2025 (11) TMI 1629 - AAR - GST

GST ruling: no multiple tax invoices on advances for boats; Section 31 and 12(2)(a) govern liability

AAR held that for supply of boats, the applicant cannot issue multiple tax invoices for a single supply upon receipt of advances. For advances, only a ... Issuance of Tax invoices at the time of receiving advance or part payment from the customers in the case of Domestic and Exports Sales of goods - declaration of the same as turnover in the corresponding GST return period and the taxes paid - process involved is not a service - issuance of multiple tax invoices for supply of same goods upon receipt of advances at the time of delivery of the boat - whether applicant can issue the Tax invoice for balance amount receivable from the customer and show the full value of the boat in the E-way bill for transportation of the consignment supported by all tax invoices already issued to the customer against the advances? - whether Tax Invoice for total value of boat can be issued at the time of' delivery of boat and issue Tax credit notes against advances or part payments received for which Tax invoices are issued earlier to offset the tax liability? HELD THAT:- N/N. 66/2017-Central Tax dated 15.11.2017 provides that all registered persons who have not opted for the composition levy under Section 10 of the CGST Act shall pay central tax on the outward supply of goods at the time of supply as specified in Section 12(2)(a) of the Act and furnish returns accordingly. Since the Notification uses the word “shall”, it is opined that compliance is mandatory, and the time of supply is to be determined as the earlier of the date of issue of invoice or the last date on which the invoice is required to be issued under Section 31. Although it appears that Section 12(2)(b) states that the time of supply to be the date of receipt of payment, this clause has been expressly excluded by the Notification in the case of such registered persons (who has not opted for composition levy) and therefore, in the applicant's case, the tax liability arises at the time of supply under Section 12(2)(a), i.e., time of supply of goods, irrespective of when payment is received. Notification No. 66/2017-Central Tax, issued under Section 148 of the CGST Act, specifies that suppliers of goods who are not under the composition scheme shall pay tax at the time of supply as per Section 12(2)(a), including in situations covered by Section 14. This effectively curtails the applicability of Section 12(2)(b), the date-of-payment trigger for determining the time of supply of goods. The express reference to Section 14 ensures that even in cases involving change in the rate of tax, the time of supply shall continue to be reckoned only on the basis of the invoice date, thereby excluding advances from taxability altogether. The Hon'ble Supreme Court in Hukam Chand Shyam Lal v. Union of India [1975 (12) TMI 168 - SUPREME COURT] held that where a statute prescribes that a thing must be done in a particular manner, it must be done in that manner or not at all. Similarly, in CIT v. Shahzada Nand & Sons [1966 (1) TMI 23 - SUPREME COURT] it was observed that a taxpayer cannot, by declining to claim a statutory relief or by voluntarily foregoing it, alter the incidence of tax as determined by law. Applying these principles, the timing of tax payment prescribed under Section 148 read with Notification No. 66/2017 is not a matter of taxpayer choice but a statutory mandate. Once the law prescribes that suppliers of goods shall pay tax only at the time of issue of invoice and not upon receipt of advance, no discretion exists to revert to the earlier method of payment on advances. Any tax paid contrary to this special procedure would have no legal sanction under the Act. It is also found that Section 31 (3) (d) of the CGST Act, 2017 squarely covers the situation faced by the applicant and it says that “a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment”. Thus, the proper document to cover advance with regard to supply of goods is not an invoice, but a “receipt voucher or any other document, containing such particulars as may be prescribed”. The document in this regard is prescribed under Rule 50 of the CGST Rules, 2017. On verification of this Rule, it is found that the prescribed document is not the same as a Tax Invoice prescribed under Rule 46 of the CGST Rules, 2017. Hence, the particular situation as expressed in the application is not to be circumvented by issuance of multiple invoices, but by issuance of document under Rule 50 (receipt voucher) with regard to advances and by issuance of document under Rule 46 (Invoice) at the time of supply. GST law does not permit issuance of multiple tax invoices for a single supply in case of supply of goods. The applicant cannot issue multiple tax invoices against a single supply of goods. Instead, receipt vouchers must be issued at the time of receiving advances, and a single tax invoice should be issued at the time of final delivery of the goods. The corresponding E-way bill shall be generated against this final invoice, reflecting the entire value of the consignment. While the applicant may reflect advances received in the final invoice for accounting clarity as per the relevant .accounting standards, the invoice value must match the value of goods transported. Recognition of unbilled revenue in financial statements does not create a mandatory GST liability. The applicant may choose to discharge GST at the time of advance receipt or upon delivery of goods, at their discretion, in accordance with law. ISSUES PRESENTED AND CONSIDERED 1. Whether, in respect of supply of goods, tax invoices can lawfully be issued and GST paid at the time of receipt of advances or part-payments, notwithstanding Notification No. 66/2017-Central Tax and the provisions on time of supply. 2. Whether multiple tax invoices can be issued for a single supply of goods corresponding to successive advances, and a final invoice issued for the balance amount, with the E-way bill reflecting the full value of the goods supported by all such invoices. 3. Whether a single tax invoice can be issued for the total value of the goods at the time of delivery and earlier invoices (if any) against advances can be neutralised through credit notes, particularly where manufacture and delivery span multiple financial years. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Permissibility of issuing tax invoices and paying GST at the time of receipt of advances for supply of goods Legal framework 1. The Court considered Section 12(2) of the CGST Act (time of supply of goods), Section 31(1) and 31(3)(d) of the CGST Act (tax invoice and receipt voucher), Section 34 of the CGST Act (credit notes), Rule 46 and Rule 50 of the CGST Rules (contents of tax invoice and receipt voucher), and Notification No. 66/2017-Central Tax issued under Section 148 of the CGST Act. 2. Notification No. 66/2017-Central Tax mandates that registered persons (other than those under composition levy) supplying goods 'shall' pay tax on outward supply at the time of supply as specified in Section 12(2)(a), including cases covered by Section 14, thereby expressly excluding Section 12(2)(b) (date of payment trigger) for such persons. 3. Section 31(1) stipulates that a registered person supplying taxable goods shall issue a tax invoice before or at the time of removal of goods for supply involving movement, or at the time of delivery/making available in any other case. Section 31(3)(d) requires a registered person, on receipt of advance payment with respect to any supply of goods or services or both, to issue a receipt voucher or other prescribed document evidencing such payment. Interpretation and reasoning 4. The Court rejected the contention that Notification No. 66/2017-Central Tax is merely an optional exemption. It was held that the notification is issued under Section 148 (special procedure for certain classes of persons) and not under Section 11 (exemption). It therefore prescribes a mandatory procedural rule for suppliers of goods regarding the timing of tax payment. 5. By using the expression 'shall pay tax ... at the time of supply as specified in Section 12(2)(a)', the notification confines the time of supply to the earlier of the date of issue of invoice or the last date on which such invoice is required to be issued under Section 31. It disables the operation of Section 12(2)(b) for suppliers of goods who are not under composition, thereby excluding advances from being a trigger for tax liability. 6. The Court held that this special procedure is binding on all taxpayers within the specified class and cannot be treated as an optional concession that may be waived. Any attempt to pay tax on advances for goods by voluntarily issuing tax invoices at the advance stage would lack legal sanction, as it would be contrary to the statutorily prescribed time of supply. 7. Relying on principles laid down by the Supreme Court-namely, that where a statute prescribes that a thing must be done in a particular manner it must be so done or not at all, and that a taxpayer cannot, by declining a statutory relief, alter the incidence of tax-the Court held that the applicant cannot lawfully choose to revert to the earlier regime of paying tax on advances for goods. 8. On the construction of Section 31(1), the Court held that in the case of supply of goods (which is quantised and tangible) the provision envisages issuance of 'a tax invoice' for the supply and does not contemplate multiple tax invoices for a single product or issuance of an invoice merely on receipt of advance long before removal/delivery. 9. Section 31(3)(d), read with Rule 50, was held to 'squarely cover' the applicant's situation. For advances in respect of goods, the proper document is a 'receipt voucher or any other document, containing such particulars as may be prescribed', not a tax invoice under Rule 46. This demarcation between a receipt voucher and a tax invoice reflects the legislative intent that advances for goods are not to be invoiced as completed supplies. 10. The Court clarified that while Notification No. 66/2017 modifies determination of time of supply under Section 12(2), it does not alter the independent requirement under Section 31(1) regarding the permissible point in time for issuing a tax invoice, which remains tied to actual or imminent supply (removal or delivery), not merely to receipt of advance. Conclusions 11. The applicant is not permitted to issue tax invoices at the time of receiving advance or part payment towards supply of goods, for either domestic or export transactions. 12. Advances received prior to actual supply of goods must be documented only by way of a receipt voucher (or equivalent document under Rule 50), and GST is payable with reference to the tax invoice issued at or before the time of removal/delivery of goods as per Section 31(1) read with Section 12(2)(a) and Notification No. 66/2017-Central Tax. Issue 2 - Issuance of multiple tax invoices for a single supply and alignment with E-way bill requirements Legal framework 13. The Court examined Section 31(1) (requirement of issuing a tax invoice for supply of goods), read with the special procedure under Notification No. 66/2017-Central Tax and the provisions on receipt vouchers (Section 31(3)(d), Rule 50) and tax invoices (Rule 46). The E-way bill mechanism was considered in the context of the statutory requirement that the value in the invoice and consignment value in the E-way bill must correspond. Interpretation and reasoning 14. The Court held that GST law does not permit issuance of multiple tax invoices for a single supply of goods. Section 31(1) contemplates a single tax invoice for the taxable supply of goods, to be issued before or at the time of removal/delivery. 15. The applicant's proposed practice of issuing tax invoices at intermediary stages against advances and issuing a final tax invoice for the balance amount was found inconsistent with the statutory scheme, which prescribes receipt vouchers for advances and a single invoice at the time of supply. 16. On the concern regarding mismatch between invoice value and E-way bill value, the Court held that the E-way bill should be generated against the single final tax invoice, which must reflect the entire value of the consignment. While advances can be reflected in the final invoice for accounting clarity, the 'invoice value' must match the value of goods transported to avoid inconsistency with the E-way bill. Conclusions 17. The applicant cannot issue multiple tax invoices for a single supply of goods based on stages of advance receipt. 18. The corresponding E-way bill must be based on the single final tax invoice that reflects the full value of the goods transported; any prior advances must be documented via receipt vouchers and only adjusted arithmetically within that final invoice, without fragmenting the supply into multiple tax invoices. Issue 3 - Use of a single final tax invoice with subsequent credit notes to adjust earlier advance-related invoices Legal framework 19. The Court considered Section 34 of the CGST Act (credit and debit notes), together with Sections 31(1), 31(3)(d), 12(2)(a), Notification No. 66/2017-Central Tax and the associated Rules on invoices and receipt vouchers. Interpretation and reasoning 20. The applicant proposed an alternative mechanism: issue a single tax invoice for the total value of the boat at the time of delivery, and thereafter issue credit notes to adjust earlier invoices that were raised at the time of receiving advances, to offset tax already paid on those advances. 21. The Court held that this method is not aligned with statutory provisions. Since tax invoices themselves cannot validly be issued at the time of advance receipt for goods (as per Sections 31(3)(d), 31(1) and Notification No. 66/2017-Central Tax), any subsequent issuance of credit notes to nullify or adjust such invalid invoices would lack legal sanction. 22. Under Section 34, credit notes are permissible only against valid tax invoices issued for completed supplies and within prescribed time limits. Where the initial documents should have been receipt vouchers rather than tax invoices, there is no legal basis for issuing credit notes to reverse or adjust those documents as if they were valid invoices for supplies. 23. The Court also noted that, notwithstanding the apparent revenue-neutrality of such a procedure, GST law prescribes a specific procedural and technical framework that must be strictly followed and cannot be circumvented in the name of convenience or accounting treatment. Conclusions 24. The applicant cannot lawfully issue a single tax invoice for the total value of the boat at the time of delivery and thereafter issue credit notes to adjust earlier invoices raised against advances, because such earlier invoices themselves cannot validly be issued. 25. As the applicant is not permitted to issue tax invoices on advances, the premise for issuing credit notes to offset such invoices does not arise; only the statutorily prescribed method-receipt vouchers for advances and a single tax invoice at the time of supply-may be followed.