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2021 (6) TMI 387 - AAR - GSTInterpretation of the term “a contract” - TDS applicability under section 51 of the GST Act - no contract or contract of continuous supply - whether the single tax invoice shall be considered as “a contract” or aggregate value of purchase from a vendor for the whole year be considered as a contract? - HELD THAT:- Coming to the meaning of “supply under a contract”, it is very well accepted that there must be a supplier and a recipient for a supply to happen and these two persons must be either distinct persons or deemed to be distinct persons under the Act. When there is a supply of goods or services from one person to another, it has to be as a follow up action of an agreement to supply, either written or verbal or implied. There is no precondition that the agreement to supply should always be in writing and the same is governed under the Contract Act, 1872. The “agreement to sell” and the contract of “Sale of Goods” as envisaged in the Sale of Goods Act, 1930 also are governed under the Contract Act, 1872. Further, sale of goods is only a subset of “supply” as envisaged in Section 7(1) of the GST Act and hence all contracts covered under the Sale of Goods Act, 1930 are also contracts under the GST Acts - The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in installments, then the contract would include all the part supplies made and covered under separate invoices. It is in this context, the supply under a contract should be understood and the total value of such supply under a contract, if it exceeds ₹ 2,50,000-00 would be liable for deduction of tax at source, subject to other conditions. The agreement of continuous supply is a contract for scenario no, 3 and 4 and if the amount involved in the supply in this contract exceeds ₹ 2.5 lakhs, then the applicant is supposed to deduct TDS on the payment credited to the vendor - In the first scenario, since the value of the single invoice is more than ₹ 2.5 lakh, there is no doubt that the tax deduction at source is applicable under section 51 subject to other conditions. In the second scenario, the applicant has clearly stated that the value of supply under a single invoice does not exceed ₹ 2.5 Lakhs and assuming that it is a single transaction as per the purchase order, then tax deduction at source is not applicable on that single transaction or invoice. But if it is a part supply and a part of the continuous supply as per the purchase order, then if the total value of supply as mentioned in the purchase order is more than ₹ 2.5 Lakh, then the provisions of tax deduction at source would become applicable even on this invoice.
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