In re Navalt Solar & Electric Boats Private Limited (GST AAR Kerala)
The applicant, Navalt Solar & Electric Boats Private Limited, is engaged in manufacturing, supplying, and servicing solar and electric boats designed to meet customer specifications. Payments for the boats are received in multiple stages—an initial advance, further payments during construction, and a final payment at the time of delivery. The applicant currently records advances as receipts and recognizes “unbilled revenue” in line with accounting standards but issues tax invoices only upon delivery of the boat. They do not pay GST on advances, relying on the existing exemption for advances received for supply of goods. Because the manufacturing process may take months and extend into subsequent financial years, the applicant seeks clarity on whether they may issue tax invoices upon receipt of advances and pay GST accordingly.
The applicant submits that Notification No. 66/2017-Central Tax exempts payment of tax on advances but argues the provision is optional, permitting them to voluntarily issue tax invoices earlier. They rely on Section 31(1) of the CGST Act, which allows issuance of a tax invoice before removal of goods, and Section 12(2)(a), which fixes liability based on the invoice date. They also propose alternative methods such as issuing a single invoice at delivery for the total value and issuing credit notes to adjust earlier invoices raised against advances.
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