Standardised PPT On GST: Indirect Taxes Committee The Institute of Chartered Accountants of India

Standardised PPT on GST
INDIRECT TAXES COMMITTEE

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
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3
Time of Supply

Time of Supply of Goods – Sec 12(2) 4
Actual date of issue of invoice by the supplier
Due date for issue of invoice by the supplier [Section 31(1)*]:

- Non-Continuous Supply involves movement: Time of removal of
goods for supply [31(1)(a)]
As per Section 12(2) of
CGST ACT, time of - Non-Continuous Supply - Other cases: Delivery of goods/ making
supply of goods shall available to the recipient or [31(1)(b)]
be earlier of invoice/ - Continuous Supply: Date of issue of statement of account/receipt of
payment, i.e., – payment [31(4)]
- Sale on approval basis: Earlier of time at which it becomes known that
the supply has taken place OR 6 months from date of removal [31(7)]
Date of receipt of payment (date on which payment is entered in the books of Accounts of
supplier or Date on which payment is credited to the supplier’s bank a/c whichever is earlier-
Explanation 2 to Section 12(2)
*Where payment is received in advance, the Supplier shall issue a receipt voucher, and NOT a tax invoice
 Excess payment of upto Rs. 1000/- is received in respect of any invoice

 Time of supply shall at option of the supplier is date of issue of invoice in respect of such
excess amount. (Proviso to Sec 12(2))
 No tax on advance received against the supply of goods

As per Notification No. 40/2017- CT dated 13-10-2017, suppliers of goods having aggregate
turnover of upto Rs 1.50 crores in the last year or current year have been exempted to pay tax
upon receipt of advance (w.e.f 13-10-2017) as the time of supply in such cases would be the date
of invoice or due date of issue of invoice in light of Clause (a) of Section 12(2). Subsequently this
exemption has been extended w.e.f. 15-11-2017 to all tax payers vide Notification No 66/2017-CT
dated 15-11-2107.
This benefit is not available to person covered under Composition Scheme.

In summary, the taxability of the consideration received in advance in respect

of goods for non-composition dealers would be as follows:
Period Taxability of consideration received in advance
Aggregate turnover less than Aggregate turnover more

Rs 1.50 crores than Rs 1.50 crores
01.07.2017 to 12.10.2017 Taxable Taxable

13.10.2017 to 14.11.2017 Not taxable Taxable
15.11.2017 and onwards Not taxable Not taxable

Time of Supply of Goods – Sec 12(2)
7
Illustrations
Non continuous supply Due date of Payment Credit in

Invoice date issue of entry in bank Time of
of goods supplier's supply
invoice books account
Section 12(2)
r/w Section 31(1)
1 Invoice raised before 10-March-18 20-March-18 26-March-18 30-March-18 10-March-18

removal
2 Advance received 30-March-18 20-March-18 10-Feb-18 25-Feb-18 20-March-18
3 Advance received 25-Jan-18

10-Feb-18 20-Feb-18 25-Jan-18 28-Jan-18
(Composition Dealer)

8
Illustrations
Non continuous supply
Invoice/ Due date of
of goods Receipt of Time of
document issue of
Section 12(2) r/w payment supply
date invoice
Section 31(1)
4 Delayed issue of invoice 26-March-18 20-March-18 28-March-18 20-March-18
5 Inter-State stock transfer 20-March-18 20-March-18 - 20-March-18

10-March-18
6 10- March-18
Advance received, invoice (40%)
for full amount issued on
10-March-18 12-March-18
same day (40% advance, 20-March-18
10-March-18
60% post supply payment) (60%)

9
Illustrations
SoA/
Continuous supply of goods Receipt of Time of
Invoice date payments due
Section 12(2) r/w Section 31(4) payment supply
date
7 01-Mar-18 05-Mar-18 03-Mar-18 01-Mar-18
Contract provides for
8 successive statements of 11-April-18 05-April-18 13-April-18 05-April-18
account/ successive payments
9
08-April-18 05-April-18 01-April-18 01-April-18


10
Illustrations
Sale on approval basis
Removal of Issue of Accepted by Receipt of Time of
Section 12(2) r/w Section
goods invoice recipient payment supply
31(7)
Acceptance
10 communicated within 6 01-Feb-18 25-Feb-18 15-Feb-18 25-Feb-18 15-Feb-18
months of removal
01-Apr-18
Acceptance not (end of 6
11 communicated within 6 01-Oct-17 15-May-18 15-May-18 18-April-18 months from
months of removal date of removal
of goods)

11
Time of Supply of Services – Sec 13(2)
If invoice issued within prescribed time u/s Date of issue of Invoice or
31(2) - 30 days (45 days in case of Banking, receipt of payment(Earlier of
Insurance, Financial Institution or NBFC entry in books or credit in bank
company)- Clause (a) account), whichever is earlier
If invoice not issued within 30 days Date of provision (completion)

(45 days in case of Banking, Insurance, of service or receipt of payment,
Financial Institution or NBFC company)- whichever is earlier
Clause (b)
Date on which recipient shows

If both the above clauses do not apply the receipt of services in his
books of accounts
*Where payment is received in advance, the Supplier shall issue a receipt voucher, and NOT a tax invoice
*Where payment of Rs. 1000/- is received in excess, then time of supply for goods or services at the option
of supplier is date of issue of invoice (Proviso to section 13(2)).
12
Illustrations
Payment Credit in
Section 13(2) Invoice date Invoice due entry in bank Time of
date supplier's account supply
books
1 Invoice raised before

10-March-18 20-March-18 26-March-18 30-March-18 10-March-18
completion of service
2 Advance received 30-April-18 20-April-18 10-April-18 30-April-18 10-April-18

13
Illustrations
Based on due date for

invoicing Commence
Section 13(2) r/w Invoice date ment of Completion Receipt of Time of
service of service payment supply
Section 31(2) r/w
CGST rule 47
3 Delayed issue of invoice 26-March-18 20-Jan-18 16-Feb-18 28-April-18 16-Feb-18
4 Advance received, 30-April-18 30-April-18

invoice for full amount
issued on same day 30-April-18 30-March-18 3-April-18
(40% advance, 60% post
supply payment) 04-May-18 30-April-18

14
Illustrations
Continuous supply of
services Date as per Receipt of Time of
Invoice date
Section 13(2) r/w Section contract payment supply
31(5)
02-Feb-18 10-Feb-18 15-Feb-18 02-Feb-18
Section 31(5)(a)
Contract provides for 17-Feb-18 10-Feb-18 15-Feb-18 10-Feb-18
5
payments monthly on the 10-Jan-18 10-Jan-18 06-Jan-18 06-Jan-18
10th of succeeding month
12-Feb-18 10-Feb-18 25-Feb-18 10-Feb-18

Time of Supply of Goods / Services - Reverse
Charge – Sec 12(3) / 13(3) 15
Goods (applicable
Date of receipt of
only for goods)
Date on which payment is

entered in the books of
recipient or debited to the
recipient’s b ank a/c
(whichever is earlier )
Where tax liable to be paid on reverse

charge basis, the time of supply of
goods/services shall be earliest of
Where it is not possible to determine

Date of entry in the books of account of
Note: This factor is relevant in case of
import of services from an associated
time of supply in the 3 other cases:

enterprise outside India
enterprise outside India
the recipient
import of services from an associated
Note: This factor is not relevant in case of
invoice by supplier
case of services) from the date of issue of
31 st day (in case of goods) / 61s t day (in
In case of import of services from an associated enterprises the time of supply is the date of entry in the
books of account of recipient of supply OR date of payment, whichever is earlier. (2nd proviso to Section
13(3) of CGST Act).
Charge – Sec 12(3) / 13(3) 16
Date of
Reverse charge invoice Removal of Receipt of Payment by Time of
Section 12(3) issued by goods goods recipient supply
supplier
1 General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17
2 Advance paid 31-Oct-17 31-Oct-17 20-Nov-17 05-Nov-17 05-Nov-17
No payment made for the

3 31-Oct-17 30-Dec-17 05-Jan-18 - 30-Nov-17
supply

Charge – Sec 12(3) / 13(3) 17
Reverse charge Date of Date of Payment by Entry of Time of
Section 13(3) invoice issued completion of recipient receipt of supply
by supplier service services in
recipient's
books
4 General 31-Oct-17 31-Aug-17 20-Nov-17 30-Nov-17 20-Nov-17
5 Advance paid 31-Oct-17 31-Oct-17 05-Nov-17 31-Oct-17 05-Nov-17
6 Delay in payment (Max. 31-Oct-17 31-Oct-17 10-Feb-18 31-Oct-17 31-Dec-17

60 days from date of (61st day from
invoice) date of
invoice)
7 Service received from 31-Oct-17 30-Nov-17 05-Apr-18 31-Mar-18 31-Mar-18
associated enterprise
located outside India
8
Service by unregistered
- 30-Nov-17 - 05-Dec-17 05-Dec-17
person, no payment made

Time of Supply of Vouchers – Sec 12(4)/13(4) 18
Time of supply in case of supply of voucher–
Date of issue – If supply is

Date of redemption of voucher –
identifiable at the point of issue of
Other cases
voucher
Note: Voucher – can be for goods or services

Time of Supply of Vouchers – Sec 12(4)/13(4) 19
Issue of vouchers First service/ Last date for
Issue of Redemption of
Section 13(4) [or Section delivery of acceptance of Time of supply
voucher voucher
12(4)] goods voucher
Voucher issued to a recipient
after supply of a service [or
1 01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 01-Nov-17
specific goods], for the same
service - valid for 1 year
of machinery along at the
time of delivery, for availing
2 01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 01-Nov-17
repair services [or specific
goods] worth Rs. 5,000 -
valid for 1 year
after supply of a service, for
3 01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 14-Dec-17
any other services or goods
across India, - valid for 1 year
Gift voucher for Rs. 1,500 for
4 services [or goods]- valid for - 01-Nov-17 25-Dec-17 31-Mar-18 01-Nov-17
6 months

Residual Provision – Sec 12(5) / 13(5) 20
Where it is not possible to determine the time of supply under

any of the circumstances discussed, it shall be determined as:
Due date for filing of such

Date on which the Tax is paid
return – If periodical return has
– Other cases
to be filed

Time of Supply of Goods / Services - Value
Addition – Sec 12(6) / 13(6) 21
Interest, For Delayed Date on which

Time of
the supplier
supply for Late Fees, payment of
receives such
value addition Penalty Consideratio addition in
by way of n shall be value
As per Section 15(2)(d) of CGST Act the value of supply shall include interest or late fee or penalty for
delayed payment of any consideration for any supply.
Change in rate of tax in respect of supply of
goods or services – Sec 14 22
Date of supply Date of Date of Time of supply Rate of tax
of goods or invoice receipt of
services payment
(1) (2) (3) (4) (5)
Before After After Earlier of (2) and (3) New
Before Before After (2) Old
Before After Before (3) Old
After Before After (3) New
After Before Before Earlier of (2) and (3) Old
After After Before (2) New

Change in rate of tax in respect of supply of
goods or services – Sec 14- Illustration 23
Suppose there is change in rate of tax from 01/10/2017. The TOS and rate of tax applicable is as
under in various situations.
Date of supply of Date of Date of receipt Time of supply Rate of tax
goods or services invoice of payment
10.09.2017 05.10.2017 08.10.2017 05.10.2017 (Earlier of (ii) New Rate
and (iii))
10.09.2017 25.09.2017 08.10.2017 25.09.2017 (date of invoice) Old rate
10.09.2017 05.10.2017 27.09.2017 27.09.2017 (date of receipt of Old rate
payment)
06.10.2017 25.09.2017 08.10.2017 08.10.2017 (date of receipt of New rate
payment)
06.10.2017 25.09.2017 27.09.2017 25.09.2017 (Earlier of (ii) and Old rate
(iii))
06.10.2017 05.10.2017 27.09.2017 05.10.2017 (date of invoice) New rate

24
Value of Supply

Value of Taxable Supply – Sec 15 25
Value of Taxable Supply
Value of supply of goods or services or both shall be the ‘Transaction Value’, where
Supplier and recipient of supply are unrelated
Price is actually paid / payable – AND price is the sole consideration for the supply
Explanation to Section 15 of the CGST Act deems the persons below to be “related persons”:
• Officers / Directors of one another’s business
• Partners in business
• Employer – employee
• A person directly / indirectly owns / controls / holds 25% of shares of both the persons
• One directly / indirectly controls the other
• Both are directly / indirectly controlled by a third person
• Together, they directly / indirectly control a third person
• Members of the same family
• Sole agent / distributor / concessionaire of the other
Transaction value: Inclusions and exclusions 26
Transaction Value INCLUDES: Transaction Value EXCLUDES

 Amounts charged separately by supplier to recipient in discount:
respect of any taxes, duties, cesses, fees and charges levied
under any law, other than taxes paid under GST regime;  Before / at the time of supply
 Amount incurred by Recipient which is liable to be paid by • Single condition: Such discount
the Supplier and not included in the price; is duly recorded in the invoice
 Charges by Supplier to Recipient being:
• Incidental expenses (e.g.: packing, commission)  After the supply: Cumulative
• Charges for anything done by the Supplier at the time conditions:
or before the supply, in respect thereof • Agreement establishing discount
• Interest/ late fee/ penalty for delayed payment of entered into before / at the time
consideration of supply
• Subsidies directly linked to price – for supplier • Discount specifically linked to
receiving the subsidy (excluding Central and State Govt relevant invoices
subsidies; i.e., Government subsidies will not be • ITC reversed by the recipient to
included in transaction value) the extent of discount

Transaction value: Recourse to Rules 27
A. Where value cannot be determined u/s 15(1), i.e., when:
1. Price is not the sole consideration
2. Supplier-recipient are related persons: Recourse to Rules even if the Supplier-Recipient
relationship:
 Did not influence the price;
 Precedes agreement to the supply;
 Has no bearing on pricing;
 Has no bearing on Agreement to the Supply;
 Has no relevance to the Supply;

Was to meet with different criteria or purpose;
(Rules will apply both ways – supplier to recipient and recipient to supplier)
B. In case of notified supplies

28
CGST Rules, 2017

(Rule 27 to 35)

Rule 27 of CGST Rules 29
Value of supply of goods or services where

consideration is not wholly in money
 The value of supply shall be-
a) The open market value of such supply
b) If open market value not available, be the sum total of

consideration in money and such further amount in money as is
equivalent to consideration not in money if such amount is not
known at the time of supply

Rule 27 of CGST Rules continued 30
c) If value is not determinable under (a) or (b), the value of supply of

goods/ services of like kind and quality
d) If value not determinable under (a), (b) or (c), be the sum total of
consideration in money and such further amount in money that is
equivalent to consideration not in money as determined by
application of rule 30 or 31 in that order.

Rule 27 of CGST Rules continued 31
 Illustration:
(1) Where a new phone is supplied for Rs. 20,000/- along with the exchange of an
old phone and if the price of the new phone without exchange is Rs. 24,000/- ,
the open market value of the new phone is Rs. 24,000/-.
(2) Where a laptop is supplied for Rs. 40,000/- along with the barter of a printer
that is manufactured by the recipient and the value of the printer known at the time
of supply is Rs. 4,000/- but the open market value of the laptop is not known, the
value of the supply of the laptop is Rs. 44,000/-.

Rule 28: Value of supply of goods or services or both between
distinct or related persons, other than through an agent 32
(a) The open market value of such supply
(b) If open market value is Value of supply of goods or

not available services of like kind and quality
(c) If value of supply is Value as determined by
not determinable application of Rule 30 or Rule
under clause (a) or (b) 31, in that order
Provided that where goods are intended for further supply as such by the
recipient, the value shall, at the option of the supplier, be an amount
equivalent to 90% of the price charged for the supply of goods of like kind
and quality by the recipient to his customer not being a related person
Where the recipient is eligible for full input tax credit, the value declared in
the invoice shall be deemed to be the open market value of goods or services

Rule 29: Value of supply of goods made or received
through an agent 33
a) open market value, or

• at the option of the supplier, be 90% of the price charged for the
supply of goods of like kind and quality by the recipient (agent)
to his customer not being a related person,
• where the goods are intended for further supply by the said
recipient (agent)
b) where the value of a supply is not determinable under clause (a),

 the same shall be determined by application of rule 30 or rule 31 in
that order.

Rule 29: Value of supply of goods made or received
through an agent 34
 Illustration:
 A principal supplies groundnut to his agent and the agent is supplying
groundnuts of like kind and quality in subsequent supplies at a price of five
thousand rupees per quintal on the day of the supply. Another independent
supplier is supplying groundnuts of like kind and quality to the said agent at the
price of four thousand five hundred and fifty rupees per quintal. The value of the
supply made by the principal shall be four thousand five hundred and fifty
rupees per quintal or where he exercises the option, the value shall be 90 per
cent. of five thousand rupees i.e., four thousand five hundred rupees per quintal.

Rule 30: Value of supply of goods or services or
both based on cost 35
• Where value is not determinable by any of the preceding rules,

• the value shall be 110% of the:
 cost of production or manufacture or
 cost of acquisition of such goods or
 cost of provision of such services.

Rule 31: Residual Method 36
• Where value cannot be determined under Rules 27 to 30, the same

shall be determined using reasonable means consistent with the
principles and general provisions of Sec 15 and these Rules.
• Further, in case of supply of services, the supplier may opt for this
rule, disregarding rule 30.

Rule 31A : Value of supply in case of lottery,
betting, gambling and horse racing 37
 Value of supply of lottery run by State Governments shall be deemed to

be higher of :-
 100/112 of the face value of ticket
 Price as notified in the Official Gazette by the organising State
 Value of supply of lottery authorised by State Governments shall be deemed to

be higher of :-
 100/128 of the face value of ticket
 Price as notified in the Official Gazette by the organising State

Rule 31A : Value of supply in case of lottery,
betting, gambling and horse racing 38
 Explanation:-
a) “lottery run by State Governments” means a lottery not allowed to be sold in
any State other than the organizing State
b) “lottery authorised by State Governments” means a lottery which is
authorised to be sold in State(s) other than the organising State also.
c) “Organising State” has the same meaning as assigned to it in clause (f) of
sub-rule (1) of rule 2 of the Lotteries (Regulation) Rules, 2010
 Value of supply of actionable claim in the form of chance to win in betting,

gambling or horse racing in a race club shall be:
 100% of the face value of the bet or
 the amount paid into the totalisator
Rule 32: Determination of value in respect of
certain supplies 39
Rule 32(2): Purchase or sale of forex including money changing
Option-1
 When exchanged from or/ to INR:
 difference of buying rate/ selling rate and RBI reference rate X total units of
currency
(If RBI reference rate is not available, value shall be 1% of gross amount of
INR received or provided)
• If neither of two currencies exchanged in INR, the value shall be equal to:
 1% of the lesser of the two amounts
 received by converting any of the two currencies into INR
 on that day at the reference rate provided by RBI.

certain supplies 40
OPTION-2
Amount of currency 1% of the gross amount of
exchanged up to Rs.1 currency exchanged or Rs. 250/-,
lakh whichever is higher
Amount of currency
Rs. 1,000/- + 0.5% of the gross
exchanged exceeding
amount of currency exchanged
Rs.1 lakh and up to
above Rs. 100,000/-
Rs.10 lakhs
Rs. 5,500/- + 0.10% of the gross
Amount of currency
amount of currency exchanged
exchanged exceeding
above Rs.10 lakhs or Rs. 60,000/-,
Rs.10 lakhs
whichever is lower
certain supplies 41
Rule 32(3) - Air Travel Agents:
• Domestic bookings: 5% of Basic Fare
• International bookings: 10% of Basic Fare
 “Basic fare” means that part of the air fare on which commission is normally
paid to the air travel agent by the airline.

certain supplies 42
Rule 32(4)-Life Insurance Business
a) gross premium charged from a policy holder reduced by the amount

allocated for investment, or savings on behalf of the policy holder, if
such amount is intimated to the policy holder at the time of supply of
service;
b) in case of single premium annuity policies other than (a) - 10% of single
premium charged from the policy holder; or
c) in all other cases, 25% of the premium charged from the policy holder
in the first year and 12.5% of the premium charged from policy holder
in subsequent years;
 Not apply where the entire premium paid by the policy holder is only
towards the risk cover in life insurance.
certain supplies 43
Rule 32(5)- Second Hand Goods
• Supply of used goods as such or after such minor processing which does
not change the nature of the goods and where no ITC has been availed
on purchase of such goods,
• the value of supply shall be:

 the difference between the selling price and purchase price and
 where the value of such supply is negative, it shall be ignored.

certain supplies 44
Rule 32(6)- Token / Coupon / Voucher / Stamp
• The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp)
which is redeemable against a supply shall be equal to:-
 money value of the goods or services or both redeemable against such token,
voucher, coupon, or stamp.
Rule 32(7)- Distinct Persons

• The value of taxable services provided by such class of service providers; as may be
notified by the Government between distinct persons, (Entry-2 of Schedule I); other
than those where ITC is not available under S.17(5); shall be deemed to be NIL.
Rule 33: Definition of Pure Agent 45
 Agency supplies are different from ‘pure agent’ in relation to valuation

 There is a payment made to third party by a payer
 Payer is a supplier of goods or services or both to a beneficiary (client)
 Underlying obligation to pay third party is of the beneficiary (client)
 Payment by payer is to discharge beneficiary’s obligation toward third
party
 Third party enjoys recourse to beneficiary in case of non-payment by
payer
 For example, income-tax liability of a client is paid by the CA

Rule 33: Value of supply of services in case of
Pure Agent 46
 The expenditure or costs incurred by the pure agent shall be excluded

from the value of supply, if all the following conditions are satisfied,
namely:
(i) the supplier acts as a pure agent of the recipient of the supply,
(ii) Receive supply in his capacity as pure agent of the recipient of supply;
(iii) the recipient of supply is liable to make payment to the third party;
(iv) the recipient of supply authorises the supplier to make payment on his behalf;
(v) the recipient of supply knows that the services shall be provided by third party;
(vi) separately indicated in the invoice of service;
(vii)the supplier recovers only such amount as has been paid to third party; and
(viii) services as pure agent are in addition to supply he provides on his own account.
Illustration 47
 Illustration.- Corporate service 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
and 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 and 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 and not part of the value of supply
made by A to B.

Rule 34: Rate of exchange of currency, other than INR,
for determination of value 48
(1) The rate of exchange for determination of value of taxable goods shall be:-
the applicable rate of exchange as notified by the Board under section 14 of the Customs
Act, 1962 for the date of time of supply of such goods in terms of section 12 of the Act.
(2) The rate of exchange for determination of value of taxable services shall be:-
the applicable rate of exchange determined as per the generally accepted accounting
principles for the date of time of supply of such services in terms of section 13 of the Act.

Rule 35: Value of supply inclusive of integrated tax, central tax,
State tax, Union territory tax 49
 Where Value of Supply is inclusive of IGST/ CGST/ SGST/ UTGST then:
Value inclusive of taxes X tax rate in % of IGST or as the case may be CGST,
SGST or UTGST
Tax Amount =
(100 + sum of tax rates, as applicable, in %)

Illustrations 50
 Mr. Mohan located in Manipal purchases 10,000 Hero ink pens worth Rs.4,00,000
from Lekhana Wholesalers located in Bhopal. Mr. Mohan’s wife is an employee in
Lekhana Wholesalers. The price of each Hero pen in the open market is Rs.52. The
supplier additionally charges Rs.5,000 for delivering the goods to the recipient’s
place of business.
 Ans. Mr. Mohan and Lekhana Wholesalers would not be treated as related persons
merely because the spouse of the recipient is an employee of the supplier, although
such spouse and the supplier would be treated as related persons. Therefore, the
transaction value will be accepted as the value of the supply. The transaction value
includes incidental expenses incurred by the supplier in respect of the supply up to
the time of delivery of goods to the recipient. This means, the transaction value
will be: Rs.4,05,000 (i.e., 4,000,000 + 5,000).

Illustrations 51
 Sriram Textiles is a registered person in Hyderabad. A particular variety of

clothing has been categorised as non-moving stock, costing Rs.5,00,000.
None of the customers were willing to buy these clothes in spite of giving big
discounts on them, for the reason that the design was too experimental. After
months, Sriram Textiles was able to sell this stock on an online website to
another retailer located in Meghalaya for Rs.2,50,000, on the condition that
the retailer would put up a poster of Sriram Textiles in all their retail outlets in
the State.
 Ans. The supplier and recipient are not related persons. Although a condition
is imposed on the recipient on effecting the sale, such a condition has no
bearing on the contract price. This is a case of distress sale, and in such a
case, it cannot be said that the supply in lacking ‘sole consideration’.
Therefore, the price of Rs.2,50,000 will be accepted as value of supply.
Illustrations 52
 Rajguru Industries stock transfers 1,00,000 units (costing Rs.10,00,000) requiring further
processing before sale, from Bijapur in Karnataka to its Nagpur branch in Maharashtra. The
Nagpur branch, apart from processing units of its own, engages in processing of similar units by
other persons who supply the same variety of goods, and thereafter sells these processed goods to
wholesalers. There are no other factories in the neighbouring area which are engaged in the same
business as that of its Nagpur unit. Goods of the same kind and quality are supplied in lots of
1,00,000 units each time, by another manufacturer located in Nagpur. The price of such goods is
Rs.9,70,000.
 Ans.: In case of transfer of goods between two registered units of the same person (having the same
PAN), the transaction will be treated as a supply even if the transfer is made without consideration,
as such persons will be treated as ‘distinct persons’ under the GST law. The value of the supply
would be the open market value of such supply. If this value cannot be determined, the value shall
be the value of supply of goods of like kind and quality. In this case, although goods of like kind
and quality are available, the same may not be accepted as the ‘like goods’ in this case would be
less expensive given that the transportation costs would be lower. Therefore, the value of the
supply would be taken at 110% of the cost, i.e., Rs. 11,00,000 (i.e., 110% * 10,00,000).

Illustrations 53
 M/s. Monalisa Painters owned by Vasudev is popularly known for painting the interiors of
banquet halls. M/s. Starry Night Painters (also owned by Vasudev) is engaged in painting
machinery equipment. A factory contracts M/s. Monalisa Painters for painting its machinery
to keep it from corrosion, for a fee of Rs.1,50,000. M/s. Monalisa Painters sub-contracts the
work to M/s. Starry Night Painters for Rs.1,00,000, and ensures supervision of the work
performed by them. Generally, M/s/ Starry Night Painters charges a fixed sum of Rs.1,000
per hour to its clients; it spends 120 hours on this project.
 Ans.: Since M/s. Monalisa Painters and M/s. Starry Night Painters are controlled by Mr.
Vasudev, the two businesses will be treated as related persons. Therefore, Rs.1,00,000 being
the sub-contract price will not be accepted as transaction value. The value of the service
would be the open market value being Rs. 1,20,000 (i.e., Rs. 1,000 per hour * 120 hours) *.
 Note: This view is based on the grounds that there are no comparable to this supply.

Illustrations 54
 Prestige Appliances Ltd. (Bangalore) has 10 agents located across the State of Karnataka
(except Bangalore). The stock of chimneys is dispatched on Just-In-Time basis from Prestige
Appliances Ltd. to the locations of the agents, based on receipt of orders from various
dealers, on a weekly basis. Prestige Appliances Ltd. is also engaged in the wholesale supply
of chimneys in Bangalore. An agent places an order for dispatch of 30 chimneys on 22-Sep-
2017. Prestige had sold 30 chimneys to a retailer in Bangalore on 18-Sep-2017 for Rs.
2,80,000. The agent effects the sale of the 30 units to a dealer who would effect the sales on
MRP basis (i.e., @ Rs.10,000/unit).
 Ans.: The law deems these supplies between the principal and agent to be supplies for the
purpose of GST. Therefore, the transfer of goods by the principal (Prestige) to its agent for
him to effect sales on behalf of the principal would be deemed to be a supply although made
without consideration. The value would be either the open market value, or 90% of the price
charged by the recipient of the intended supply to its customers, at the option of the supplier.
Thus, the value of the supply by Prestige to its agent would be either Rs. 2,80,000, or
2,70,000 (i.e., 90%*10,000 * 30), based on the option chosen by Prestige.

Illustrations 55
 Mr. & Ms. Mehta purchase 10 gift vouchers for Rs. 500 each from Crossword, and 5
vouchers from Four Fountains Spa costing Rs. 1,000 each, and gives them as return gifts to
children and their parents for their son’s birthday party. The vouchers from Four Fountains
Spa had a special offer for couples – services for both persons at the price chargeable to one.
 Ans. The value of the supply would be the money value of the goods redeemable against
the voucher. Thus, in case of vouchers from Crossword, the value would be Rs. 5,000 (i.e.,
Rs.500 * 10) and the value of vouchers in case of Four Fountains Spa would be Rs. 10,000
(i.e., Rs. 1,000 * 2 * 5).

56
Thank You
For any Clarification, Please Contact
Indirect Taxes Committee of ICAI
Email: [email protected], Website: www.idtc.icai.org

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INDIRECT TAXES COMMITTEE

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

Actual date of issue of invoice by the supplier

Due date for issue of invoice by the supplier [Section 31(1)*]:

 Excess payment of upto Rs. 1000/- is received in respect of any invoice

 No tax on advance received against the supply of goods

© Indirect Taxes Committee, ICAI

In summary, the taxability of the consideration received in advance in respect

Period Taxability of consideration received in advance

Aggregate turnover less than Aggregate turnover more

01.07.2017 to 12.10.2017 Taxable Taxable

© Indirect Taxes Committee, ICAI

Non continuous supply Due date of Payment Credit in

1 Invoice raised before 10-March-18 20-March-18 26-March-18 30-March-18 10-March-18

2 Advance received 30-March-18 20-March-18 10-Feb-18 25-Feb-18 20-March-18

3 Advance received 25-Jan-18

© Indirect Taxes Committee, ICAI

5 Inter-State stock transfer 20-March-18 20-March-18 - 20-March-18

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

If invoice not issued within 30 days Date of provision (completion)

Date on which recipient shows

1 Invoice raised before

2 Advance received 30-April-18 20-April-18 10-April-18 30-April-18 10-April-18

© Indirect Taxes Committee, ICAI

Based on due date for

3 Delayed issue of invoice 26-March-18 20-Jan-18 16-Feb-18 28-April-18 16-Feb-18

4 Advance received, 30-April-18 30-April-18

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

only for goods)

Date on which payment is

Where tax liable to be paid on reverse

Where it is not possible to determine

time of supply in the 3 other cases:

1 General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17

2 Advance paid 31-Oct-17 31-Oct-17 20-Nov-17 05-Nov-17 05-Nov-17

No payment made for the

© Indirect Taxes Committee, ICAI

5 Advance paid 31-Oct-17 31-Oct-17 05-Nov-17 31-Oct-17 05-Nov-17

6 Delay in payment (Max. 31-Oct-17 31-Oct-17 10-Feb-18 31-Oct-17 31-Dec-17

© Indirect Taxes Committee, ICAI

Time of supply in case of supply of voucher–

Date of issue – If supply is

Note: Voucher – can be for goods or services

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

Where it is not possible to determine the time of supply under

Due date for filing of such

© Indirect Taxes Committee, ICAI

Interest, For Delayed Date on which

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

© Indirect Taxes Committee, ICAI

Value of Taxable Supply

Transaction Value INCLUDES: Transaction Value EXCLUDES