Section 14 of GST – Change in rate of tax in respect of supply of goods or services.. Complete Analysis of GST Section 14. This Act may be called the CGST Act, 2017. Explanation of All Sections of Goods and Service Tax. Section Wise Analysis of GST Act 2017, in this article you may find complete details regarding Section 14 of GST Act 2017 – Change in rate of tax in respect of the supply of goods or services., gst all section and definitions. Now Check more details from below…..
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Section 14 of GST – Change in rate of tax in respect of supply of goods or services.
Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely: ––
(a) in case the goods or services or both have been supplied before the change in rate of tax, ––
(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;
(b) in case the goods or services or both have been supplied after the change in rate of tax, ––
(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or
(ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:
Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.
Explanation. ––For the purposes of this section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.
Related provisions of the Statute
| Section or Rule (CGST / SGST) | Description |
| Section 2(66) | Definition of Tax Invoice or Invoice |
| Section 2(52) | Definition of Goods |
| Section 2(102) | Definition of Services |
| Section 2(105) | Definition of Supplier |
| Section 7 | Scope of Supply |
| Section 31 Tax invoice |
Analysis
Payment of tax requires the presence of all the following events:
- (i) supply of goods or services
- (ii) issue of invoice
- (iii) payment for the supply
When there is a change in the rate of tax during the occurrence of these three events, there may be some concern about the applicability of the correct rate of tax. Section 14 addresses this aspect clearly.
Where the supply takes place after the change in the rate of tax, the time of supply may be as follows:
(a) Supply before the cut-off date-say 01-Sep- 18
| Supply | Invoice | Payment | Point of taxation |
| 25.08.2019 | 01.09.2019 | 05.09.2019 | 01.09.2019 (Invoice or payment, whichever is earlier) |
| 25.08.2019 | 26.08.2019 | 05.09.2019 | 26.08.2019(Date of Invoice) |
| 25.08.2019 | 01.09.2019 | 27.08.2019 | 27.08.2019(Date of payment) |
(b) Supply after the cut-off date-say 01-Sep-17
| Supply | Invoice | Payment | Point of taxation |
| 01.09.2019 | 25.08.2019 | 05.09.2019 | 05.09.2019(Date of payment) |
| 01.09.2019 | 25.08.2019 | 26.08.2019 | 25.08.2019 (Date of invoice or date of payment, whichever is earlier) |
| 01.09.2019 | 02.09.2019 | 26.08.2019 | 02.09.2019(Date of Invoice) |
It is relevant to note here that the Notification 66/2017-CT dated 15.11.2017 exempting a taxable person from payment of tax on advances received refers to the scenarios enumerated in section 14. This may not mean that the receipt of payment in advance should not be considered for determining the change in tax rate; since, the said notification will have limited application for ascertaining the time of supply of goods.
In other words, section 12 specifies the scenarios for ascertaining time of supply whereas section 14 specifies the point of determination of appropriate rate of tax. This means that on application of the said notification, if the date of receipt of advance is relevant, the payment of tax may be deferred till the date of supply of goods at the rate applicable as on the date of receipt of advance (point of taxation).
Although supply has not yet taken place, the time of supply determined as above is valid and not in violation of the levy of GST for the following reasons:
- (i) Supply is defined in section 7(1)(a) as ‘……made or agreed to be made…..’
- (ii) Levy of GST in section 9 is on such supply, that is, ‘made or agreed to be made’
Prescribing the time of supply anterior to the time of actual supply is well accommodated in the language of the Act.
Determination of time of supply under Section 14 has been provided as under:
| Supply | Invoice | Payment | Time of Supply |
| Before Rate Change | Before Rate Change | Before Rate Change | Not governed by Section 14 |
| Before Rate Change | Change Before Rate | After Rate Change | Date of issue of invoice |
| Before Rate Change | After Rate Change | Before Rate Change | Date of receipt of payment |
| After Rate Change | After Rate Change | After Rate Change | Not governed by Section 14 |
| After Rate Change | After Rate Change | Before Rate Change | Date of issue of invoice |
| After Rate Change | Before Rate Change | After Rate Change | Date of receipt of payment |
| After Rate Change | Before Rate Change | Before Rate Change | Date of receipt of payment or date of issue of invoice, whichever is earlier |
Please note that in above chart, “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.
Considering that it is more common to come across of supply of services prior to issuance of tax invoice, section 14 may operate predominantly in the context of services. Although not as common, supply of goods being permitted without invoice being issued simultaneously, section 14 does not cease to operate with respect of goods in instances dealt with in rule 55 of CGST Rules.
Further, section 14 cannot be pressed into service where issuance of invoice is deliberately (and perhaps with mala fide intentions) delayed. Section 14 is a provision that operates where contractually invoice is issued with some interval of time where there is an intervening ‘change of rate’ event. Where there is a deliberate omission to issue tax invoice, the date when the invoice ought to have been issued will operate to fasten tax liability. It is not acceptable that supply itself becomes uncertain due to non-issuance of tax invoice. Therefore, it is accepted that section 14 operates in normal circumstances and not in extraneous and artificial circumstances of belated invoicing as time of supply cannot be shifted ‘at will’ but by normal course of business.
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