Chennai Port Trust – 2019 (31) G.S.T.L. 164 (A.A.R. – GST) & 2019 (30) G.S.T.L. 488 (A.A.R. – GST)

Time of Supply of service in case of renting of immovable property

In this case the applicant has rentable land and buildings. As a part of port activity, these land and buildings are rented/licensed to various port users. The port users use these land and buildings for the purpose of open storage, covered storage and transit of goods and for movement of goods like buried pipe line. The licensing normally falls under the definition of “continuous supply of services” since the licensing is done for a minimum period of 11 months and goes up to 30 years as provided in the Major Port Trusts Act, 1963.

In such a situation, the applicant does not issue a tax invoice containing the particulars mentioned in Section 31 of CGST Act 2017, but issues a reminder letter to pay monthly fee based on the expired license agreement.

In respect of continuous supply of service when the license is in effect, as per Section 31(5), the tax invoice, containing the details as per Rule 46 of CGST/TNGST Rules, should be raised on or before due date of payment as ascertainable from the contract. It is seen in the present cases, the due date of payment is periodical, either monthly or annually, with the due dates specified after the end of such period. If the rent invoice (rent claim advice) is issued before the due date of payment, the time of supply is determined by Section 13(2) (a), as the earliest of the date of issue of invoice by the supplier and the date of receipt of payment. If payment is not received for any reason, including legal disputes, the time of supply shall be date of issue of invoice.

In case the rent invoice (rent claim advice) is issued after 30 days as specified in Rule 47, then the time of supply would be the earliest of date of provision of service, which is end of recurrent period specified in the agreement after which the rent/license fee is to be paid and date of receipt of payment.

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