Section 14 of GST – Change in rate of tax in respect of supply of goods or services

Section 14 of GST – Change in rate of tax in respect of supply of goods or services..  Complete Analysis of GST Section 14. This Act may be called the CGST Act, 2017. Explanation of All Sections of Goods and Service Tax. Section Wise Analysis of GST Act 2017, in this article you may find complete details regarding Section 14 of GST Act 2017 – Change in rate of tax in respect of supply of goods or services., gst all section and definitionsNow Check more details from below…..

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Section 14 of GST – Change in rate of tax in respect of supply of goods or services.

Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely: –

(a) in case the goods or services or both have been supplied before the change in rate of tax, –

  • (i)where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
  • (ii)where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
  • (iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;

(b)in case the goods or services or both have been supplied after the change in rate of tax, ––

  • (i)where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or
  • (ii)where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or
  • (iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:

Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.

Explanation. –For the purposes of this section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

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:

(a) Supply before the cut-off date-say 01-Sep- 18

Supply Invoice Payment Point of taxation
25.08.2018 01.09.2018 05.09.2018 01.09.2018 (Invoice or payment, whichever is earlier)
25.08.2018 26.08.2018 05.09.2018 26.08.2018(Date of Invoice)
25.08.2018 01.09.2018 27.08.2018 27.08.2018(Date of payment)

(b) Supply after the cut-off date-say 01-Sep-17

Supply Invoice Payment Point of taxation
01.09.2017 25.08.2017 05.09.2017 05.09.2017(Date of payment)
01.09.2017 25.08.2017 26.08.2017 25.08.2017 (Date of invoice or date of payment, whichever is earlier)
01.09.2017 02.09.2017 26.08.2017 02.09.2017(Date of Invoice)

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.

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