Time of Supply for Continuous Supply of Goods and Services

Continuous supply of goods and services is common in business: electricity supply, gas pipeline, telecom services, AMC, subscription-based services, rental, etc. The time of supply rules for continuous supply are different and depend on whether payments are linked to periodic completion.

Definitions

Continuous Supply of Goods

Section 2(32) defines continuous supply of goods as a supply of goods which is provided or to be provided continuously or on recurrent basis under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. It includes supply of such goods as the Government may notify.

Examples: Supply of electricity, gas, water through pipelines, supply of fuel under a long-term contract with periodic billing.

Continuous Supply of Services

Section 2(33) defines continuous supply of services as a supply of services which is provided or to be provided continuously or on recurrent basis under a contract for a period exceeding three months with periodic payment obligations. It includes services as notified.

Examples: Annual maintenance contracts, telecom services, internet services, security services, manpower supply, rental services, construction services under long-term contracts, etc.

Time of Supply for Continuous Supply of Goods

For continuous supply of goods, where successive statements of accounts or successive payments are involved, the time of supply is the earlier of:

Date of expiry of the period to which the statement or payment relates.
Date of receipt of payment.

If there are no successive statements or payments, the time of supply is the date of issue of invoice or the date of receipt of payment, whichever is earlier.

Example

Electricity board supplies electricity and issues a bill on 5 June for consumption in May. The due date for payment is 20 June. Customer pays on 15 June.

Time of supply = earliest of:

Date of expiry of period to which statement relates: 31 May (end of May)
Date of payment: 15 June

So time of supply = 31 May. GST should be accounted in May's return.

Time of Supply for Continuous Supply of Services

For continuous supply of services:

Where payment is linked to the completion of a defined event

Time of supply is the date when the event is completed or the payment is due, whichever is earlier.

Where payment is linked to periodic completion

Time of supply is the earlier of:

Date of expiry of the period to which the payment relates.
Date of receipt of payment.

Where payment is not linked to periodic completion

Time of supply is the earlier of:

Date of issue of invoice.
Date of receipt of payment.

Example: AMC Contract

A company has an AMC for 12 months from 1 January to 31 December, with quarterly payments due at the end of each quarter.

Payment for first quarter (Jan-Mar) is due on 31 March.
Invoice issued on 1 March.
Payment received on 25 March.

Time of supply for first quarter = earliest of:

End of period: 31 March
Payment date: 25 March

So time of supply = 25 March.

Practical Compliance

Identify whether the supply is continuous under Section 2(32) or 2(33).
Determine the periodicity of billing and payment.
Apply the correct rule for each period.
Issue invoices on time and report in the correct return.
Maintain contract documents and payment schedules.

How Anuj Desai & Associates Can Help

We help businesses determine time of supply for continuous supplies, manage periodic billing and ensure correct GST reporting.

Contact Anuj Desai & Associates
Email: office@anujdesaiassociates.com
Phone: 9619456656
Website: https://anujdesaiassociates.com
LinkedIn: linkedin.com/in/ca-anuj-desai-122547230

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