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Supply of goods on approval basis: the time of supply is the earlier of:
ADate of approval or 90 days
BDate of removal of goods
CDate of approval or 6 months from removal
DDate of issue of invoice on dispatch
Answer & Solution
Correct answer: C. Date of approval or 6 months from removal
1. Sec 31(7) covers goods sent on approval for sale or return.
2. Invoice (and hence time of supply) is the EARLIER of: the time the goods are approved by the recipient, OR six months from the date of removal.
3. Pre-approval dispatch is a movement WITHOUT supply and does not trigger tax.
_Source: ICAI BoS CA Final Paper 8, Ch 4 "Time of Supply", §Sec 31(7)_
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