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GST – Scope of Supply – Taxability of Advance Payments, Taxable Supply, Time of supply - Challenge to Constitutional validity of Sections 7, 12, 13 and 16(2)(b) of the CGST Act, 2017 - Petitioner, an unincorporated consortium, was awarded a contract by the MMRDA for the construction of the Mumbai Trans Harbour Link Project. Under the contract, MMRDA made advance payments to the petitioner, which the petitioner remitted to its constituents along with the GST amount – Petitioner was denied input tax credit on the GST paid on the advance payments on the ground that the petitioner had not received the actual supply of goods or services – Whether the provisions of Section 7 of the CGST Act, which include "supplies agreed to be made" within the scope of supply, are ultra vires the provisions of Article 246A read with Article 366(12A) and violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution – HELD - Applying the definition of consideration to the advances as received by the petitioner, the payment received as an advance would partake the character of a ‘consideration’ in relation to the supply of services. The advance payments as received by the petitioner, is in relation to a works contract as defined under section 2(119) of the CGST Act - the words “in furtherance of business”, as used in Section 7(1)(a) of the CGST Act would necessarily mean that the supply is connected to or in relation to the activities in question or is the integral part of such activity. By applying such interpretation, it cannot be denied that once an advance was received by the petitioner in the course of or in furtherance of the contract in question, it would necessarily amount to a supply attracting payment of GST - Further, sub-section (1A) in Section 7 was incorporated by the CGST Amendment Act, 2018 with retrospective effect from 1 July 2017, providing that where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II, which includes ‘works contract’ as defined in Section 2(119), finding place in item 6 of Schedule II defining a ‘composite supply’. Thus, the legislative intention behind Section 7 is quite clear that such composite contract would fall within the definition of supply as envisaged by Section 7(1)(a) - It would also not be correct for the petitioner to contend that the scope of supply as defined under Section 7 would not be applicable for any deferred supply and / or for that matter would not include the supply to cover the advance payment considering the nature of the contract - Section 7 is required to be holistically read. Merely for the reason that Section 7(1)(a) uses the word “or agreed to be made for a consideration”, so as to define “supply”, would not render nugatory the contents of the earlier part of sub-clause (a) of sub-section (1) which categorically provides that supply includes all forms of supply of goods or services or both – the Legislature in its wisdom has not only in terms of Section 7(1)(a), but further by insertion of clause (aa) in sub-section (1) of Section 7, included such “supply of goods or services agreed to be made for consideration or a deferred payment for other valuable consideration”, so as to fall within the ambit of expression ‘supply’ - the petitioner’s challenge to the vires of Section 7 on the ground that it applies to ‘supplies agreed to be made’ is not well founded - by implication of provisions of the CGST Act and more particularly on a cumulative reading of Sections 7 and 9, advance payment as received by the petitioner from the MMRDA would be subject to the levy of GST - Challenge to the Constitutional validity of Sections 7, 12, and 13 of the CGST Act is rejected. However, petitioner is entitled to the input tax credit under Section 16 of the CGST Act, based on the "Receipt Voucher" issued by the petitioner's constituent – the writ petition is disposed of
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