Goods & Service Tax

INDIRECT TAX AMENDMENTS FOR JAN’25 EXAMS

(STATUTORY UPDATE)

CHAPTER-5

PLACE OF SUPPLY
Place of Supply of Goods other than supply of goods imported into, or exported from India
[Section 10 of IGST Act, 2017]:

Section 10 prescribes the provisions for determining the place of supply of goods in domestic
transactions.
Situation Place of Supply of Goods
Where Supply involves movement of Location of the goods at the time at which movement of goods
goods terminates for delivery to the recipient (Illustration 1)
Where the goods are delivered to It shall be deemed that the said third person has received the goods
recipient or any other person on the and place of supply of such goods shall be the Principal place of
direction of third party business of third party (Illustration 2)
Where there is No movement of Location of such goods at the time of delivery to the recipient
goods in a supply (Illustration 3)
Where an unregistered person Address of unregistered person recorded in the invoice.
purchases goods over the counter (Simply mentioning the State of unregistered person instead of
(OTC) in one State and thereafter, complete address would be sufficient).
transports the goods to another State. If address of the unregistered person is not recorded in the invoice:
Location of the supplier. (Illustration 4)
Where the goods are Installed/ Place of such assembly or installation (Illustration 5)
assembled at site
Where the goods are Supplied on Location where such goods are taken on board (Illustration 6)
board a conveyance
Where place of supply cannot be determined as per Section 10, it is determined as per Rules.

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CHAPTER-6

TIME OF SUPPLY
TIME OF SUPPLY OF SERVICES [Section 13 of CGST Act, 2017]:

(1) The liability to pay tax on Services shall arise at the time of supply as determined in terms of
the provisions of this section [Section 13(1)].

(2) Forward Charge Mechanism [Section 13(2)]:

The time of supply of services shall be-
(a) In cases where the invoice has been issued on time as per Section 31-
Earlier of the date of issue of invoice and the date of receipt of payment.
(b) In cases where the invoice has not been issued on time as per Section 31-
Earlier of the date of provision of service and the date of receipt of payment.
(c) In a case where the provisions of clause (a) or clause (b) do not apply-
Date on which the recipient shows the receipt of services in his books of account:

The date of receipt of payment would be earlier of-

➢ Date of credit in the supplier’s bank account, as reflected in his bank statement
➢ Date on which the receipt of payment is recorded in the books of accounts of the supplier.

Section 31 read with rule 47 of CGST rules mandates that the time limit for issue of invoice
is as follows-
a) Taxable Supply of Services: Invoice must be issued within 30 days from the date of supply
of service (45 days where the supplier is banking companies, Insurance companies,
Financial Institutions & NBFC’s).
b) Where the supply involves continuous supply of services:
Invoice must be issued on or before the-
➢ Due date of payment (where the contract specifies the due date) OR
➢ Date of actual receipt of payment (where the due date is not ascertainable from the
Contract) OR
➢ Date of completion of milestone event where the payment is linked to completion of a
milestone event.
c) In a case where the supply of services ceases under a contract before the completion of the
supply, the invoice shall be issued at the time when the supply ceases and such invoice shall
be issued to the extent of the supply made before such cessation.

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CHAPTER-8

INPUT TAX CREDIT

ELIGIBILITY AND CONDITIONS FOR TAKING INPUT TAX CREDIT [Section 16]:

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit
note for supply of goods or services or both after-
➢ 30th November of the following financial year OR
➢ Actual date of furnishing of the relevant annual return
Whichever is earlier. (Illustration 4 & 5)
Exception:
The time limit u/s 16(4) does not apply for re-availing of credit that had been reversed earlier.

Illustration 4:
Invoice is dated 31st July 2022. Annual return for 2022-23 is filed on 20.10.2023.
Answer:
Invoice is related to F.Y 2022-23 and Annual return for 2022-23 is filed on 20.10.2023.
Standard date is 30.11.2023.
Earlier of two dates is 20.10.2023.
In this case, Recipient will be able to claim input tax credit not later than 20.10.2023.
ITC needs to be claimed and to be reported in the return (GSTR-3B) for September 2023 due to be filed
on 20.10.2023.

Illustration 5:
A limited received invoice dated 10.4.2022 containing input tax of Rs. 1,00,000. A Limited filed its
annual return for 2022-23 on 31.8.2023.
Answer:
Invoice is related to F.Y 2022-23 and Annual return for 2022-23 is filed on 31.8.2023.
Standard date is 30.11.2023.
Earlier of two dates is 31.8.2023.
In this case, A Limited will be able to claim input tax credit not later than 31.8.2022.
Hence, A Limited will have to avail and report such input tax credit in GSTR-3B for the month of July
2023 to be filed on or before 20.8.2023.

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Blocked Credits [Section 17(5)]:

(c) Works contract services when supplied for construction of an immovable property (other than
plant and machinery) except where it is an input service for further supply of works contract
service;
ITC on works contract services for construction of immovable property is available only
in the following three situations:
i. When the works contract service is availed by a works contractor for being used in
providing the works contract service.
ii. For construction of plant and machinery. In this case, ITC is allowed to all recipients
irrespective of their line of business.
iii. When the value of works contract service is not capitalized. In this case, ITC is
allowed to all recipients irrespective of their line of business.

Examples:
1. ITC on works contracts services availed by a software company for construction of its
office, is blocked.
2. CD & Co., a works contractor of Noida, has been awarded a contract for construction of a
commercial complex in Lucknow. The firm avails services of EF & Co., a local works
contractor of Lucknow, for the construction of complex. ITC on such works contract
services availed by CD & Co., is allowed.
3. ITC on works contract services availed by an automobile company for construction of a
foundation on which a machinery (to be used in the production process) is to be mounted
permanently, is allowed.
4. A consulting firm has availed services of a works contractor for repair of its office building.
The company has booked such expenditure in its profit and loss account. ITC on such
services is allowed.

(d) Goods or services or both received by a taxable person for construction of an immovable property
(other than plant or machinery) on his own account including when such goods or services or both
are used in the course or furtherance of business.
ITC on goods and/or services used in construction of immovable property is available
only in the following three situations:
i. For construction of plant and machinery
ii. When the value of goods and/or services is not capitalized
iii. When the construction is not on own account

Examples:
1. A company buys cement, tiles etc. and avails the services of an architect for construction of
its office building. ITC on such goods and services is blocked.
2. MN & Constructions procures cement, paint, iron rods and services of architects and
interior designers for construction of a commercial complex for one of its clients. ITC on
such goods and services is allowed to MN & Co as it is not on their own account.

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3. A company buys cement, tiles etc. and avails the services of an architect for renovation of
its office building. The company has booked such expenditure in its profit and loss account.
ITC on such goods and services is allowed.
Explanation- For the purposes of clauses (c) and (d), the expression "construction" includes re-
construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the
said immovable property;

(e) Goods or Services or both on which tax has been paid under section 10; (Composition Supply
Scheme)
(f) Goods or Services or both received by a non-resident taxable person except on goods imported by
him;
(g) Goods or Services or both used for personal consumption;
(h) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples
However, where the activity of distribution of gifts or free samples falls within the scope of
"supply" on account of the provisions contained in Schedule I of the said Act, the supplier
would be eligible to avail the ITC.
Further it is clarified that ITC shall be available to the supplier for the inputs, input services and
capital goods used in relation to supply of goods or services or both as part of Buy one get one
free offer and Buy more, save more offers; and
(i) Any tax paid in accordance with the provisions of sections 74, 129 and 130. (Recovery Sections)

Explanation– “Plant and machinery” means apparatus, equipment, and machinery fixed to earth by
foundation or structural support that are used for making outward supply of goods or services or both and
includes such foundation and structural supports but excludes-
i. land, building or any other civil structures;
ii. telecommunication towers; and
iii. pipelines laid outside the factory premises

ALL THE BEST

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