Clarification on Time of Supply for Spectrum Allocation Services under Deferred Payment

Spectrum Allocation Model: Telecom operators bid for spectrum rights, provided by the Government of India through the Department of Telecommunications (DoT). GST is payable by the telecom operator on a reverse charge basis (Notification No. 13/2017-Central Tax (Rate) dated 28th June 2017). Continuous Supply of Services: When telecom operators choose to pay in installments, this constitutes a continuous supply of services, as defined under section 2(33) of the CGST Act. The services (spectrum usage) are provided continuously for a period exceeding three months with periodic payment obligations.

Time of Supply Rules for Reverse Charge: Section 13(3) of the CGST Act applies to services on reverse charge basis. The time of supply shall be the earlier of: (a) The date of payment entered in the recipient's books of account or debited in their bank account, whichever is earlier; or (b) The date immediately following sixty days from the date of issue of invoice or any other document by the supplier.

Invoice Issuance for Continuous Supply of Services: Under section 31(5)(a) of the CGST Act, where the due date of payment is ascertainable from the contract, the invoice must be issued on or before the due date of payment. In this case, the due dates are clear from the Notice Inviting Applications and the FAL. Therefore, invoices must be issued on or before the due date of payment according to the option chosen by the telecom operator.

Similar Cases: This treatment of time of supply applies to other scenarios where natural resources are allocated by the government with payment options either upfront or in deferred installments, constituting continuous supply of services under section 2(33) of the CGST Act. Implementation: Suitable trade notices should be issued to publicize this clarification. Any difficulties in implementation should be reported to the Board. A Hindi version of the circular will follow.