ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

INTRODUCTION
 It is a point in time when liability to charge tax arises.
 To understand concept of time of supply, we must first know time period for issuance of Tax Invoice.

DATE OF RECEIPT OF PAYMENT = Earlier of (For the purpose of this chapter)

(i) Date on which Payment is entered in the books of A/c of recipient.
(ii) Date on which Payment is debited from the bank A/c of recipient.

TIME OF ISSUE OF TAX INVOICE FOR SUPPLY OF GOODS [SEC 31]

GENERAL CASE [Section 31(1)]: Before or at the time of
Case Time of issue of Invoice for Goods
If supply involves Movement of Goods Removal of goods for supply to the recipient
In other cases Delivery of goods or making available to the recipient

Ex: Ritu Manufacturers, Delhi supplies goods to Prakhar Electronics, Haryana. The goods were removed from its
factory in Delhi on 23rd September. Ritu Manufacturers needs to issue a tax invoice on or before 23rd September.

CONTINUOUS SUPPLY [Sec 31(4)] [Successive statements of A/Cs or Payments are involved]
 Before or at the time each such statement is issued or each such payment is received.

GOODS SENT ON APPROVAL [Sec 31(7)]

(a) Date when Recipient indicates that he has accepted the supply of goods;
(i.e at the time of supply) whichever is earlier
(b) Within 6 months from the Date of Removal.

TIME OF SUPPLY OF GOODS

FORWARD CHARGE [SEC 12(2)]
(a) Date of Issue of Invoice by the supplier;
Earlier of
(b) Last Date on which invoice is required to be issued u/s 31.

Points to be Noted:
1. No GST is payable on advances received for supply of goods under Forward charge.
2. Excess Payment Received upto Rs. 1,000.
If Payment received > value of goods in Invoice (excess being) upto Rs. 1,000; Supplier can choose to
take Date of Invoice issued w.r.t such excess amount as ToS of goods for such excess value.
3. Supply shall be deemed to have been made to the extent it is covered by the invoice/payment.

Ex: 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.

Q1. Determine the Time of supply in each of the following independent cases if supply involves movement of goods.
SN Date of Removal Date of invoice Date when goods made available Date of Payment
1. 1.2.2019 2.2.2019 3.2.2019 15.3.2019
2. 3.2.2019 1.2.2019 4.2.2019 25.3.2019
3. 4.3.2019 4.3.2019 6.3.2019 1.2.2019

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 83
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

Answer:
 As per sec 12(2), in case of forward charge, time of supply shall be earlier of:
(a) Date of Issue of Invoice by the supplier or
(b) Last Date on which invoice is required to be issued u/s 31.
 As per section 31, supplier of goods is required to issue invoice on/before removal of goods.
 Thus, in case of supply transaction involving movement of goods, time of supply shall be earlier of:
(a) Date of Issue of Invoice by the supplier or
(b) Date of Removal of Goods (which is the Last Date on which invoice is required to be issued u/s 31).
 Thus Date of Payment & Date when goods are made available to recipient becomes irrelevant in this question.
SN Date of Removal Date of invoice ToS Reason
Since invoice is not issued on/before the date of
1 1.2.2019 2.2.2019 1.2.2019
removal, ToS is date of removal of goods.
Since invoice is issued prior to date of removal of
2 3.2.2019 1.2.2019 1.2.2019
goods, ToS is date of issuance of invoice
Since invoice is issued prior to date of removal of
3 4.3.2019 4.3.2019 4.3.2019
goods, TOS is date of issue of invoice.
, Note: No GST will be payable on advances received for supply of goods.

REVERSE CHARGE [SEC 12(3)]

(a) Date of Receipt of Goods;
(b) Date of Receipt of Payment;
Earlier of
(c) Date immediately following 30 days from date of issue of invoice (or any other
document in lieu thereof) by supplier

Note: If it is not possible to determine ToS using sec 12(3), ToS = Date of entry in books of A/c of the
recipient of supply.

Q2. Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
SN Date of Invoice Date of Receipt Date of payment by recipient of goods
1 30.11.2018 2.12.2018 25.11.2018: Part payment made;
28.12.2018: Balance amount paid
2 1.11.2018 5.12.2018 Payment is entered in books of A/c on 25.11.2018 & debited in
recipient's bank account on 28.11.2018
3 30.11.2018 2.12.2018 Payment is entered in the books of A/c on 25.11.2018 & debited in
recipient's bank account on 20.11.2018

Answer: In case of RCM, ToS shall be earlier of

(a) Date of Receipt of Goods
(b) Earlier of (i) Date on which Payment is entered in books of A/c of recipient.
(ii) Date on which Payment is debited from bank A/c of recipient.
(c) Date immediately following 30 days from date of issue of invoice by supplier

SN Date of Date immediately Date of Date of payment ToS of goods

Invoice following 30 days Receipt by recipient of goods
from date of of goods
invoice
1 30.11.2018 31.12.2018 2.12.2018 25.11.2018: Part payment; 25.11.2018 for part payment
28.12.2018: Balance payment 2.12.2018: Balance amount
2 1.11.2018 2.12.2018 5.12.2018 25.11.2018 25.11.2018
3 30.11.2018 31.12.2018 2.12.2018 20.11.2018 20.11.2018

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 84
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

VOUCHERS SUPPLIED BY SUPPLIER [SEC 12(4)]

Case Time of Supply

(i) If Supply is Identifiable at that point Date of Issue of Voucher
(ii) All other cases Date of Redemption of Voucher

RESIDUAL CASES [SEC 12(5)] [If it is not possible to determine ToS using 12(2), 12(3), 12(4)]

Case Time of Supply

(i) If GST Periodical Return has to be filed Date on which such return is to be filed
(ii) All other cases Date on which GST is paid.

INTEREST, LATE FEE, PENALTY → ToS = Date of receipt of such amount by supplier.

Ex: Radha Traders sold goods to Shyam Sales on 6th June with a condition that interest @ 2% per month will be
charged if Shyam Sales failed to make payment within 15 days of delivery of the goods. Goods were delivered as also
the invoice was issued on 6th June. Shyam Sales paid the consideration for the goods on 6th July along with interest.
ToS for the goods sold is the date of issue of invoice i.e., 6th June & ToS for addition in value by way of interest is
date when such addition in value is received by Radha Traders i.e., 6th July.

TIME OF ISSUE OF TAX INVOICE FOR SUPPLY OF SERVICES [SEC 31]

GENERAL CASE [Section 31(2)] Before or after provision of service BUT
Case Time of issue of Invoice for Services
In Normal cases within 30 days from date of Provision of Service.
In case of Insurance, Banks & NBFC within 45 days from date of Provision of Service.

Ex: Katyani Security Services Ltd. provides security services to Royal Jewellers for their Jewellery Exhibition to be
organized on 5th October. Katyani Security Services Ltd. needs to issue a tax invoice within 30 days of supply of
security services, i.e. on or before 4th November.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 85
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

CONTINUOUS SUPPLY [Sec 31(5)]

Case Time of issue of Invoice for Services
Due date of Payment is ascertainable from contract On/before due date of payment
Due date of Payment is not ascertainable from contract Before/at time of receipt of payment
Payment is linked to completion of an event On/before completion of that event

SUPPLY OF SERVICES CEASES BEFORE COMPLETION OF SUPPLY (under a contract) [Sec 31(6)]
 At time when supply ceases & only to extent of supply made before such cessation.

Q3. Mr. X had a contract for supplying services for 365 days for Rs. 36,500. However, after 50 days, he has stopped
supply of service. He has asked you for an advice as to whether he should raise an invoice or not?
Ans: Yes. Where a supply of service ceases before its completion, an invoice has to be issued at the time when the
supply ceases, i.e., on 50th day. Invoice shall be issued to the extent of service provided before its cessation.

TIME OF SUPPLY OF SERVICE

FORWARD CHARGE [SEC 13(2)]
Cases Time of Supply [Earlier of ↓]
If invoice is issued within Time limit Date of (i) Issue of invoice or (ii) Receipt of Payment

If invoice is not issued within Time limit Date of (i) Provision of service or (ii) Receipt of Payment

Points to be noted:
 If ToS cannot be found out using above provisions, ToS = Date of receipt of services as shown in
books of A/c of recipient.
 Supply shall be deemed to have been made to extent it is covered by invoice or payment.
 Excess Payment Received upto Rs. 1,000: Same as supply of goods.

REVERSE CHARGE [SEC 13(3)]

Earlier (a) Date of receipt of payment
of (b) 61st days from date of issue of invoice (or any other document in lieu thereof) by supplier

IMPORT OF SERVICE B/W ASSOCIATED ENTERPRISES (supplier is located outside India)

 ToS = Earlier of (i) Date of entry of service in books of A/c of the recipient or (ii) Date of Payment.

Note: If it is not possible to determine ToS using sec 12(3), ToS = Date of Entry in books of A/c of
Recipient of Supply.

VOUCHERS SUPPLIED BY SUPPLIER [SEC 13(4)] → Same as ToS for Goods u/s 12(4)

RESIDUAL CASES [SEC 13(5)] [If it is not possible to determine ToS using 13(2), 13(3), 13(4)]
→ Same as ToS for Goods u/s 12(5)

INTEREST, LATE FEE, PENALTY → Same as ToS for Goods

Second Proviso to Rule 47 [Inter – branch Transfer]

 Insurance/banking companies/FIs/NBFCs/Telecom companies/notified supplier of services
 making taxable supplies b/w distinct person u/s 25,
 invoice may be issued (i) before or at time of recording such supply in books of A/c or
(ii) before expiry of quarter during which supply was made.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 86
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

Q4. XY Ltd. is located in India & holding 51% of shares of ABC Ltd., a USA based company. ABC Ltd. provides Business
Auxiliary Services to XY Ltd. Determine the time of supply of XY Ltd.:
Agreed consideration US $ 1,00,000
Date on which services are provided by Wilson Ltd. 16.12.2018
Date on which invoice is sent by Wilson Ltd. 19.12.2018
Date of debit in the books of account of Apte & Apte Ltd. 30.12.2018
Date on which payment is made by Apte & Apte Ltd. 23.03.2019
Answer:
 XY Ltd. of India & ABC Ltd. of US are ‘associated enterprises’ as XY Ltd. holds 51% shares of US based company.
 As per Section 13(3), in case of supply by associated enterprises, where the supplier of service is located outside
India, ToS shall be earlier of: (a) Date of entry in the books of A/c of recipient of supply; or (b) Date of payment.
 Therefore, the time of supply shall be 30.12.2018.

Q5. Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
SN Date of payment by recipient of services Date of Invoice
1 10.10.2018 29.08.2018
2 10.10.2018 01.08.2018
3 Part payment made on 30.08.2018 & balance amount paid on 01.11.2018 29.08.2018
4 Payment is entered in the books of A/c on 28.08.2018 & debited in recipient's bank 01.08.2018
account on 30.08.2018
5 Payment is entered in the books of A/c on 30.08.2018 & debited in recipient's bank 29.08.2018
account on 26.08.2018
Answer:
SN Date of Date immediately Date of Payment ToS
Invoice following 60 days from
invoice
1 29.08.2018 29.10.2018 10.10.2018 10.10.2018
2 01.08.2018 1.10.2018 10.10.2018 01.10.2018
3 29.08.2018 29.10.2018 Part payment made on 30.08.2018 for part payment;
30.8.2018 & balance 29.10.2018 for balance
amount paid on 1.11.2018
4 01.08.2018 1.10.2018 28.08.2018 28.08.2018 (i.e. when payment is
entered in books of A/c of recipient)
5 29.08.2018 29.10.2018 26.08.2018 26.08.2018 (i.e. when payment is
debited in recipient's bank A/c)

Q6. Income-tax search was carried out at house of Mr. X working in MNC. Undisclosed assets were found, which he
claims as service income. Dates of service are not known. Find ToS if Mr. X voluntarily pays GST during investigation.
Answer:
 If it is not possible to determine ToS & where periodical return is not to be filed (Mr. X, being an employee in MNC
is not a registered person), date of payment of tax is taken as the time of supply.
 Therefore, the date when Mr. X pays the GST will be the time of supply.

Q7. Gadiwala Ltd. is engaged in supply of cleaning services in residential premises. Investigation shows that Gadiwala
Ltd. carried out service of cleaning & repairs of tanks in Paradise society, for which society showed a payment in cash
on 25.12.2019 to them against work of this description. Dates of the work are not clear from the records of Gadiwal
Ltd. Gadiwala Ltd. have not issued invoice or entered the payment in their books of account. Determine ToS.
Answer:
 ToS cannot be determined using section 13(2)(a)/(b) as neither the invoice has been issued nor the date of
provision of service is available & date of receipt of payment in the books of supplier is not available.
 Therefore, ToS will be determined using section 13(2)(c) i.e., date on which the recipient of service shows receipt
of the service in his books of account.
 ToS = 25.12.2018, the date on which Kamal Housing society records the receipt of service in its books of A/c.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 87
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

QUESTION BANK
Q1. From following information, determine the time of supply of goods where supply involves movement of goods:
SN Date of Invoice Date of Removal Date of Payment Other Information
1 18.11.2018 10.11.2018 18.11.2018 -
2 1.11.2018 11.11.2018 - Supply is due to Inter-State stock transfer.
3 22.11.2018 02.12.2018 Rs. 5,00,000 is received as advance & invoice
20.11.2018
for full amount is issued on 22.11.2018.
10.12.2018 Balance Rs. 10 Lacs is received on 10.12.2018.
Answer:
 As per sec 12(2), in case of supply transaction involving movement of goods, time of supply shall be earlier of:
(a) Date of Issue of Invoice by the supplier or (b) Last Date on which invoice is required to be issued u/s 31.
 As per section 31, supplier of goods is required to issue invoice on/before removal of goods.
 Thus, in case of supply transaction involving movement of goods, time of supply shall be earlier of:
(a) Date of Issue of Invoice by the supplier or
(b) Date of Removal of Goods (which is the Last Date on which invoice is required to be issued u/s 31).
 Thus Date of Payment & Date when goods are made available to recipient becomes irrelevant in this question.
SN Invoice date Last date of issue of invoice ToS
1 18.11.2018 10.11.2018 10.11.2018
2 01.11.2018 11.11.2018 01.11.2018
3 22.11.2018 02.12.2018 22.11.2018 (for Entire: 15 Lacs)

Q2. Explain the meaning of the term ‘date of receipt of payment’ as per section 13 of CGST Act, 2017. [RTP Nov 18]
Answer: As per section 13, ‘Date of receipt of payment refers to the earliest of following 2 dates:
(a) Date on which the payment is recorded in the books of A/c of supplier of service that receives the payment, or
(b) Date on which the payment is credited to the supplier’s bank account,

Q3. If a supplier of goods has received Rs. 1,500 against an invoice of Rs. 1,100 on 25.07.2018 & date of invoice of next
supply to the said recipient is 14.8.2018. Find ToS in respect of excess amount over & above invoice value.
Answer:
 In the given case, supplier has received payment in excess of payment due as per invoice. Receipt of such excess
payment has resulted into receipt of advance in hands of supplier.
 Where amount received is in excess of invoice with amount upto Rs. 1,000, supplier has option to choose time of
supply as date of issue of fresh invoice for the said excess amount.
 Thus, time of supply w.r.t Rs. 400/- shall be 14.08.2018 (date of invoicing of such supply).

Q4. Determine the time of supply if there is continuous supply of goods:

SN Invoice date Removal of goods Statement of A/c Receipt of payment
1 1.12.2018 15.11.2018; 25.11.2018 5.12.2018 2.12.2018
2 21.01.2019 18.01.2019; 31.01.2019 5.1.2019 10.2.2019
Answer:
 In case of continuous supply of goods where successive statements of A/c or successive payments are involved,
invoice is issued before/at the time of issue of each such statement or each such payment is received - Sec 31(4).
 As per Section 12(2), in case of forward charge, time of supply of goods shall be the earlier of:
(a) Date of issue of invoice by the supplier; or (b) Last Date on which invoice is required to be issued u/s 31.
 Date of Removal of goods is irrelevant in case of Continuous Supply of goods.
SN Invoice date Statement of A/c ToS Reason
1 1.12.2018 5.12.2018 1.12.2018 ToS is date of invoice since invoice is issued before
statement of account.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 88
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

2 21.1.2019 5.1.2019 5.1.2019 ToS is date of statement of A/c since invoice is

issued after date of statement of A/c & payment is
also received after that date.

Q5. Determine the time of supply if goods are supplied on approval basis.
SN Removal of goods Issue of invoice Accepted by recipient Receipt of payment
1 1.12.2018 15.12.2018 5.12.2018 25.12.2018
2 1.12.2018 25.7.2019 25.7.2019 20.7.2019
Answer:
 In case of goods sent on approval, invoice shall be issued on earlier of (a) Date when Recipient indicates that he has
accepted the supply of goods or (b) Within 6 months from the Date of Removal - [Sec 31(7)]
 Date of Issue of invoice & date of payment becomes irrelevant in case of goods sent on approval.
SN Removal of goods Accepted by recipient ToS Reason
1 1.12.2018 05.12.2018 5.12.2018 TOS is shall be date of acceptance by recipient as
invoice was issued after that date.
2 1.12.2018 25.07.2019 2.6.2019 TOS shall be date after expiry of 6 months from
the date of removal, since invoice is not issued
within 6 months from date of removal.

Q6. Determine ToS in each of the following cases in case recipient of goods is liable to pay tax under RCM.
SN. Date of invoice Date of receipt of goods Date of payment in Date when payment
books of A/c debited in bank A/c
1. 01.10.2018 05.10.2018 10.10.2018 12.10.2018
2. 01.10.2018 15.10.2018 10.10.2018 12.10.2018
3. 01.10.2018 15.10.2018 12.10.2018 10.10.2018
4. 01.10.2018 15.11.2018 18.11.2018 20.11.2018
Answer: In case of RCM, ToS shall be earlier of
(a) Date of Receipt of Goods
(b) Earlier of (i) Date on which Payment is entered in books of A/c of recipient.
(ii) Date on which Payment is debited from bank A/c of recipient.
(c) Date immediately following 30 days from date of issue of invoice by supplier
SN Date of invoice Date of receipt Date of payment Time of supply
1 01.10.2018 05.10.2018 10.10.2018 05.10.2018
2 01.10.2018 15.10.2018 10.10.2018 10.10.2018
3 01.10.2018 15.10.2018 10.10.2018 10.10.2018
4 01.10.2018 15.11.2018 18.11.2018 01.11.2018

Q7. Determine the time of supply if supply is taxed under reverse charge basis:
SN Date of invoice Date Removal Date of Date of entry in books of Date of debit in bank
Receipt A/c of recipient A/c of recipient
1. 31.12.2018 31.12.2018 20.01.2019 30.01.2019 01.02.2019
2. 31.12.2018 31.12.2018 20.01.2019 05.01.2019 06.01.2019
3. 31.12.2018 28.02.2019 05.03.2019 - -
Answer: In case of RCM, ToS shall be earlier of
(a) Date of Receipt of Goods
(b) Earlier of (i) Date on which Payment is entered in books of A/c of recipient.
(ii) Date on which Payment is debited from bank A/c of recipient.
(c) Date immediately following 30 days from date of issue of invoice by supplier

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 89
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

SN. Date of invoice Removal of goods Receipt of DOP Time of supply

goods
1. 31.12.2018 31.12.2018 20.01.2019 30.01.2019 20.01.2019
2. 31.12.2018 31.12.2018 20.01.2019 05.01.2019 05.01.2019
3. 31.12.2018 28.02.2019 05.03.2019 - 31.01.2019

Q8. A machine has to be supplied at site. It is done by sourcing various components from vendors & assembling the
machine at site. The details of the various events are:
15.12.2018 Purchase order with advance of Rs. 1,25,000 is received for machine worth Rs. 25 Lacs & entry duly
made in the seller's books of account
25.01.2019 The machine is assembled, tested at site, & accepted by buyer
30.01.2019 Invoice raised
10.02.2019 Balance payment of Rs. 23,75,000 received
Determine the time of supplies in the above scenario.
Answer:
 As per Section 12(2), the time of supply of goods shall be the earlier of:
(a) Date of issue of invoice by the supplier; or
(b) Last Date on which invoice is required to be issued u/s 31.
 As per Section 31(1), a registered person supplying taxable goods shall issue invoice before/at the time of,
(i) If supply involves movement of goods: Removal of goods for supply to the recipient; or
(ii) In other cases: Delivery of goods or making available thereof to the recipient.
 In this case, since supply does not involve movement of goods since they are assembled at site, invoice shall be
issued on/before Delivery of goods or making them available to the recipient.
Thus Last date for issue of invoice is 25.01.2018. However, invoice has been issued on 30.01.2019.
 ToS = 25.01.2018 (being earlier of Date of Invoice or Last date on which invoice should have been issued.

Q9. LPG is supplied by a pipeline. Monthly payments are made by the recipient as per contract. Every quarter, invoice
is issued by the supplier supported by a statement of the goods dispatched & payments made, & the recipient has to
pay the differential amount, if any. The details of the various events are:
(a) Payments of Rs. 5 lacs made in each month: 3.11.2018; 3.12.2018; 1.1.2019.
(b) Statement of accounts issued by supplier, with invoice for the quarter Oct 2018 to Dec 2018: 2.1.2019.
(c) Differential payment of Rs. 78,000 received by supplier for the quarter Oct 2018 to Dec 2018: 25.1.2019.
Determine the time of supply.
Answer:
 In case of continuous supply of goods where successive statements of A/c or successive payments are involved,
invoice shall be issued before/at the time of issue of each such statement or each such payment - Sec 31(4).
 As per Section 12(2), in case of forward charge, time of supply of goods shall be the earlier of:
(a) Date of issue of invoice by the supplier; or
(b) Last Date on which invoice is required to be issued u/s 31.
 Date of Removal of goods is irrelevant in case of Continuous Supply of goods.
 Therefore, invoice should be issued on 3.11.2018, 3-12-2018 & 1.1.2019 when monthly payments of Rs. 5 lacs are
received.
 Thus, ToS = 3.11.2018, 03.12.2018 & 1.1.2019 respectively for goods valued at 5 lacs each.
 ToS for goods valued at Rs. 78,000 will be 2.1.2019 (i.e. date of issuance of invoice).

Q10. Mr. X, a registered supplier supplied certain goods to Mr. Y on 6 months’ credit with a penalty clause in the
agreement levying a penalty of 5% of the invoice value in case of delayed payment. The invoice was dated 01-11-2018.
Mr. Y could not make the payment on the due date due to unavoidable reasons. He however made the payment of the
invoice value on 05-05-2019. Mr. X raised a debit note for the penalty amount. There being dispute on this, the matter
was in arbitration which was finally resolved with Mr. Y agreeing to pay half of the penalty amount. The amount was
paid by Mr. Y on 12-12-2019. Determine the Time of Supply.
Answer:
 With respect to the goods supplied, ToS = Date of invoice (assuming the delivery of goods on the date of invoice) i.e.,
01-11-2018.
 Penalty: For penalty amount, ToS shall be ‘date of payment of Penalty’ i.e. 12.12.2019 [as per Section 12(6)].

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 90
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

Q11. Determine ToS where supply is by issue of voucher valid for 1 year & are issued after supply of first service.
First service Issue of voucher Redemption of voucher Last date for acceptance of voucher
1.1.2019 1.1.2019 31.10.2019 31.12.2019
Answer: ToS is date of issue of voucher (i.e 1.1.2019) since supply is identifiable at the time of issuance of voucher.

Q12. Determine ToS of service from the following information

Particulars of voucher First service/ Issue of Redemption Last date for
delivery of goods voucher of voucher acceptance of voucher
Voucher valid for 1 year is issued to a 01.01.2019 01.01.2019 14.12.2019 31.12.2019
recipient after supply of a service, for
any other G & S across India.
Answer: ToS = Date of redemption of voucher (i.e 14.12.2019) since supply is not identifiable at the time of issue.

Q13. Determine the time of supply of service in each of following independent cases:
SN Date of Provision of Service Date of Invoice, Bill Date on which payment received
1 10.11.2018 30.11.2018 15.12.2018
2 10.11.2018 30.11.2018 15.11.2018
3 10.11.2018 30.11.2018 15.11.2018 (Part) & 10.12.2018 (remaining)
4 10.11.2018 30.11.2018 06.11.2018 (Part) & 09.11.2018 (remaining)
5 10.11.2018 30.11.2018 06.11.2018 (Part) & 16.11.2018 (remaining)
6 10.11.2018 12.12.2018 30.04.2019
7 10.11.2018 12.12.2018 05.11.2018 (Part) & 25.12.2018 (remaining)
8 10.11.2018 22.12.2018 12.12.2018
Answer:
(a) If invoice is issued within Time limit: ToS = Earlier of Date of (i) Issue of invoice or (ii) Receipt of Payment.
(b) If invoice is not issued within Time limit: ToS = Date of (i) Provision of service or (ii) Receipt of Payment.

Time limit for issue of invoice [Sec 31(2)] before or after provision of service but
Case Time of issue of Invoice for Services
In Normal cases within 30 days from date of Provision of Service.
In case of Insurance, Banks & NBFC within 45 days from date of Provision of Service.

SN Date of Date of Date of Payment ToS Comment

Provision of Invoice
Service
1 10.11.2018 30.11.2018 15.12.2018 30.11.2018
2 10.11.2018 30.11.2018 15.11.2018 15.11.2018
3 10.11.2018 30.11.2018 15.11.2018 (Part) 15.11.2018 & Invoice issued within 30 days. Part payment
& 30.11.2018 for received before invoice & remaining
10.12.2018 respective payment after invoice.
(remaining) amounts
4. 10.11.2018 30.11.2018 06.11.2018 (Part) 06.11.2018 & Invoice issued within 30 days. However,
& 09.11.2018 for advance has been received in 2 installments
09.11.2018 the respective before date of completion of service. Thus,
(remaining) amounts ToS = date of receipt of each such advance
5. 10.11.2018 30.11.2018 06.11.2018 (Part) 06.11.2018 & Invoice issued within 30 days. Part payment
& 16.11.2018 for (in form of advance) received before issue of
16.11.2018 the respective invoice & remaining payment received after
(remaining) amounts providing service.
6. 10.11.2018 12.12.2018 30.04.2019 10.11.2018 Invoice not issued within 30 days &
payment received after providing service.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 91
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

7. 10.11.2018 12.12.2018 05.11.2018 (Part) 05.11.2018 & Invoice not issued within 30 days.
& 10.11.2018 for Part payment received as advance before
25.12.2018 respective completion of service& remaining payment
(remaining) amounts received subsequently.
8. 10.11.2018 22.12.2018 12.12.2018 10.11.2018 Invoice not issued within 30 days & entire
payment received after providing service.

Q14. Determine the time of supply from the following particulars:

25.07.2018 Booking of convention hall, sum agreed Rs. 15,00,000, advance of Rs. 1,01,000 received
10.11.2018 Event held in convention hall
20.12.2018 Invoice issued for Rs. 15,00,000, indicating balance of Rs. 13,99,000 payable
25.12.2018 Balance payment of Rs. 13,99,000 received
Answer:
 As per Section 31 r/w Rule 47 of CGST Rules, invoice shall be issued within 30 days of supply of service.
 In the given case, the invoice is not issued within the prescribed time limit.
 If invoice is not issued within Time limit: ToS = Date of (i) Provision of service or (ii) Receipt of Payment.
 ToS for Rs. 1,01,000 is 25.7.2018 as date of payment of Rs. 1,01,000 is earlier than date of provision of service.
 ToS for balance Rs. 13,99,000 is 10.11.2018 which is the date of provision of service.

Q15. Determine the time of supply of services. Supply is a continuous supply of service where contract provides for
monthly payment upto 15th of the succeeding month.
Entry of provision of Invoice date Due date of payment as Receipt of payment
services in books of A/c per contract
30.11.2018 07.12.2018 15.12.2018 20.12.2018
31.12.2018 22.01.2019 15.01.2019 20.01.2019
31.01.2019 15.02.2019 15.02.2019 11.02.2019
Answer:
 In case of Continuous supply of services: If due date of payment is ascertainable from contract, invoice shall be issued
On or before due date of payment.
 If invoice is issued within Time limit: ToS = Date of (i) Issue of Invoice or (ii) Receipt of Payment.
 If invoice is not issued within Time limit: ToS = Date of (i) Provision of service or (ii) Receipt of Payment.
Entry of provision Invoice date Due date of payment Receipt of payment Time of supply
of services in books as per contract
30.11.2018 07.12.2018 15.12.2018 20.12.2018 07.12.2018
31.12.2018 22.01.2019 15.01.2019 20.01.2019 15.01.2019
31.01.2019 15.02.2019 15.02.2019 11.02.2019 11.02.2019

Q16. Golden Industries Ltd. engaged the services of Sandhu transporter for road transport of a consignment on 25-12-
2018 & made advance payment for the transport on the same date, i.e.,25-12-2018. However, the consignment could
not be sent immediately on account of a strike in the factory, & instead was sent on 20-01-2019. Invoice was received
from the transporter on 22.1.2019. What is ToS of transporter's service? [Transporter's service is taxed on RCM].
Answer:
 ToS of service under RCM = Earlier of: (a) Date of payment or (b) 61st day from date of issue of invoice [Sec. 13(3)].
 In this case, date of payment precedes 61st day from the date of issue of invoice by the supplier of service.
 Hence, the date of payment, i.e. 25-12-2018, will be treated as the time of supply of service.

Q17. Anup received some taxable services from Loreal Enterprises of UK on 1.12.2019 for which an invoice was raised
on 1.12.2018. Determine ToS of services if Anup makes the payment on: (a) 1.1.2020; (b) 5.3.2020.
Answer:
ToS of service under RCM = Earlier of: (a) Date of payment or (b) 61st day from date of issue of invoice [Sec. 13(3)].
(a) Since the payment has been made within 60 days from the date of invoice, ToS = Date of payment i.e. 1.1.2020.
(b) Since the payment is not made within a period of 60 days of the date of invoice, ToS = Date immediately following
the said period of 60 days i.e. 31.1.2020.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 92
 ERRORLESS GST - CMA INTER DEC 20 Exams – BY CA PRANAV CHANDAK

Q18. On 4th Sep. 2019, V.R. Mehman a famous music composer, received Rs. 3 cr from T-Series Music Co. Ltd. for sale
of copyright of his original music album. He finished his work & made available the CD to the music company on 20th
July, 2019 & raised the invoice on 24th July, 2019. What will be ToS? [Above Service is taxable under RCM] [May 2018]
Answer:
 As per section 13(3), ToS of service taxable under RCM shall be earlier of:
(a) Date of payment or (b) 61st day from the date of issue of invoice
 Since the payment is made within 60 days from the date of invoice, the time of supply shall be 4.9.2019.

Subscribe on YouTube | Download “Pranav Chandak Academy” App for FREE TEST SERIES
Page 93
 GST is a destination based tax.
 Place of supply determine the place (taxable jurisdiction) where the tax should reach.
 While determining the levy of taxes based on Place of Supply, two things are considered namely:
1. Location of Supplier – It is the registered place of business of the supplier.
2. Place of Supply - It is the registered place of business of the recipient.
 Place of supply & location of supplier are the two determinants to ascertain the nature of supply.

Sec No. Nature of supply Place of supply of goods

10(1)(a) Supply involves movement of goods by supplier or Location of goods when movement of
recipient or by any other person. goods terminates for delivery to recipient.
[Refer CQ1]

10(1)(b)  Goods are delivered by the supplier It shall be deemed that 3rd person (buyer)
 to the recipient or any other person has received goods & PoS of such goods
shall be Principal PoB of such person.
 on direction of 3rd person (buyer), whether acting
[Refer CQ2 & CQ3]
as agent or otherwise,
 before/during movement of goods (transit)

 This is an example of ‘Bill to’ ‘ship to’ model. In such transactions, 2 supplies are involved:
(i) Supplier → 3rd person (buyer); (ii) 3rd person (buyer) → Recipient.
 Sec 10(1)(b) deals with first part of the transaction (supply by supplier to 3 rd person).
 PC Note: If goods are delivered by supplier to the recipient at the instruction of a 3rd person
(buyer or his agent), PoS = Principal PoB of 3rd person & not of the actual recipient.

10(1)(c) Supply does not involve movement of goods, Location of such goods at the time of
whether by supplier or recipient. delivery to the recipient. [CQ4 & CQ5]

10(1)(d) Goods are assembled or installed at site. Place of Installation/assembly [Refer CQ6]

10(1)(e) Goods are supplied on board a conveyance Place at which such goods are taken on
including vessel, aircraft, train, motor vehicle. board. [Refer CQ7]

10(2) PoS of goods cannot be determined Determined in prescribed manner.

SN Nature of supply Place of supply of goods

 IGST will be levied
1 Import into India Location of the importer
 In GST, export of goods has been treated as
2 Export from India Location outside India ‘zero rated supply’.

Page 94
CQ1. Mr. X of Mumbai sells refrigerators to Mr. Y of Ahmedabad. Place of supply would be Gujarat. Since location
of supplier (Maharashtra) & PoS (Gujarat) are in different states, IGST would be charged, being inter-state supply.

CQ2. Mr. A having registered PoB at Pune, placed an order on B Ltd. in New Delhi, for delivering a parcel to Mr. C
who was at Nasik. In this case, PoS would be Maharashtra [for transaction b/w B Ltd. & Mr. A].
Since the location of supplier (New Delhi) & place of supply (Maharashtra) are different, IGST would be charged.
However, PoS for a second leg of the transaction i.e. b/w A & C Ltd. would be determined using ection 10(1)(a)
which shall be Maharashtra, considering that movement of goods terminates at Nasik. Here, since location of
supplier (Pune/Maharashtra) & PoS (Nasik/Maharashtra) are in the same state, CGST + SGST would be charged.

CQ3. Mr. X (a supplier in UP having Principal PoB at Noida) asks Mr. Y of Ahmedabad, Gujarat to deliver 50
washing machines to his buyer Mr. Z at Jaipur, Rajasthan. In this case, two supplies are involved, one b/w Mr. X
& Mr. Z & other b/w Mr. Y & Mr. X. 1st supply is covered u/s 10(1)(a); 2nd supply is covered u/s 10(1)(b); Thus,
PoS of goods is not the location of delivery of such goods (Jaipur) but Principal PoB of 3 rd person i.e., Principal
PoB of Mr. X located at Noida.

CQ4. Mr. A (New Delhi) has leased his machine (cost Rs. 8,00,000) to Mr. B (Noida, UP) for production of goods
on a monthly rent of Rs. 40,000. After 14 months. Mr. B requested Mr. A to sell the machine to him for Rs. 4 lacs
which is agreed to by Mr. A. In this case, there will be no movement of goods & same will be sold on as is where
is basis. Thus, the location of the machine at the time of such sale will be the place of supply i.e., Noida.

CQ5. Mr. Kapish from Bangalore travelled to Chennai for vacation & purchased a laptop from Croma at Chennai.
PoS = Tamil Nadu. Since location of supplier & Place of supply are in same state, CGST + SGST would be charged,
being intra-state supply.

CQ6. Surya Narayan from Jamshedpur ordered a machine to be installed in his factory at Jamshedpur. The
supplier, from Kolkata, sourced the parts from various states across the country after which the machine was
successfully installed at his factory at Jamshedpur. In this case, the place of supply would be Jamshedpur
(Jharkhand). Since the location of the supplier (West Bengal) & the place of supply (Jharkhand) are different, IGST
would be charged.

CQ7. Howrah – New Delhi Rajdhani Express supplies food which was taken on board at Mugalsarai in Uttar
Pradesh. PoS of food for a transaction b/w the supplier of food & the railways would be Uttar Pradesh.
However, PoS of food for a transaction b/w railways & the passengers would be determined u/s 12 of the IGST
Act as such supply would be treated as ancillary to the supply of passenger transportation service.

Page 95
 [Supplier & Recipient is in India]

A. GENERAL PRINCIPLE (SERVICES) [RP → Registered Person; URP → UnRegistered Person]

Section Recipient is ↓ Place of Supply of Services
12(2)(a) Registered Person PoS = Location of the recipient of service
12(2)(b) Unregistered If Address of recipient exists on records → PoS = Location of Recipient
Person
If Address of recipient does not exists → PoS = Location of Supplier

B. SPECIAL (SPECIFIC) SERVICES

Sec Nature of Services PoS of Service
12(3) (a) Directly in relation to Immovable Property Place at which immovable Property is
[Architects, interior decorators, surveyors, engineers etc; located or intended to be located.
estate agents or for construction work]
(b) Lodging Accommodation by Hotel, Guest House, If immovable property is located o/s
Home Stay, club, camps including house boat India → PoS = Location of recipient
(c) Accommodation in any immovable property for
organising any marriage or reception or function
including auxiliary services provided in relation to
such function at such immovable property
(d) Any ancillary services of above services.
Explanation: If immovable property is located in more than 1 state/UT, supply shall be treated
as made in each of respective States in proportion to value for the services separately collected
OR determined as per T&Cs of the contract/agreement.
12(4)  Restaurant & Catering services; PoS = Place where services are Actually
 Personal grooming, Fitness, Beauty treatment Performed
 Health services, cosmetic/plastic surgery
12(5)  Training & performance appraisal services Recipient PoS
Reg. Person Location of Recipient
Unregistered Place where services
Person are actually performed
12(6) Admission to event or amusement park or any other PoS = Place where event is Actually
place & Services ancillary thereto. held OR Place where park or such
other place is located.
12(7) (a) Service of organisation of any event including Recipient PoS
services in relation to conference, fair, exhibition,
celebration etc. Reg. Person Location of Recipient
(b) Ancillary services to organization/assigning of Unregistered Place where event is
sponsorship to such events. Person actually held.
Note: If event is held o/s India, PoS = Location of recipient.
12(8) Transportation of goods, including by mail or courier. Recipient PoS
Reg. Person Location of Recipient
Unregistered Place at which such
Person goods are handed over
for transportation.
Note: If transportation of goods is to a place o/s India, PoS = Place of destination of such goods.

Page 96
12(9) Transportation of Passengers Recipient PoS
Reg. Person Location of Recipient
Unregistered Place where passenger
Person embarks on conveyance
for continuous journey.

Note: If right to passage is given for future use & point of embarkation is not known at the time
of issue of the right, PoS = As per sec 12(2).
Note: Return journey shall be treated as a separate journey, even if right to passage for onward
& return journey is issued at the same time.
12(10) Services supplied on board a conveyance Location of 1st scheduled point of
departure of that conveyance for journey.
12(11) Telecommunication services including data transfer,
broad casting, cable TV services etc.
A. Fixed Telecommunication line, Internet, Cable, Dish. Place of installation of connection
B. Post-paid connections, Internet Services Billing address of recipient
Services provided by selling agent, distributor of SIM Address of selling agent/distributor
Service provided by any person to final subscriber Location where such pre-payment is
received or such vouchers are sold
Online Payment or electronic mode Location of recipient of services.
C. Pre-paid connections (Recharge coupon) Address of Agent, place of
payment/sale of voucher coupon etc.
D. Other cases PoS = Address of recipient as per the
records of the supplier of services.
If address of recipient is not available;
PoS = Location of the supplier.

Examples Place of Supply

Mr. X (Kolkata) gets a landline phone installed at his home from Skybel Ltd. Kolkata
Mr. Y (Mumbai) gets a DTH installed at his home from RT Ltd. Mumbai
Mr. D (Mumbai) takes a post-paid mobile connection in Mumbai from Skybel Ltd. Mumbai
Mr. E (New Delhi) gets his post-paid bill paid online from Goa. New Delhi
Mr. C (Pune) purchases a pre-paid card from a selling agent in Mumbai. Mumbai
Mr. F (Puducherry) gets a pre-paid recharged from a grocery shop in Chennai Chennai

12(12) Financial & stock broking services PoS = Address of recipient as per the
records of the supplier of services.
If address of recipient is not available;
PoS = Location of the supplier.

12(13) Insurance services Location of recipient

12(14) Advertisement service to Government States where advertisement is done.

Page 97
Examples:
1 Mr. A is a Company Secretary registered at Mumbai & travels to Bangalore for business purpose & stays at
a hotel there. In this case, the place of supply would be Bangalore/ Karnataka i.e. place of immovable
property.
2 XYZ Consultants (registered at Bangalore) provides training to its client’s employees at Mumbai. The
clients are registered at Chennai. In this case, if the client (recipient) is registered, the place of supply
would be the location of recipient, that is Chennai (Tamil Nadu) & consequently IGST would be charged as
the location of Supplier (State of Karnataka) & the Place of Supply (State of Tamil Nadu) are different.
(Training & Performance Appraisal Services)
3 In the above example, if the client was unregistered, the place of supply would have been
Mumbai/Maharashtra & again IGST would be charged. (Training & Performance Appraisal Services)
4 Radha is a resident of Mumbai & travelled to Bangalore for a vacation & booked tickets for an event at the
water park. In this case, the place of supply would be Bangalore/ Karnataka (Admission to events).
5 Mr. X based in Ahmedabad, solicits the services of an event management company based in New Delhi,
for his daughter’s marriage. They plan for a destination wedding at a palace in Udaipur. In this case, if Mr.
X is registered, PoS would be Ahmedabad (Gujarat) & IGST would be charged. But, If he is unregistered,
PoS would be Udaipur (Rajasthan) & IGST would be charged.
6 Nagendra Kumar is relocating from Bangalore to Chennai & calls for packers & movers for packing &
relocation & shipping of household effects. In this case the place of supply would be Bangalore
(transportation services). Assuming the packers are also from Bangalore, CGST + SGST would be
applicable.
7 Tarun books a round trip for AHM – PNQ – BLR – PNQ – AHM, with a stopover at Bangalore. The tickets are
booked with a Bangalore based airline. In this case, this would be treated as a continuous journey with a
stopover. For the first leg, the place of supply would be Ahmedabad & since the Location of Supplier (BLR)
& the Place of Supply (AHM) are different, IGST would be charged. For the second leg of the journey, the
place of supply would be Bangalore, & since the Location of Supplier (BLR) & the place of supply are same,
CGST + IGST would be charged. (Passenger Transportation Services).
8 Nikhil, from Kolkata, gets a job at Mumbai & he gets a landline connection done at Mumbai. In this case, the
place of supply would be Mumbai. If he would have taken a post-paid connection, & provided the Billing
Address of Kolkata, the place of supply would have been Kolkata.
9 Priya, an unregistered person, from New Delhi, has an account with a Bank at New Delhi. She is on a
vacation in Nainital, & visits a bank for getting a Demand Draft made.
In this case, since the address of the recipient will be available in the records of the supplier, PoS = New
Delhi.
In case she went to a branch at Nainital for availing currency exchange services which isn’t linked to her
account in New Delhi, address of recipient would not be available in the records of the supplier, & hence
PoS = Nainital.

Page 98
A. GENERAL PRINCIPLE (SERVICES) [Sec 13(2) of IGST Act]
PoS = Location of the recipient of services; Except for sec 13(3) to 13(13).
Note: If location of the recipient of services is not available; PoS = Location of the supplier.

B. SPECIFIC SUPPLY
Sec Nature of Service Place of Supply
13(3) 1. Services requiring physical presence of goods Place where service is actually
performed
Exception:
 Services in respect of goods, that are temporarily Location of the recipient
imported into India for repairs & are exported after Location of supplier (If location of
repairs, without being put to any other use in India recipient is not available)
 Services supplied in respect of goods, that are provided Place where goods are situated at
from remote location by electronic means. the time of supply of services.
2. Services supplied to an individual, which require the Location where the service is
physical presence of the recipient. actually performed
13(4) Services directly in relation to immovable property
 Accommodation in hotel, club or campsite
 Grant of rights to use immovable property Location of immovable
 Construction and related services property
 Services of architects or interior decorators
 Services of experts and estate agents
13(5) Admission to the event OR organization of events or
Place where the event is held
celebrations, fair, conference & ancillary services
13(6) Services covered u/s 13(3), 13(4), 13(5) provided at multiple
PoS = Location falling in TT
locations including a location in TT.
13(7) Services supplied in more than one State/UT Proportional to value of service in
each State/UT.
13(8) Banking & financial services, Intermediary services &
Hiring of means of transport
 Services supplied by banking company, FIs, NBFCs to
A/c holders
Location of Supplier of service
 Intermediary services
 Services consisting of hiring of means of transport,
including yachts but excluding aircrafts & vessels, upto
1 month
13(9) Transportation of goods, except by mail or courier Destination of such goods
13(10) Passenger transportation services Place where passenger embarks
on the conveyance for continuous
journey
13(11) Services provided on board a conveyance 1st scheduled point of departure
of that conveyance for journey.
13(12) OIDAR Services [Not covered in CS Executive inDetail] Location of Recipient of Service

Page 99
PC Note: In case of advertisements over internet, the advertisement service shall be deemed to
have been provided all over India. Thus, the value of such service will be apportioned amongst all
States & UTs, of India. The amount attributable to the value of advertisement service disseminated
in a State/UT shall be calculated on the basis of the internet subscribers in such State/UT.

Continuous  A Journey for which a single or more than one ticket or invoice is issued at the same
Journey time, either by a single supplier of service or through an agent
[Sec 2(3)]
 & which involves no stopover b/w any of the legs of the journey for which one or more
separate tickets or invoices are issued.
Explanation: For the purposes of this clause, the term “stopover” means a place where a
passenger can disembark either to transfer to another conveyance or break his journey
for a certain period in order to resume it at a later point of time.

Export of Supply of any service when -

Services  Supplier of service is located in India;
[Sec 2(6)]  Recipient of service is located outside India;
 Place of supply of service is outside India;
 Payment for such service has been received by the supplier of service in convertible
foreign exchange or in Indian rupees wherever permitted by RBI; &
 Supplier of service & recipient of service are not merely establishments of a distinct
person in accordance with Explanation 1 in section 8.

Import of Supply of any service, where -

Services  Supplier of service is located outside India;
[Sec 2(11)]  Recipient of service is located in India; &
 Place of supply of service is in India.

Location of (a) where supply is received at a place other than PoB for which registration has been
Recipient of obtained (a fixed establishment elsewhere), Location of such fixed establishment.
Services
[Sec 2(14)] (b) where supply is received at more than 1 establishment (whether PoB/fixed establishment)
Location of the establishment most directly concerned with receipt of the supply.
(c) in absence of such places, Location of the usual place of residence of the recipient.

Location of (a) where supply is made from a place other than PoB for which registration has been
the Supplier obtained (a fixed establishment elsewhere), Location of such fixed establishment;
of Services
[Sec 2(15)] (b) where supply is made from more than 1 establishment (whether PoB/FE), Location
of the establishment most directly concerned with the provision of the supply;
(c) in absence of such places, Location of the usual place of residence of the supplier.
Non-taxable Any Government, local authority, governmental authority, an individual or any other
online person not registered & receiving online information & database access or retrieval
recipient services in relation to any purpose other than commerce, industry or any other business
[Sec 2(16)] or profession, located in taxable territory.

Page 100
 As GST is levied as % of the value of supply, it becomes important to know how to arrive at value on
which tax is to be paid.
 Section 15 of CGST Act supplemented with Chapter IV: Determination of Value of Supply of CGST
Rules prescribes provisions for determining value of goods and services.

TRANSACTION VALUE [Section 15(1)]

Value of “Supply of G/S” = Transaction value (price actually paid/payable) if:
(i) Supplier & Recipient are not Related & (ii) Price is the Sole Consideration for supply.

INCLUSIONS in the “Value of Supply” [Section 15(2)]

(a) Taxes: Any taxes, duties, cess, fees & charges (if charged separately) Except GST & related Cess.
(b) TCS should not be included in VoS. (since it is an interim levy not having character of tax).
(c) Payment to 3rd party by the Recipient on behalf of the supplier:
 Any amount paid/payable by recipient to 3rd party
 which supplier is liable to pay in relation to such supply &
 such payment is not included in price.
PC Note: Amount paid by the recipient to 3rd party will be added to VoS only when supplier is under
contractual liability to make payment to such third parties & said payment is in relation to such supply.

(d) Incidental expenses: Any amount charged for anything done by the supplier i.r.o supply of G/&S at
time of, or before delivery/supply of G/S.
Commission paid to agent & recovered from recipient.
Packing if charged by supplier to recipient.
Inspection or certification charges if billed to recipient of supply.
Installation & testing charges [Since charged for something done at time of making supply].
Weighment charges, loading & designing charges incurred before supply.
Outward freight, transit insurance
1. Delivery of goods at buyer’s premises
 Goods + Delivery + Insurance = Composite supply;
 Principal supply is “supply of goods”.
 Thus, ‘Outward freight & Insurance charges’ becomes part of value of composite supply
& GST is payable on outward freight & insurance charges at rate as applicable for goods.
2. Ex-factory basis contract  Outward freight will not be included in value of supply since
buyer pays outward freight.

(e) Interest, late fee, Penalty for delayed payment of any consideration for any supply.
(f) Subsidies directly linked to the price [excluding subsidies provided by CG/SG]
Nature of Subsidy Treatment in Value
Received from CG/SG Not added to the value of supply
Directly Linked to price of supply Added to value
Received from others
Not Linked to price of supply Not added to value

Page 101
EXCLUSIONS from Value of Supply [Section 15(3)]
Time of Giving Discount Treatment
before or at time of supply  If such discount has been recorded (shown) in invoice issued for
such supply, it shall be excluded from VoS.
Discount given after supply  If such discount is given as per agreement which existed at time of
such supply & specifically linked to relevant invoices &
 Proportionate ITC has been reversed by recipient.

Value in case of “DISCOUNTS”

Discounts including ‘Buy more, Save more’ offers
 Supplier offers staggered discount to his customers (increase in discount with increase in
purchase).
 Such discounts are excluded to determine the value of supply.
Ex: Get 10 % discount for purchases above Rs. 5,000; 20% discount for purchases above Rs. 10,000; & 30%
discount for purchases above Rs. 20,000. Such discounts are shown on the invoice itself.
 Some suppliers offer periodic/year ending discounts to their stockists, etc.
Ex: Get additional discount of 1% if you purchase 10,000 pieces in a year; get additional discount of 2% if you
purchase 15,000 pieces in a year.
Such discounts are established in terms of an agreement entered into at/before the time of
supply though not shown on invoice as actual quantum of such discounts gets determined
after the supply has been effected & generally at year end. In commercial parlance, such
discounts are colloquially referred to as “volume discounts”. Such discounts are passed on by
supplier through credit notes.
 Such Discounts offered by suppliers to the customers shall be excluded to determine
VoS provided they satisfy the parameters laid down in sec 15(3) of CGST Act, including
reversal of ITC by recipient of supply as is attributable to discount on the basis of documents
issued by supplier.

Page 102
 SECONDARY DISCOUNTS

 These are the discounts which are not known at the time of supply or are offered after supply.
Ex. M/s A supplies 10,000 packets of biscuits to M/s B at Rs. 10 per packet. Afterwards M/s A re-values it at
Rs. 9 per packet. Subsequently, M/s A issues credit note to M/s B for Rs. 1 per packet.
 Secondary discounts shall not be excluded while determining VoS as such discounts are not known
at the time of supply & conditions in sec 15(3)(b) of CGST Act are not satisfied.
 There is no impact on availability or otherwise of ITC in the hands of supplier in this case.

Examples:
1. Parle gives a discount of 30% on list price to its distributors. In an invoice, list price is mentioned as Rs. 200, on
which a discount of 30% is given. VoS = Rs. 140, as discount is allowed at time of supply & shown in invoice.
2. Agreement of Raju Electrical Appliances with its dealers is that sale of rice cookers over 1000 pieces in Diwali month
will entitle them to discount of 5% per cooker. Therefore, quantum of discount can be determined only at the end
of Diwali month. However, since the agreement relating to discount was in existence at the time of supply, &
discount can be worked out for each invoice, such post supply discount will be allowed as a deduction from VoS.
Raju Electrical Appliances can issue credit note for 5% of value of goods along with GST & claim adjustment of
excess tax paid. Dealer must reverse the proportionate ITC on the relevant stock to bring it in line with reduced tax.
3. Pink & Blue Pvt. Ltd. (PBPL) sold goods to Orange Pvt. Ltd. (OPL) on 15th January at Rs. 50,000 (exclusive of taxes
& discounts) & charged Rs. 9,000 as IGST @ 18%. The terms of supply stipulated that discount @ 2% will be given
to OPL if it makes the payment within one month of the supply. OPL avails the input tax credit of Rs. 9,000 in the
month of January & makes the payment for the goods on 10th February. PBPL issues credit note for Rs. 1180 [Rs.
1,000 for value of discount & Rs. 180 for proportionate IGST leviable thereon] to OPL on 11th February. After
receiving credit note, OPL reverses the input tax credit of Rs. 180 attributable to the discount given by the PBPL.
PBPL can reduce its GST liability of the month of February by Rs. 180. OPL would have paid Rs. 57,820 (Rs. 50,000
+ Rs. 9,000 - Rs. 1,000 - Rs. 180) to PBPL on 10th February.
4. In the above example, if the terms of supply did not provide for discount @ 2% for payment within one month but
PBPL offers such discount to OPL at the time of payment after negotiation, the discount will not be allowed as a
deduction from the value. PBPL will issue a commercial credit note for only the value of discount, i.e. for Rs. 1,000.
OPL will not reverse any input tax credit and PBPL will also not be able to reduce its GST liability for February. In
this case, OPL would pay Rs. 58,000 (Rs. 50,000 + Rs. 9,000 – Rs. 1,000) to PBPL on 10th February.
5. A company announces turnover discounts after reviewing dealer performance during year. Discounts are based on
performance slabs & are given as cash-back. As these discounts were not known at time of supply, they will not be
deducted from VoS of those goods. Hence, the company will not be able to adjust excess tax paid from its tax liability.

SECTION 15(4) – REFERENCE TO VALUATION RULE

 If value of supply of G/&S cannot be determined u/s 15(1), it shall be determined in such manner as
may be prescribed.
 Applicability: (a) Supplier & recipient are related party; (b) Price is not sole consideration for supply.

Value to be adopted for computing GST on services of BFs/BCs to Banking Company

 Banking company is the service provider in BF/BC model operated by banking company.
 Thus, banking company is liable to pay GST on Entire Value of Service Charge or fee charged to
customers (whether or not received via BF or BC).

Page 103
 Rule Case Value of Supply of G/S
27 Consideration is not (a) Open Market Value of such supply
wholly in money
If Open Market Value is not available
(b) Consideration in money + Money value of Non-Monetary
consideration (if such amount is known at the time of supply)

If value of supply is not determinable using (a) & (b) above;

(c) Value = Value of supply of G/S of like kind & quality.

If value of supply is not determinable using (a), (b) & (c);

(d) Total of consideration in money + Monetary value of non-monetary
consideration as determined by application of rule 30/31.

Examples:
1. Where a new phone is supplied for Rs. 20,000 along with exchange of old phone & if price of the new phone
without exchange is Rs. 24,000, open market value of new phone i.e Rs. 24,000 will be VOS.
2. Where a laptop is supplied for Rs. 40,000 along with barter of a printer that is manufactured by the recipient
& value of the printer known at the time of supply is Rs. 4,000; but open market value of the laptop is not
known, value of supply of the laptop = Rs. 40,000 + Rs. 4,000 = Rs. 44,000.

Analysis of Rule 27: Where, the consideration for a supply is not wholly in money [which means
there is portion of consideration payable in kind], open market value of the underlying goods or
services shall be the value for the purpose of calculating tax liability. However, where, open market
value is also not available, then one may monetize the consideration which is in kind & add in the
consideration in money to arrive at the value of supply. In case, the methodologies cannot be applied,
then, one may find the value of goods or services of like kind or quality & adopt such value. In any of
the above methodologies are not applicable, Rule 30 & Rule 31 be applied to arrive at the value of
additional consideration not in money to finally arrive at the value of supply.

28 Supply b/w related (a) Open market value of such supply

persons or distinct
person u/s 25(4)/(5) (b) Value = Value of supply of G/S of like kind & quality (if open
(other than through an market value is not available)
agent)
(c) If value of supply is not determinable using (a) & (b) above; Value
as determined by the application of rule 30/31.

 If goods are intended for further supply (as such) by recipient to unrelated person:
Value (at the option of supplier) = 90 % of price charged (for like ‘kind & quality’ goods) from his customer
not being a related person.
 If the recipient is eligible for full ITC, value declared in invoice shall be deemed to be the ‘Open Market
Value’ of G/S.

Analysis: Where supplier & recipient are related or distinct, statute book refuses to accept the
transaction value as there is every possibility of collusion to reduce the value. Thus, Rule 28 provides
for adoption of open market value of the same supply or if not available, open market value of the
goods of like kind & quality. Where the recipient intends to make further supply of goods or services,
the provision permits the supplier to value the gods at 90% of the price intended to be charged by the
recipient while making further supply. It is also provided that where the recipient is eligible to avail full
input tax credit, the value, whatever, is declared by the supplier, shall be accepted as the correct value.

Page 104
 29 Supply of goods b/w (a) Open market value of such supply OR
Principal & Agent If goods are intended for further supply (as such) by recipient to
unrelated person:
Value (at the option of supplier) = 90 % of price charged (for like
‘kind & quality’ goods) from his customer not being a related person.

(b) If value of supply is not determinable using (a) above; Value shall
be determined by the application of rule 30/31.

Ex: A principal supplies groundnut to his agent & agent is supplying groundnuts of like kind & quality in
subsequent supplies at Rs. 5,000 per quintal on the day of supply. Another supplier is supplying groundnuts of
like kind & quality to said agent at Rs. 4,550 per quintal. Value of the supply made by principal = Rs. 4,550 per
quintal. If he exercises the option, value = 90% of Rs. 5,000 = Rs. 4,500 per quintal.
30 Value based on COST If value is not determinable by any of the preceding rules;
Value = 110% of Cost of Production.

31 Residual Method If value cannot be determined u/r 27 to 30, it shall be determined using
[Best Judgement reasonable means consistent with principles & general provisions
Method] of sec 15 & provisions of this Chapter.

Note: Service providers can directly use this rule (ignoring rule 30)

31A Lottery; Betting; (a) Lottery run by SGs (a) 100/112 of face value of ticket OR
Gambling & Horse [Higher of (a) or (b)] (b) 100/112 of notified price in OG by SG.
racing
(b) Lottery organized by (a) 100/128 of face value of ticket OR
SGs [Higher of →] (b) 100/128 of notified price in OG by SG.

“Lottery run by State Governments” means a lottery not allowed to be sold in any State other than
the organizing State;
“Lottery authorised by State Governments” means a lottery which is authorised to be sold in State(s)
other than the organising State also;

Supply of Actionable claim in form of chance to win in betting/gambling/horse racing = 100%

of face value of the bet or the amount paid into the totalisator.

32  Rule 32 overrides other rules of valuation.

 Rule 32 provides valuation methods for 5 specific supplies.
 Valuation methods prescribed under this rule are optional.
 Thus, the supplier of these 5 specific supplies can use this rule if he so desires.
 He can also value his supplies in accordance with other valuation rules.
Space for Class Notes:

Page 105
 METHOD 1

(a) If a foreign currency is exchanged with Indian Rupees & vice versa
Case Value of Supply
RBI Rate is available Difference b/w RBI Rate & selling/buying rate
RBI Rate is NOT available 1% of gross amount of Indian Rupees
(b) If a foreign currency is exchanged with another foreign currency
Value = 1% of lesser of two amounts the person (changing money) would have
received by converting any of the two currencies in Indian Rupees (at RBI rate).

METHOD 2 [Slab Rate; Option once exercised cannot be withdrawn for remaining part of FY]

Currency exchanged Value of Supply ↓ [Min = Rs. 250 & Max. = Rs. 60,000]

Upto 1 Lac 1% of currency exchanged;

Above 1 lac but upto 10 Lacs Rs. 1,000 + 0.5% of (Currency exchanged – Rs. 1 Lac)

Above 10 Lacs Rs. 5,500 + 0.1% of (Currency exchanged – Rs. 10 Lac)

Domestic Booking 5% of basic fare

International Booking 10% of basic fare

Cases Value
If amount allocated for investment on Gross premium - Amount allocated for investments
behalf of policy holders is given
Note: Amount Invested/savings shall be intimated
separately at the time of provision
to policy holder at the time of collection of premium
service
Single premium annuity policy 10% of single premium charged
If entire premium charged from policy Entire Premium
holders is only towards risk cover
Any other life insurance policy  1st year: 25% of premium charged;
 Subsequent yrs: 12.5% of premium charged

32(5) VALUE OF SECOND HAND GOODS

If ITC is not availed If ITC is availed

 Value = Selling price – Purchase price (Margin).  Normal valuation as per other
 No Margin = No GST. applicable provisions

 Purchase value of goods repossessed from defaulting borrower (unregistered) = Purchase

price of such goods by defaulting borrower – 5% for every quarter/part between date of
purchase & date of disposal by the person making such repossession.
 If defaulting borrower is registered → Repossessing lender agency will discharge GST at the
supply value without any reduction from actual/notional purchase value.

Page 106
 PC Note: Intra-State supply of 2nd hand goods by UR supplier to reg. 2nd hand dealer → Exempt.

Value = Money value of G/S redeemable against such token, voucher, coupon, stamp.

32(7) VALUE OF SERVICES PROVIDED BY NOTIFIED SERVICE PROVIDERS

Value of supply = Nil (if following conditions are satisfied)

Conditions:
1. Government may notify a class of service providers for the purpose of this rule.
2. ITC is available to the supplier of notified services.
3. Service is provided to related person or distinct person u/s 25(4)/(5) without consideration.

Expenditure/costs incurred by a supplier of G/S as pure agent of recipient of supply shall be

excluded from value of supply if following conditions are satisfied:
 Supplier acts as pure agent of recipient when he makes the payment to 3 rd party on
authorisation by such recipient; &
 Payment made by pure agent on behalf of recipient has been separately indicated in invoice
issued by pure agent to recipient; &
 Supplies procured by pure agent from 3rd party as a pure agent of recipient are in addition to
the services he supplies on his own account.

Pure Agent: A Person who

(a) enters into a contractual agreement with recipient of supply to act as his pure agent to incur
expenditure or costs in the course of supply of G/S;
(b) does not hold (nor intends) any title to G/S so procured or supplied as pure agent
(c) does not use for his own interest such goods or services so procured
(d) receives only actual amount incurred to procure such G/S in addition to amount received for
supply he provides on his own account.

Ex: Corporate services Firm A is engaged to handle the legal work pertaining to the incorporation of
Company B. Other than its service fees, A also recovers from B, registration fee & approval fee for the
name of the company paid to the Registrar of Companies. The fees charged by the Registrar of
Companies for the registration & approval of the name are compulsorily levied on B. A is merely
acting as a pure agent in the payment of those fees. Therefore, A’s recovery of such expenses is a
disbursement & not part of the value of supply made by A to B.
34

1. Exchange Rate for determination of value of taxable goods = Applicable rate of exchange as
notified by CBEC u/s 14 of Customs Act, 1962 for the date of ToS of such goods.

2. Exchange Rate for determination of value of taxable services = Applicable rate of exchange
determined as per ‘generally accepted accounting principles’ for the date of ToS of such
services in terms of section 13 of the Act.

Tax rate in %
Tax amount = Value inclusive of taxes ×
(100 + Tax rates) in %

Page 107
MEANING OF RELATED PERSON: Persons shall be deemed to be “related persons” if:
 Such persons are officers or directors of one another’s businesses;
 Such persons are legally recognized partners in business;
 Such persons are employer & employee;
 Any person directly or indirectly owns, controls or holds ≥ 25% of the outstanding voting stock or shares
of both of them;
 One of them directly or indirectly controls the other;
 Both of them are directly or indirectly controlled by a third person;
 Together they directly or indirectly control a third person; or
 They are members of the same family;
 One is the sole agent or sole distributor or sole concessionaire of the other.

Ex. Nisha Enterprises had made supplies of Rs. 750,000 to Tee Kay Services. There was a tax levied by Municipal
Authorities on such sale of Rs. 75,000/-. CGST & SGST chargeable on the supply was Rs. 37,500. Packing charges,
not included in the price above amounted to Rs. 15,000.
Nisha Enterprises received a subsidy of Rs. 30,000/- from an NGO on the sale of such goods, & the price mentioned
above is after taking in to account the subsidy.
Discount offered is @ 1% & that’s mentioned on the Invoice. Determine the Value of Supply.
Price Charged Rs. 7,50,000
Add: Tax charged by Municipal Authorities Rs. 75,000
Packing Charges Rs. 15,000
Subsidy from NGO Rs. 30,000
Total after all inclusions Rs. 8,70,000
Less: Discount @ 1% Rs. 7,500

Notes:
1. CGST & SGST is not included in the determination of value of supply. Rather it is taxed post determination
on the same.
2. Subsidy since received from a non-governmental body is added back to determine the value of supply.
3. Discount on basic price is an exclusion.

Page 108
Which A/c  Production/Manufacture of goods [i.e RM, WIP, FG]
are to be for facilitating audit &
 Inward & outward supply of G/S; Stock of goods
maintained? to show correct value
 Output tax paid & payable; ITC availed.
[Sec 35(1)]

 G/S Imported or exported

Given in  Supplies attracting RCM along with all ancillary & related documents
[Rule 56]  Name & Address of persons to/from whom he has supplied/ received Goods or Services.
 Separate A/c of advances received/paid/adjustments made.
Where to A/c are maintained Manually A/c are to be kept at every PoB mentioned in RC.
Maintain?
A/c are maintained Digitally A/c shall be accessible at every PoB mentioned in RC.
Retention of  At least 72 months (6 years) from due date of furnishing of annual return for the FY
Books of A/c relevant to such A/c & records.
[Sec 36]  Period will be counted from last date of filing of Annual Return for that year.
Ex: For FY 2019-20, due date of filing annual return is 31/12/2020. Books of A/c of FY 2019-20 must be maintained
for 6 years, i.e., 31.12.2026.
PC Note: If RP is a part of any appeal/proceedings or is under investigation, then he must maintain A/c
related to such matters of such appeal for 1 year from date of order of such proceedings/appeal.

Applicability Every RP whose ATO during FY > Rs. 2 crores shall get A/c audited by CA/CMA.
Filing Such RP shall along with annual return furnish a copy of -
requirement Audited Annual A/c & Reconciliation statement (which reconciles value of supplies
by such RP declared in Annual Return with Annual Audited Financial Statements) in Form GSTR-9C.
Exception Department of CG/SG/LA whose audit is done by C&AG → Sec 35(5) is not applicable.

AUDIT UNDER GST

Who can  Commissioner or

conduct  Any officer authorised by him (by general or special order)
Place at the place of business of RP or in the office of the “person conducting audit”.
Prior Notice of not less than 15 working days before the conduct of audit in Form GST ADT-01.
Time for  Audit shall be completed within 3 months from the date of commencement of Audit.
Completion  Commissioner may extend by a further period not exceeding 6 months
Commence- (a) Date on which records/documents called by tax authorities are made available
Ment of audit (b) Actual institution of Audit at PoB of RP [Whichever is Later]
Ex: Notice for audit was served to X Ltd on 6.7.2019. Required information was furnished by X Ltd on 22.8.2019. Audit
officers visited PoB of X Ltd. on 15.9.2019. What is the last date within which the audit is to be completed?
Answer: Audit is to be completed within 3 months from 22.8.2019 [i.e on/before 21.11.2019].

Page 201
Procedure  PO along with his team will verify:
 verify all the necessary Accounts/books/records.
 Correctness of TO; Exemptions & deductions claimed;
 Rate of tax applied i.r.o. supply of G/S;
 ITC availed & utilized; Refund claimed & Other relevant issues.
 During the audit, authorised officer may require the registered person,
 to give him necessary facility to verify books of A/c or other documents;
 to furnish required information & give assistance for timely completion.
Finalisation PO shall (within 30 days) inform about the findings & its reasons to RP in Form ADT-02.
No Direct  If tax liability is identified during the audit or ITC wrongly availed or utilized by auditee,
Demand PO may initiate action u/s 73 or 74 [i.e. SCN is to be issued].
PC Note: General Audit u/s 65 can be undertaken even if taxable person is not registered as there is no
specific condition mentioned for audit of Registered/unregistered taxable person [Only for Knowledge].

Who & When  If at any stage of scrutiny, inquiry, investigation or any other proceedings, any officer not
may below the rank of Assistant Commissioner, is of the opinion that
directed  Value has not been correctly declared or
Special Audit
 ITC availed is not within the normal limits,
 he may (with prior approval of Commissioner) direct such RP to get his records/books
of A/c examined & audited by CA/CMA as may be nominated by the Commissioner.
Expenses  Expenses of audit including remuneration of such CA or cost accountant, shall be
determined & paid by the Commissioner.
Time Limit  Nominated CA/CMA shall submit a duly signed & certified Audit report to the said
Assistant Commissioner within 90 days. [Extension by 90 days is possible].
Special  RP will be given an opportunity of being heard for the use of any information, document
Audit etc. obtained during Special Audit proposed to be used in any further proceedings.
Report  On conclusion of special audit, RP shall be informed of the findings of Special audit.
Demand &  No demand of tax is permitted on completion of special audit u/s 66.
recovery  In case any possible tax liability is identified, procedure u/s 73 or 74 is to be followed.
 Based on findings of the special audit, action can be initiated u/s 51.
PC Note: Special Audit u/s 66 may be directed even if Accounts of RP have been audited under any other
provisions of this Act or any other law. Ex: If audit has been conducted by tax authorities u/s 65, special audit
u/s 66 can still be directed irrespective of any Audit covered under any provisions of this Act or under any other Act.

Nature General/Departmental Audit Special audit

By Whom Commissioner or officers authorised CA/CMA nominated by commissioner
Notice Prior notice of 15 days No prior notice/intimation
Time 3 Months + Extension of 6 months 90 days + Extension of 90 days
Findings Audit reports should be intimated Audit reports should be summited to
upon completion of the audit deputy/assistant commissioner
OOBH No specific provision Yes if findings are to be used in further proceedings
Action Yes, u/s 73 by the issuance of SCN (Show Cause Notice)

Page 202
 12A. TAX DEDUCTED AT SOURCE [Section 51]
Deductor Following persons (deductor) are mandatorily required to deduct tax at source from
payments made to the suppliers of taxable goods and/or services:
1. Department or Establishment of CG/SG;
2. Local Authority;
3. Government Agencies;
4. Following persons notified by CG on recommendation of GST Council
(a) Authority or a board or any other body set up by an Act of Parliament or State
Legislature or established by any Government,
with 51% or more participation (equity/control) to carry out any function;
(b) Society established by CG/SG/LA under Societies Registration Act, 1860;
(c) Public sector undertakings (PSUs)
NO TDS TDS provisions are not applicable in following cases:
► Post audit authorities under Ministry of Defence
► Supply of G/S from a PSU to another PSU (whether a distinct person or not)

Rate Intra State → CGST @ 1% & SGST/UTGST @ 1%; Inter State → IGST @ 2%
From Payment made or credited to supplier of TAXABLE G/S notified by CG.
Note: Tax is not required to be deducted on supply of EXEMPT G/S.
Limit Deduction is required if total value of supply under ‘a contract’ > Rs. 2.5 lakhs.
Note: If contract is made for both taxable supply & exempted supply, deduction will be
made if total value of taxable supply in the contract > Rs. 2.5 Lacs.
Examples:
1. Value of a contract for printing material is Rs. 3 Lacs + GST & the same is received vide 6 invoices of Rs. 50,000 +
GST each in FY 18-19 & FY 19-20. TDS is required to be deducted on each bill.
2. If value of 6 contracts for printing material from the same vendor A is Rs. 50,000 + GST each & same is received
vide 6 invoices of Rs. 50,000 + GST each. TDS is not required to be deducted on any bill.
3. If value of 1 contract for printing material from a vendor A is Rs. 2,75,000 inclusive of 18% GST. TDS is not
required to be deducted as the value of contract exclusive of GST is less than ` 2,50,000/-
4. If value of 1 contract for printing material & books from a vendor A is Rs. 3.5 lacs + GST. Value of books is Rs. 1
lac (GST is exempt) & Value of printing material is Rs. 2,50,000 (GST chargeable). No TDS is applicable as value
of contract of taxable goods (printing material) does not exceeds 2.5 lac.
5. If value of 1 contract for printing material & books from a vendor A is Rs. 4 lacs + GST as applicable. Value of
books is Rs. 1 lac (Exempt) & Value of printing material is Rs. 3 lacs (GST chargeable). TDS is required to be
deducted only on value of contract of taxable goods (printing material) of Rs. 3 lacs.
Value Value of supply shall exclude the tax indicated in the invoice.
NO TDS If location of supplier & PoS is in a State/UT which is different from the State/UT of
registration of the recipient, there will be no TDS.
The above statement can be explained in the following situations:
(a) Supplier, PoS & recipient are in same state: Intra state supply & TDS is required.
(b) Supplier & PoS are in different states: Inter state supply & IGST will be deducted.
(c) Supplier & PoS are in State A & recipient is located in State B: No TDS.
CRUX: When both supplier & PoS are different from that of recipient, no TDS.
 No tax shall be deducted if location of supplier & PoS is in a State/UT which is different from the
State/UT of registration of the recipient.

Page 203
  If location of supplier & PoS are in same State/UT & deductor is registered in that State/UT without
legislature, it is intra-State supply & TDS is to be deducted.
 If location of supplier is in State A & recipient of supply is in another State/UT B. However, if customer
is in the same state A, then it is intra-State supply & TDS @ 1% under CGST Act and @ 1% under
SGST Act is to be deducted as the deductor is registered in State/UT A.
Ex: If material is purchased by B (WB) from A (WB) but to be delivered to C(TN) & value of contract of
taxable goods (printing material) of Rs. 3,00,000 + GST, tax is liable to be deducted as follows: 1% CGST &
1% SGST on Rs. 3,00,000 = Rs. 6,000.
 If location of supplier is in State A & recipient of supply is in another State/UT B. However, if the
customer is in yet another state C, then it is inter-State supply & TDS @ 2% under IGST Act is to be
deducted as the deductor is not registered in State/UT A.
Ex: If material is purchased by B (WB) from A (Bihar) but to be delivered to C (TN) & value of contract of
taxable goods (printing material) of Rs. 3 lacs + GST, tax is liable to be deducted @ 2%.
Remittance 1. Tax deducted shall be paid to CG within 10 days after the end of the month in which
such deduction is made.
Non-remittance by deductor: he is liable to pay interest u/s 50 @ 18% p.a.
TDS As per Rule 66, the deductor shall furnish a TDS certificate in Form GSTR-7A within 5
Certificate days of remittance to the deductee mentioning (a) contract value; (b) Rate of deduction; (c)
Amount deducted (d) Amount paid to Government.
Certificate not furnished by the Deductor within 5 days: Deductor has to pay a late
fee of Rs. 100 per day from 6th day until the day he furnishes the certificate. The
maximum late fee is prescribed as Rs. 5000.
Refund on Deductor or deductee can claim refund of excess deduction or erroneous deduction.
Excess However, if amount deducted has been credited to Electronic Cash Ledger of deductee,
Collection deductor cannot claim refund.
Reflection The amount of tax deducted is reflected in
of amount of  Electronic Cash Ledger of deductee.
TDS
 Return filed by deductor u/s 39(3).
Tax deducted is reflected in Electronic Cash Ledger of deductee in return in Form GSTR-
7 filed by deductor shall be claimed as credit.

SOME IMPORTANT PROVISIONS:

 If Advance is paid to supplier on/after 01.10.2018 for supply of taxable G/S, TDS is applicable.
Ex: If contract of Rs. 3 lacs + GST is made on 30th Sep 2018 but neither supply of goods nor payment is made
on that day. Thereafter advance is made on 1st October 2018 of Rs. 10,000 + GST. Herein Tax will be deducted
on the advance of Rs. 10,000/- made on 1st October 2018.

 If contract value is revised, tax is required to be deducted on entire (revised) value.

Ex: Contract with a supplier ABC was entered into for 2 Lacs & payment of Rs. 1 Lac has been made on 15.10.2018.
Now, on 20.10.2018 the contract value is revised from Rs. 2 Lakh to Rs. 6 Lacs. In this case TDS shall have to be
deducted on entire amount i.e. Rs. 6 lacs while making remaining payment of Rs. 5 Lacs. In other words, Rs. 12,000
would be deducted when remaining payment of Rs. 5 Lacs is made.

Page 204
 12B. TAX COLLECTED AT SOURCE [Section 52]
Meaning TCS refers to the tax which is collected by ECO when a supplier supplies some G/S
through its portal & payment for that supply is collected by ECO.
Who is liable Every ECO (not being an agent) shall collect tax at source (TCS) from net value of taxable
to collect supplies made through it by other suppliers whenever ECO collects the consideration on
behalf of the supplier.
Rate Intra-State supply - 0.5% of net value. Inter-State supply - 1% of net value
Net Value Aggregate value of taxable supplies of G/S - taxable supplies returned to suppliers
(other than notified services u/s 9(5) by all registered persons through operator)
Deposit of TCS amount collected by the ECO has to be remitted to the Government Treasury within
TCS 10 days after the end of the month in which the collection was made.
Credit Supplier can claim credit of the TCS amount in his electronic cash ledger. This amount
should reflect in the monthly statement filed by the e-commerce operator.
Notice to  An officer not below the rank of Deputy Commissioner can issue notice to an operator,
Operator asking him to furnish details relating to volume of the goods/services supplied, stock of
goods lying in warehouses/godowns etc.
 The operator is required to furnish such details within 15 working days.
 In case an operator fails to furnish the information, besides being liable for penal action
u/s 122, it shall also be liable for penalty up to Rs. 25,000.
Filing of  An electronic statement has to be filed by the ECO containing details of the outward
Monthly & supplies of G/S effected through it, including the supplies returned through it & amount
Annual collected by it as TCS during the month within 10 days after the end of each month in
Statements which supplies are made.
by ECO  Additionally, ECO is also mandated to file an Annual Statement on or before 31st day
of December following the end of the financial year.
Rectification If the ECO discovers any discrepancy on his own not being the result of any scrutiny,
in Monthly inspection or enforcement proceedings, he has to rectify the statement. However, the limit
Statement by for rectification is earlier of:
ECO (a) Due date for filing statement for september following the end of FY OR
(b) Actual date of furnishing of relevant annual statement.

Q1. Mr. X is a supplier selling his own products through a web site hosted by him. Does he fall under the definition
of an “electronic commerce operator”? Whether he is required to collect TCS on such supplies?
Answer: As per the definitions in Section 2(44) & 2(45), Mr. X will come under ECO. However, according to
Section 52 of the Act, TCS is required to be collected on net value of taxable supplies made through it by other
suppliers where the consideration is to be collected by ECO. In cases where someone is selling their own products
through a website, there is no requirement to collect tax at source as per the provisions of this Section. These
transactions will be liable to GST at the prevailing rates. Thus NO TCS.
Q2. If we purchase goods from different vendors and are selling them on our website under our own billing. Is
TCS required to be collected on such supplies?
Answer: No. According to sec 52, TCS is required to be collected on net value of taxable supplies made through
it by other suppliers where the consideration is to be collected by ECO. In this case, there are 2 transactions:
where we purchase the goods from the vendors & where we sell it through our website. For 1 st transaction, GST
is leviable & will need to be paid to our vendor, on which ITC is available for us. 2nd transaction is a supply on our
own account & not by other suppliers. Thus there is no requirement to collect tax at source. The transaction will
attract GST at the prevailing rates.

Page 205