GST ITC Eligibility in Barter Arrangement - Invoice Raised Before Receipt of Services

[NYAYASETU LEGAL ASSOCIATES LLP]

Dear Experts,

We are engaged in the trading of Plastic products and have entered into a reciprocal (barter) agreement with a media agency wherein we supply our products to the agency and in return, the agency provides advertisement/media services.

Some more Facts of the case:

1. We supplied goods to the service provider in November 2025 and discharged GST accordingly.

2. As per the agreement, advertisement services are to be provided over a period based on mutual execution (campaigns, media releases, etc.).

3. As on date (March 2026), no advertisement services have actually been executed or received, nor have any specific media slots or campaigns been finalized.

4. However, the service provider is proposing to raise an invoice in March 2026 for the agreed value of services.

Query:

1. Whether ITC can be availed based on such invoice in March 2026, even though services have not been actually received or executed [Sec 16(2)(b)]?

2. Can this arrangement be treated as a case where 'right to receive service' is created, thereby allowing ITC (similar to prepaid services like software licenses or pre-booked advertisement slots)?

3. Does the absence of specific deliverables (such as confirmed media slots, campaign schedule, etc.) impact the eligibility of ITC?

4. Whether raising of invoice before actual execution of services is in line with Section 31 read with Section 13 of the CGST Act?

In an agreement, it is mentioned that all individual transactions are to be executed through separate deal letters / purchase orders.
Request your expert guidance on the above.

[VIPUL JHAVERI]

one cardinal principal to avail ITC credits always remains is "to receive good and services"

Section 16. Eligibility and conditions for taking input tax credit.-

(b) he has received the goods or services or both.

AI Summary

Input tax credit in barter arrangements depends on service receipt, invoicing timing, and whether a right to receive services exists. Input tax credit eligibility is questioned in a barter arrangement where goods are supplied to a media agency and advertisement services are to be received in return. The concern is whether ITC can be claimed on an invoice raised before the services are actually executed or received, whether a 'right to receive service' can be said to exist, and whether the absence of specific deliverables affects eligibility. The query also asks whether such invoicing is consistent with the invoicing and time-of-supply provisions and notes that individual transactions are to be executed through separate deal letters or purchase orders.