Ashish Miglani
PLACE OF SUPPLY - PART 1 (Section 10,11 & 12 of IGST Act)
Before implementation of GST, there was VAT and VAT is the origin based tax for eg:- Goods were supplied from ‘X’ State to ‘Y’ State then the Tax benefit would be given to ‘X’ State, which totally changed in GST, GST became the destination based Tax for eg:- Goods were supplied from ‘X’ State to ‘Y’ State then the Tax benefit would be given to ‘Y’ State. Through this Place of Supply tax can be determined which tax is to be charged IGST (Supplied Inter-State), CGST + SGST (Supplied Intra-State/Within the State). In GST Place of Supply plays a vital role in determination of tax. It’s a vide topic which we will be discussing in different parts. In this part we are discussing the Place of Supply for Goods -
PLACE OF SUPPLY
It is explained in Section 10, 11, 12, 13 of the IGST Act 2017.
Section 10 says Place of Supply of goods other than supply of goods imported into, or exported from India. In other word we can say it is the Place of Supply for goods which has been domestically supplied.
Clause (a) of Section 10 is explained with the example
Location of Supplier |
Location of Recipient |
Tax to be charged |
‘A’ Manufacturer(State Delhi) |
‘B’ Wholesaler(State U.P) |
IGST |
Clause (b) - Bill to Ship to Model -
In this case, goods are delivered by the supplier (Mr. A) to a recipient (Mr C) on the direction of a third person (Mr B). It shall be deemed that the said third person (Mr B) has received the goods and the place of supply of such goods shall be the principal place of business of such person. In other word the place of supply would be the Location of Mr B even though Mr B has not received the goods actually.
Location of Supplier |
Goods delivered to |
Location of Recipient |
Tax to be charged |
A’ Manufacturer(State UP) |
‘C’ Retailer(State U.P) |
‘B’ wholesaler(State Delhi) |
CGST +SGST |
Clause (c)
where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient
Clause (d)
where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly
Clause (e)
where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board
Section 11 states Place of supply of goods imported into, or exported from India
The place of supply of goods,––
(a) imported into India shall be the location of the importer; (IGST will be charged)
(b) exported from India shall be the location outside India. (Whether with payment of IGST or LUT).
Section 12 states that Place of Supply or services where location of supplier and recipient in India
-
The provisions of this section shall apply to determine the place of supply of services where the location of supplier of services and the location of the recipient of services is in India.
(2) The place of supply of services, except the services specified in sub-sections (3) to (14),––
(a) made to a registered person shall be the location of such person;
(b) made to any person other than a registered person shall be,––
(i) the location of the recipient where the address on record exists; and
(ii) the location of the supplier of services in other cases.
(3) The place of supply of services,––
(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and
other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or
Example 1: - If the engineer, architect etc is located in Delhi and owner of the property is registered in Mumbai and immovable property is in Delhi then his/her service is within the state then CGST + SGST will be charged.
Example 2: - If the engineer, architect etc is located in Delhi and owner of the property is registered in Mumbai and immovable property is also in Mumbai then his/her service is within the state then IGST will be charged.
(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or
(c) by way of accommodation in any immovable property for organizing any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or
(d) any services ancillary to the services referred to in clauses (a), (b) and (c), shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located:
In the above clauses (a) (b) (c) the example or the concept remains the same in case of service.
Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.
Explanation ––Where the immovable property or boat or vessel is located in more than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.
(4) The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed.
(5) The place of supply of services in relation to training and performance appraisal to,––
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the location where the services are actually performed.
(6) The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located.
(7) Where the event is held in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.
(8) The place of supply of services by way of transportation of goods, including by mail or courier to,––
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.
[Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.]
Example - DTDC Delhi has picked the goods of Mr A Delhi to deliver the same in London. Here both supplier and recipient are located in Same State, Still IGST would be charged by DTDC Delhi on the Tax Invoice raised to Mr A Delhi.
(9) The place of supply of passenger transportation service to,—
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey:
Provided that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in accordance with the provisions of sub-section (2).
Explanation ––For the purposes of this sub-section, the return journey shall be treated as a separate journey, even if the right to passage for onward and return journey is issued at the same time.
(10) The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey.
Explanation –– If the goods were kept in train (Mumbai to Gujarat) starting from Mumbai then the Place of Supply will be Mumbai.
(11) The place of supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person shall,—
(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;
(b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services;
(c) in cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means,
(i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or
(ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold;
(d) in other cases, be the address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services:
Provided that where the address of the recipient as per the records of the supplier of services is not available, the place of supply shall be location of the supplier of services:
Provided further that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall be the place of supply of such services.
(12) The place of supply of banking and other financial services, including stock broking services to any person shall be the location of the recipient of services on the records of the supplier of services:
Provided that if the location of recipient of services is not on the records of the supplier, the place of supply shall be the location of the supplier of services.
(13) The place of supply of insurance services shall,––
(a) to a registered person, be the location of such person;
(b) to a person other than a registered person, be the location of the recipient of services on the records of the supplier of services.
(14) The place of supply of advertisement services to the Central Government, a State Government, a statutory body or a local authority meant for the States or Union territories identified in the contract or agreement shall be taken as being in each of such States or Union territories and the value of such supplies specific to each State or Union territory shall be in proportion to the amount attributable to services provided by way of dissemination in the respective States or Union territories as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.
