What is Time of Supply for Goods on Reverse Charge

In our previous blog post What is Time of Supply for Goods on Forward Charge we discussed time of supply for goods on Forward Charge. In this blog, we will discuss time of supply of goods on reverse charge. In order to ensure that the tax is collected on the sale of goods or services from various unorganised sectors, the government introduced Reverse Charge Mechanism. Under this, the recipient or buyer of goods or services has to pay the tax to the credit of the Government, unlike in the forward charge, where supplier is liable to pay the tax. The key change is the shift in responsibility of paying tax, which has moved from the supplier to the buyer.

Under Current Regime

Under VAT, on purchases made from unregistered dealers, the recipient (registered dealer) of goods has to pay a tax called Purchase Tax. For example, Ram Traders, a registered dealer located in Karnataka purchase goods from Mr. Shiv Kumar, an unregistered trader. On this purchase, Ram Traders will be liable to pay the Purchase Tax.

Under GST

Under GST, the same concept of reverse charge mechanism is retained. This is applicable on specific supply of goods and services, which is yet to be notified by the Government. Let us understand time of supply for goods under Reverse Charge Mechanism. The liability of GST (CGST and SGST or IGST as applicable) will arise as shown below:

Earliest of the following
Date of Receipt of Goods	The date on which the goods are received by the recipient.
Date of Payment	The date on which payment is made. The earliest of the date on which the payment is accounted for in the books of accounts of the recipient or the date on which the payment is credited to his bank account.
30 Days from Date of Invoice	The date immediately following 30 days from the date of issue of invoice by the supplier

If, for any reason the above dates cannot be determined, then the time of supply will be the date of recording the supply in the books of the recipient. Let us understand with examples.

Date of Receipt of Goods	Date of Invoice	Date of Payment	Time of Supply of Goods	Explanation
29th July, 2017	5th August, 2017	10th November, 2017	29th July, 2017	The date of receipt of goods, in this case, is earlier than the date of payment and 30 days from the date of invoice. Hence, the time of supply will be 29th July, 2017.
15th August, 2017	25th August, 2017	30th July, 2017	30th July, 2017	The date of payment is earlier than the date of receipt of goods and 30 days from date of invoice. Hence, the time of supply will be 30th July, 2017.
10th August, 2017	1st July, 2017	15th August, 2017	31st July, 2017	In this case, 30 days from date of invoice is earlier than the date of receipt of goods and the date of payment. Hence, the time of supply will be 31st July, 2017.