SUPPLY, TIME & PLACE OF SUPPLY - (SECTION 7 OF CGST ACT)

GST TIME OF SUPPLY

1. Supply - (Sec.7 of CGST ACT) Unit - 1

2. Taxable event - ‘Supply’ A taxable event is any transaction or occurrence that results in a tax consequence.

3. DEFINITIONS: GOODS:

4. Concept of supply - Section 7 of CGST ACT ‘ S upply’ is the key stone of GST atchitechture Provisions relating to meaning and scope of supply are contained in Chapter III of CGST Act

5. Sections and schedules of ‘Supply’ Section 7 - Meaning and scope of supply Section 8 - Taxability of composite and mixed supply Schedule I - Activities to be treated as supply even if made without consideration Schedule II - Activities or transactions to be treated as supply of goods or as supply of services Schedule III - Activities or transactions which shall be treated neither as supply of goods nor as supply of services

6. Meaning of ‘supply’ - Sec.7 (1) of CGST ACT Supply includes (Sec.7(1) (a))- All forms of supply of goods or services or both such as sale, transfer, barter,exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business

7. Meaning of ‘supply’ - Sec.7 (1) of CGST ACT Sec 7 (1) (b) - importation of services, for a consideration whether or not in the course or furtherance of business and Sec7(1)(c) - the activities specified in Schedule I , made or agreed to be made without a consideration

8. Schedule I to the CGST Act,2017 ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION https://taxguru.in/goods-and-service-tax/section-7-scope-supply-cgst-act-2017.html

9. Definition: ‘Goods’

10. Meaning of Consideration under GST Consideration = Payment in money or otherwise for supply of goods or services (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply whether by the recipient or by any other person Consideration = Monetary value of any act or forbearance

11. Consideration includes monetary value of any act or forbearance Consideration includes monetary value of any act or forbearance, in respect of, in response to, or for the inducement of the supply, whether by the recipient or by any other person Example : M/s Dev Ltd. agreed to sell its business to M/s RN Ltd., for a consideration of Rs.50,00,000. M/s Dev Ltd. further agrees that it will not conduct same or similar business for a period of 10 years, for which M/s RN Ltd., paid Rs.20,00,000. Hence, M/s Dev Ltd., consideration is Rs.70,00,000.

12. Consideration C onsideration does not include subsidy given by the CG or a SG Consideration includes non-monetary consideration Example: A Sports Club agrees to hire services of cricket player Mr. C for a consideration of Rs.2 crores. In addition to this, the agreement provides that the player shall be provided with the car valued for Rs.20 lakhs. The entire value of Rs.2.20 crores will be considered as consideration and subject to tax.

13. Consideration may be paid by third person Consideration need not always flow from the recipient of the supply. It can also be made by a third person. Example : M/s L Ltd., being an authorized dealer of the TT brand, rendered services to buyer of car, but payment is made to authorized dealer by the TT Company. It is called as consideration is given by third person. Therefore, it is treated as supply of service and liable to tax in the hands of M/s L Ltd.

14. Definitions: S ection 2(31) Consideration “consideration” in relation to the supply of goods or services includes........ (i) It can be monetary or non-monetary. (ii) It can be given to/by third person. (iii) It should be lawful. (iv) Forbearance/abstinence can be consideration. (v) Compromise or composition is consideration. (vi) It should be certain. (vii) It excludes deposit (refundable or non-refundable) that is not treated by supplier as consideration for supply.

15. Illustration 1 ABC &Co a registered supplier of Dlhi, has supplied 20,000 packages at Rs.30 each to XYZ gift shop in Punjab. Each Package consists of 2 chocolates , 2 fruit juice bottles and a packet of toy balloons. Determine the rate of GST applicable in the given case assuming the rates of GST to be as under: Goods/services supplied Tax rate Chocloates 18% Fruit juice bottles 12% Toy balloons 5%

16. Solution: Supply of a package containing chocolates , fruit juice and packet of toy balloons is mixed supply as each of these items can be separately and is not dependent on any other. Hence, it is a mixed supply which attracts highest rate of tax. Applicable GST rate = 20,000 packages x Rs.30 each = Rs.6,00,000 GST rate = 18% = 6,00,000 x 18/100 = Rs.1,08,000

17. Why are time place and value of supply important? Time of supply means the point in time when goods/services are considered supplied’. When the seller knows the ‘time’, it helps him identify due date for payment of taxes. Place of supply is required for determining the right tax to be charged on the invoice, whether IGST or CGST/SGST will apply. Value of supply is important because GST is calculated on the value of the sale. If the value is calculated incorrectly, then the amount of GST charged is also incorrect

18. Time of Supply in GST Time of supply is a relevant measure under the GST law for every transaction entered into by the supplier of goods and services. It means the point in time when goods have been deemed to be supplied or services have been deemed to be provided for determining when the taxpayer is liable to pay taxes .

19. Determination of time of supply of Goods Date of issue of invoice Last date on which invoice should have been issued 3. Date of receipt of advance/ payment*.

20. Example: Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The payment was received on 31st January. The goods were supplied on 20th January. Time of supply is earliest of – Date of issue of invoice – 15th January Last date on which invoice should have been issued – 20th January. Thus the time of supply is 15th January.

21. What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X on 1st January? The time of supply for the advance of Rs 50,000 will be 1st January(since the date of receipt of advance is before the invoice is issued). For the balance Rs 50,000, the time of supply will be 15th January. Note: GST is not applicable to advances under GST. GST in Advance is payable at the time of issue of the invoice. Notification No. 66/2017 – Central Tax issued on 15.11.2017