Time of Supply For Continuous Supply of Service under GST

Time of Supply For Continuous Supply of Service under GST

Time of supply of service in case of continuous supply of service and time limit within which invoice has to be issued.

CONTINUOUS SUPPLY OF SERVICE

We should first understand the continuous supply of service.As per section 2(33) of CGST Act 2017,“Continuous supply of service” means a supply of service which is provided or agreed to be provided continuously or on recurring basis under a contract for a period exceeding Three months with periodic payment obligations and includes supply of such services.

ISSUE OF INVOICE AS PER 31(5)

As per section 31(5) of CGST Act in case of continuous supply of service:-

Where the due date of payment is ascertainable or predetermined from the “Contract” then the invoice shall be issued on or before the due date of payment.

Let’s Understand with

Example 1

A Ltd enters into a contract with Mr. B for construction service for a period of one year to complete the project. In terms, it was agreed that in each month Mr. A will pay 100,000 to Mr. B on 15th.Then as per this case invoice shall be issued by Mr. B on or before 15th of each month.

Where the due date of payment is not ascertainable or not predetermined from the contract then the invoice shall be issued before or at the time when the supplier of service receives payment.

Example 2

A Ltd enters into a contract with Mr. B for construction service for a period of one year to complete the project. Mr. B receives lump sum amount of 100,000 from L Ltd.  on 10th September.So if he receives the payment on the lump sum or in installment without any predetermined or un-ascertained date then the invoice shall be issued before or at the time when the supplier of service receives payment i.e. 10th of September.

Where the payment is linked to the “Completion of an event” the invoice shall be issued on or before the date of completion of that event.

Example 3

A Ltd enters into a contract with Mr. B for construction service for a period of one year to complete the project.Mr. B receives lump sum amount of 100,000 from A Ltd. on 10th September.So if he receives the payment on the lump sum or in installment without any predetermined or un-ascertained date then the invoice shall be issued before or at the time when the supplier of service receives payment i.e.10th of September.

As per sec 13(2) of CGST Act, the time of supply of service for the continuous supply of service shall be the earliest of the following dates:-

If the invoice is issued within the prescribed period under section 31(5), the date of issue of the invoice by the supplier or the date of receipt of payment whichever is earlier. or if the invoice is not issued within the prescribed period under section 31(5), then the date of provision of service or the date of receipt of payment whichever is earlier.