Mobilisation advance under GST becomes taxable when applied to works contract consideration, and later invoices must reflect net adjustment.

An unadjusted mobilisation advance received for a works contract was treated as taxable consideration once applied to the supply, so the balance outstanding on 01/07/2017 attracted GST. For later invoices, valuation had to be under section 15 on the net amount after setting off the advance already taxed, because charging GST on the full gross invoice value would cause double taxation. The ruling therefore confirmed taxability of the advance when credited and required subsequent billing to exclude the portion already brought to tax, leaving GST payable only on the remaining value.

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Issues: (i) whether the unadjusted mobilisation advance outstanding on the date of GST implementation was liable to GST as consideration for works contract service; (ii) whether GST on subsequent invoices was to be charged on the gross invoice value or on the net amount after adjusting the advance already subjected to tax.

Issue (i): whether the unadjusted mobilisation advance outstanding on the date of GST implementation was liable to GST as consideration for works contract service.

Analysis: The time of supply under section 13(2) is the earlier of the date of invoice or receipt of payment, and a received advance becomes taxable to the extent it is applied as consideration. The mobilisation advance here was interest-free, secured by bank guarantee, and contractually earmarked to assist performance of the works contract. Under the GST definition of consideration, a deposit is excluded only if it is not applied as consideration; once applied to the supply, it forms part of taxable consideration. The Authority held that the unadjusted advance outstanding on 01/07/2017 was deemed consideration for the works contract service and was taxable under GST.

Conclusion: The unadjusted mobilisation advance was liable to GST as consideration for deemed supply of works contract service.

Issue (ii): whether GST on subsequent invoices was to be charged on the gross invoice value or on the net amount after adjusting the advance already subjected to tax.

Analysis: The works contract under GST is not divisible into separate goods and service components for the valuation of this advance, and section 15(1) governs valuation of the supply. Since the advance was already treated as taxable consideration to the extent received, charging GST again on the full later invoice value would result in double taxation. The value of later invoices therefore had to be reduced by the portion of advance adjusted in those invoices, and tax was payable only on the balance amount remaining after such adjustment.

Conclusion: GST on subsequent invoices was payable on the net amount after adjustment of the mobilisation advance.

Final Conclusion: The advance was taxable when credited to the applicant's account, and the later billing had to exclude the portion already brought to tax so that only the balance value suffered GST.

Ratio Decidendi: Under GST, an advance received for a works contract becomes taxable when it is applied as consideration, and later invoices must be valued after deducting that already-taxed advance to prevent double taxation.

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