time of supply for works comtracts

[giri gattupalli]

respected sir,

for a govt works contractor who do civil works such as buildings and bridges for state govt what is the time of supply to rise the gst liability .it is to be noted that govt contractors does not rise any tax invoice against govt departments such as r&b etc

thanking you please discuss

[SHARAD ANADA]

Your service is continuous supply of service. Pl refer Sec 2(33) of CGST Act 2017 as under:

Sec 2 (33) “continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;

The determination of stage of completion of services is an abstract one, unless specifically defined by contract, unlike in the case of goods where the volume of goods supplied can be easily tracked/ identified. Hence, a contract for supply of service spanning over a definite period has been treated as a continuous supply, so that the tax dues are collected periodically.

The law categorically provides for time limit to issue invoices as under:

(a) where due date of payment is ascertainable: On or before the due date of payment;

(b) where the due date of payment is not ascertainable: Before or at the time of receipt of payment;

(c) where the payment is linked to the completion of an event (milestones): On or before the date of completion of that event.

[giri gattupalli]

thanks for your reply.kindly elaborate with example

[giri gattupalli]

respected sir

agreement with r&b department of state govt made in fy 2016-17.

works completed in fy 2016-17.

check measure made by department in april 2017.

but amount of one crore received in 2017 sep( gst period.)

this is the scenario.

please discuss

thanking you

[KASTURI SETHI]

After in agreement with Sh.Sharad Anada' reply, I elaborate as under :

Govt. contractor received the payment for above services in September, 17. In this case, time of supply of services is the date of receipt of payment as per Section 13 (2)(b) & C of CGST Act. Your client was required to issue invoice on the date of the receipt of payment. Govt. contractor is covered under (c) above mentioned in the reply dated 14.2.20 of Sh.Sharad Anada Ji. Service has been completed on the date of payment.

In this context, see Board's Flyer No.13 dated 1.1.18.

[giri gattupalli]

thank you sethi ji

giri gstp

AI Summary

Time of supply for continuous service: receipt of payment determines GST liability and invoice issuance. For government works contracts treated as a continuous supply of services with periodic payment obligations, the time of supply is the due date of payment if ascertainable, otherwise before or at receipt of payment, and if payment is linked to a milestone, on or before completion of that event. When payment for completed works is received later, the time of supply is the date of receipt of payment and the contractor must issue the tax invoice on that date.