Time of supply of services – Section 13 of CGST ACT 2017

Section 13 of the Central Goods and Services Tax (CGST) Act, 2017, deals with the time of supply of services. It specifies the point in time when a service shall be deemed to be supplied and liable to GST. The time of supply of services is crucial for determining the applicable GST rate, the liability to pay tax, and the input tax credit (ITC) that can be claimed by the recipient.

The time of supply of services can be determined based on the following events, whichever occurs earlier:

The date of issue of invoice by the supplier or the date of receipt of payment, whichever is earlier.

In case the invoice is not issued within the prescribed time, the date of completion of the provision of service.

In case of continuous supply of services, the date of expiry of the period to which such services are supplied.

In case the services are received in advance, the date of receipt of such advance.

The above-mentioned events apply in different scenarios, and the time of supply of services can vary accordingly. For instance, in the case of reverse charge mechanism, the time of supply of services is determined based on the date of payment to the supplier or the date of debit in the books of accounts of the recipient, whichever is earlier.

It is important for businesses to understand the time of supply of services to ensure proper compliance with GST regulations and to avoid penalties for incorrect reporting of GST liability and ITC.

Date of issuance of Invoice in respect of continuous supply of services as per provisions of section 31(5)

As per the provisions of Section 31(5) of the Central Goods and Services Tax (CGST) Act, 2017, in the case of continuous supply of services, where the due date of payment is ascertainable from the contract, the invoice shall be issued before or after the payment is due but within a period of 45 days from the date of the supply of services.

This means that in the case of continuous supply of services, the supplier has the option to issue an invoice either before or after the due date of payment as per the contract, as long as the invoice is issued within 45 days from the date of supply of services.

Conclusion

However, if the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier receives the payment.

It is important to note that the due date of payment is not the same as the date of payment. The due date is the date specified in the contract for payment, whereas the date of payment is the actual date on which payment is made. In case the due date of payment is not ascertainable from the contract, the invoice should be issued before or at the time of receipt of payment.