Supply under Proposed GST Law

  • Contributed by CA. Raman Khatuwala

     Difference between the Sale & Supply ?

    • Till now VAT is paid on sale of goods and Central Excise Duty is paid on manufacture of commodity. In GST, this concept is changed which is based on supply of goods.

    Sale Supply
    It  is  an activity which involves the transfer  of goods in addition to the transfer of its ownership.
    For  ex-  Mr A purchases  goods from the retail shop M/s ABC by paying prescribed sum of money. Here M/s ABC has sold goods to Mr A.
    It involves  mere transfer of goods. Transfer  of ownership is not compulsory.
    For  ex-Branch Transfer, Consignment sale.

     

    Meaning and Scope of Supply under Model GST Law, 2016

    (1) The following is included under the term”Supply”

    (a) All forms of supply of goods and/or services which are made or agreed to be made for a consideration by a person in the course of business such as –

    • Sale.
    • Transfer.
    • Barter Exchange.
    • License.
    • Rental.
    • Lease or Disposal.

    (b) Importation of services for a consideration which can be related to or not related to the Business.

    (2) Activities specified in the “Schedule I” of the Model GST Law: Following activities can be termed as Supply even if made without any consideration :-

    • Supply of goods or services between related persons.
    • Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.
    • Supply of goods in the following cases : –

    (1) By a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or

    (2) By an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

    • Importation of services by a taxable person from a related person or from any of his other establishments outside India, which is in the course of business.

    (2) The Matter included in Schedule II of Model GST Law, is to be treated as a supply of goods or a supply of services.

    It comprises of following-

    • Transfer of the title in goods is a supply of goods.
    • Any lease, tenancy, easement, license to occupy land is a supply of services of Land & Building.
    • Any treatment or process which is being applied to another person’s goods is a supply of services.
    • Transfer of Business Asset.

    (3) The activities or transactions specified in Schedule III

    Under noted activities / transactions, as specified in Schedule III of the Model GST Law which shall not be treated as “ Supply” under GST :-

    • Services by an employee to his employer during the course of employment.
    • Services by a court or tribunal established under a law.
    • Services performed by MP, MLA, person holding posts in pursuance to provisions of Constitution.
    • Services of person who holds a position in a body established by the Central Govt, State Govt or local authority.
    • Services by a diplomatic mission in India.
    • Services of a burial, crematorium, funeral, mortuary and transportation of deceased.

    (4) Activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities as specified in Schedule IV of the Model GST Law shall be treated neither as a supply of goods nor a supply of services.

    TIME OF SUPPLY

    Time of supply in case of “Goods”

    (1) The liability to pay CGST / SGST on the goods shall arise at the time of supply as determined in terms of the provisions under Model GST Law.

    (2) The time of supply of goods shall be considered on the earlier of the following dates, which are as follows-

    (a)The date of issue of invoice by the supplier or the last date on which he is required, under Model GST Law 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.

    (3) In case where tax on supplies which is liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates –

    (a) the date of the receipt of goods, or

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

    (c) the date immediately following thirty days from the date of issue of invoice by the supplier.

    Where it is not possible to determine the time of supply under above three dates, then the time of supply shall be the date of entry in the books of account of the recipient of supply.

    (4) In case of supply of vouchers, by whatever name called, by a supplier, the time of supply shall be –
    (a) Date of issue of voucher, if the supply is identifiable at that point

    OR

    (b) Date of redemption of voucher, in other cases.

    (5) In case it is not possible to determine the time of supply of goods under the under the above cases then the following will be done –

    (a) The date of filling the Return in a case where a periodical return.

    OR

    (b) Date on which the CGST/SGST is paid in the other cases.


    Time of supply in Case of “Services”

    (1) The liability to pay CGST/SGST on services is at the time of supply.

    (2) The time of supply of services shall be considered earlier of the following dates.

    (a) Date of issue of invoice by the supplier or the last date on which he is required to issue the invoice with respect to the supply made under the Model GST Law.

    OR

    (b) Date on which the supplier receives the payment.

    (3) In case of supplies In which Tax is paid or liable to be paid on reverse charge, time of supply shall be the earlier of the following dates :-

    (a) Date on which the payment is made.

    OR

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

    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.

    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

    Date of payment, whichever is earlier.

    (4) The Time of Supply in case of supply of vouchers will be –

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

    (b) In other cases, Date of Redemption of voucher.

    (5) The Time of Supply in which in which it is not possible to determine the time of supply of services in the manner specified in (2), (3) or (4) above will be –

    (a) Date of Filling of Return in a case where a periodical return has to be filed.

    OR

    (a) Date on which the CGST/SGST is paid in other cases.

    Supply of Goods & Services in case of Change in the Rates of Taxes.

    The time of supply, in cases where there is a change in the rate of tax in respect of goods or services, shall be determined in the following manner –

    (a) When it is supplied before the change in rate of Tax.

    Three cases exists which are as follows –

    (i) where invoice is issued and the payment is also received after the change in rate of tax.
    The time of supply shall be –

    Date of receipt of payment.

    or

    Date of issue of invoice.

    whichever is earlier.

    OR

    (ii) where the invoice has been issued prior to change in rate of tax but the payment is received after the change in rate of tax.

    The time of supply shall be –

    Date of issue of invoice.

    OR

    (iii) where the payment is received before the change in rate of tax, but the invoice for the same has been issued after the change in rate of tax.

    The time of supply shall be –

    Date of receipt of payment.

    (b) When it is supplied After the change in rate of Tax.

    (i) Payment received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax.

    Time of supply shall be –

    Date of receipt of payment.

    OR

    (ii) Invoice has been issued and the payment is received before the change in rate of tax.

    Time of supply shall be –

    Date of receipt of payment.

    or

    Date of issue of invoice.

    whichever is earlier.

    OR

    (iii) where the invoice has been issued after but the payment is received before the change in rate of tax –

    Time of supply shall be –

    Date of issue of invoice.

     

    Note:
    Views presented in this article are personal view of the author. Information presented in this article is intended for information purpose only and does not constitute any legal opinion or advice. Readers and Users are requested to seek formal legal advice prior to acting upon any of the information provided herein.