Mobilisation advance treated as consideration for supply; GST liability arises on receipt of advance unless invoice earlier.

Mobilisation advance under a contract is applied as consideration for supply and therefore taxable under GST; works contract payments qualify as supply of services and advances adjusted against running account bills constitute consideration. The time of supply for such advances is the date of receipt of payment unless a tax invoice for the advance is issued within the period permitted for issuance of invoices, in which case the time of supply is the earlier of invoice issuance or receipt of payment. Tax liability arises at that time accordingly.

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Issues: Whether mobilisation advance (advance payment) received by a contractor and subsequently adjusted against running account bills is taxable under GST and, if taxable, when the liability to pay tax arises.

Analysis: Section 2(31) of the Central Goods and Services Tax Act, 2017 defines "consideration" and the proviso excludes a deposit unless the supplier applies such deposit as consideration for the supply. The mobilisation advance in the contract is adjusted against R.A. bills and therefore is applied as consideration for the supply. Works contract services are treated as supply of services under Schedule II of the Central Goods and Services Tax Act, 2017. The time of supply for services is governed by Section 13 of the Central Goods and Services Tax Act, 2017, which prescribes the earliest of: issue of invoice (where issued within period prescribed under Section 31), receipt of payment, provision of service (if invoice not issued within prescribed period), or entry in recipient's books. Section 31 permits issuance of tax invoice before provision of service within the prescribed period; if an invoice for the advance is issued within that period the time of supply may be the invoice date. In the absence of such invoice, the date of receipt of the advance is the time of supply.

Conclusion: The mobilisation advance is consideration for the supply and is liable to GST. The liability to pay tax arises on the date of receipt of the advance, except where a tax invoice for the advance is issued within the period prescribed under Section 31 of the Central Goods and Services Tax Act, 2017, in which case the time of supply is the date of issue of invoice or date of receipt of payment, whichever is earlier.

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