GST Update on Time Of Supply Of Services

As we all know that the Parliament has approved the final GST laws and the said laws have been placed in public domain for analysis. This is the third official draft is being analysed by experts and members of trade and industry. The basic objective of placing the draft law in public domain was to remove ambiguous provisions that may invite unnecessary litigation. However, if we study the provisions regarding time of supply of services, it is observed that the situation has been brought to the original draft introduced in June, 2016. The provision in the GST Bill, 2017 relating to time of supply of services read as follows:-

The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period
prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books of
account, in a case where the provisions of clause (a) or clause (b) do not apply

The above cited provision is the same as proposed in draft law released in June, 2016. It is pertinent to mention that a lot of representation was made by both members of trade and Institute of Chartered Accountants regarding deletion of clause (c) as it is very ambiguous. It was represented that practically it is not possible for the service provider to determine the date on which service receiver shows receipt of services in his books of accounts. Moreover, in case of services, it is extremely difficult to ascertain the date of receipt of services as goods are tangible but services are intangible. As such, the parameter of receipt of services by service receiver is vague and absurd.

The trade and industry was delighted when the provision of clause (c) was removed in the GST Law released on November, 2016. However, the e-GST Bill, 2017 again mentions the clause (c) in the provisions of time of supply of services. This is setback for the ones who had represented and made efforts to delete the clause so as to make the GST law litigation free but it appears that all the efforts have gone in vain.

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GST Update on Time Of Supply Of Services

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