TaxTMI 
TaxTMI 
2026 (2) TMI 1251
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.... services related to Sewage Treatment Plant. As the facts of the case were not clear from the application filed by the applicant, they were asked to submit the facts properly in writing during the course of hearing held on 04.12.2025. As per the letter dtd. 13.12.2025 received from the applicant, the applicant has received a contract for providing services related to storm water drainage, for the newly developed areas falling under Ahmedabad Urban Development Authority (AUDA). 3. As per the terms of the tender, 10 % of the accepted contract amount is given as advance/loan to the applicant, which is backed by an equivalent amount of security to be given by the applicant to AUDA. The said terms are mentioned in clause 14.2 and sub-clause 1....
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....ge; that they are given 10% of the accepted contract amount as advance/loan which is backed by an equivalent amount of security to be given by them to AUDA; that the said advance is adjusted in the R.A. Bills raised form time to time; that they are of the opinion that no GST is payable of the advance; that they seek an advance ruling as to whether GST is payable on the said advance. They also submitted a brief note of the work undertaken by them along with the relevant provisions mentioned in the Tender regarding Advance Payment. As mentioned earlier, as the application was not clear on facts as well as the ruling which is being sought, the applicant was requested to submit a proper submission as well as the copy of the contract. The facts ....
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.... procurement of project resources. As per GCC Clause 14.2 of the Tender condition, the advance payment is an interest free loan for mobilisation and design, which would be backed by a guarantee given by the applicant. As per PCC Clause 14.2.3, the deductions of the advance payment shall be made at the amortisation rate of 25%. 9. Mobilisation advances are usually given to the contractors by the service recipients to meet the needs of working capital incurred at the commencement of a project. The Brief scope of work mentioned by the applicant is as under: - • Storm Water Drainage Network in catchment area of 194.78 Ha of Shela including RCC NP3/NP4 pipeline and Box • Storm Water Drainage Network in catchment area....
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....h, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; As per the definition, any payment made or to be made whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person is a consideration for supply. However, as per the proviso, a deposit given in respect of the supply of goods or services shall not be considered as....
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....ating to services. As mentioned earlier, the applicant is providing works contract service. As per Schedule-II of the CGST Act, works contract shall be treated as a supply of service. Therefore, the relevant Section in the applicant's case would be Section 13, which is reproduced below: - Section 13 - (1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of services shall be the earliest of the following dates, namely:- (a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or....
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....person supplying taxable services shall before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value of tax charged thereon and such other particulars as may be prescribed. Thus, an invoice for the advance can be raised before the provision of service. From the submissions of the applicant, it does not appear that any invoice is being issued by the applicant when the advance is received by the applicant, because as per their view, they are not liable for payment of GST on the advances received. The advance is being adjusted during the issue of R.A. Bills and the GST is being proposed to be paid by the applicant on the advance during this stage. This means that the invoice for t....