Hello friends greetings for the day, in the current article we will discuss about the time of supply of service in case of continuous supply of service and time limit within which invoice has to be issued.
CONTINUOUS SUPPLY OF SERVICE
We should first understand what is continuous supply of service, As per 2(33) of CGST Act 2017 “Continuous supply of service” means a supply of service which is provided or agreed to be provided continuously or on recurring basis under a contract for a period exceeding Three months with periodic payment obligations and includes supply of such services as the government may subject to such conditions as it may by notification specify
ISSUE OF INVOICE AS PER 31(5)
As per section 31(5) of CGST Act in case of continuous supply of service:-
- Where the due date of payment is ascertainable or predetermined from the “Contract” then the invoice shall be issued on or before the due date of payment.
Lets take example to understand it further, A ltd enters into a contract with Mr. B for construction service for a period of one year to complete the project. In terms it was agreed that in each month Mr. A will pay 100,000 on 15th. Then as per this case invoice shall be issued by Mr. B on or before 15th of each month.
- Where the due date of payment is not ascertainable or not predetermined from the contract then the invoice shall be issued before or at the time when the supplier of service receives payment.
Lets take example to understand it further, A ltd enters into a contract with Mr. B for construction service for a period of one year to complete the project. Mr. B receives lump sum amount of 100,000 on 10th September so if he receives the payment on lump sum or in installment without any predetermined or unascertained date then the invoice shall be issued before or at the time when the supplier of service receives payment i.e. 10th of September.
- Where the payment is linked to the “Completion of an event” the invoice shall be issued on or before the date of completion of that event.
Lets take example to understand it further, A ltd enters into a contract with Mr. B for construction service for a period of one year to complete the project. Mr. B receives lump sum amount of 100,000 on 10th September so if he receives the payment on lump sum or in installment without any predetermined or unascertained date then the invoice shall be issued before or at the time when the supplier of service receives payment i.e. 10th of September.
As per sec 13(2) of CGST Act the time of supply of service for continuous supply of service shall be the earliest of the following dates:-
- If the invoice is issued within the prescribed period under section 31(5), the date of issue of invoice by the supplier or the date of receipt of payment whichever is earlier. or
- If the invoice is not issued within the prescribed period under section 31(5), then the date of provision of service or the date of receipt of payment whichever is earlier.
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Author Bio
Hai Brother.
When we read the definition of Continuous supply,
“supply of service which is provided or agreed to be provided continuously or on recurring basis under a contract for a period exceeding Three months with periodic payment obligations and includes supply of such services as the government may subject to such conditions as it may by notification specify”
which transpires that any contract which is continuous in nature would seems to be a continuous service. But, this fact would not work when the contract comes into Works Contract.
Please clarify whether a works contract is a Continuous service.