GST on Advance Payment if Client defaults

AJM_India (Director) (58 Points)

15 April 2024  

We are civil contractors.

We often start contract work with 20-30% advance payment. We do not raise any invoice against advance payment.

At the end of the contract period (30-60 days), we raise a Performa Invoice for full amount to the client and the client releases balance payment to us.

In some cases, the clients default on payment and usurp the pending payment.
Are we liable to raise an invoice for advance payment received and incur additional liability (loss) of GST amount as well. O
ur CA insists that we have to raise the invoice on advance payment and pay GST Liability.

Ideally we would like to forfeit the advance payment due to non adherence of Contract / Payment Terms.
Is there any way we can justify non payment of GST on advance payment since we have already incurred 70% loss on the contract job.