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2021 (3) TMI 802 - AAAR - GSTTime of supply - Deposit Works' being executed by the applicant - whether it is the time of receipt of funds from the client government department or the time when expenditure incurred towards execution of the work is debited to Deposit Works account? - value of supply under both situations - Challenge to AAR decision - Authority of Advance Ruling has ruled that the value of the supply, on the advance payment received by the applicant, will be the amount of advance received by the applicant towards that particular work/supply. HELD THAT:- Apart from entrusted work of executing housing and improvement schemes in the State, the applicant may also undertake the execution of any housing or other building project at the request of the State Government or, with the previous approval of the State Government, at the request of any other person on such terms and conditions as may be agreed upon. This work is known as “Deposit Work”. As per the appellant the funds required for execution of such projects are provided entirely by the Government, generally in lump sum before the start of the work string with certain restrictions viz. the funds cannot be diverted to any other project and any interest accruing from these funds will be paid back to the Government by depositing it in the relevant Head of Accounts. Whether the advance received by the appellant, for the said deposit work, is to be treated as “Advance Payment” received for the said work or as “Deposit”? - HELD THAT:- As per the appellant the money received for the said “deposit work” to be treated as “deposit” in terms of proviso of Sub Section (31) of Section 2 of the CGST Act, 2017. Absolute control of the money - HELD THAT:- Advances are generally given so that the work get completed smoothly without any hindrances and may not get delay due to lack of fund. Restrictions regarding use of advance are normally attached so that the amount cannot be diverted for any other project and to avoid any delay in timely completion of the project - any condition/restrictions attached with the advance do not alter its character, it remains advance which later on get adjusted in payment once bills /invoices are issued). Interest paid back to the Government - HELD THAT:- As per the definition of “Deposit Work” given in the Chapter 2 of Financial Handbook, Vol-VI, “Deposit work” are those works which are assigned to government construction agencies for execution in such capacity. IN such case, the funds are provided by the Government through the department for whom the building or any other structure is to be constructed - as per the interest payment challans provided by the appellant the interest amount is being credited to the Government account and not in the account of the service recipient agency. The law is crystal clear that once any advance amount is received towards provision of any service that will be treated as the time of supply. We, therefore, opined that the Authority has rightly ruled that the time of receiving of advance payment will be time of supply with reference to discharge of GST liability. The Authority of Advance Ruling has correctly ruled that the value of the supply, on the advance payment received by the applicant, will be the amount of advance received by the applicant towards that particular work/supply - ruling of AAR upheld.
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