Interpreting GST: Time and Value of Supply for 'Deposit Works'

The case involved determining the time and value of supply for 'Deposit Works' under GST. The applicant argued that funds received for 'Deposit Works' should be treated as deposits, while the Authority for Advance Ruling (AAR) concluded that they are advance payments. The AAR ruled that the time of supply for 'Deposit Works' is the time of receipt of funds, and the value of supply is the amount of advance received for the specific work. The ruling is subject to provisions under Section 103(2) unless declared void under Section 104(1) of the CGST Act, 2017.

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Issues Involved:
1. Determination of the time of supply for 'Deposit Works' under GST.
2. Determination of the value of supply for 'Deposit Works' under GST.

Detailed Analysis:

1. Determination of the Time of Supply for 'Deposit Works' Under GST:
The applicant, M/s Uttar Pradesh Avas Evam Vikas Parishad, sought an advance ruling to determine the time of supply for 'Deposit Works.' The applicant contended that the funds received for 'Deposit Works' should be treated as deposits and not advances, arguing that these funds are restricted for use solely for the execution of the project and cannot be utilized for any other purpose. They compared this arrangement to an 'Escrow Account' and argued that the consideration for services is received only when the funds are debited for project expenses.

However, the Authority for Advance Ruling (AAR) examined the provisions of Section 13(2) of the CGST Act, 2017, which defines the time of supply for services. The AAR concluded that the funds received by the applicant are in the nature of advance payments and not deposits. According to Section 13(2), the time of supply is the earliest of the date of issue of invoice or the date of receipt of payment. Therefore, the AAR ruled that the time of supply for 'Deposit Works' will be the time of receipt of funds from the client government department.

2. Determination of the Value of Supply for 'Deposit Works' Under GST:
The applicant also sought clarity on the value of supply in the context of 'Deposit Works.' They argued that since the funds are treated as deposits, the value of supply should be determined when the funds are debited for project expenses. The AAR referred to Section 15 of the CGST Act, 2017, which defines the value of taxable supply as the transaction value, i.e., the price actually paid or payable for the supply of goods or services.

The AAR reiterated that the funds received by the applicant are advance payments for the supply of services. Therefore, the value of supply should be the amount of advance received by the applicant for the particular work or supply. The AAR also referred to the Central Board of Indirect Taxes and Customs (CBIC) flyer on "Advance received for future supply," which states that the time of supply to the extent of the advance received is at the time of receipt of advance.

Ruling:
1. Time of Supply: The time of supply in the case of 'Deposit Works' being executed by the applicant will be the time of receipt of funds from the client government department.
2. Value of Supply: 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.

This ruling is valid subject to the provisions under Section 103(2) until and unless declared void under Section 104(1) of the CGST Act, 2017.

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