EXAMPLE-57
Rahul
Ltd. entered into an agreement with QRS Ltd for construction of a new building
to be used primarily for commercial purpose for a total consideration of Rs. 200
lakh on 02.07.2017. As per terms of
contract Rahul Ltd. is required to make payment at different stages of
completion of the building namely 50%, 75% and 100%.
Determine
the time limit for issue of invoice u/s 31 and Time of supply using details
given as under:-
|
STAGE |
Date |
Date
of Issue of Invoice |
Date
of Payment |
Amt
of work done |
|
Initial
booking 50%
completion of
building 75%
completion of
building 100%
completion of
building |
02.07.2017 20.09.
2017 28.03.2018 30.09.
2018 |
02.07.2017 22.09.
2017
30.04.
2018 30.09.
2018 |
02.07.
2017 18.09.
2017 30.04.
2018
08.10.
2018 |
20
Lakh 80
Lakh 50
lakh 50
lakh |
Answer
“continuous
supply of services” has been defined under section 2(33). It means a
supply of service which is provided, or agreed to be provided, continuously or
on recurrent basis, under a contract, for a period exceeding three months with
periodic payment obligations and includes supply of such service as the Central
or a State Government may, whether or not subject to any condition, by
notification, specify.
As
per section 31(5), in case of continuous supply of service invoice is required
to be issue before or on the following dates:-
Where the due date of payment is
ascertainable from the contract-
the invoice shall be issued on or before due date of payment.
Where
the due date of payment is not ascertainable from the contract- the
invoice shall be issued on or before each such time when the supplier of service
receives the payment.
Where the payment is linked to
the completion of an event -
the invoice shall be issued on or before time of completion of that event.
According to
above definitions, supply of construction service shall fall in the ambit of
continuous supply of services.
As due date of
payment is determinable, therefore, invoice shall be issued on or before due
date of payment.
Time
of supply in case of above services will be as ascertained in below table;
|
STAGE |
Remarks
|
Relevant
events |
Time
of supply (earlier of relevant events) |
Amt
of work done |
|
Initial
booking 50%
completion of
building 75%
completion of
building 100%
completion of
building |
Invoice
issue (within
time) Invoice
not issue (within
time) Invoice
not issue (within
time) Invoice
issue (within
time) |
Date
of invoice or Payment (Whichever
is earlier) Provision
of supply or Payment (Whichever
is earlier) Provision
of supply or Payment (Whichever
is earlier) Date
of invoice or Payment (Whichever
is earlier) |
02.07.
2017 18.09.
2017 28.03.2018 30.09.
2018 |
20
Lakh 80
Lakh 50
lakh 50
lakh |