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TMI Blog2025 (1) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... tions P Ltd., (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/2022/06 dated 07.03.2022. 3. Briefly, the facts are enumerated below for ease of reference: * the appellant undertakes EPC [Engineering, Procurement, Construction] contract for construction of bridges & other projects for Government of India/State Government; * as a sample, EPC contract dated 15.1.2018, relating to construction of 4 lane Signature bridge between Okha and Beyt Dwarka on NH-51 is submitted, which has been entrusted by Ministry of Road Transport and Highways, New Delhi ['authority'/MORT&H] to the appellant. * in terms of the EPC contract, the authority gives an interest bearing advance equal to 10% of contract price for mobilization expenses, to extend financial assistance to mobilize resources for timely & smooth take off of the project; * this mobilization advance, is in lieu of counter bank guarantee [BG] of 110% of the advance which would remain effective till completion and full repayment of the advance; * the payment for construction work is done by the authority on completion of payment stage, as defined in the EPC contract & post this the appellant raises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation (i). Time of Supply, on said Advances received by SPSC for Supply of its Service, is the date of receipt of said advance. 7. Aggrieved by the aforesaid advance ruling, the appellant is before us, raising the following contentions, viz * mobilization advance is not in the nature of payment & is not taxable at the time of receipt; that it is merely a transaction in money as at the time of receipt of advance, it is not in the nature of supply of goods/service but merely a transaction in money; that it will not be susceptible to GST-as there is no supply & since it is not in the nature of consideration; * that consideration excludes deposit unless the supplier applies such deposit as consideration/payment towards a supply at which point it ceases to be a deposit & becomes a payment/consideration; * that when a BG is given to secure mobilization advance it cannot be said to be towards discharge of an obligation; that where money is paid in discharge of an obligation, there is no question of repayment of the said sum; * that if the mobilization advance was in the nature of a payment, there would be no requirement for the appellant to give a BG; * that since mobili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment"), equal in amount to 10 (ten) percent of the contract price, exclusive for mobilization expenses. The advance payment for mobilization expenses shall be made in two instalments each equal to 5% (five percent) of the contract price. The second 5% (five percent) mobilization advance would be released after submission of utilization certificate by the contractor for the first 5% advance already released earlier. In addition to the above, the Authority shall make an additional interest-bearing advance payment against newly purchased key construction equipment required for the works as per agreed construction programme and brought to the sites, if so requested by the Contractor subject to the same terms and conditions specified for Advance payment mobilization expenses in this Agreement. The maximum of such advances shall be 5% (five percent) of the Contract price against Bank Guarantee. This advance shall be further subject to the condition that (i) such new equipment are considered by the Authority's Engineer to be necessary for the works and (ii) these new equipment should be procured in the name of Contractor and is verified by Authority's Engineer to have been brought to si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 10% (ten percent) per annum from the date of advance payment to the date of recovery by encashment of the Bank Guarantee for the Advance payment. For the avoidance of doubt the aforesaid interest shall be payable on each instalment of the advance payment regardless of whether the instalment or any part thereof has been repaid to the authority prior to the termination. 19.3 Procedure for estimating the payment of Works 19.3.1 The Authority shall make interim payments to the Contractor as certified by the Authority's Engineer on completion of a stage, in a length, number or area as specified and valued in accordance with the proportion of the Contract price assigned to each item and its stage in Schedule-II. 12. In terms of section 2 (119), works contract inter alia means a contract for construction, completion, erection, or commissioning, etc of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Further, in terms of Sr. No. 6 (a) of schedule-II to CGST Act, 2017, provision of works contract will be treated as supply of services. Thus, EPC agreement between the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment is credited to his bank account, whichever is earlier. A conjoint reading of both the sections 2 (31) and 13, leads to a conclusion that the liability to pay tax on services shall arise at the time of supply, which will be the earliest of the date of issue of invoice by the supplier, if it is issued within the prescribed period or the date of receipt of payment, whichever is earlier. The explanation to section 13 (2) through a deeming provision states that the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment & that "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. Further, the proviso to section 2 (31) goes on to add that a deposit in respect of the supply of services shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply. 15. A perusal of clause 19.2.7, reproduced supra, spells the mode of repayment of mobilization advance/advance payment. What it contemplates is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a consideration. This averment belies the fact and our findings as recorded in para 15, supra. 20. Lastly, we find that the appellant has relied upon several citations, a compilation of which is submitted during the course of personal hearing. On going through the same, it is observed as under: * Five Star Construction P Ltd, Punjab Tractors Cooperative Multipurpose Society Ltd, and M/s. Ahlcon India P Ltd., ibid, pertain to Income Tax Act and is therefore, not relevant. * Thermax Instrumentation Ltd., SMS Infrastructure Ltd. and Gammon India Ltd, ibid. The case law is not applicable to the present dispute, owing to the fact that the definition of 'consideration' as per Section 67 under the Finance Act, 1994 and under the CGST Act, 2017 are different. * Reliance Infratel Ltd, ibid. On going through the case law, it is observed that the facts are different. The Hon'ble Tribunal in the case concluded that a combined reading of clauses 4.1 & 4.2 and 11 of Master Service Agreement, does not lead to a conclusion that the amount which was received by the appellant was in the nature of advances for the services to be rendered. This not being the factual position in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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