No tax invoices can be issued for advance or part payment for supply of goods, whether domestic or export sales: GST AAR

The present application has been filed under the CGST Act, 2017 by a company named Navalt Solar and Electric Boats Private Limited (Applicant) before the kerala Authority for Advance Ruling Goods and Services Tax Department, Tax Tower, Thiruvananthapuram.

The Kerala Authority for Advance Ruling (AAR) has issued Advance Ruling No. KER/36/2025 dated October 10, 2025, deciding on GST invoicing and tax liability for Navalt Solar & Electric Boats Pvt. Ltd., a manufacturer of custom-built solar and electric boats.

M/s Navalt Solar and Electric Boats Private Limited is a private company having GSTIN 32AAECN5227B1Z1. It is involved in the business of manufacturing, supplying and servicing solar and electric boats and it designs and undertakes the construction of boats based on customer-specific preferences.

The company receives payments from customers in advance in stages, part payments during manufacturing, and final payment at delivery and sought clarity on whether it could issue tax invoices at each stage of receiving advance payments and pay GST accordingly.

Questions Asked by the Applicant

The applicant asks the following questions, seeking the present Kerala Authority for Advance Ruling.

1) 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?

2) If the applicant can issue multiple tax invoices for the supply of the same goods upon receipt of advances as queries in (1) above, at the time of delivery of the boat, whether the applicant can issue the Tax invoice for the 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?

3) Whether, instead of issuing the tax invoice for the balance amount received as stated in (2) above, whether Tax Invoice for the total value of the 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?

AAR’s Decision on Classification

The Kerala Authority for Advance Ruling Goods and Services Tax gave the following answers to the questions asked by the applicant:

Answer 1: The Kerala Authority added, No the applicant cannot issue tax invoices when they receive advance or part payments for goods, whether for domestic or export sales. Under GST law, any advance received before the actual supply of goods must be recorded using a receipt voucher as per Rule 50. A tax invoice can only be issued when the goods are removed for delivery or are delivered to the customer, as required under Section 31(1) of the CGST Act.

Answer 2: According to the Kerala AAR this question becomes irrelevant and does not merit a separate ruling.

Answer 3: As per the ruling, Since the applicant is not allowed to issue tax invoices for advance payments, they also cannot issue credit notes later to adjust those invoices. Credit notes can only be issued for proper tax invoices raised after the actual supply of goods. Therefore this question does not apply.