Law Legends


Continous supply of goods and services

Goods & Service Tax

Continuous Supply of Goods Services

"Continuous Supply of Goods" means

According to the contract the goods are being supplied, or are to be supplied, on a continuous or recurring basis whether or not by means of a wire, cable, pipeline or other conduit and where the supplier makes billing on a periodic basis. Or any other supply which has been notified by the government, it will be called Continuous Supply of Goods.

"Continuous supply of services" means

According to the contract, the services which are being provided or to be provided continuously or whose period is more than 3 months and it involves giving periodic payment, or any other supply which has been notified by the government, is called continuous supply. of service will be called.

In this type of supply, two things need to be kept in mind from the supplier's point of view: when to pay tax and when to take ITC credit.

So to pay tax the most important thing is to know the time of supply. From that it will be determined when tax has to be paid and in which month the tax liability will arise.

In case of Goods the time of supply will be

When the invoice has been issued by the supplier, or the last date by which the invoice was to be issued as per section 31 of CGST Act, 2017. Whichever of the two occurs first, tax liability will accrue on that day.

In case of service the time of supply will be

Tax liability will arise on the date the invoice is issued or the date payment is received, whichever is earlier.

According to Section 31, when to issue invoice –

In case of continuous supply of goods –

As per section 31, as per agreement, the date on which the periodic statement is being issued or the date on which payment is received.

Whichever is earlier among the two.

The invoice will be issued by the supplier on that date.

In case of Continuous Supply of Service –

Where due date of payment is confirmed then on the due date of payment, invoice will be issued.

  1. In case the due date of payment is not confirmed, the invoice will be issued only when the payment has been received.
  2. Where the payment is linked to a completion of event, in that case the invoice will be issued on completion of the event.

Now we understand from the recipient's point of view when the recipient has to take ITC -

Section 16 of CGST Act 2017 which talks about eligibility to claim ITC, according to section 16, the recipient must have a tax invoice. The goods and services have been received and tax has actually been paid to the government by the supplier. And GST return has been filed as per section 39 of CGST act 2017.

Then the customer will get credit of the tax declared in the invoice.

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