Appeal against Advance Ruling on time of supply of services regarding mobilization advance. Court held time of supply is date of receipt as advance forms consideration. Bank guarantee is discharge of obligation. Exemption for goods advance not applicable to services.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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(; u., Al.t A'l' APP E I,LAI'l,l A t.l'l'II()ltITY r-OIt Al)VANCI'l lLtjl,IN(; (;ooDS ANI) S}){VICl,lS l'AX ''iatvtABKET-tifl'"I)/5. I{A.IYA KAIT I}IIAVAN, ASIIITAM T{0AI), AIIMI,II)All.,\l) 11i0009.
nl)VAN(lll Ill.jl,lN(i(APPITAL) NO.(;ll.r(iAAAI{/APPIiAl/2024rc7 (I N,,\PPL [(ln' l'lON NO. Advancc I{uling/SGS t'&C GS' 1 120221 LIll 04)
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Nar.nc ancl adcl'css o1- thc M/s. S I'Singla Constrr:ctions I) l,tr1., appcllant Opp. Ifaj llhawan, Il uk rnan i nagar. [)cr bhoorni. I)ra.arka.(iujarat- l6l 135 GS'I'IN of thc appcllanl : i 24AAGCS5ll3l\1zc Advancc I{uling No. and I a;aila;,t,t tv ttno)zt os datcd07.03.2022. ' l)alc Jurisdiction Olficc CcnlcrCommissioncratc Itajkol I)ivision - Jamnagar-l I I{angc -I)warka [)atc o1'appcal 30.04.2022 [)atc ol'l)crsonal I lcaring 15.10.2024 I)rcso.rt lbr thc appcllant Shri Ita"jat Mittal, n dvocatc, Shri Saniay Shah, Aclvocatc Shri Mohindcr Kr-rtrar, Ilcacl'l-aration. Mis ,S l' Singla Constructions I) [,tct..
At thc outsct wc would like to makc it clcar thal thc provisions o1' thc Ccntral(loods and Scrviccs'l-ax Act, 2011 and(iujarat (ioods and Scrviccs ['ax Act, 2017(hclcinaftcr rcfcrrcd to as thc 'CGS'I' Act, 2017' ancl Lhc'(lGS'l' Act, 20 l7') arc pari maleria and havc thc samc provisions in likc rraltcr and dilltr tbm cach othcr only on a lcw spccific provisions.'l'hcrclil"c, trnlcss a r-r'rcr-rtion is particularly madc to such dissin-rilar provisions, a rcfl'rcncc to thc(l(lS'l' Act, 201 7 n ould also mcan rcli:rcncc lo thc corrcsponcling sinrilal provisions in thc G(lS'l'Act, 201 7.
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Ilriclly, thc lacts arc cnumcratccl bclow lbr casc o1'rc('crcncc:
a tirc appcllant undcltakcs EI'C llrnginccring, I)rocurcmcr.rt, Constrr-rction I contracl lbr conslruction o1' bridgcs & othcr projccLs lirr(lovcrnmcnt o f l ncli a/Statc(iovcrntrcnl;
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lluling on thc r rcstion as to what is thc timc ol'sLrppJy lbr thc purposc ol clischargc of G;'l' in rcspcct of mobilization advancc t'cccivcd by it lbr construction scrr iccs-
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\. noLr rlitrr Sl'Sl J..r rl,1 .,!r1.sr thr r.\rllilLr\ on ixr!l .'irrn.. b!r i hrl;r.Ir!LLIrL! ,1.:.,D.,r, :i,rN ,l:,r! .r ,1r tu'..rtr L. Llrr(,,1 L"i.1'! d\o1.r\. fr'.th. ItL ! l'''-1:'l !., r,,! li I i i i:T .r r!rJ n(llr..!thntrriof lr, lirr..r !Lt.i.1,f .J ,1\rrrL.. .i.r!t.l h<sup>\l'S( li,rSL:p;,lr,'i1' s.rtr.i. i'rlr'Jrt. 'l r.f.rLrl, l..r. .!i.f..
E. I)clsor.rirl l.rcaring in thc n'rattcl was hcld on 15.I 0.2021. wl'rcrcir.r Sl.rrr I{a.iat Mittal, Advocatc, Shri Sanjay Shah, Advocatc, Shri Molrinclcr Kunrar, I lcad l'axation ol- thc appcllant, appcarcd and rcitcratcd thc subr-r-rissions madc in thc appcal. During thc coursc of personai hcaring thc authorizcd rcprcscntalivc submittcd a compilation consisting ol-rhc bclow mcntioncd casc larvs ul:
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I.'INDI N(;S
I l. 'l'hc a1 lcllant, as a parl oI'thc appcal papcrs, has cncloscd ccnain cxtracts ol thc I I'C llinginccring, l'rocurcmcnt and construction I agrccmcnt lbr construction o1' ncwzl-lanc signaturc bridgc connccting missing Jink bctrvccn Okha, rd Ilcyt l)warka on l]I'}C rrodc inclucling conslruction ol' approachcs on l iw national highway No. NI I-51 .'l'l'rc rclcvant cleruscs, ns cr-rllcd out llorn t rc cxtracts providcd, is as undcr:
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t9.2. t 1'h,, ..ltthority shcrll make an interest bearing ((Q Bank tlares1 crth,unct pct)xl1ent ( te",4drance payment"), equal in emounl to l0 (ten) percent o/ thc conlt'acl p icc, exclttsive .[or mobilization expenses. l'hc uclvance paltmcnt fitr mobilizalit tl expense.\ shall be made in lvn inslalmenls cuch equul to 5%,(/irt 1 Orilcr clatccl 2.11. ')12 in I'lA no. I u(r I/l)cl/201 I r Manu/l'l l/0141/l' )7
'zttl{,, 1+:1Stli. l9 lri-llorr) 'xlll 1+l1S'lr{r 7 i |ri llorn) ' 202 i (44)(;S il., -l ( I ri-llom)
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'Ordcr tlatccl1 9.1 0 1012in I'l'Ano M24ll)cl/201 I
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pcrcent) of /h.e controct price.'l'he saconLl50% (fite percent) mohilizationutlvance v,oultl be relect.sed afiersubmissionofutilizalion certi/icate by llrc contractorfor the /irst 5% adtonce olreadyreleased earlier.
!n rrdtlition to the obotte. lhcAuthoritlt shallmtrkc un odditionulinleresl-bcoring trt.lt'ttnt:e fo))t1lenl ogoinstnev,lyptrrchased ke.v con\lntcliotlequipmentrcquiretl lorthe v,ork.str.;1;crugreatlconslttt(tion pro'lt'antntcctntl hru.rghltrt lhc 'sile'si.f So reqtraslctl l.t.y: the('ontruclor nthiecllo llrc strntcle t'nt.;und t;ontlitirttts s:petifietllbr .1r.1|crnca p0))manl ntohilizutionexpcnse.\ in lhis lgrecntenl.l'lttntrtxittttttttttl .;rrr'lt trtlt'rnce,s .vhu!t be 5%,(fiw percent)rtf lhe L'ontractpricc ugoinst llank Otruranlca. 'l'hi,y trtlt,ance shull be.firrther subject to lhe coruliliott lhot (i) .sttch nat1, equiPnlalll ure con.vitlarctl by the,4uthority's lingineer/o ba necetsury.fbrlhe v'orks untl (ii) thesa ne|, equipment should beprocuredin the nameo/ Conlraclorttntl i.; t,crilietl b)r,'luthority s tingineer lohave been broughtto sile.
'l'he ,4tlvunca ;tuymenl .frtr mobilizalion expcnses and.fbr trctluisition ttf key nev conslrlt(:lion eqltipmenl u,ottld betleemedas inlereslhcttring dd|anceut llank rtrle, l0 l;c c)ntltottnded anntrully. 7hcinleresl v'rtttldbe recoterctl olt;ng v:ilhthc tecot'cr)) of mobilizctlion udvancepu)lmenl in equulinstallntcnlstrs pcr prrtti'titttt laiel tlot:,n./br lhe ntobilizalictncrdvoncerecover)/
1().) 2 t he(ontr(('lot ttl, trltltlv to the.ltrlhrn'il.t /itrthc lit.tt i11.\l(tlm(nl of lJlL' .!th'trttLi, l)(t.\ntltll ll(g1. linlt uflcr lht:1l)l)oitll(t.ltlttlc. ulOny t ilh tttt itrtvttLrthlL trnLl tpt(on(litit)tlttl gtrtrruntoe /i ortt tt llunk fottut utnot.rrtl t:tlttitttltttl lrt llt)'/f,(rtrtc htrntlrctl rrntl lcrt pcrccnt.l of.\1td1 in.\ldllnenl..;uhslunliollt' in the lortn lttrtt'ilttl ul .1nnar-lll of SthctlLtlcl.i. 1o remuin el/ettiva tillthe crtmplctauntl /ttllr!lu.\tnant thercof.
19.2.1 lt on)) time clier 60(sixty) days /rontthe lppoinled tkrte,lhe contruclor muy apply to the ,4uthority.fitr the secontl inslalment ofthe atlvantcp(tvmcntalong v,ith un irretutcable and unconditionolguarontee fi'om aBank ./branuntoLutl equivaLent n I l0%,(one hundred and tenpercenl) ofsuch instalntenl. .tubslonlially in the./ornt provided at lnnex-lll o/ Schetle-(i.Io rcmuin ef/ective till the complctc und.[ull rcytayntenl tlrcreof.
19.).' tht tttlt rtnr-.r.: l)tt).:t1(111 .:hull berL ptritl lhrottllt /)(ttLtttlttgt'tltrluctitttt.s ftttrtt tht, .xttrge l)Ltrtn('t'tl.\ tltlt:rtnint:tl b1.' thc -'1trthorit.l.s linginccrin ut:cttrtltrttt:t'tilh .lrr/r('1rrursc.r l9.i. trv /ttllt.rt.s:
19.2.8 ll thc adtance poymenl has nol baen [irlly repuidprirn'lo 'l crntintrtion ttnder clou,sc 21.7 or lrlicle 23, us lha cose mo.t) hc, lhe v,hole o/ the bulunce then out.\tanding shall immediutcl), t;ecoma due uncl puyubla b.t,tht: conlroL'!or to thc .lulltorit1,. Witltoutprc jutlica lo tlta ;tt ot,i.tirtn: o/ cltrusc19.2.7. in the c|ent of tcrrrtinulion for conlructor dc/atrlt, the ltlvonccp.tytllcnl .sholl bc tleernctl lo cot't'),' intere,'l ol lhe rolc ol l0'%(ten perccnl) ;tar unnutn.fiont llte dote of utlwrnca pd.ymenl lo lhc(latte of rccot,cry b1, cr"r,.tOrro,r, o/ the Bttnh Outtrunlce firthe tltlvtnt e po,-menl. l;or the uvoit.lonceol eloubl thc o/itrasaidinlart:.sl :htll bc pq,ohle ort each inslulmenl of lhe utlt,ance pdymenl regttrtllcss ttl v,fulher the instulment or any porl thereo/ has been repaid lo lhe oulhorily prior lo lha lerntinulion.
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19.-i l'r, ' cdnrc.fbr estintuling thepo.l'rnenl of Works 19.3.t'l ,. )uthoritl' .vhttl! muka intarint Jtcrltrtutl<sup>to lht ('ottlruttoru.Y ct'rtilit'ti h-l thc .tut,tt'itt".s l'.ttginaaron tttmplalionof u sttrgc. in u langlhnuntharrtt rrt ttt u:^ specifir. . ttntl t'ultrcditt trcc'ordoncav'ith the proPorliott of tht L'ot ructpricr: ussigncd l, ,:ttch ilem and ils.slugein Schedule-ll.
t2. ln tcrr rs ol- scction 2(l19),worl<s contracl inler a/la tlcatlslt contract lbr con: lructior-r, colnplction, crcction, or colnnlissioning, ctc ol'an1' irlmovablc prop 'rty whcrcin translcr ol propcrty in goods(whcthcr asgoocls or in somc <lthcr lorm) is involvcd in thc cxccutionol'such contmct. Iiurthcr'. ilr tcnrs ol'Sr'. N r. 6(a) ol'schcdr"rlc-ll to CGS'l' Act, 20I 7,provision ol'rvorks conLract rvill bc 'e Jtc(l as sLrppll' ol' scrviccs.'l'hr"rs, lll)(- irgrcclllcllt bctlr cctl MOlt'l'&lI lbr constrr-rctiono1'ncw4-larrcsignatr'rrc bri(llrc thc appcllant an, connccting tn iss ng linl< bctwccn Okha and tlcytl)warl<a, is a supplyol' SCfVICC.
li Scclior 2(3 l) dcfincsthc tcrm 'considcration'as undcr vL
I-ikcwisc, tirnc o'supply ol'scrviccs, in tcrms of scction13, statcs as lbllows uL Irclcvatrt cxtrac'rI
Seclion 13. 'ine ol Suppl.y of Scrvices ilit). to lttr.t tttx on serri(as sltull uri.sc ul lltc tintt of .ttr1t1t ' trLtttrtlLtnt't' ttith t|tc prrtt'isions ofIlti.t :atIitttt. )t llrt, ti i,tl,tr1,1tl.r0/.ri,r'r'ir,.r ,ltrrllht liic' t'Lrt lir,'t1 rtl tlttlrtl!tttt iir,g ,Lrltr /,)t tltrtt, rtf i::trt,ofintoit.e h) lhc:trltltlit,t" i/.tltrittt'rtict i.s i.t.strt'tl trithitt tlr ,,,r.i.d ltt.ctL.rihultrrttlat.t1,r**1:at.ti,rr -iIt)t.tJle(lutct)f tf(.1'il)lt)l l)Lr.\t)'t11. tltichevcri.; curlier'.or (h,t ., tlut( of ltr.tli.siott of .tcnice. iltlrc inroitt'is ttttl i.tsttatl vitltirt llrt' 1xri,I lttt:crihatltrrrltr tl+'r+f 5a('liot1'iI or tlrt Ll(tlt ()l tr((il)tol l)u.'t111. trltit'hc'vtri.s aurlier: ttr L) t, , dtttcttn trhicllh? rcciPitnl .sptv's tht tccciltt rtf 'vrt'ica;itt lti'.,hrxtk'l of ttt ount. itt u ctr.yeI l.rr.c tht prot'isions of tltrtt.st'(u) ttr clou.rt (h) lo tlol Proyile rltur ...... l,ir:rr 6,,r (.)
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Ii.rplanulion .-llrr thc purpost.: of clutrsa.t(tt) unl(h)- li1 the sultply shull be tlacmed to htra hccn ntudc to thc erttnt it i.\ uttered by lhe invoice or, as lhc cuse ma1,he. lha ;tut'ntcnl. (ii) "lhe dale oJ raceipl of paymenl" shull be the clutc on v,hich tha paymenl is enlercd in lhe bookt of ^ccounl of the supplier or lhe date on which the pu).,menl is creditcd tct hi.v bank uccount. v,hithcvcr is c ur li er.
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rcccivcd by thc rppcllant in rcspcct o1'supply ol'scrvicc, is thc datc ol'rcccipt o I' such advancc
I8. 'l'l.rc n, \t avcnrclrt raisccl by thc appcllant is thal sinccrllobilization advancc is rccci ccl tor.vards plocurcmcnt o['nrachincry.ic goods,in tcrtttso;' rrotillc:rl.ion No. t$l20ll clatccl l5.l I .201 7, CIIIC has crcmptccl pavtrrcnt ol ( iS l' on advattc, paicl on goods. Wc do not llrrd rnuch tncrit to thcar,cttllcttl. 'l l-rc clucstion o applicability ol' notillcation No. 6(r/2017-C'l(ltatc)datccl I 5.1 I .2017, clt.c , not arisc, owing to thc Iact that in paragraph i2, rvc havc allcady hcld th rt in tcrms ol' thc agrccmcnt bclwccn thc appcllantantl MOIt'l'&ll, thc supply is in rcspcct ol'scrviccs.'l'hc saidnotil-rcationis applicablc onlyi r rcspcct ol'supply of goods.
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owing 1<l thc Iact that thc dcfinitiott of 'corrs idcration' aspcr Scction67 undcr thc [:inancc Act. 1994 ancl r:ndcr thc C(iS'l Act,20I 7 arc dil Icrcnt.
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( lla.jccr'-opno; ) (li V Sir,a Naga Kunrari)
Mcnrbcr (S(;S'l') Mcnrbcr (C(;S'f)
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3 issues framed by the court
Whether the time of supply of services in respect of mobilization advance received is the date of receipt or the subsequent invoicing stage?
Whether a bank guarantee provided to secure mobilization advance constitutes discharge of an obligation for the purpose of GST law?
Whether notification No. 66/2017-C.Ex. (State) regarding exemption on advance paid for goods applies to mobilization advance for a work contract service?
4 provisions across 2 enactments
M/s. S P Singla Constructions Pvt Ltd.
Gujarat Authority for Advance Ruling
M J Sridhar
C C Kumbhar
G S Sugandhi
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
