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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 ..... aid supply , it is observed 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, the amount received by the applicant is in the nature of Advance payment and not Security deposit . Thus the proviso in question does not apply in the instant case. Time of supply of service - Section 13 of the CGST Act, 2017 - HELD THAT:- The time of supply is determined with reference to the time when the supplier receives payment with respect to the supply as well as a few other references like issue of invoice, receipt of goods etc. In general, the time of supply is earliest of issuance of invoice or receipt of payment. Therefore, in case of advance received for any supply, time of supply is fixed at the point when advance is received, irrespective of the fact whether the supply is made or not. Accordingly, GST needs to be paid with reference to the time at which advance is received. In view of this we observe that the time of supply in case of 'Deposit Works' being executed by the applicant wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Works' undertaken by Public Works Department. iv. The important terms and conditions associated with such 'Deposit Works', are as follows- a. The money received by the applicant for execution of the project shall not be utilised for any other purpose and shall be used in execution of the project only. b. If the applicant earns any interest in any manner on the money received for execution of the project, it will be paid back in the head of account from which the money was drawn. v. The consequence of aforesaid terms and condition is that the money received for execution of the project is held by the applicant solely as a deposit which can be spent only in execution of the project. Accordingly, the applicant spends from the deposit only when any expenditure is incurred towards execution of the project. 4) Accordingly, the applicant in his application has sought Advance Ruling as follows : - i. What is the time of supply in case of 'Deposit Works' being executed by the applicant- whether it is the time of receipt of funds from the client government department or the time when expenditure incurred towards execution of the work is debited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived 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 in view of provisions of Section 13(2) of the CGST Act, 2017, the time of supply of service will be the date of receipt of such payment in advance and the value of supply of service will be the amount which has been received in advance. 7) The applicant was granted a personal hearing on 31 st October 2019. Shri Mritunjai Kumar Singh, authorized representative, appeared in the personal hearing, on behalf of the applicant and Ms. Smita Roy, Assistant Commissioner, Division-I, Lucknow represented the department. 8) During the course of personal hearing, the authorized representative reiterated the submissions already made vide application dated 26.09.2019 (received by the Authority on 01.10.2019) and also filed additional submission, gist of which is as under:- a. Any interest or other monetary benefit accruing from these funds can also not be pocketed by the Construction Agencies and if any interest accrues on the unutilised funds lying in their bank accounts, it will have to be return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar 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 provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act' 2017. 10). We have gone through the submissions made by the applicant and have examined the explanation submitted by them. At the outset, we find that the issue raised in the application is squarely covered under Section 97(2)(c) of the CGST Act 2017, being a matter related to determination of time and value of supply of goods or service or both. We therefore, admit the application for consideration on merits. 11) We further observe that the question sought by the applicant is as under- i. What is the time of supply in case of 'Deposit Works' being executed by the applicant- whether it is the time of receipt of funds from the client government department or the time when expenditure incurred towards execution of the work is debited to 'Deposit Works account'? ii. What shall be the value of supply in aforementioned two alternatives? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 does not apply in the instant case. 15). Now coming to the first question of the applicant regarding the time of supply of service, we observe that, Section 13 of the CGST Act, 2017 deals with that, and sub section 2 of Section 13 of the CGST Act, 2017 defines the time of supply for service as:- (2) The time of supply of services shall be the earliest of the following dates, namely: a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or (b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or (c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation .-For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supply shall not include any discount which is given- (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made to the extent it is covered by the invoice or, as the case may be, the payment. For instance, an advance of ₹ 10 lacs is received for a supply worth ₹ 1 crore to be made in future. The time of supply to the extent of advance received i.e. ₹ 10 lacs shall be at the time of receipt of advance and for the balance amount of ₹ 90 lacs, it shall be determined with reference to date of issue of invoice and other parameters. 19) In view of aforementioned discussion, we observe that the value of the supply, on the advance payment received by the applicant, will be the amount of advance received by the applicant towards that particular work/ supply. 20) In view of the above, both the members unanimously rule as under; RULING i. What is the time of supply in case of 'Deposit Works' being executed by the applicant- Whether it is the time of receipt of funds from the client government department or the time when expenditure incurred towards execution of the work is debited to 'Deposit Works account'? Ans : The time of supply in case of 'Deposit Works' being executed by the applicant will be the time of receipt of fund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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