
(B) Date of Payment
- Whichever is EARLIER

2. Liability Arises on the Date of TOS

Discharge Liability up to due date of return (exam purpose 20TH OF NEXT MONTH)

Example
• A Inc. a foreign company, and B Ltd., an Indian company, are ASSOCIATED
ENTERPRISES. A Inc. provides technical services to B Ltd. Vide an email dated
June 4th, A Inc. informs B Ltd. the cost of technical services provided to it. B
Ltd. transfers the payment to A Inc. on 12th August. TIME OF SUPPLY OF
SERVICES IS 12TH AUGUST BEING THE DATE OF PAYMENT AS THERE IS NO
PRIOR ENTRY of the amount in the books of account of B Ltd.

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Practice Question
Q1. Renudhoot Ltd. enters into a contract with XYZ Ltd. on 2nd July 2020 for a
period of 2 years for construction of a new building - to be used for commercial
purposes - for a total consideration of Rs. 150 lakh. As per the terms of contract,
Renduhoot Ltd. is required to make payment at different stages of completion of the
building namely, 50%, 75% and 100%.

Date of
Date of Date of Amount paid
Stage issuance of
various stages payment (Rs.)
invoice

Initial booking 02.07.2020 02.07.2020 02.07.2020 15 lakh

50% completion
15.03.2021 22.03.2021 29.03.2021 60 lakh
of building

75% completion
20.06.2021 24.07.2021 23.07.2021 35 lakh
of building

100% completion
30.09.2021 30.09.2021 20.09.2021 40 lakh
of building
ANSWER:

Stages of
Time of supply
completion

Since invoice is issued within the prescribed time limit, earlier of

the date of issue of invoice or date of receipt of payment is the
Initial
time of supply. However, date of issuance of invoice (02.07.2020)
booking
and date of receipt of payment (02.07.2020) are the same.
Therefore, TIME OF SUPPLY IS 02.07.2020.

Since invoice has not been issued on or before the date of 50%
completion, earlier of date of provision of service (15.03.2021) or
50%
date of receipt of payment (29.03.2021), i.e. 15.03.2021 IS
THE TIME OF SUPPLY.

Since invoice has not been issued on or before the date of 75%
completion, earlier of date of provision of service (20.06.2021) or
75%
date of receipt of payment (23.07.2021), i.e. 20.06.2021 IS
THE TIME OF SUPPLY.

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