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2019 (10) TMI 1204 - AAR - GSTTime of supply of services - continuous supply of services - renting of immovable properties - principles of natural justice - HELD THAT - In respect of renting of immovable property there is no real completion of supply of service, except what is specified in the contract. The lessee receives the service of renting throughout their stay on a continuous basis. The payments are periodic as determined by the lease agreement usually monthly or annually. Therefore, for contracts for renting of immovable properties where the period of the lease/ actual stay is more than three months, as is the case here, the service is a continuous supply of service. The license has expired and not in force but the licensee continues to be in Possession and occupation of the immovable properties - HELD THAT - When the license is expired and there are provisions made in the lease agreement regarding continued supply of service as in the case of the lease agreement with Customs, the supply of service is a continuous Supply of Service as defined in Section 2(33). However, if there is no such provision made in the agreement it can be said that the supply is not under a contract and therefore, in such cases, the supply no longer qualifies under the definition of continuous supply. In respect of continuous supply of service, as per Section 31(5), the tax invoice should be raised on or before due date of payment if said due date is ascertainable from the contract. It is seen that in all cases the Rent Claim Advice issued by the applicant contains a due date of payment of the demand raised in the same - in case where the contract contains provisions for continued supply of service even after expiry, it is a continuous supply of service - Accordingly, in cases where there is a provision in contract for continued supply of services after expiry or termination of the contract, the invoice is issued with the period prescribed in Section 31 (5) and the Time of supply is determined by Section 13(2) (a), as the earliest of the date of issue of invoice or Rent Claim Advice by the supplier and the date of receipt of payment. In respect of cases where there is no such provision regarding continued supply of service after expiry of contract, it can be said that no such contract exists. However, there is still a supply of service of renting of the immovable property. As per Rule 47 of the CGST/TNGST Rules, the invoice should be issued within thirty days from date of supply of service - In the instant case the applicant issues RCA on monthly basis for the rent/ fee pertaining to a specific month. If such RCAs are issued within thirty days after the end of recurrent period specified in the agreement after which the rent/license fee is to be paid ,for which the rent is being sought, it can be said that they are issued within the prescribed period as per Section 31 (2) and the Time of supply is determined by Section 13(2) (a), as the earliest of the date of issue of invoice or Rent Claim Advice by the supplier and the date of receipt of payment as the invoice is issued within the period prescribed. If the RCAs are issued more than thirty days after the end of the month for which the rent is being sought, it can be said that they are not issued within the prescribed period and the Time of supply is determined by Section 13(2) (b), as the earliest of the date of provision of service, which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid and the date of receipt of payment, whichever is earlier. The license is in force, but the licensee does not pay the periodical license fee to them as provided in the license agreement - HELD THAT - If the invoice is issued after such due date of payment, the Time of supply is determined by Section 13(2)(b), as the earliest of the date of provision of service which is the end of the period (monthly/annual etc. ) specified in the contract and the date of receipt of payment, whichever is earlier. If payment is not received, the time of supply shall be the date of provision of service which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid. The license is in force, but the licensee pays a portion of the agreed license fee by them under the expired license agreement - HELD THAT - The question is wrongly worded as if the license is in force, the licensee could not be paying any amount under the expired license agreement. The applicant means to ask regarding the case where the license is in force and instead of receiving the full consideration, they only get a partial amount as payment. In these case too, it will apply as the date of payment of full consideration is the date of reckoning of the date of payment. .
Issues Involved:
1. Time of Supply (TOS) for continuous supply of services (CSS) in the nature of renting immovable properties when the license has expired but the licensee continues to occupy the property. 2. TOS when the license is in force but the licensee does not pay the periodical license fee. 3. TOS when the license is in force but the licensee pays only a portion of the agreed license fee. Detailed Analysis: Issue 1: Time of Supply for Expired License with Continued Occupation The applicant, engaged in supplying port services and renting immovable properties, sought clarity on TOS when the license has expired but the licensee continues to occupy the property. The applicant issues a Rent Claim Advice (RCA) periodically, which contains all necessary details akin to a tax invoice under Section 31 of the CGST Act. - Continuous Supply of Service: Renting of immovable property qualifies as a continuous supply of service under Section 2(33) of the CGST Act, as it involves recurrent payments over a period exceeding three months. - Tax Invoice Requirements: As per Section 31(2), a registered person must issue a tax invoice showing the description, value, and tax charged. - TOS Determination: - With Contract Provisions: If the lease agreement includes provisions for continued supply after expiry, the RCA (acting as a tax invoice) must be issued on or before the due date of payment specified in the contract. The TOS is determined under Section 13(2)(a) as the earliest of the date of issue of the RCA or the date of receipt of payment. - Without Contract Provisions: If no such provisions exist, the RCA must be issued within thirty days from the end of the recurrent period for which the rent is sought. If issued within this period, the TOS is determined under Section 13(2)(a). If issued after thirty days, the TOS is determined under Section 13(2)(b) as the earliest of the date of provision of service or the date of receipt of payment. Issue 2: Time of Supply when Licensee Does Not Pay Periodical License Fee The applicant sought clarity on TOS when the license is in force, but the licensee does not pay the periodical license fee as agreed. - Invoice Issued Before Due Date: If the rent invoice is issued before the due date of payment specified in the lease agreement, the TOS is determined under Section 13(2)(a) as the earliest of the date of issue of the invoice or the date of receipt of payment. - Invoice Issued After Due Date: If the invoice is issued after the due date, the TOS is determined under Section 13(2)(b) as the earliest of the date of provision of service (end of the recurrent period) or the date of receipt of payment. Issue 3: Time of Supply when Licensee Pays a Portion of the Agreed License Fee The applicant sought clarity on TOS when the license is in force, but the licensee pays only a portion of the agreed license fee. - Partial Payment: The TOS is determined similarly to Issue 2. The date of payment of the full consideration is the date of reckoning for the TOS. If the invoice is issued before the due date, TOS is under Section 13(2)(a). If issued after the due date, TOS is under Section 13(2)(b). Ruling: 1. Expired License with Continued Occupation: - With Contract Provisions: TOS is determined under Section 13(2)(a) as the earliest of the date of issue of RCA or the date of receipt of payment. - Without Contract Provisions: If RCA is issued within thirty days after the recurrent period, TOS is under Section 13(2)(a). If issued after thirty days, TOS is under Section 13(2)(b). 2. License in Force, Non-Payment of Fee: - Invoice Issued Before Due Date: TOS is determined under Section 13(2)(a). - Invoice Issued After Due Date: TOS is determined under Section 13(2)(b). 3. License in Force, Partial Payment: - Partial Payment: TOS is determined similarly to Issue 2. If the invoice is issued before the due date, TOS is under Section 13(2)(a). If issued after the due date, TOS is under Section 13(2)(b).
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