Clarification on Time of Supply for HAM Road Construction Projects

HAM Model: Concessionaires handle both construction and operation & maintenance (O&M) of highways. Payments are staggered over the contract period. Continuous Supply of Services: Under Section 2(33) of the CGST Act, HAM contracts are considered continuous supply of services due to their periodic payment structure.

Time of Supply Rules: Clause (a) of Section 13(2): Time of supply is the date of invoice or date of payment receipt, whichever is earlier, if the invoice is issued within the prescribed period. Clause (b) of Section 13(2): If the invoice isn't issued on time, the time of supply is the service provision date or payment receipt date, whichever is earlier. Invoice Issuance: For continuous services, invoices must be issued by the specified date or upon completion of an event, as per Section 31(5).

Tax Liability: Arises on the earlier of the invoice date or payment receipt date if the invoice is issued on time. Otherwise, it arises on the service provision date or payment receipt date. Interest Component: Any interest included in annuity payments is taxable under Section 15(2)(d) of the CGST Act.

Practical Impact: Concessionaires need to monitor invoice issuance dates and payment receipts to ensure timely tax payments. Further Guidance: Suitable trade notices should be issued for public awareness, and any implementation difficulties should be reported to the Board.