[(44) ―time of supply‖, in relation to,–

• a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply―or the time when any payment is received by the supplier in respect of that supply, whichever is earlier;
• a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and
• services, means the time at which the services are rendered or provided;

Provided that in respect of sub clause ( a) ,(b) or (c), where any part payment is received, –

(i)            for the supply in a tax period, it shall be accounted for in the return for that tax period; and

(ii)          in respect of exempt supply, it shall be accounted for in the return for the tax period during which the exemption is withdrawn from such supply;]

 Explanation:

This definition is very important as it determines as to when the sales ax incidence arises. Time of supply depends on different situations as under:

• NORMAL

Earlier of:

Time at which goods are delivered or made available to the recipient of the supply;

Or

The time when payment is received by the supplier in the respect of that supply whichever is earlier.

It means that advance against supply is subject to tax at the time of payment of advance. Therefore, an invoice needs to be issued in respect to advance.

The payer can also claim input tax on advance against purchases.

• SUPPLY TO AN ASSOCIATED PERSON AND THE GOODS ARE NOT TO BE REMOVED

Time at which goods are made available to the associated person

• SUPPLY THROUGH HIRE PURCHASE AGREEMENT

Date of agreement