What is the Continuous Supply of Goods and Services under GST?

Continuous supply of goods and services refers to a supply of goods or services that is provided continuously or on a regular basis over a specific period. It may involve a long-term contract or an agreement to supply goods or services at a regular interval. The GST law recognises continuous supply as a distinct category of supply and has specific provisions for it. The time of supply, rate of tax, and other aspects of continuous supply are determined based on the terms of the contract or agreement between the supplier and the recipient. It is important for businesses to understand the provisions related to continuous supply to ensure compliance with GST regulations.

What is the continuous supply of goods?

Continuous supply of goods can refer to any of the following scenarios:

• A supply of goods which has been provided or which will be provided; OR
• A supply of goods made on a continuous or recurring basis; OR
• A supply of goods made under the terms of a contract; OR
• An invoice is periodically sent by the supplier to the recipient; OR
• A supply of goods made by means of a wire, or a cable, or a similar conduit e.g. cooking gas pipeline, electricity, water supply etc.

When to Issue an Invoice for Continuous Supply of Goods 

In the case of a continuous supply of goods, a supplier is not liable to raise an invoice with every consignment. It is raised periodically. For example, if a certain number of bricks is agreed upon, a supplier will only raise an invoice at the agreed period, such as monthly, quarterly or annually. Or Account statements/payments are issued one after the other, and invoices are raised before or at the same time as each statement or payment.

What is the continuous supply of services?

The continuous supply of services refers to the unceasing supply of services that have been agreed upon over time which exceeds three months, per the terms of a contract signed by both parties. The compensation is also provided periodically.  Some examples of continuous supply of services include annual maintenance contracts, internet services providers etc. 

When to Issue an Invoice for Continuous Supply of Services

The invoice is to be raised before or after a payment is made within the specified time agreed on by both parties. 

• If the due date of payment is identified, the invoice will be raised before payment is due. 
• If the due date of payment is not identified, the invoice will be raised when the supplier has received the payment. 
• If the payment depends on the completion of a specific task, then the invoice will be raised after the said task is completed. 
• In case of cessation of services before the end date of a contract, an invoice would be raised on the day the services stop, for example, the end of a contract in September, which was to be finished in December. 

Note- if the supplier is a bank or a financial institution, an invoice would be raised 45 days from the date of service supply. 

Conclusion 

Continuous supply of goods and services under GST is a distinct category of supply that involves regular or ongoing supply of goods or services over a specific period. The GST law has specific provisions related to continuous supply, which determine the time of supply, rate of tax, and other aspects based on the terms of the contract or agreement between the supplier and recipient. It is important for businesses to understand and comply with these provisions to ensure proper accounting and payment of taxes. Proper documentation and record-keeping are crucial for continuous supply, and any errors or omissions could lead to penalties or interest charges.