No GST on 'Mobilization Advance' received in Pre-GST Era

Last updated: 09 March 2020

Court :
Hon'ble Tamil Nadu Authority

Brief :
Shapoorji Pallonji & Company Private Limited ('Applicant') is engaged in the construction business dealing with various clients under Composite Works Contracts involving supply of both goods & services. They had entered into an agreement, dated November 21st, 2016 with the Christian Medical College, Tamil Nadu ('CMC') for construction of Service & Teaching Facility at CMC. As per the Agreement CMC was required to pay 'Mobilization Advance' to the Applicant, which would be equivalent to 5% of the contract price in two tranches of 2.5% each, totally amounting to Rs.75,83,72,000/- and the same is to be recovered on a time basis in 15 equal instalments on monthly basis against the Running Bill ('RA Bill'). Both tranches of 'Mobilization Advance' were paid to them by CMC during the Pre-GST regime & on receipt of 'Mobilization Advance' they had paid Service Tax ('ST') payable under Section 66B read with Section 67 of the Finance Act, 1994. However, no Value Added Tax ('VAT') was paid on Mobilization Advance as VAT would be payable subsequently only at the time of charging RA Bill.

Citation :
Shapoorji Pallonji & Company Private Limited ('Applicant') Christian Medical College, Tamil Nadu ('Respondent')