Time of Supply when amount is received from the members in sinking fund for supply of future services like up-keep of the structure of the building by painting the exterior/common areas; replacement/repair of major equipment such as lifts, generators etc.

The applicant furnished copy of resolution dated 22-1-2021, of the Management Committee, to collect Rs. 10,000 every year towards the sinking fund. Also there exists no bye-laws to state that the balance amount of the sinking fund will be refunded to the members after utilizing the same in future.

In view of the above the issue is whether the amounts collected towards sinking fund amounts to advances for supply of future services or deposits. There are certain distinguishable features of both advance and deposit and advances defer from the deposits. The amounts that are not returnable can be termed as advances.

Section 13(2)(a) stipulates that the time of supply of services shall be the earliest of the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 of the CGST Act, 2017 or the receipt of payment, whichever is earlier. Since the applicant receives the payment earlier, hence the time of supply is the date of receipt of amount towards the sinking fund and therefore the said amounts are liable to GST as they are advances towards future supply of services but not the deposit.

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