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TMI Blog2019 (12) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... r building project at the request of the State Government or, with the previous approval of the State Government, at the request of any other person on such terms and conditions as may be agreed upon. 3) The Applicant, in its application dated 26.09.2019, has submitted that: i. Projects being executed by the applicant for others are called 'Deposit Works', because of their close analogy with similar works often executed by Public Works Department of the State Government. ii. The applicant, in case of such works, realises an additional amount @12.5% as 'Supervision and Centage charges' on the total cost of construction which is permitted under Section 48 of the Act. iii. Since most of such 'Deposit Works' undertaken by the applicant are the projects of Government of UP and 'Deposit Works' when executed by Public Works Department are governed by accounting rules contained in Financial Hand Book Volume-VI, the terms and conditions of such works are invariably the same as are applicable to 'Deposit Works' undertaken by Public Works Department. iv. The important terms and conditions associated with such 'Deposit Works', are as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally received by suppliers for supply of goods/ services wherein he has full freedom to use the money in the manner he likes. v. Since the funds received as above from the State Government do not qualify as advance payments and are essentially in nature of deposits, the applicant shall be held, as per provisions contained in the proviso to section 2(31)(b) of CGST Act, to have received the consideration when he debits the funds by the expenditure incurred towards execution of the project. vi. Accordingly, the time of supply of services by the applicant, as per provisions contained in section 13(2) of CGST Act, shall be date of receipt of consideration determined as above i.e. the date of debit of the expenditure to the account of funds obtained for execution of the project, if no tax invoice has been issued prior to this date. 6) The application for advance ruling was forwarded to the Jurisdictional GST Officer to offer their comments/ views/ verification report on the matter, which were received in the office vide letter C. No. 132/CGST/Lko-1 /R-V/Misc Report/ 2018/6110 dated 30.10.2019, wherein it was submitted that the applicant is receiving payment in advance and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration for the work only when any expenditure incurred in execution of the work is debited to the funds. e. Since the applicant gets the consideration for the work only as aforesaid, the time of supply, as determined by the provisions of section 13(2) of CGST Act, happens to be the date on which the funds are debited with the expenditure incurred in execution of the work and the value of supply comes out to be the amount of such consideration. f. Finally, since the liability to pay tax arises at the time of supply, the liability of applicant arise at the time when they appropriate the funds for meeting any expenditure incurred towards execution of the work, the value of supply being the amount of funds appropriated as such. DISCUSSION AND FINDING 9) At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt received by them as "Deposit Work" is a deposit and not advance, is not tenable. The amount received by them is rightly classifiable under advance received for supply of service. As regard to the contention of the applicant that the fund cannot be used elsewhere but only for execution of demarcated project, we observe that this is an additional condition imposed so that the funds of one project cannot be diverted to other project and work get completed within the stipulated timeframe. 14) As regard to the proviso to sub section 31 of Section 2 of CGST Act 2017 i.e. "Provided that a deposit given in respect of supply of goods or service or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply", we observe that the above said provision envisages a situation wherein the amount is received by the service provider as "Security deposit" for any particular work and the same get refunded after the completion of said work. Whereas, in the instant case, as discussed supra, the amount received by the applicant is in the nature of "Advance payment" and not "Security deposit". Thus the proviso in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant would be the time of receipt of funds from the client (Government department). 17) Now coming to the second question of the applicant regarding what shall be the value of supply we observe that Section 15 of the CGST Act' 2017 defines the value of taxable service, which is as under:- "15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related." 18) Further, we observe that as per explanation given in the sub Section 2 of Section 13 of the CGST Act: "Explanation- For the purpose of clause (a) and (b)- (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment." We also observe that the Central Board of Indirect Taxes and Customs has issued flyer on the "Advance received for future supply" under GST. Para 2 of the said flyer deals with the advance payment, which is as under:- "As per the explanation 1 to Section 12 of the CGST Act, 2017 a "supply" shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. For instance, an advance of Rs. 10 lacs is received for a supply worth Rs. 1 crore to be made in future. The time of supply to the extent of advance received i.e. Rs. 10 lacs shall be at the time of receipt of advance and for the balance amount of Rs. 90 lacs, it shall be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X
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