TaxTMI 
TaxTMI 
2021 (6) TMI 387
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....nterpretation of the term "a contract" for TDS applicability under section 51 of the GST Act. In the absence of any contract, or contract of continuous supply, whether TDS provisions under section 51 is applicable for every supply of goods and services? Or whether the single tax invoice shall be considered as "a contract" or aggregate value of purchase from a vendor for the whole year be considered as a contract? 3. Admissibility of the application : The applicant, filed the instant application, in relation to application of a notification and this question is related to the issue covered under Section 97(2)(a) of the CGST Act 2017 and hence the application is admitted. 4. Applicant's interpretation of law : The applicant submits their interpretation of law as under: 4.1 The applicant states they are a society registered under the Karnataka Societies Registration Act, 1960 and are dealing with innovative ideas un order to minimise the cost of housing for the purpose of benefitting the public. In this process they do purchase of goods and services. 4.2 As per Notification No. 50/2018- Central Tax dated 13.09.2018, they are bound by the CGST provisions under sect....
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....00. 4.5 The applicant states that he is of the opinion that in the absence of "a contract" no TDS is required to be deducted when the value of an invoice is below Rs. 2,50,000-00. 5. The applicant has brought to the notice of provisions of Section 51(1) of the GST Act, and Notification No.50/2018- Central Tax dated 13.09.2018 and stated that no explanation was given for the term "a contract" in the said notification nor the GST Act has define the term "a contract" elsewhere. He has also brought to the notice of section 4 of the Sale of Goods Act, 1930, as stated as under: "As per Section 4 of the Sale of Goods Act, 1930, Sale and agreement to sell are defined as under:- (1) "a contract" of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one-part owner and another. (2) A contract of sale may be absolute or conditional (3) Where under a contract of sale the property in goods is transferred from the seller to the buyer, the contract is called sale, but where the transfer of the property in the goods is to take place at a....
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....his authorised representative. According each invoice shall constitute as am individual contract." PERSONAL HEARING: / PROCEEDINGS HELD ON 16-12-2020 6. Sri. Ramachandra Bhat, Chartered Accountant & duly authorised representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application. 7. The Office of Commissioner of Central Excise and Central Tax, Mangaluru has filed their opinion and comments which are as under: "As per Section 51(1) of the CGST/SGST Act, 2017, read with Notification No.50/2018- Central Tax dated 13.09.2018, the following persons are required to deduct the tax:- A. A department or establishment of the Central Government or State Government or B. Local Authority; or C. Governmental Agencies; or D. Such persons or category of persons as may be notified by the Government in the recommendations of the Council namely:- (a) An authority or a board or any other body, - (i) set up by an Act or Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent or more participation by way of equity or co....
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....ment between the two parties, where one party sets out the terms of the agreement and the other party accepts the terms. A business contract can be in written form or even in verbal form, or sometimes it is a combination of both. An invoice on the other hand, does not involve an agreement by two sides, but instead it is a document created by one party and sent to the other party, to request payment for services rendered. Electronic communications. Including emails and text messages can serve as contracts, as long as it is clear in the communication that one party offers the terms for an agreement and the other party accepts those terms. If a customer has utilised a purchase order to make a transaction, then the invoice will also bear that purchase order number. Most invoices come with their own individual identification number and all invoices are dated. Once both sides agree to an invoice, it then becomes a legal debt and an agreement. The customer is not bound to pay the invoice until the vendor has satisfied all elements of the invoice. In most cases, the customer will outline their terms of the transaction on a purchase order. Further, as per Rule 46(q) of the CGST Rules,....
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.... In the absence of any contract, or contract of continuous supply, whether TDS provisions under section 51 is applicable for every supply of goods and services? Or whether the single tax invoice shall be considered as "a contract" or aggregate value of purchase from a vendor for the whole year be considered as a contract? 9. The above issue is related to the application of the provisions of tax deduction at source on the tax invoices in the four scenarios given by the applicant. 9.1 At the outset, the provisions of tax deduction at source are per section 51 reads as under:- "51. Tax deduction at source.- (1) Notwithstanding anything to the contrary contained in this Act, the Government may mandate,- (a) a department or establishment of the Central Government or State Government; or (b) local authority; or (c) Governmental agencies; or (d) Such persons or category of persons as may be notified by the Government on the recommendations of the Council, (hereafter in this section referred to as "the deductor"), to deduct tax at the rate of one per cent, from the payment made or credited to the supplier (hereafter ....
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....ous supply of goods or services, then part supplies under the contract are covered in an invoice and in such cases, invoice would not be equated to the contract. The set of invoices issued for all the supplies made as a consequence of the contract of supply would summate to the contract and not the individual invoice. The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in installments, then the contract would include all the part supplies made and covered under separate invoices. It is in this context, the supply under a contract should be understood and the total value of such supply under a contract, if it exceeds Rs. 2,50,000-00 would be liable for deduction of tax at source, subject to other conditions. 12. Further, section 2(32) of the GST Act defines "continuous supply" as under:- "(32) "continuous supply of goods" means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and inc....