TaxTMI 
TaxTMI 
2025 (1) TMI 393
X X X X Extracts X X X X
X X X X Extracts X X X X
....Section 100 of the CGST Act, 2017 and the GGST Act, 2017 by M/s. S P Singla Constructions P Ltd., (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/2022/06 dated 07.03.2022. 3. Briefly, the facts are enumerated below for ease of reference: • the appellant undertakes EPC [Engineering, Procurement, Construction] contract for construction of bridges & other projects for Government of India/State Government; • as a sample, EPC contract dated 15.1.2018, relating to construction of 4 lane Signature bridge between Okha and Beyt Dwarka on NH-51 is submitted, which has been entrusted by Ministry of Road Transport and Highways, New Delhi ['authority'/MORT&H] to the appellant. • in terms of the EPC contract, the authority gives an interest bearing advance equal to 10% of contract price for mobilization expenses, to extend financial assistance to mobilize resources for timely & smooth take off of the project; • this mobilization advance, is in lieu of counter bank guarantee [BG] of 110% of the advance which would remain effective till completion and full repayment of the advance; • the payment fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... held as follows: Ruling We note that SPSC does not contest the taxability on said Advance, but is before us for its deferment from date of its receipt to date of issue of invoice. We pass the Ruling based on Section 13 (2) CGST Act read with its explanation (i). Time of Supply, on said Advances received by SPSC for Supply of its Service, is the date of receipt of said advance. 7. Aggrieved by the aforesaid advance ruling, the appellant is before us, raising the following contentions, viz • mobilization advance is not in the nature of payment & is not taxable at the time of receipt; that it is merely a transaction in money as at the time of receipt of advance, it is not in the nature of supply of goods/service but merely a transaction in money; that it will not be susceptible to GST-as there is no supply & since it is not in the nature of consideration; • that consideration excludes deposit unless the supplier applies such deposit as consideration/payment towards a supply at which point it ceases to be a deposit & becomes a payment/consideration; • that when a BG is given to secure mobilization advance it cannot be said....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C [Engineering, Procurement and construction] agreement for construction of new 4-lane signature bridge connecting missing link between Okha and Beyt Dwarka on EPC mode including construction of approaches on new national highway No. NH-51. The relevant clauses, as culled out from the extracts provided, is as under: 19.2 Advance Payment 19.2.1 The Authority shall make an interest bearing (@ Bank Rate^$) advance payment (the "Advance payment"), equal in amount to 10 (ten) percent of the contract price, exclusive for mobilization expenses. The advance payment for mobilization expenses shall be made in two instalments each equal to 5% (five percent) of the contract price. The second 5% (five percent) mobilization advance would be released after submission of utilization certificate by the contractor for the first 5% advance already released earlier. In addition to the above, the Authority shall make an additional interest-bearing advance payment against newly purchased key construction equipment required for the works as per agreed construction programme and brought to the sites, if so requested by the Contractor subject to the same terms and conditions spec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the time when 80% (80 percent) of the contract price has been certified for payment. 19.2.8 If the advance payment has not been fully repaid prior to Termination under clause 21.7 or Article 23, as the case may be, the whole of the balance then outstanding shall immediately become due and payable by the contractor to the Authority. Without prejudice to the provisions of clause 19.2.7. in the event of termination for contractor default, the Advance payment shall be deemed to carry interest at the rate of 10% (ten percent) per annum from the date of advance payment to the date of recovery by encashment of the Bank Guarantee for the Advance payment. For the avoidance of doubt the aforesaid interest shall be payable on each instalment of the advance payment regardless of whether the instalment or any part thereof has been repaid to the authority prior to the termination. 19.3 Procedure for estimating the payment of Works 19.3.1 The Authority shall make interim payments to the Contractor as certified by the Authority's Engineer on completion of a stage, in a length, number or area as specified and valued in accordance with the proportion of the Contract pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he date of receipt of payment, whichever is earlier; or (c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply: Provided that ............ Explanation.--For the purposes of clauses (a) and (b)-- (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment; (ii) "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. A conjoint reading of both the sections 2 (31) and 13, leads to a conclusion that the liability to pay tax on services shall arise at the time of supply, which will be the earliest of the date of issue of invoice by the supplier, if it is issued within the prescribed period or the date of receipt of payment, whichever is earlier. The explanation to section 13 (2) through a deeming provision states that the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 dated 15.11.2017, CBIC has exempted payment of GST on advance paid on goods. We do not find much merit to the averment. The question of applicability of notification No. 66/2017-CT (Rate) dated 15.11.2017, does not arise, owing to the fact that in paragraph 12, we have already held that in terms of the agreement between the appellant and MORT&H, the supply is in respect of services. The said notification is applicable only in respect of supply of goods. 19. The next averment raised is that the mobilization advance is a short term advance & recorded as such in books of accounts; that it is not a revenue; that it being a deposit, is not a consideration. This averment belies the fact and our findings as recorded in para 15, supra. 20. Lastly, we find that the appellant has relied upon several citations, a compilation of which is submitted during the course of personal hearing. On going through the same, it is observed as under: • Five Star Construction P Ltd, Punjab Tractors Cooperative Multipurpose Society Ltd, and M/s. Ahlcon India P Ltd., ibid, pertain to Income Tax Act and is therefore, not relevant. • Thermax Instrumentation Ltd., SMS Infrastruct....