Gujarat AAR Holds Advance Received by Assessee as ‘Consideration’ Under GST | Biz Flow Kit
The Gujarat Authority of Advance Ruling at Ahmedabad determined a case for Goods and Services Tax liability in which it was said that the advance obtained via the applicant comes within the ambit of ‘consideration’.
The applicant is a government contractor furnishing services for the Sewage Treatment Plant. They had obtained a contract to furnish stormwater drainage services for newly developed areas within the Ahmedabad Urban Development Authority (AUDA).
Under the terms of the tender, 10% of the contract amount is provided as an advance to the applicant. All payments incurred via AUDA towards execution are paid, including an 18% GST Rate.
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The applicant is concerned about GST applicability on advance payments, which are adjusted in the R.A. Bills. The applicant’s counsel argues that no GST is payable on the advance.
The adjudicating authority specified that the petitioner is furnishing works contract services to AUDA. It was mentioned that a deposit incurred via an advance shall be deemed as consideration.
It was mentioned that under Schedule II of the CGST Act, a works contract will be considered as a supply of service. Also, under section 13, the obligation to file tax on services will emerge during supply.
The case of Re: S.P. Singla Constructions P. Ltd was discussed, where a two-member bench of CGST, consisting of Members Sushma Vora and Vishal Malani, concluded that Goods and Services Tax (GST) is applicable on any advance payments received.
| Name of the Applicant | PC Snehal Construction Private Limited |
| Advance Ruling No | GUJ/GAAR/R/2026/03 |
| GSTIN of the Applicant | 24AAJCP2964L1Z0 |
| Present for the applicant | Shri Bhargav Desai and Shri Kannaiyalal Modi |
| Gujarat GST AAR | Read Order |
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