Home Case Index All Cases GST GST + AAR GST - 2019 (10) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 1188 - AAR - GSTTime of supply - continuous supply of services - renting of immovable properties - HELD THAT - It is seen from lease agreements with State Bank of India for 01.04.2015 to 31.03.2020, R R Stones Private Limited for the period 05.03.2016 to 04.03.2021, Raj Petro Specialties Private Limited for the period 04.11.2015 to 03.11,2020 and Total Care Services Private Limited for a period of 10 years that the lease fee is to be paid monthly or with an upfront payment and rent to be paid annually. It is seen that there is a requirement of the lessee to pay lease rent or license fee periodically while they occupy the immovable property. During the currency of the lease agreement, the applicant issues an invoice periodically as required in the respective lease agreement. In respect of continuous supply of service when the license is in effect , as per Section 31(5), the tax invoice, containing the details as per Rule 46 of CGST/TNGST Rules ,should be raised on or before due date of payment as ascertainable from the contract. It is seen in the sample contracts provided that in certain cases, the due date of payment is periodical, either monthly or annually, with the due dates specified after the end of such period. If the rent invoice is issued before the due date of payment, the Time of supply is determined by Section 13(2) (a), as the earliest of the date of issue of invoice by the supplier and the date of receipt of payment. If payment is not received for any reason, including legal disputes, the time of supply shall be date of issue of invoice. If the invoice is issued after such due date of payment, the Time of supply is determined by Section 13(2) (b), as the earliest of the date of provision of service which is the end of the period (monthly/annual etc.) specified in the contract and the date of receipt of payment, whichever is earlier. If payment is not received for any reason, including legal disputes, the time of supply shall be the date of provision of service which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid. The time of supply in cases where instead of receiving the full consideration, they only get a partial amount as payment - HELD THAT - In these case too the above will apply as the date of payment of full consideration is the date of reckoning of the date of payment.
Issues Involved:
1. Determination of the Time of Supply (TOS) for continuous supply of services in the nature of renting immovable properties in four specific scenarios. Issue-wise Detailed Analysis: Issue 1: Licensee does not react to reminder letters and does not pay the monthly license fee. The applicant contends that in such cases, the TOS should be determined based on the earliest of the date of issue of invoice or the date of receipt of payment. Since the licensee does not pay, the TOS should be the date of issue of the invoice. The Authority for Advance Ruling (AAR) agrees, stating that if the rent invoice is issued before the due date of payment, the TOS is the date of issue of the invoice. If issued after the due date, the TOS is the end of the period specified in the contract. Issue 2: Licensee disputes the amount of license fee and does not pay. The applicant argues that the TOS should be the date of issue of the invoice since the licensee disputes the fee and does not pay. The AAR concurs, noting that in the absence of payment, the TOS is the date of issue of the invoice if issued before the due date. If issued after the due date, the TOS is the end of the period specified in the contract. Issue 3: Licensee initiates legal disputes and does not pay the license fee. The applicant states that the TOS should be the date of issue of the invoice due to the ongoing legal disputes. The AAR confirms that if the invoice is issued before the due date, the TOS is the date of issue of the invoice. If issued after the due date, the TOS is the end of the period specified in the contract. Issue 4: Licensee initiates legal disputes but pays adhoc amounts under protest. The applicant suggests that the TOS should be the date of issue of the invoice, considering partial payments. The AAR rules that the TOS is the date of issue of the invoice if issued before the due date. If issued after the due date, the TOS is the end of the period specified in the contract. Partial payments do not alter this determination. Comprehensive Analysis: The AAR's ruling hinges on the provisions of Section 13 and Section 31 of the CGST Act, which outline the TOS for continuous supply of services. The AAR emphasizes that the TOS is either the date of issue of the invoice or the end of the period specified in the contract, depending on whether the invoice is issued before or after the due date of payment. This ruling applies uniformly across all four scenarios presented by the applicant, ensuring consistency in the determination of TOS for continuous supply of services related to renting immovable properties. The AAR also highlights that the applicant must issue invoices containing all particulars as per Rule 46 of the CGST Rules. In cases where the due date of payment is not ascertainable from the contract, the TOS is the date of receipt of payment. The AAR's decision underscores the importance of adhering to contractual terms and the statutory requirements for invoicing and payment under the GST framework. Ruling: In all specified scenarios, if the rent invoice is issued before the due date of payment, the TOS is the date of issue of the invoice. If issued after the due date, the TOS is the end of the recurrent period specified in the agreement. Partial payments do not affect the determination of TOS.
|