Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Location of Supplier and Place of Supply of Goods and Services under GST Law

The basic principle of GST is that it should effectively lax the consumption of such supplies at the destination thereof or as the case may at the point of consumption. So place of supply provision determines the place i.e. taxable jurisdiction where the tax should reach.

Thus, the ‘location of the supplier’ and ‘place of supply’ is very crucial to determine whether the supply is an inter-State supply or an intra-State supply. Where location of supplier and place of supply are in the same State or Union Territory, the supply will be an intra-State supply and shall be liable to CGST and SGST/UTGST. On the other hand, where the location of the supplier and the place of supply are in two difference States or in two different Union Territories or in a State and Union Territory, the supply will be an inter-State supply and shall be liable to IGST.

Location of Supplier and Place of Supply of Goods and Services under GST Law
Location of Supplier and Place of Supply of Goods and Services under GST Law

1.   Location of Supplier of Goods under GST Law

The term “location of supplier of goods” is not defined in law. The word ‘location’ here refers to the site or premises (geographical point) where the supplier is situated with the goods in his control ready to be supplied. In other words, it is the physical point where the goods are situated under the control of the person wherever incorporated or registered and ready to be supplied.

2. “Location of the Supplier of Services” [Section 2(15) of the IGST Act, 2017]

“Location of the supplier of services” means,—

Situation Location of the supplier
(a) where a supply is made from a place of business for which the registration has been obtained It shall be the location of such place of business
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere) It shall be the location of such fixed establishment
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment It shall be the location of the establishment most
directly concerned with the provision of the supply
(d) in absence of such places It shall be the location of the usual place of residence of the supplier

3.   [Section 10 of IGST Act, 2017]- Place of Supply of Goods other than Supply of Goods Imported into, or Exported from India

The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under,—

Applicable Section Nature of supply of goods Place of Supply
10(1)(a) Where the supply involves movement of goods, whether by the supplier or the recipient or by any other person The location of the goods at the time at which the movement of goods terminates for delivery to the recipient

Example 1:

R of Delhi makes a supply of goods to G of Noida (UP). The place of supply in this case shall be Noida where the movement goods terminates and it will be a case of inter-State supply liable to IGST.

On the other hand, if G is also located in Delhi, the place of supply shall be Delhi and it will be a case of intra-State supply liable to CGST and Delhi SGST.

Example 2:

R of Jaipur (Rajasthan) comes to Delhi and wishes to buy a TV for his residence at Jaipur. He visited a showroom of TV of G in Delhi. G agreed to transport and deliver the TV to R at his residence in Jaipur for a sum of Rs. 80,000 including transportation charges. In this case, supply involves movement of goods from Delhi to Jaipur and responsibility of movement of goods is of the supplier G. The place of supply in this case shall be Jaipur where the movement terminates for delivery. Hence, it shall be a case of inter-State supply and liable to IGST.

The situation will not be different if R agrees that he will himself move the goods to Jaipur

Applicable Section Nature of supply of goods Place of Supply
10(1)(b) Where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise. It shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such third person

Example 1:

R of Delhi has supplied goods to G of Surat (Gujarat). During the movement of goods G directed R to transfer the documents of title to S of Mumbai. The place of supply of such goods shall be Gujarat and it will be a case of inter-State supply liable to IGST.

Example 2 :

R, of Punjab, books an order to supply tools to K of Kanpur (UP). R places the order on Gedore Tools Ltd. Delhi, the manufacturer of such tools and instructs Gedore Tools Ltd. to deliver the tools directly to K of Kanpur to save the transportation cost.

In this case goods are delivered to K in Kanpur by Gedore Tools Ltd. the supplier of goods located in Delhi on the direction of R. Delivery of goods by Gedore of Delhi to K of Kanpur (UP) shall be considered as supply to R of Pun jab and the place of supply of this transaction shall be Punjab being the principal place of business of R. This supply shall be considered as inter-State supply and shall be subject to IGST which will be charged by Gedore Tools Ltd. of Delhi in his invoice raised to R of Punjab.

Applicable Section Nature of supply of goods Place of Supply
10(1)(c) Where the supply does not involve movement of goods, whether by the supplier or the recipient The location of such goods at the time of the delivery to the recipient
10(1)(d) Where the goods are assembled or installed at site The place of such installation or assembly

Example :

Suppose R of Delhi enters into an agreement with (1 of Jaipur (Rajasthan) for installation of TV tower at Kanpur (U.P.). The place of supply in this case shall be the place of installation of TV tower i.e. Kanpur (UP). Thus it will be a case of inter-State supply and R will have to pay IGST at Delhi.

On the other hand, if this TV tower has to be installed by R on behalf of G in Delhi, it will be a case of intra-State supply and R will have to pay CGST and Delhi SGST at Delhi.

See also  Provisions of Central Goods and Service Tax (CGST) Act, 2017 are also applicable to IGST Act. and UTGST Act.
Applicable Section Nature of supply of goods Place of Supply
10(1)(e) Where the goods are supplied on board a conveyance, including a vessel, an aircraft, train or a motor vehicle The location at which such goods are taken on board.

However, in respect of services, the place of supply shall be the location of the first scheduled point of departure of that conveyance for the journey.

Example :

R, a flight caterer, of Delhi has loaded food and drinks on Air India aircraft at Delhi on its flight from Mumbai to Chandigarh via Delhi for passengers on board The place of supply in this case shall be Delhi from where foods and drinks were loaded on the aircraft and it will be a case of intra-State supply and R will have to pay CGST and Delhi SGST at Delhi

The above section 10 can be summed up in the following chart:

4.   Place of Supply of Goods Imported into, or Exported from India [Section 11 of IGST Act, 2017]

 

Applicable Section Nature of supply of goods Place of Supply
11(a) The place of supply of goods imported into India The location of the importer
11(b) The place of supply of goods exported from India The location outside India

5.  Place of Supply of Services where Location of Supplier and Recipient is in India [Section 12 of IGST Act, 2017]

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. [Section 12(1)]

Applicable Section Nature of supply of Services Place of Supply
12(2) Services, except the services specified in subsections (3) 10(14) made to —

(a) a registered person;

(b) any person other than a registered person

The location of such person

(i) the location of the recipient address on record exists; and

(ii) the location of the supplier of other cases.

12(3) (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 coordination of construction work; or

(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 organising 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),

The location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located:

However, 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.

Example: Suppose a road is constructed from Delhi to Mumbai covering multiple states. The supply of service shall be treated as made in each of the States 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 reasonable basis as may he prescribed in this behalf.

12(4) Restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery The location where the services are actually performed.
12(5) Services in relation to training and performance appraisal to—

(a) a registered person,

(b) a person other than a registered person,

 

The location of such person

The location where the services are actually performed.

12(6) 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 The place where the event is actually held or where the park or such other place is located.
12(7) Services provided by way of—

(a) organisation of a cultural, artistic, sporting. scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events: or

(b) services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of sponsorship to such events to—

(i) a registered person,

(ii) a person other than a registered person,

 

 

 

 

 

 

The location of such person;

The place where the event is actually held and ii the event is held outside India, the place of supply shall be the location of the recipient.

Explanation—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.
12(8) Services by way of transportation of goods, including by mail or courier to—

(a) a registered person,

(b) a person other than a registered person,

 

 

The location of such person;

The location at which such goods are handed over for their transportation.

12(9) Passenger transportation service to—

(a) a registered person.

(b) a person other than a registered person,

 

The location of such person;

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 section 12(2). [Proviso to section 12(9)]

Example:

Suppose a ticket/pass for anywhere travel in India is issued by Air India to R. In this case the place of embarkation will not be available at the time of issue of invoice as the right to passage is for future use. Accordingly, place of supply cannot be the place of embarkation. In such case, the place of supply of such service shall be determined in accordance with the provisions of section 12(2) i.e. if the services are made to—

(a) a registered person, it shall be the location of such person;

(b) any person, other than a registered person it 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.

Explanation : –

For the purposes of section 12(9), 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.

Example :

A person travels from Mumbai to Delhi and back to Mumbai The place of supply shall be determined as under:

If the person is registered, the place of supply shall be the location of recipient, lithe person is not registered, the place of supply for the forward journey from Mumbai to Delhi shall be Mumbai, the place where he embarks.

However, for the return journey, the place of supply shall be Delhi as the return journey has to be treated as separate journey.

12(10) Services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle The location of the first scheduled point of departure of that conveyance for the journey
12(11) Telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person—

(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna,

(b) in case of mobile connection for telecommunication and internet services provided on post-paid basis,

(c) in cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pie-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,

(ii) by any person to the final subscriber,

(d) in other cases,

 

 

The location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;

The location of billing address of the recipient of services on the record of the supplier of services;

 

 

 

 

The address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply;

The location where such pre- payment is received or such vouchers are sold;

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.

Explanation .—

Where the leased circuit is installed in more than one Slate or Union territory and a consolidated amount is charged for supply of services relating to such circuit, 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.

12(12) Banking and other financial services, including stock broking services to any person 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.

12(13) Insurance services—

(a) to a registered person,

(b) to a person other than a registered person,

 

The location of such person;

The location of the recipient of services on the records of the supplier of services.

12(14) 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 It shall be taken as being in each of such States or Union territories and the value of such supplies specific to each Slate 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.

6.   [Section 13 of ICST Act 2017]- Place of Supply of Services where Location of Supplier or Location of Recipient is Outside India

The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India, [Section 13(1)]

Applicable Section Nature of Supply of Services Place of Supply
13(2) Services except the services specified in sub- sections (3) to (13) The location of the recipient of services:

Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services.

13(3) (a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in
order to provide the services:(b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.
The location where the services are actually performed.

Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services:

Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs

The location where the services are actually performed.

13(14) Services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or coordination of Construction work, including that of architects or interior decorators, The place where the immovable property is located or intended to be located.
13(5) Services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, The place where the event is actually held.
13(6) Where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than one location, including a location in the taxable territory. The location in the taxable territory.
13(7) Where the services referred to in sub-section (3) or sub-section (4) or sub-section (5) are supplied in more than one State or Union territory, The place of supply of such services shall be taken as being in each of the respective States or Union territories and the value of such supplies specific
to each State or Union territory shall be 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.
13(8) (a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders:

(b) intermediary services;

(c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of I month.

 

 

The location of the supplier of services

13(9) Services of transportation of goods, other than by way of mail or courier, The place of destination of such goods.
13(10) Services in respect of passenger transportation services The place where the passenger embarks on the conveyance for a continuous journey.
13(11) Services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, The first scheduled point of departure of that conveyance for the journey.
13(12) Online information and database access or retrieval services The location of the recipient of services.

Explanation.—

For the purposes of this sub section person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non- contradictory conditions are satisfied, namely:—

(a) the location of address presented by the recipient of services through internet is in
the taxable territory;

(b) the credit card or debit card or store value card or charge card or smart card or any
other card by which the recipient of services settles payment has been issued in the taxable territory;

(c) the billing address of the recipient of services is in the taxable territory;

(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;

(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;

(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory:

(g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory.

13(13) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.

7.   Special Provision for Payment of Tax by a Supplier of Online Information and Database Access or Retrieval Services [Section 14 of IGST Act, 2017]

 

Nature of Supply of Services Person responsible for payment of GST
Online information and database access or retrieval services Section 14(1) :

Supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient

the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services
Provided that in the case of supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, an intermediary located in the non-taxable territory, who arranges or facilitates the supply of such services, shall be deemed to be the recipient of such services from the supplier of services in non-taxable territory and supplying such services to the non- taxable online recipient except when such intermediary satisfies the following conditions, namely:—

(a)        the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;

(b)        the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge which is that the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services;

(c)        the intermediary involved in the supply does not authorise delivery; and

(d)        the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.

Who will seek registration where section 12(1) is applicable?

The supplier of online information and database access or retrieval services referred to in sub-section (1) shall, for payment of integrated tax, take a single registration under the Simplified Registration Scheme to be notified by the Government:

Provided that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay integrated tax on behalf of the supplier:

Provided further that if such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.

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