FAQ ON GST:- CHAPTER 5 – TIME OF SUPPLY

GST Update 17.10.2016

GST DAILY DOSE OF UPDATION:-

FAQ ON GST:- CHAPTER 5 – TIME OF SUPPLY

Question 2: It speaks that The time of supply of goods shall be the earliest of the following namely,
(i) the date on which the goods are removed by the supplier, where the supply of goods require removal; or
(ii) the date on which the goods are made available where the supply does not require removal; or
(iii) the date on which the supplier issues invoices with respect to the supply where the above two situations do not apply; or
(iv) the date on which the recipient shows the receipt of the goods in his books of accounts.

The fourth condition is bound to create problems as how the supplier is supposed to know that the recipient has shown the receipt in his books. Moreover, the provision 12(2)(3) prescribes one more condition of date of receipt of payment but the FAQ issued by CBEC forgot the above condition in his answer. Also under Central Excise law , the duty is paid at the time of removal of goods but under proposed GST law, it is to be paid on advance receipt of payment. But the credit of the same will not be passed on as the recipient cannot take the credit without receipt of goods.

Question 10: It speaks that where invoice is not issued and date of payment or date of completion of provision of service are also not ascertainable The time of supply shall be the date on which the recipient shows the receipt of services in his books of accounts. As above, this provision is bound to create difficulties in ascertainment of time of supply of services. The provider has to ascertain when the receipt of service is shown by recipient of service in his books of account. This clearly implies that the provider has to keep the track of books of accounts of all recipient of his services which is impossible task.

Chapter-7 - GST Payment of Taxes

Question 1: This speaks that certain categories of registered persons will be required to pay to the government account Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). Looking at an already complex mechanism and procedure evolving, introduction of TDS & TCS in indirect taxes also doesn’t sound beneficial except that of generating litigations. With so many complexity in law, we are forgetting the basic principle of simplifying the indirect tax regime.

Question 5: This speaks that no input tax credit on account of CGST shall be utilized towards payment of SGST and vice versa. These are like provisions like there are present in current VAT laws not allowing cenvat of CST. When the motive of GST is to unify the country in terms of taxation, such restrictions only seem to be taking the tax reforms backwards. Moreover, IGST is sum total of CGST and SGST. When IGST can be used for payment of CGST and SGST then in a indirect manner, a portion of SGST is allowed to be used for payment of CGST or vice versa. For example, a buyer takes the credit of IGST of 18% (9%CGST+9% SGST) and utilises such credit of IGST in CGST only. But this IGST consists of CGST and SGST only. Hence, the buyer in a indirect way has used the credit of SGST in CGST. But the CGST credit cannot be directly used in payment SGST or vice versa. But to protect the federal system of India, the basic spirit behind GST law of "ONE TAX, ONE NATION" has been lost.

We will carry some other questions in our next update.

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GST Update 17.10.2016

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