Analysis
Payment of tax requires the presence of all the following events:
(i) supply of goods or services
(ii) issue of invoice
(iii) payment for the supply
When there is a change in the rate of tax during the occurrence of these three events, there may be some concern about the applicability of the correct rate of tax. Section 14 addresses this aspect clearly.
Where the supply takes place after the change in the rate of tax, the time of supply may be as follows:
Supply before the cut-off date-say 01-Sep- 18
(b) Supply after the cut-off date-say 01-Sep-17
It is relevant to note here that the Notification 66/2017-CT dated 15.11.2017 exempting a taxable person from payment of tax on advances received refers to the scenarios enumerated in section 14. This may not mean that the receipt of payment in advance should not be considered for determining the change in tax rate; since, the said notification will have limited application for ascertaining the time of supply of goods. In other words, section 12 specifies the scenarios for ascertaining time of supply whereas section 14 specifies the point of determination of appropriate rate of tax. This means that on application of the said notification, if the date of receipt of advance is relevant, the payment of tax may be deferred till the date of supply of goods at the rate applicable as on the date of receipt of advance (point of taxation).
Although supply has not yet taken place, the time of supply determined as above is valid and not in violation of the levy of GST for the following reasons:
(i) Supply is defined in section 7(1)(a) as ‘……made or agreed to be made…..’
(ii) Levy of GST in section 9 is on such supply, that is, ‘made or agreed to be made’ Prescribing the time of supply anterior to the time of actual supply is well accommodated in the language of the Act.