Invoice raised on 30.06.2017 but payment received in GST period, will GST is applicable

[Ravish MV]

Doing Government contracts, which were exempted (sewage and canal projects) under service tax regime. Raised Bill on 30.06.2017. But payments were received till March 2018. Will the payments/receipts attracts GST.

[KASTURI SETHI]

In this scenario, your activity/service is out of ambit of GST. See Rule 3 of Point of Taxation Rules, 2011.

[Ganeshan Kalyani]

Provision of service and issue of invoice is during pre GST period and only payment is received in GST. In this case old tax provision is applicable and not GST law.

[SHARAD ANADA]

Sec 142(11) Progressive or periodic supply of goods or services

(a) notwithstanding anything contained in section 12, no tax shall be payable on goods under this Act to the extent the tax was leviable on the said goods under the Value Added Tax Act of the State;

(b) notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994;

(c) where tax was paid on any supply both under the Value Added Tax Act and under Chapter V of the Finance Act, 1994, tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed. No CGST shall be levied on:

1.Goods, to the extent tax was leviable under the Value Added Tax Act of the state;

Considering the non-obstante clause, it is provided that even though any of the ingredients of supply prescribed in section 12 occur after the appointed date, if VAT was lawfully levied (even if not yet paid), VAT alone will be leviable and not GST.

2.Service, to the extent Service Tax was leviable on the said service.

In short, GST shall not be levied on a supply to the extent Value Added Tax or Service Tax, as the case may be, was leviable on the said supply.

Eg: Advance of ₹ 1,00,000/- was received on 10th June, 2017 for service to be rendered in July, 2017. The invoice for the service was raised for ₹ 1,50,000/- on 31st July, 2017. GST shall be levied only on ₹ 50,000/-.

Relying upon the salutary principles contained in section 6 of the General Clauses Act regarding the force and power of ‘repeal and saving’ clause in any legislation, it would be appropriate to mention the results of application of that law in certain situations:

(i) Where services have been rendered under the earlier law and invoice has also been issued under the earlier law and tax duly levied on provision of service butt the payment of this tax was required on ‘receipt basis’, service tax will continue to be paid as and when outstanding receivables are realized. Tax once levied cannot be levied again (as GST) merely because the service tax was ‘lawfully’ not payable until realization.

(ii) Where services have been reference under the earlier law but invoice for the same has not been issued and is permitted to be issued within 30 days from the date of completion of service, when the invoice is actually issued, service tax alone ought to be applied. This invoice will not be covered by section 140(5) as the invoice has not been issued before the appointed date. Also the service tax charged will not be available to claim as a refund under 142(3) to 142(8). These reasons do not justify levy of GST on the services already provided.

[Surabhi Parihar]

For supply to be taxed under GST, provision of time of supply u/s 13(2) should be considered. wherein it is explicitey made clear that time of supply shall be the earliest of date of issuance of invoice or receipt of payment.

In the present case, since the Bill/invoice was raised in the erstwhile service tax regime which is earlier provision in terms of section 13(2), no GST shall be applicable irrespective of whether the payment is received under GST.

[Spudarjunan S]

Since your case is covered in the transitional period, kindly refer section 142(11)(c) of CGST Act, 2017. (As you refered Sewage and Canal Projects - I inferred it to be a works contract service)

An important factor to be considered in your case is that when did you actually provided the service whether pre-GST or post-GST.

AI Summary

Pre-GST invoicing preserves service tax liability under transitional provisions, preventing GST on such supplies despite post-GST receipts. If a service was invoiced before the GST appointed day and was leviable to service tax, transitional provisions preserve that tax character so that receipts realized after the appointed day remain taxable under the earlier service tax regime to the extent service tax was leviable; the earliest of invoice issuance or receipt of payment governs time of supply and prevents GST levy on amounts attributable to the pre appointed day liability.