Raj Jaggi
Quick Summary
Frequent Supplies in Business - But Are They Legally Continuous? In the world of large infrastructure and manufacturing projects, the movement of goods seldom follows the simplicity of a single transaction. In reality, supplies tend to move in a measured and organised rhythm. Steel reaches project
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FAQ :
Under Section 2(32) of the CGST Act, a continuous supply of goods is defined as a supply that is provided or agreed to be provided continuously or on a recurrent basis under a contract, where the supplier invoices the recipient on a regular or periodic basis.
No, frequent deliveries alone do not automatically qualify as a continuous supply of goods. The arrangement must satisfy cumulative conditions, including a contractual basis and periodic invoicing, not just repeated physical movement of goods.
The key conditions are: 1) The supply must be provided or agreed to be provided continuously or on a recurrent basis. 2) The supply must be made under a contract. 3) The recurring nature of the supply must stem from the contract itself. 4) The supplier must invoice the recipient on a regular or periodic basis.
Periodic invoicing is often the decisive factor. It signals that the commercial arrangement reflects the continuity of the supply, aligning the billing mechanism with the ongoing nature of the transaction, rather than treating each dispatch as a separate event.
The utility model involves steady supply over time with periodic consolidated invoices (e.g., monthly billing for utilities), aligning with continuous supply. The dispatch model involves transaction-by-transaction invoicing for each delivery, which may be treated as independent supplies even if frequent.
If an arrangement qualifies as a continuous supply of goods with periodic billing, invoices can be issued as per the agreed billing cycle. The time of supply generally aligns with the date of the periodic invoice or receipt of payment, providing commercial convenience and better compliance alignment.
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