The time of issue of an invoice is a crucial aspect under the GST regime as it determines the time of supply and the due date for payment of tax liability. It is essential to issue a tax invoice within the prescribed time limit, failing which penalties and interest may apply. Delayed issuance of invoices can also affect input tax credit claims, leading to a cascading effect on tax liability. Additionally, incorrect or delayed invoices can result in compliance issues and audit queries. Therefore, businesses need to ensure timely and accurate issuance of tax invoices to avoid any adverse impact on their cash flow and reputation.
For the supply of taxable goods, the time to issue an invoice will be as follows:
General Rule [Sec 31(1)]
- If the supply involves the movement of goods, the tax invoice must be issued before or at the time of removal of goods.
- If the supply does not involve the movement of goods, the tax invoice must be issued before or at the time of delivery of goods or making available to the recipient.
It should be noted that “removal” refers only to the movement of goods that occurs during the supply and not at any other time. According to Section 2(96) of the CGST Act, “removal of goods” refers to the dispatch of goods by the supplier or any person acting on their behalf, or the collection of goods by the recipient or any person acting on their behalf. When it comes to the export of goods, the tax invoice must be issued before or at the time of removal of goods since it involves the movement of goods.
The term “delivery” is not specifically defined in the GST Law, but under the Sale of Goods Act, 1930, it refers to the voluntary transfer of possession from one person to another. Mere possession of goods does not constitute delivery of goods. Delivery may be in the form of physical, symbolic, or constructive.
Continuous Supply of Goods
If there is a continuous supply of goods that involves successive statements of accounts or payments, the invoice must be issued at the earliest of the following times:
• When each statement is issued;
• When each payment is received.
According to section 2(32) of the CGST Act, a ‘continuous supply of goods’ refers to the supply of goods that is provided or agreed to be provided:
• Continuously or on a recurrent basis;
• Under a contract;
• By means of a wire, cable, pipeline, or other conduit;
• The supplier sends invoices to the recipient on a regular or periodic basis as notified.
For instance, XYZ Construction Company receives river sand and bricks regularly from its suppliers, and the suppliers issue successive statements of accounts every fortnight. The invoice should be raised before or at the time of issuance of the statement of accounts by the suppliers.
Goods Sent on Approval for Sale or Return
If goods are sent on a basis of approval for sale or return, the tax invoice should be issued either when it is known that the supply has taken place or within 6 months from the date of removal. Rule 55(1)(c) of the CGST Rules specifies that if the transportation of goods is for reasons other than by way of supply, the supplier must issue a delivery challan. Additionally, Rule 55(4) of the CGST Rules permits the supplier of goods to issue an invoice after the delivery of goods if they are unable to do so at the time of supply.
Circular No. 10/10/2017 dated 18-10-2017 allows goods sent on approval basis to be moved on a delivery challan, along with an e-way bill where applicable. The invoice can then be issued at the time of delivery of goods. Consequently, the person delivering the goods can carry an invoice book with them to issue the invoice as and when the supply is fructified.
Tax Invoice by Recipient of supply of goods-Reverse Charge
Section 2(98) of the CGST Act defines “reverse charge” as a situation where the liability to pay tax falls on the recipient of goods or services, rather than on the supplier. This is covered under Section 9(3) or Section 9(4) of the CGST Act, or Section 5(3) or Section 5(4) of the IGST Act.
The supplier of goods on which the recipient is liable to pay tax under the reverse charge mechanism may be registered or unregistered under GST. If the supplier is registered, they must issue a tax invoice specifically mentioning that the supply is covered by reverse charge mechanism as per Rule 46(p) of the CGST Rules. However, if the supplier is not registered under GST, the recipient must issue the tax invoice upon receipt of goods. These invoices are commonly known as “Self-generated Tax Invoices” or “Self Invoices” and apply to supplies covered under Section 9(3) or Section 9(4).
According to the Second Proviso to Rule 46, the above invoice may be issued on a consolidated basis at the end of the month, covering all supplies received under Section 9(4).
When the recipient issues a tax invoice for reverse charge, the time of supply is not directly linked to the date of the tax invoice. Instead, it is linked to the date of receipt of goods or the date of payment entered in the recipient’s books of account.
If tax is paid under reverse charge, the time of supply of goods will be the earlier of the following dates:
- The date of receipt of goods.
- The date of payment as entered in the books of the recipient or the date of debit in the recipient’s bank account.
- The 31st day from the date of issue of invoice or any other relevant document by the supplier.
However, if the time of supply of goods cannot be determined using the above criteria, the date of entry in the recipient’s books of account will become the time of supply.
Issue of Delivery Challan: In Case of Movement of Goods for Job Work
According to Section 143 of the CGST Act, in the case of job work, if a registered person sends inputs or capital goods to a job worker for job work without payment of tax, and the job worker subsequently sends them to another job worker, the following conditions must be met:
- The registered person must bring back the inputs within one year or the capital goods within three years after completion of the job work to any of their places of business.
- If the principal wants to send the processed inputs within 1 year from the date of dispatch, or capital goods within 3 years from the date of dispatch from the premises of the job worker to the customer directly, then they must ensure that the job worker is a registered person. If the job worker is unregistered, the principal can supply the goods within India on payment of taxes or for export, with or without payment of taxes, from the premises of the job worker only after including the job worker’s premises as their own place of business.
- For the movement of goods between the principal and the job worker and vice versa, since such movement is not a supply, the parties involved must move goods by way of delivery challan as provided in Rule 55(1) of CGST Rules.
As per Circular 38/12/2018 dated 26-03-2018, the principal must issue a tax invoice on expiry of three years/one year and declare such supplies in the GST return filed for the month in which the period of three years/one year expires. However, interest must be paid from the date on which such inputs or capital goods were initially sent for job work.