Continuous Supply of Goods and Services under GST

Continuous supply refers to an ongoing process where goods or services are supplied periodically and payments are made on a regular basis—often monthly. For instance, supplying bricks to builders is a continuous supply of goods because the supply occurs repeatedly over a long period. Likewise, telecom and internet services provided by telecom companies are classic examples of a continuous supply of services.

Continuous Supply of Goods

Continuous supply of goods means that goods are provided on a recurring basis under a contract. Key features include:

• Nature of Supply: Goods are supplied continuously or recurrently, possibly via a wire, cable, pipeline, etc.
• Invoicing: Invoices are issued periodically—either before or at the time of each payment or statement.

Example:
A brick supplier delivers batches of bricks to a builder and issues an invoice with each delivery.

Continuous Supply of Services

Continuous supply of services refers to services provided on a recurring basis under a contract—typically for a period exceeding three months—with periodic payment obligations.

Example 1 – Telecom Services:
A telecom service provider issues a monthly telephone bill as per the contract.

Example 2 – Works Contract Termination:
A works contract commencing on 1st August 2024 was scheduled to complete in March 2025, but was terminated on 11th November 2024. An invoice is issued on 11th November 2024 covering the work performed until termination.

Specified Time for Issuing Invoices

In a continuous supply arrangement, the invoice must be issued within 30 days from the date on which the event specified in the contract (triggering a payment) is completed. For banks, financial institutions, and NBFCs, the period extends to 45 days.

Note: The Centre or State may notify that certain supplies are treated as continuous supply.

Conclusion

In the GST regime, various events—such as issuing an invoice, receiving a payment, or the completion of a service event—trigger the time of supply, ensuring that tax is collected as early as possible. Due to the multiple parameters involved in determining the time of supply, businesses often face challenges reconciling their financial records with GST returns. For further assistance or any queries regarding GST compliance, please feel free to contact DisyTax. We’re here to help you navigate GST complexities with clarity and confidence.