What is Place of Supply in GST

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Guide on What is Place of Supply in GST is as follows:

Overview of What is Place of Supply in GST

The basic principle of GST is that it should effectively tax the consumption of such supplies at the destination thereof or as the case may at the point of consumption. The place of supply provisions determine the place i.e., taxable jurisdiction where the tax should reach. The place of supply and the location of the supplier are the two determinants to ascertain the nature of supply i.e., whether a supply is intra-State or inter-State.

In other words, these two factors are required to determine whether a supply is subject to SGST/UTGST plus CGST in a given State/Union territory or else would attract IGST if it is an inter-State supply.

If an inter-State transaction is wrongly treated as intra-State or vice-versa and tax paid accordingly, the correct tax will need to be paid and refund claimed for tax wrongly paid. Though no interest is levied in such a case, procedural requirements increase and working capital gets blocked where the amount involved is huge. Hence, determining correct place of supply is of paramount importance.

Chapter V of the IGST Act [Sections 10 to 13] prescribes the provisions relating to place of supply of goods and services in cross border transactions as well as domestic transactions.

Section 10: Place Of Supply Of Goods Other Than Supply Of Goods Imported Into, Or Exported From India

Section 10 prescribes the provisions for determining the place of supply of goods in domestic transactions i.e., within India. Sub-section (1) of section 10 sets out five rules to provide the place of supply of goods in the following specific situations:

  • Supply involving movement of goods
  • Goods delivered on bill to ship to model
  • Supply not involving movement of goods
  • Goods assembled/installed at site
  • Goods supplied on board a conveyance

For residual cases, sub-section (2) of section 10 provides that where the place of supply of goods cannot be determined, the Government may prescribe the manner to ascertain the same.

Section 10(1)(a): Supply involving movement of goods

In case of supply involving movement of goods, the place of supply is the location of the goods at the time when the movement of goods terminates (ends) for delivery to the recipient.

The ‘location of the goods’ is a question of fact to be ascertained by observing the journey that the goods supplied make from their origin from supplier to termination with the recipient. This movement, however, can be undertaken by the supplier or recipient or even any other person after having disclosed the destination of the movement of goods.

It is important to understand that this provision does not apply in cases where there is no movement of goods. Also, the provision does not link itself to transfer of property in goods but to the movement of the goods.

Examples:

1.X Ltd. of Mumbai receives order from A ltd. of Jaipur, for supply of certain goods. The price quoted by X Ltd. being inclusive of freight. X Ltd. arranges for the transportation of the goods to Jaipur. The delivery of goods is taken by A Ltd. at Jaipur. Determine the place of supply of goods. Would your answer be different if A Ltd. has arranged for the transport of goods which are delivered to it by transporter in Jaipur.

Ans. As per Section 10(1)(a) of IGST Act, 2017, where the supply involves movement of goods, whether by the supplier or by the recipient or by any other person, the place of supply shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.

Since the movement of the goods terminates in Jaipur (i.e. Rajasthan), the place of supply of goods shall be at Jaipur, Rajasthan.

If the transportation costs were agreed to be borne by the purchaser A Ltd., and the transportation of the goods is arranged through a transporter, the movement of the goods takes place at the direction of the purchaser, but since the movement of the goods terminate for delivery to the recipient at Jaipur, therefore, the place of supply shall be Jaipur, Rajasthan. Thus, the answer will remain same.

2.X Ltd., located in Mumbai, Maharashtra receives order from M/s Y Ltd. located in Ahmedabad, Gujarat for supply of one machine. Find the place of supply and applicable GST?

Ans.

  1. Location of Supplier: Mumbai (Maharashtra).
  2. Place of Supply: Ahmedabad (Gujarat) Since, the movement of goods terminate at Ahmedabad. [Sec 10(1)(a) of IGST Act, 2017]

Since location of supplier is into one state and place of supply is into another state, supply will qualify as ‘inter –state supply’ in terms of Sec 7 of IGST Act. Thus, IGST shall be applicable GST.

Section 10(1)(b): Supply involving movement of goods delivered to recipient on the instruction of third person – Bill to Ship to Sale

Clause (b) of section 10(1) lays down the provisions to determine the place of supply in cases where there is a tripartite arrangement of supply, commonly known as bill to ship to transactions or where there is a sale of goods in transit by the original buyer/ agents.

In simple words, where goods are delivered by the supplier to the recipient at the instruction of a third person, the place of supply is the principal place of business of such third person and not of the actual recipient.

Examples:

1.What is place of supply in GST if the goods are delivered by the supplier to a person on the direction of a third person?

Ans. As per section 10(1)(b) of the IGST Act, 2017, it would be deemed that the third person has received the goods and the place of supply of such goods will be the principal place of business of such person.

2.Mr. X (a supplier registered in Uttar Pradesh having principal place of business at Noida) asks Mr. Y of Ahmedabad, Gujarat to deliver 50 washing machines to his buyer Mr. Z at Jaipur, Rajasthan. In this case, two supplies are involved, one between Mr. X and Mr. Z and other between Mr. Y and Mr. X. What is place of supply in GST for each supply?

Ans.

ParticularsSupply 1Supply 2
SupplierMr Y- Ahmedabad (Gujarat)Mr X – Noida (UP)
RecipientMr X – Noida (UP)Mr Z – Jaipur (Rajasthan)
Place of SupplySec 10(1)(b)Sec 10(1)(a)

While the supply-1 (i.e., between Mr. Y and Mr. X) is covered under section 10(1)(b), the supply-2 (i.e., between Mr. X and Mr. Z) is covered under section 10(1)(a).

For first supply, POS shall be location of the principal place of business of third person i.e., principal place of business of Mr. X located at Noida, UP.

For second supply, POS shall be location of goods at the time of termination of movement of goods at time of delivery of goods to the recipient (Mr Z, Jaipur, Rajasthan) i.e., Rajasthan State.

Section 10(1)(c): Supply not involving movement of goods

If the supply does not involve movement of goods, the place of supply is the location of goods at the time of delivery to the recipient.

Examples:

1.Quickdeal Enterprises (Ahmedabad, Gujarat) opens a new branch office at Hissar, Haryana. It purchases a building for office from Ruhani Builders (Hissar) along with pre-installed office furniture and fixtures. Determine place of supply of the pre-installed office furniture and fixtures.

Ans. Section 10(1)(c) of the IGST Act, 2017, stipulates that if the supply does not involve movement of goods, the place of supply is the location of goods at the time of delivery to the recipient. Since there is no movement of office furniture and fixtures in the given case, the place of supply of such goods is their location at the time of delivery to the recipient (Quickdeal Enterprises) i.e., Hissar, Haryana

2.M/s X Ltd has place of business in Chennai, being an NBFC given an asset under operating lease to M/s ABC Ltd. of Chennai. The said asset so far used by M/s ABC Ltd in their factory located at Hyderabad. At the end of lease period the said asset acquired by M/s ABC Ltd. Find the place of supply of goods and levy of GST.

Ans. Section 10(1)(c) of the IGST Act,2017 clearly states that where there is no movement of goods from one place to another, the place of supply of the goods shall be the location of goods at the time of delivery to the recipient .

Therefore, the place of supply shall be Hyderabad and location of the supplier shall be Chennai. Since the same is an inter-state supply as per section 8 of the IGST Act, 2017. Thus, IGST will be levied as per section 5 of the same act.

Section 10(1)(d): Supply involving installation or assembly of goods

If the supply involves goods which are to be installed or assembled at site, the place of supply is the place of such installation or assembly.

Examples:

1.Mr. D located in New Delhi, place order to Mr. C of New Delhi for installation of Air-condition machine in his factory located in Chennai. Mr. D procures the Indoor and out-door units, set of plugs, electrical cables, distribution boards and other items from different States in India and arranges for delivery in Chennai. The said machine assembled by Mr. D in Chennai. Find the Place of supply of goods and levy tax?

Ans. As per section 10(1)(d) of the IGST Act, 2017, the place of supply where goods are assembled or installed at site is the place of such installation or assembly. The location of the supplier is New Delhi. Therefore, as per section 7(1) of the IGST Act, 2017, it shall be an inter-state supply and under section 5 of the same act IGST shall be levied. Hence, Mr C of New Delhi is liable to pay IGST.

Section 10(1)(e): Goods supplied on board a conveyance

When goods are sold during a journey on board a conveyance, it becomes difficult to determine the place of supply of goods – whether it is the location from where the journey originates or whether it is the destination or whether it is any of the locations covered by the conveyance during the journey. Examples of goods sold on board a conveyance can be books and miscellaneous items sold by the hawkers in train etc.

Section 10(1)(e) lays down that place of supply of goods supplied on a board a conveyance like aircraft, train, vessel, motor vehicle is the location where such goods have been taken on board.

Examples:

1.Chennai express train going form Chennai to Cochin, M/s X Ltd. located in Cochin has supplied goods (juice can, chips, etc) which are given to passengers during night time. The food packets are loaded at Chennai Central Station, Chennai. Find the place of supply of goods and levy of GST?

Ans. Section 10(1)(e) of the IGST Act, 2017 states that the place of supply (POS) shall be the location at which the goods are taken on board.

In the present case the goods are loaded at Chennai therefore the POS shall be Chennai. Since the POS is Chennai and the location of the supplier is Cochin, it is an inter-state supply and IGST will be payable on the same as per section 5 of the same act. M/s X Ltd. is liable to pay IGST.

Section 11: Place Of Supply Of Goods Imported Into, Or Exported From India

Section 11 deals with the determination of place of supply in cases involving import and export of goods.

Section 11(a): Import of goods

The import of goods has been defined in section 2(10) of the IGST Act as bringing goods into India from a place outside India. All imports are deemed as inter-State supplies and accordingly IGST is levied in addition to the applicable custom duties.

If the goods have been imported in India, the place of supply of goods is the place where the importer is located.

Examples:

XYZ imports electric kettles from China for her Kitchen Store in Noida, Uttar Pradesh. Ms. XYZ is registered in Uttar Pradesh. The place of supply is Noida.

Section 11(b): Export of goods

Section 2(5) defines export of goods to mean taking goods out of India to a place outside India.

Under the GST Law, export of goods has been treated as:

  • inter-State supply
  • ‘zero rated supply’ i.e., the goods or services exported shall be relieved of GST levied upon them either at the input stage or at the final product stage.

The place of supply in case of export of goods is the place where they have been exported i.e., the destination outside India.

Examples:

Mr. Sachin (New Delhi) exports goods from New Delhi to London, UK. The place of supply is London.

Section 12: Place Of Supply Of Services Where Location Of Supplier Of Service And The Location Of The Recipient Of Service Is In India

Section 12 contains the provisions for determining the place of supply of services where both the location of supplier and the location of recipient are in India. If either of the two persons (supplier or recipient) is outside India, the place of supply is determined by section 13.

Section 12 lays down a general rule to determine the place of supply of services as well as few other rules to determine place of supply of certain specific services. Thus, place of supply is determined as per general rule in respect of services other than the ones covered by the specific rules.

It is also important to note that in many cases, the section provides different places of supply for a service supplied to registered and unregistered persons.

Section 12(2): General Rule

The rule is applicable only if the supply of service does not fall in any of the specific cases provided under section 12.

The rule provides that the place of supply of services made to a registered person is the location of the person receiving the services. Since the supplier has the GSTIN of the person receiving the service, the location of such GSTIN is the place of supply.

However, if the services is supplied to an unregistered person, the place of supply is:

  • the location of such unregistered person, if the address of the unregistered person is available in the records of the supplier.
  • the location of the supplier of services in other cases.

Examples:

M/s DHL courier registered under GST and located in Mumbai, provided transportation of documents like Cheques, promissory notes, pay orders (which cannot be considered as goods) belonging to Mr. C of Chennai, from Mumbai to Chennai. Find the place of supply of services in the following independent cases:

  • (a) Mr. C of Chennai is a registered person under GST.
  • (b) Mr. C of Chennai is an un-registered person under GST, however his address is available in the books of M/s DHL courier.
  • (c) Mr. C of Chennai is an un-registered person under GST, however his address is not available in the books of M/s DHL courier.

Ans. As per section 2(52) of the CGST Act, 2017 money and securities shall not be goods. Since Section 12(8) of the IGST Act, 2017 is for transportation of goods and these documents are not regarded as goods, section 12(8) shall not be applicable.

Thus to determine the place of supply of services we shall solely apply section 12(2) of the same act. Place of supply of services is as per Sec 12(2) but not under Sec 12(8) of IGST.

  • (a) POS = Chennai (i.e. location of recipient of service)
  • (b) POS = Chennai (i.e. location of recipient of service)
  • (c) POS = Mumbai (i.e. location of supplier of service)

Section 12(3): Services in relation to an immovable property/boat/vessel

Section 12(3) covers supplies of services which are in relation to an immovable property or a boat or a vessel. Such services are classified in following major categories:

a)Services provided directly in relation to an immovable property including those by

  • architect,
  • interior decorator,
  • surveyor,
  • engineer and other related experts,
  • estate agent

(b) Service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work.

(c) Services provided by way of lodging, accommodation by a

  • hotel
  • inn
  • guest house
  • homestay
  • club
  • campsite
  • house boat
  • vessel

(d) Services provided by way of accommodation in an immovable property for organizing

  • any marriage/reception or matters related thereto,
  • official, social, cultural, religious or business functions
  • including services provided in relation to such function at such property

(e) Services ancillary to the above-mentioned services.

In all above cases, location of the immovable property or the boat or the vessel is the place of supply.

If the services have been supplied for an immovable property which is yet to be constructed/developed (e.g. architect’s services for drawing the plan of a building), the place where such immovable property is intended to be located is the place of supply.

Immovable property/Boat/Vessel located in more than one State/Union territory:

Sometimes the immovable property may extend to more than one location, for example, a railway line, a national highway or a bridge on a river may originate in one State and end in the other State or a house boat stay may traverse more than one State.

In such cases, i.e., where the immovable property or boat or vessel is located in more than one State/Union territory, the service is deemed to have been supplied in each of the respective States/Union territories, in proportion to the value for the services determined in terms of the contract or agreement entered into in this regard.

Manner of determining proportionate value of service in the absence of a contract or agreement:

In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of services supplied in different States/Union territories (where the immovable property or boat or vessel is located) is computed in accordance with rule 4 of IGST Rules.

Examples:

1.Determine place of supply in independent cases as under :

  • A company in Pune contracts with a Pune based architect to design a structure for their new office to be located in Bangalore.
  • Mr. A of Jaipur entered into a lease agreement with Mr. B of Jaipur whereby he leased out his farm in Nagpur to Mr. B.

Ans.

CasePlace of supplyReasons
A company in Pune contracts with a Pune based architect to design a structure for their new office in Bangalore.BangaloreThough the supplier of service and the recipient are both located in Pune, place of supply would be the place where the immovable property is located i.e. Bangalore as per section 12(3) of IGST Act, 2017.
Mr. A of Jaipur entered into a lease agreement with Mr. B of Jaipur whereby he leased out his farm in Nagpur to Mr. B.NagpurThough the supplier and the recipient are both in Jaipur, Rajasthan but any service provided by way of grant of rights to use immovable property is covered under Section 12(3)(a) of the IGST Act, 2017, therefore, the place of supply shall be the location of the immovable property, here being Nagpur.

Section 12(4): Restaurant service, personal grooming/fitness/ beauty and health services

The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery is the location where such services are actually performed.

Examples:

1.What will be the place of supply for restaurant and catering services?

Ans. Section 12(4) of IGST Act, 2017 provides that the place of supply of service shall be location where the services are actually performed in respect of restaurant and catering services, personal grooming, fitness, beauty treatment, health services including cosmetic and plastic surgery.

Section 12(5): Training and performance appraisal services

The place of supply of services in relation to training and performance appraisal depends upon whether the supply is B2B or B2C.

In B2B supply i.e., where the recipient of service is a registered person, the place of supply is the location of such person.

However, in case of B2C supply i.e., where the recipient of service is unregistered, the place of supply is the place where the service is actually performed.

Examples:

1.Mr. A located at Kolkata provides training at Kolkata to employees of M/s Infosys Ltd, which is registered at Mumbai. Find the place of supply of service and GST liability in the following two cases?

  • Case 1: Infosys is registered person under GST
  • Case 2: Infosys is not registered person under GST

Ans. Case 1: If Infosys Ltd is a registered person POS will be Mumbai. Mr. A. is liable to pay IGST.

Case 2: If Infosys Ltd is not a registered than POS will be Kolkata. Mr. A. liable to pay CGST and SGST.

Section 12(6): Services by way of admission to events/amusement park/other places

The place of supply of following services-

(i)Services provided by way of admission to following types of events:

  • Cultural
  • Sporting
  • Artistic
  • Entertainment
  • Educational
  • Scientific

(ii)Services provided by way of admission to amusement park or any other place.

(iii)Services ancillary to the above-mentioned services.

is the place where the event is actually held or where the park or such other place is located.

Examples:

1.X of Delhi visits Hyderabad. During his stay in Hyderabad, he visits Appu Ghar, Hyderabad (i.e. an amusement park). What is the place of supply?

Ans. As per section 12(6) of the IGST Act, 2017, the place of supply (POS) for an amusement event shall be the location where the park is located.

Thus in the present case the POS will be Hyderabad. The location of the supplier and the place of supply both is in Hyderabad and it will treated as an Intra-state supply as per section 8 and Appu Ghar shall be liable to pay CGST and SGST.

2.Board of Control for Cricket in India located at Mumbai, sold tickets on-line for IPL match, is going to conduct at Chepauk Stadium, Chennai. However, finally match conduct at Mumbai. Find the place of supply of service of admission to sporting event?

Ans. As per section 12(6) of the IGST Act, 2017, the place of supply (POS) for a sporting event shall be the location where the event is actually held.

Thus in the present case the POS will be Mumbai. Location of the supplier and the place of supply both is in Mumbai and it will treated as an Intra-state supply as per section 8 and BCCI shall be liable to pay CGST and SGST.

Section 12(7): Organisation of events

For supplies related to organization of events or assigning sponsorship to such events, the place of supply depends on whether the supply is made to a registered person or an unregistered person.

When such service is provided to a registered person, the place of supply is location of recipient. When it is provided to an unregistered person, the place of supply is the location where the event is actually held and if the event is held outside India, the place of supply is the location of recipient.

The event can be a cultural, artistic, sporting, scientific, educational or entertainment event. It can also be a conference, fair, exhibition, celebration or other similar event. Place of supply of services ancillary to organisation of such type of events or assigning of sponsorship to such events is also determined under sub-section (7) of section 12 i.e., in the manner described above.

Event held in more than one State/Union territory

If the event is held in more than one State/Union territory and a consolidated amount is charged for services relating to such event, the place of supply of such services is deemed to be in each of the respective States/Union territories in proportion to the value for services determined in terms of the contract or agreement entered into in this regard.

Manner of determining proportionate value of service in the absence of a contract or agreement

In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of services made in different States/Union territories (where the event is held) is computed in accordance with rule 5 of IGST Rules by the application of generally accepted accounting principles.

Examples:

1.Determine place of supply in following independent cases :

  • (i) Mega Events, an event management company at New Delhi, organizes an award function for Shah Diamond Merchants of Ahmedabad (registered in Gujarat), at Mumbai.
  • (ii) Mega Events, an event management company at New Delhi, organizes an award function for Shah Diamond Merchants of Ahmedabad (registered in Gujarat), at Mauritius.

Ans. Based on above provision, the answers can be as follows :

  • (i) Since the recipient is a registered person, the place of supply is the location of the recipient, i.e., Ahmedabad.
  • (ii) Since the recipient is a registered person, the place of supply is the location of the recipient, i.e., Ahmedabad.

Section 12(8): Transportation of goods including mails

The place of supply of services by way of transportation of goods, including by mail or courier, etc. provided to a registered person, is the location of such person.

However, where such services are provided to an unregistered person, the place of supply is the location at which such goods are handed over for their transportation.

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Examples:

1.ABC, a Goods transportation agency located in Delhi, provides services to PQR Ltd. registered in Gurugram. A consignment of new motorcycles from the factory of PQR Ltd. in Gurugram (Haryana) is transported to its depot in Bhopal, Madhya Pradesh. Determine place of supply of transportation of goods service.

Ans. As per section 12(8) of the IGST Act, 2017, in respect of goods transportation service to registered recipient, the place of supply of shall be the location of such a person. Thus, the place of supply of service in this case is location of PQR Ltd. (Registered Recipient) i.e. Gurugram (Haryana).

Section 12(9): Passenger transportation service

The place of supply of services by way of Passenger transportation service provided to a registered person, is the location of such person.

However, where such services are provided to an unregistered person, the place of supply is the location where the passenger embarks on the conveyance for a continuous journey.

Where there is Issue of right to passage for future use-point of boarding not known at the time of issue of right

a) If the address of the unregistered person is available in the records of the supplier, the location of such unregistered person.

b) In other cases, the location of the supplier of services.

Note: The return journey is treated as a separate journey, even if the tickets for onward and return journey are issued at the same time.

Examples:

1.Jet Airways registered under GST and located in Mumbai operates flight from Mumbai-Delhi-Mumbai. Mr. TYN who is unregistered person, purchase air ticket for Mumbai-Delhi-Mumbai. Only one ticket is issued to him showing both the route. Find the Place of supply of service and GST liability?

Ans. As per section 12(9) of the IGST Act, 2017, in respect of passenger transportation services to unregistered person, the place of supply of service for forward journey shall be the place where passenger embarks on the conveyance for a continuous journey.

However, the return journey shall be treated as a separate journey. Thus, the place of supply of services in this case is place of embarkation i.e., Mumbai (Maharashtra). For return journey the place of supply shall be place of embarkation i.e. Delhi.

Section 12(10): Service supplied on board a conveyance

The place of supply of services by way of services supplied on board a conveyance is the location of the first scheduled point of departure of that conveyance for the journey.

Note: Conveyance includes a vessel, an aircraft, a train or a motor vehicle.

Here for determining the place of supply of both goods and services supplied on board a conveyance, no distinction is made between registered and unregistered recipients.

Examples:

1.Air Asia provides a video game or a movie-on-demand on-board as entertainment against a charge of Rs. 900 during the Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi flight. What is the place of supply?

Ans. As per section 12(10) of the IGST Act, 2017, the place of supply of services on board a conveyance shall be the location of the first scheduled point of departure of that conveyance for that journey. In this case the place of supply of this service will be Bangkok which is situated in a non-taxable territory and, consequently, not chargeable to GST.

Section 12(11): Telecommunication service

Telecommunication services include the services of telephone, data transfer(internet), cable, DTH (Direct to home) services, etc. Section 12(11) classifies the telecommunication services into 3 categories for the purpose of determining the place of supply as under:

  • Services provided using a fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna.
  • Post-paid mobile connection and post-paid internet services.
  • Pre-paid mobile connection and pre-paid internet and DTH services.

Here Recipient is any person.

Nature of SupplyPlace of Supply
1.Fixed telecommunication line
2.Leased circuits
3.Internet leased circuit
4.Cable or dish antenna
Location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services.
Post-paid mobile connection and internet services1.Location of billing address of the recipient of services in the records of the supplier of services.
2.Location of the supplier of services, if the address is not available.
1.Pre-paid mobile connection, internet services and DTH services (recharge coupon, vouchers, net pack etc.)
2.Services provided through a
(i)selling agent
(ii)re-seller
(iii)distributor of subscriber identity module card or recharge voucher
Address of the selling agent/re-seller/ distributor at the time of supply.
Services provided by any person to final subscriberLocation where such pre-payment is received or such vouchers are sold.
Pre-paid services, the payment for which is made through internet banking/other electronic mode of paymentLocation of the recipient of services in the records of the supplier of services.
Other cases1.The address of the recipient as per the records of the supplier of services.
2.Location of the supplier of services if the address is not available.

Leased circuit is installed in more than one State/Union territory

If the leased circuit is installed in more than one State/Union territory and a consolidated amount is charged for supply of services, the place of supply is deemed to be in each of the respective States/Union territories in proportion to the value for services determined in terms of the contract or agreement entered into in this regard.

Manner of determining proportionate value of service in the absence of a contract or agreement

In the absence of a contract or agreement between the supplier and recipient of services, the value of services supplied in different States/Union territories (where the leased circuit is installed) is determined in accordance with rule 6 of the IGST Rules in proportion to the number of points lying in each such State/ Union territory.

Examples:

1.M/s Air Call registered under GST and located in Chennai. M/s Air Call have appointed Mr. C as a selling agent for supplying pre-payment voucher to the subscriber. Find the Place of supply of service and GST liability?

Ans. Section 12(11) of the IGST Act, 2017, the place of supply for telecommunication services for a selling agent supplying pre-payment voucher shall be the address of the selling agent as per the record of the supplier at the time of supply.

In this case, the place of supply shall be Chennai (i.e. Address of the selling agent on the record of M/s Air Call). Also since the same would be intra-state supply as per section 8 of the IGST Act. CGST & SGST would be liable to be paid by M/s Air Call.

Section 12(12): Financial and stock broking services

The place of supply of banking and other financial services, including stock broking services to any person is the location of the recipient of services in the records of the supplier of services.

However, if the location of recipient of services is not available in the records of the supplier, the place of supply is the location of the supplier of services.

Examples:

1.A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in Manali. What is the place of supply?

Ans. As per section 12(12) of the IGST Act, 2017, in respect of Banking & Financial Service to unregistered person, the place of supply of service shall be the location of supplier of service as location of recipient of service is not on record of the supplier. Thus, the place of supply service in this case is location of ICICI Bank i.e. Manali.

2.Mr. Harsha being a registered stock broker at BSE, located in Mumbai. He has clients in Chennai, Kolkata, Bengaluru. He purchase and sells shares of clients located in Chennai, Kolkata, Bengaluru. Find the place of supply of service and GST liability?

Ans. As per section 12(12) of the IGST Act, 2017, in respect of Stock Broking Services to registered person, the place of supply of service shall be the location of recipient of service on the records of supplier of service. Thus, the place of supply service in this case is location of Recipient of service i.e. Chennai, Kolkata & Bengaluru respectively.

Section 12(13): Insurance services

The place of supply of insurance services is the location of recipient when provided to a registered recipient.

If such services are provided to unregistered person, the place of supply is the location of the recipient of services in the records of the supplier of services.

Examples:

1.An unregistered person from Gurugram travels by Air India flight from Mumbai to Delhi and gets his travel insurance done in Mumbai. What is the place of supply of insurance services?

Ans. When insurance service is provided to an unregistered person, the location of the recipient of services on the records of the supplier of insurance services is the place of supply. So Gurugram is the place of supply.

Section 12(14): Advertisement service to the Government

The place of supply of advertisement service to the Central Government/ State Government/ Statutory body/ Local authority meant for the State/Union territory identified in contract or agreement is the location of each of such States/Union territories where the advertisement is broadcasted/ run /played/disseminated.

The value of such supplies specific to each State/Union territory is in proportion to the amount attributable to the services provided by way of dissemination in the respective States/Union territories determined in terms of the contract or agreement entered into in this regard.

Manner of determining proportionate value of service in the absence of a contract or agreement

In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of advertisement services attributable to different States/Union territories(where the advertisement is broadcasted/ run /played/disseminated) is computed in accordance with rule 3 of IGST Rules.

Examples:

1.The Government has hired 200 hoardings in Lakshadweep and 175 hoardings in Chennai for providing advertisement of Gas subsidy and contract contains the consideration for these hoardings separately. Hoarding services supplied by M/s X Ltd. located in Hyderabad. Find the place of supply of service and GST liability.

Ans. Advertisement service to Government – It is covered by section 12(14) of IGST Act. This rule is applicable if advertisement services are provided to the Central Government, a State Government, statutory body or a local authority.

Place of supply of services will be the concerned State / Union Territory. Consequently, the place of supply of service will be Lakshadweep & Chennai. Also, since the same is an inter-state supply as per section 7 of the IGST Act, 2017 it shall be chargeable to IGST under section 5 of the same act.

GST = IGST is liable to be paid by M/s X Ltd.

Section 13: Place Of Supply Of Services Where Location Of Supplier Or Location Of Recipient Is Outside India

Section 13 provides for determination of place of supply of services in cases where either the location of the supplier of services or the recipient of services is outside India.

Thus, this section provides the place of supply in relation to international or cross-border supply of services. Place of supply of a service is one of the factors which determines as to whether a service can be termed as import or export of service.

Section 13(2): General Rule

The rule is applicable only if the supply of service does not fall in any of the specific cases provided in section 13.

The rule provides that the place of supply of services is the location of the person receiving the services.

However, if the location of the recipient of services is not available in the ordinary course of business, the place of supply is the location of the supplier of services.

Examples:

1.RST Inc., a corn chips manufacturing company based in USA, intends to launch its products in India. However, the company wishes to know the taste and sensibilities of Indians before launching its products in India. For this purpose, RST Inc. has approached ABC Consultants, Mumbai, (Maharashtra) to carry out a survey in India to enable it to make changes, if any, in its products to suit Indian taste.

The survey is to be solely based on the oral replies of the surveyees; they will not be provided any sample by RST Inc. to taste. ABC Consultants will be paid in convertible foreign exchange for the assignment. With reference to the provisions of GST law, determine the place of supply of the service.

Ans. As per section 13(2) of the IGST Act, 2017, the place of supply of services shall be the location of the recipient of services. Thus, the place of supply of services in this case is the location of RST Inc. i.e., USA.

Section 13(3): Performance based services

Sr. No.Nature of SupplyPlace of Supply
1.Services requiring physical presence of goods
Exceptions:
Location where the service is actually performed.
Services supplied in respect of goods, that are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs/treatment/process, without being put to any other use in India1.Location of the recipient.
2.Location of the supplier, if location of recipient is not available.
Services supplied in respect of goods, that are provided from a remote location by electronic meansLocation where goods are situated at the time of supply of services.
2.Services supplied to an individual, which require the physical presence of the recipientLocation where the service is actually performed.

Examples:

1.ABC Fabricators has its factory located in Gujarat. It has temporarily imported certain goods from its customer located in China and re-exported them to China after carrying out the necessary repairs without putting them to any use in Gujarat. Examine what would be the place of supply of service in the given case ?

Will your answer be different if the repaired goods are re-exported after being put to use in Gujarat for some time?

Ans. As per the second proviso to section 13(3) of the IGST Act, 2017 it clearly states that section 13(3) shall not be applicable in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are re-exported after repairs without being put to any other use in India.

In the given case, since goods have been temporarily imported by ABC Fabricators and have been re-exported after the repairs without being put to any use in Gujarat (taxable territory), thus the place of provision of repair services carried out by ABC Fabricators will be determined by Sec 13(2) of IGST Act, 2017. Consequently, the place of supply of service will be the location of recipient, viz. China (non-taxable territory).

However, if repaired goods are re-exported after being put to use, the place of supply will be determined according to Sec 13(3)(a) of IGST Act, 2017, if the use to which such goods are put to is not required for such repair.

Therefore in such a case, the place of supply of service will be the location where the service is actually performed, which in the given case is Gujarat. However, if the use is of such nature, which is necessary for carrying out the repairs, the place of supply of service will again be determined as per Sec 13(2) of IGST Act, 2017.

Section 13(4): Services in relation to immovable property

Services supplied directly in relation to an immovable property like

  • Services of experts and estate agents
  • Accommodation by a hotel, inn, guest house, club or campsite
  • Grant of rights to use immovable property
  • Construction and related services
  • Services of architects or interior decorators

Then the place of supply is the location of immovable property.

Examples:

Mr. Mahendra Goyal, an interior decorator provides professional services to Mr. Harish Jain in relation to two of his immovable properties. Determine the place of supply in the transactions below as per provisions of GST law in the following situation:

CaseLocation of Mr. Mahendra GoyalLocation of Mr. Harish JainProperties situated at
IDelhiNew YorkParis (France)

Ans. Since the recipient of service is located outside India, hence, section 13 will apply. Since immovable property is intended to be located outside India, therefore, as per Section 13(4) of the IGST Act, 2017, the place of supply shall be the location of the property situated, here – Paris (France).

Section 13(5): Services by way of admission to and/or organization of events or celebrations etc.

Services supplied by way of admission to or organisation of following:

  • Cultural, artistic, sporting, scientific, educational, entertainment events,
  • Celebration, conference, fair, exhibition
  • Similar events
  • Services ancillary to such admission or organization of event

then place of supply is place where the event is actually held.

Section 13(6): Where any services referred to in 13(3) or 13(4) or 13(5) above is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory.

Examples:

1.Determine the place of supply of service: X Ltd. of Delhi, agrees to provide ‘technical inspection and certification service’ in respect of a newly developed product of an overseas firm (for a newly launched motorbike which has to meet emission standards in different states or countries).

The overseas firm has provided its newly developed product X Ltd. for the purpose of testing. The testing is carried out in Delhi (15%), Assam (35%) and Sweden (50%).

Ans. As per Section 13(6) of IGST Act, 2017, where the services referred to in the question are supplied in more than one location, including a location in the taxable territory then in that case the Place of supply (POS) of the said service will be the location in the taxable territory (i.e. Delhi and Assam).

X Ltd. is liable to pay CGST and SGST for the part of Delhi as it shall be intra-state supply. X Ltd. is liable to pay IGST for the part of Assam as it will be inter-state supply. X Ltd. is also liable to pay CGST and SGST as well as IGST for the services rendered in Sweden in ratio 3:7. It means tax will be payable on the entire value.

Section 13(7): Where the services referred to in 13(3) or 13(4) or 13(5) above 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.(Given Below)

Manner of determining proportionate value of service in the absence of a contract or agreement

For Section 13(3):

In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of services supplied in different States/Union territories (where the service is performed) is computed in accordance with rule 7 of IGST Rules.

For Section 13(4):

In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of services supplied in different States/Union territories (where the service is supplied) is computed in accordance with rule 8 of IGST Rules.

Rule 8 lays down that in the absence of any such contract or agreement, the value is determined by applying the provisions of rule 4 of the said rules, mutatis mutandis.

For Section 13(5):

In the absence of a contract or agreement between the supplier and recipient of services, the proportionate value of services supplied in different States/Union territories (where the service is supplied) is computed in accordance with rule 9 of IGST Rules.

Rule 9 lays down that in the absence of any such contract or agreement, the value is determined by applying the provisions of rule 5 of the said rules, mutatis mutandis.

Section 13(8): Banking and financial services, Intermediary services and Hiring of means of transport

If

  • Services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders
  • Intermediary services
  • Services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of 1 month

then place of supply is location of the supplier of such services.

Examples:

1.Mr. S has a permanent residence at Chennai. He has a savings bank account with Chennai Mound Road Branch of State Bank of India. On Aug 1, 20XX, Mr. S opened a safe deposit locker with the Chennai Mound Road Branch of State Bank of India.

Mr. S went to Singapore for official work in Sep, 20XX and has been residing there since then. Mr. S contends that since he is a non-resident during the year 20X2-X3 in terms of the Income-tax Act, GST cannot be levied on the locker fee charged by State Bank of India for the year 20X2-X3. Examine the correctness of the contention of Mr. S.

Ans. Under the GST regime, the taxability under GST shall be independent of the residential status under the Income Tax Act, 1961. The place of supply shall be determined as per the provisions of section 13 of the IGST Act, 2017 as the supplier is located in Chennai and the recipient shall be located in Singapore.

As per section 13(8) of the IGST Act place of supply (POS) for banking services to an account holder shall be the location of the supplier of the services. For the purpose for GST we will refer to section. In this case the POS shall be Chennai and there will be a liability for GST as there it is intra-state supply. GST = CGST and SGST is liable to be paid by State Bank of India Chennai Mount Road Branch. The contention raised by Mr. S is wrong and the State Bank of India is right in levying GST.

Section 13(9), (10) and (11): Transportation services

Nature of SupplyPlace of Supply
Transportation of goods, other than by way of mail or courierDestination of such goods.
Passenger transportation servicesPlace where the passenger embarks on the conveyance for a continuous journey.
Services provided on board a conveyance during passenger transportation including services intended to be wholly or substantially consumed while on boardFirst scheduled point of departure of that conveyance for the journey.

Examples:

1.A vessel Bhishma, sailing from U.S.A to Australia via, India carries various types of capital goods namely ‘A, C & D’. ‘A’ are destined to Mumbai Port. On account of submission of bill of transshipment product ‘A’ transshipped to Chennai port as ultimate destination in India. Find the place of supply of service and person liable to pay GST?

Ans. As per section 13(9) of the IGST Act, 2017, the Place of supply of services of transportation of goods, shall be the place of destination of such goods and person liable to pay GST is the importer.

In the given case – Place of supply shall be the destination of the goods, i.e. Chennai for product ‘A’. GST is liable to be paid on the ocean freight by the importer on product A.

No GST will chargeable on capital goods ‘C & D’ as it beyond the taxable jurisdiction of India.

2.A single ticket is issued by Jet Airways for London-Mumbai-London flight (date of flight for London-Mumbai sector : October 10, 20XX, for return journey Mumbai-London : October 25, 20XX). A single ticket is issued for the entire journey. What is the place of supply?

Ans. For the purpose of ascertaining the place of supply for passenger transportation service we shall reply upon section 12(9) or section 13(10) of the IGST Act, 2017. The place of supply in respect of passenger transportation service shall be the place where the passenger embarks the journey.

In the present case London-Mumbai-London journey will not be a “continuous journey”. London-Mumbai will be treated as separate journey where the place of supply will be London and for Mumbai-London leg, Mumbai will be place of supply.

Section 13(12): Online information and database access or retrieval services (OIDAR)

The place of supply of OIDAR is the location of the recipient of services.

We hope you understood What is Place of Supply in GST. If you have any doubt regarding any concept, feel free to contact us.

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