What is supply under GST?

Under the Goods and Services Tax (GST) supply means a taxable event. Taxable event means any transaction that results in tax consequences. Supply includes any transaction such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agree to be made of goods or services for a consideration in the course or furtherance of business.

Here the term goods refer to any movable property, actionable claim such as betting, gambling etc. and growing crops and the term services refers to anything other than goods, conversion of currency etc. The term goods and services excludes money and securities.

Consideration means payment. It need not always in the form of money. It can be in money or in kind.

As per Schedule-I of CGST Act there are some transaction which is deemed to be a supply even without consideration.

There are some circumstances which is not supply related to goods and services:

• Art works sent by artists to galleries for exhibition is not supply.
• Issuance of Letter of credit / Bank guarantee
• Issuance of Certificate of deposit / Commercial paper
• Future / Forward without delivery
• Transaction on money (Loans & Advance)

Example of supply:

• A shopkeeper sells a book for ₹500 to the buyer. In this case this is a transaction of sale and shopkeeper sold book for a consideration in the course of business. This transaction will be supply of goods under CGST Act.
• Ram buys a car for its personal use and sold it after 5 years to a dealer. This is not supply under CGST Act as ram did not supply its car in the course of business.

Types of supply

Composite supply

As per supply under GST a composite supply is a supply made by a taxable person which comprises two or more taxable supplies of goods or services or both, which are naturally bundled and supply in the ordinary course of business one of which is a principal supply and other supply are in the nature of incidental or ancillary which help in better enjoyment of a main service.

Principal supply means the predominant item in combined package of goods or services.

For example: Shyam booked a flight ticket from Bihar to Delhi, the travel ticket may include service of food on plane, free insurance and use of airport lounge. In this case transportation of passenger is predominant element of composite supply and is treated as the principal supply.

Mixed supply

Mixed supply means two or more individual supply that are unrelated of goods or services or both, made in conjunction of each other for a single price and such supply does not constitute a composite supply.

For example: A gift hamper containing chocolate, cold drink, sweets, cake, dry fruits etc. supplied for a single price is a mixed supply. Each of these items can be supplied independently in the market.

Import of services:

Import of services can be of two types with or without consideration. Import of services happens with consideration in course or furtherance of business or not in course or furtherance of business will be considered as supply. If import of services take place without consideration to related or distinct person in course or furtherance of business, then it is supply and in other ceases it is not supply.

Time of supply

The time of supply indicate the point in time when the liability to pay tax arises. Tax is paid to the government on the due date with reference to the said ‘Time of supply’. For example: If time of supply for a said supply is 25^th January, the tax leviable thereon would be payable on its due date which is by 20^th February. Due date is prescribed in CGST Act for suppliers filing GST on monthly basis. Time of supply provided by Goods and Services vide section 12 and section 13 of the CGST Act.

Time of supply of Goods Section 12

As per section 12 there are certain situations are defined to determine time of supply which is listed below:

• Supply of goods under forward charge mechanism (FCM) [Section 12(2)]. Time of supply under FCM is the earlier of following two dates: 

1. Date of issue of invoice by the supplier or the due date of issue of invoice as per section 31
2. Date of receipt of payment by the supplier. It is considered for determining time of supply only in certain cases which is supply of goods in the form of actionable claims, i.e. online money gaming, lottery etc. and supply of goods made by composition supplier. The date of making payment shall be earlier of date of recording payment in recipient’s books or date of debit in recipient’s bank account.

Section 31 Date of raising invoice in case of goods

Where supply involve movement of goods the invoice needs to be issued before or at the time of removal of goods and if goods not involved movement then the invoice needs to be issued before or at the time of goods making available to recipient.

Continuous supply of goods for example: newspaper supply and gas supply etc. The date of issue before or at the time of:

1. Issuance of periodical statement, or
2. Receipt of periodical payment

In case of goods sent or taken on approval or return basis invoice should be issued earlier of following:

1. Before or at the time of supply, or
2. 6 months from removal of goods

• Time of supply of goods under reverse charge mechanism (RCM) [Section 12(3)]. The time of supply for such goods will be the earliest of:

1. Date of receipt of goods or,
2. Date on which payment is recorded in the books of recipient or the date on which the payment debited in the bank account of recipient or,
3. 31^st day from the date of issue of invoice by the supplier.

• Time of supply of vouchers exchangeable for goods [Section 12(4)]. Vouchers are instruments that can be exchanged as payment of supply of goods and/or services. Time of supply is:

1. Date of issue of vouchers if the supply is identifiable at that point of or,
2. Date of redemption of vouchers in other cases.

• Time of supply of goods in other cases [section 12(5)]. If situation does not fall under any of the above provisos the time of supply is following:

1. Due date of filing of return or,
2. In any other cases, date on which GST is paid

Time of supply of services section 13

The liability to pay tax on services arises at the time of supply as per the provisions of this section. Determination of time of supply in the following situations:

• Time of supply of services under forward charge mechanism (FCM) [section 13(2)]. Time of supply if the invoice is issued within the time prescribed under section 31, will be the earlier of:

1. Date of issue of invoice or date of receipt of payment, whichever is earlier.
2. Date of provisions of services or date of receipt of payment, whichever is earlier.

Section 31 Date of raising invoice in case of services

In case of normal supply of services due date of issue of Invoice is before or within 30 days of provisions of services.

In case of services provided by insurance, banking and NBFCs to distinct person the tax invoice needs to be issued before expiry of the quarter during which such supply has been made. In case of services provided to any other person (not telecom co.) the invoice needs to be issued within 45 days from provisions of services.

In case of continuous supply of services, the invoices should be issued either:

• On or before due date of payment where the due date of payment is visible.
• Where the due date of payment is not known, invoice issued before or at the time of receipt of payment by the supplier.
• On or before the date of completion of the milestone event where the payment is linked to completion of an event.
• Time of supply of services taxable under reverse charge [section 13(3)]. In this services received from associated enterprises located outside India is excluded. The time of supply is earliest of following:

1. Date of making payment, or
2. 61^st day from date of invoice issued by the supplier if supplier is liable to issue invoice, or
3. Date of invoice issued by the recipient if the recipient is liable to issue invoice.

• Time of supply of vouchers for services [section 13(4)]. The time of supply under this section is:

1. Date of issue of voucher is the supply is identifiable at that point of time, or
2. In other cases, the date of redemption of voucher.

• Time of supply of services in residual cases [section 13(5)]. Situation which does not fall under above provisions is covered under this section is:

1. Due date of return, or
2. In other cases, date on which GST is paid.