Rental services exceeding three months qualify as continuous supply requiring invoices within thirty days under Rule 47

The AAR-TN ruled on time of supply for continuous rental services of immovable property. For leases exceeding three months, rental constitutes continuous supply of services under Section 2(33). When contracts contain provisions for continued supply after expiry, invoices must be issued per Section 31(5) with time of supply determined under Section 13(2)(a) as earliest of invoice date or payment receipt. Without such provisions, no contract exists but supply continues, requiring invoices within thirty days under Rule 47. If issued timely, time of supply follows Section 13(2)(a); if delayed beyond thirty days, Section 13(2)(b) applies using service provision date or payment receipt, whichever is earlier.

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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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