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GST – Karnataka AAR – Section 51 – Application of TDS provisions, Value of supply under a Contract, Continuous supply - Interpretation of the term “a contract” for TDS applicability under section 51 of the CGST Act - in the absence of any contract or contract of continuous supply, whether the TDS provisions under section 51 is applicable for every supply or whether the single tax invoice shall be considered as "a contract" or ‘aggregate value of purchase from a vendor for the whole year’ be considered as a contract – HELD - Section 51 of the CGST Act does not refers to value of the invoice, but only refers to the total value of supply under a contract. Hence the invoice is not the criteria but the supply under a contract is criteria for determining the liability to deduct the tax at source under section 51 of the CGST Act - There is no precondition that the agreement to supply should be in writing or the same is governed under the Contract Act, 1872. The "agreement to sell" and the contract of "Sale of Goods" as envisaged in the Sale of Goods Act, 1930 also are governed under the Contract Act, 1872 - Further, sale of goods is only a subset of "supply" as envisaged in Section 7(1) of the CGST Act and hence all contracts covered under the Sale of Goods Act, 1930 are also contracts under the CGST Act – The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in installments, then the contract would include all the part supplies made and covered under separate invoices and if the total value of such supply under a contract exceeds Rs.2.5 Lakhs, it would be liable for deduction of tax at source, subject to other conditions - In the first scenario, since the value of the single invoice is more than Rs.2.5 lakh, there is no doubt that the tax deduction at source is applicable under section 51 subject to other conditions. In the second scenario, the applicant has stated that the value of supply under a single invoice does not exceed Rs.2.5 Lakhs and assuming that it is a single transaction as per the purchase order, then tax deduction at source is not applicable on that single transaction or invoice. But if it is a part supply and a part of the continuous supply as per the purchase order, then if the total value of supply as mentioned in the purchase order is more than Rs.2.5 Lakh, then the provisions of tax deduction at source would become applicable even on this invoice - The tax deduction at source is applicable to all supplies subject to condition that the value of supply under a contract under scenario no. 3 and 4 and purchase order under scenario no. 2 is more than Rs.2.5 Lakhs and invoice value is only applicable for scenario no. 1 as the basis for determining the "value of supply" under a contract
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