GST liability under a works contract must follow statutory time-of-supply rules, with invoice tax treatment left to the parties.

GST liability under the contract could not be avoided by seeking protection against demand or deduction from the first running account bill, because the contract was not shown to be exempt and tax liability arose under the statutory time-of-supply rules. The petitioner remained responsible for filing returns, and the contractual price and bill of quantity did not by themselves displace the GST obligation. At the same time, where GST formed part of the invoices, the Municipality could not avoid its own liability in relation to that tax. Whether the agreement was a fixed-rate contract and how the tax component was to be built into payment terms was left to the parties under the contract.

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Issues: Whether GST could be directed not to be demanded or deducted from the first running account bill, and whether the petitioner could avoid immediate payment of GST on the basis of the contract price and bill of quantity.

Analysis: The contract was not shown to be exempt from GST. The liability to pay GST arose in accordance with the statutory provisions governing time of supply, and the obligation to file returns remained on the petitioner. At the same time, if GST formed part of the invoices, the Municipality could not avoid its own liability in relation to such tax. The question whether the contract was a fixed rate contract, and whether the tax component had to be built into the payment terms, was left to the parties to decide under the contract.

Conclusion: The petitioner was not entitled to the relief sought against GST demand or deduction, and only the clarification on the statutory position was granted.

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