GROUP BY 1
I've never known GROUP BY to support using ordinals, only ORDER BY. Either way, only MySQL supports GROUP BY's not including all columns without aggregate functions performed on them. Ordinals aren't recommended practice either because if they're based on the order of the SELECT - if that changes, so does your ORDER BY (or GROUP BY if supported).
There's no need to run GROUP BY on the contents when you're using UNION - UNION ensures that duplicates are removed; UNION ALL is faster because it doesn't - and in that case you would need the GROUP BY...
Your query only needs to be:
SELECT a.id,
a.time
FROM dbo.TABLE_A a
UNION
SELECT b.id,
b.time
FROM dbo.TABLE_B b