GST Advance Ruling on Issuing Invoices for Advance Payments on Goods
The Authority for Advance Ruling in Kerala decided that businesses cannot issue tax invoices for goods upon receiving advance payments.
- Ruling
- ADVANCE RULING No. KER/ 36/2025 Dated 10.10.2025
- Dated
- 10 Oct 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Tax invoices for goods must be issued at or before delivery.
- Advances for goods require a receipt voucher, not a tax invoice.
- Notification 66/2017 makes this rule mandatory for all goods suppliers.
- The request to issue multiple invoices for one supply was rejected.
In short
Navalt Solar & Electric Boats asked if they could issue tax invoices when receiving advance payments for boats to simplify their accounting. The Authority for Advance Ruling (AAR) examined whether this practice complies with the Goods and Services Tax (GST) law regarding the timing of tax payments.
What has changed
How it worked before
Businesses were often unsure if they could voluntarily pay GST on advances for goods by issuing an invoice early to match their internal revenue recognition.
What has changed
The authority clarified that for goods, the time of supply is strictly tied to the delivery or the invoice date, not the payment date. You must issue a receipt voucher for advances and cannot issue a tax invoice until the goods are removed or delivered.
Who this affects
Manufacturers and suppliers of goods who receive advance payments from customers.
An example
A furniture maker receives a 50% advance for a custom dining table. They want to issue a tax invoice now to pay the GST immediately. Under this ruling, they must issue a receipt voucher instead. They can only issue the tax invoice when the table is ready for delivery.
What you should do
Continue issuing receipt vouchers for advances as required by law. Remember that an advance ruling only binds the specific company that asked and its local tax office; it is not a general law for all businesses.
If you do nothing
If you issue tax invoices for advances, you may face issues with your GST returns and E-way bill generation, as these documents will not align with the statutory time of supply. A tax officer may reject your tax payments on advances as invalid or non-compliant. This could lead to penalties or the need to revise your filings later.
The terms explained
- Receipt Voucher
- A document issued when you receive money for a supply of goods before the actual delivery, which does not trigger the tax invoice requirement.
- Time of Supply
- The specific point in time when a transaction is considered to have occurred for tax purposes, determining when you must pay GST.
- Advance Ruling
- A formal decision by tax authorities on a specific question asked by a business, which clarifies how tax laws apply to that situation.
The ruling in detail
Authority for Advance Ruling
NAVALT SOLAR & ELECTRIC BOATS PRIVATE LIMITED
ADVANCE RULING No. KER/ 36/2025 Dated 10.10.2025 · Keralam
Questions before the authority
- Whether the applicant can issue Tax invoices at the time of receiving advance or part payment from the customers in the case of Domestic and Exports Sales of goods and declare the same as turnover in the corresponding GST return period and pay the taxes accordingly, even though the process involved is not a service?
- If applicant can issue multiple tax invoices for supply of same goods upon receipt of advances as queries in (1) above, at the time of delivery of the boat, whether applicant can issue the Tax invoice for balance amount receivable from the customer and show the full value of the boat in the E-way bill for transportation of the consignment supported by all tax invoices already issued to the customer against the advances?
- Whether instead of issuing the tax invoice for the balance amount received as stated in (2) above, whether Tax Invoice for total value of boat can be issued at the time of delivery of boat and issue Tax credit notes against advances or part payments received for which Tax invoices are issued earlier to offset the tax liability?
Facts
The applicant manufactures and supplies custom-built solar and electric boats, receiving payments in stages including an initial advance, part payments during manufacturing, and a final payment upon delivery. The applicant sought to issue tax invoices upon receipt of these advances to align with their revenue recognition and to avoid mismatches between invoice values and E-way bills. They currently treat these advances as unbilled revenue and do not issue tax invoices or pay GST until final delivery.
Ruling
| Question | What the authority ruled |
|---|---|
| Issuance of tax invoices on receipt of advances | No Advances must be documented via a receipt voucher under Rule 50. |
| Issuance of multiple tax invoices for a single supply | Not applicable The question became infructuous as the answer to the first question was in the negative. |
| Issuance of final invoice with credit notes for advances | No Credit notes are only permissible against valid tax invoices issued for actual supplies. |
The Authority ruled that the applicant cannot issue tax invoices upon receipt of advances for the supply of goods. It held that advances must be documented via a receipt voucher under Rule 50, and tax invoices must only be issued at or before the time of removal or delivery of goods. Consequently, the requests to issue multiple invoices or use credit notes to offset tax on advances were rejected.
Reasoning
The Authority relied on Notification No. 66/2017-Central Tax, which mandates that the time of supply for goods is the date of issue of the invoice or the last date on which the invoice is required to be issued under Section 31. It concluded that this notification is a **mandatory procedural rule** that excludes the date of payment as a trigger for tax liability. Furthermore, it determined that Section 31(3)(d) requires the issuance of a receipt voucher for advances, which is distinct from a tax invoice. Therefore, the applicant cannot voluntarily choose to pay tax on advances by issuing tax invoices prematurely.
Provisions relied on
- Section 12(2)(a) of the CGST Act
- Section 31(1) of the CGST Act
- Section 31(3)(d) of the CGST Act
- Section 34 of the CGST Act
- Notification No. 66/2017-Central Tax
- Rule 46 of the CGST Rules
- Rule 50 of the CGST Rules
For the practitioner
This ruling clarifies that suppliers of goods cannot opt to pay GST on advances by issuing tax invoices, as the **time of supply is statutorily fixed** to the invoice date or removal of goods. Practitioners should advise clients that receipt vouchers are the only compliant method for documenting advances for goods. It settles that the exemption from paying tax on advances is a mandatory procedure, not a discretionary benefit.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/7-navalt.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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