Place of Supply under GST and determination of nature of supply under GST
By: – CA.VINOD CHAURASIA
Goods and Services Tax – GST
Dated:- 19-8-2017
Place of Supply under GST and determination of nature of supply under GST
Introduction: This article discusses in detail about place of supply, its importance & place of supplier of services & recipient of service and determination of nature of supply under GST.
GST is Destination based taxation or consumption based taxation. By Destination based tax we mean that the revenue accrued to the place where the goods or services are consumed.
Therefore Place of Supply in GST is nothing but the place where the goods or services are consumed.
'Place of Supply' under GST is an important factor as it defines whether the transaction will be counted as intra-state(i.e within the same state) or inter-state(i.e. between two states) and accordingly the changeability of tax, i.e levy of SGST, CGST & IGST will be determined.
Due to the be
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to the specific situation.
For determining the nature of levy of taxes based on Place of Supply, two things are to be considered namely:
* Location of Supplier: It is the registered place of business of the supplier
* Place of Supply: It is the registered place of business of the recipient.
General provisions for determination of place of supply of goods such as:
* If the supplier as well as the recipient are located in same state, then it will be counted as 'Intra-State Supply of Goods' and hence SGST & CGST will be levied.
* If the supplier and the recipient are located in different states, then it will be counted as 'Inter-State Supply of Goods' and hence IGST will be levied.
Specific provisions for determination of place of supply of goods such as:
* The place of supply of goods: where the supply involves movement of goods
* The place of supply of goods: where the supply involves no movement of goods
* The place of supply of goods: in case of export & import of go
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ovider is outside India. Transactions in which both the recipient as well as provider are outside India are not covered here.
General Rule
The Place of Supply for services treated as international transactions shall be:
* The location of service recipient
* In case where the location of service recipient is not available, the place of supply shall be location of the supplier.
The special cases under this classification are discussed below in this article.
Location of the recipient of services as per section 2(14) of IGST Act:
S.No
Case
Location of Recipient of Service
Where a supply is received at a place of business for which the registration has been obtained
such place of business
Where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere)
such fixed establishment
Where a supply is received at more than one establishment, whether the place of business or fixed establishment
th
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rted into, or exported from India
Section of IGST Act
Situation
Place of Supply
10(1)(a)
Supply Involves Movement of Goods
Location of the goods at the time of at which the movement of goods terminates for delivery to the recipient.
This is irrespective of the fact that whether the transport is arranged by the buyer or seller.
Example: B comes to Rajasthan and purchase some goods from A and told to send the goods to Delhi, A takes the bilty in his own name and send the goods to B in Delhi. In the given case, POS would be Delhi, as effective control of the goods to B is handed in Delhi.
10(1)(b)
Goods are delivered by the supplier to a recipient or any other person, on the direction of a third person by way of by way of documents of title to the goods or otherwise
It shall be deemed that the said third person has received the goods and the POS of such goods shall be the principal place of business of such person.
Example: A in Rajasthan supplies goods to B in Delhi. B in Del
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er and the recipient is in India:
* General Rule Section 12(2)
* Specific Rule Section 12(3) to 12(14)
General Rule – Section 12(2) of IGST Act, 2017:-
If the recipient is a registered person then the place of supply would be:
* the location of recipient of service.
If recipient is not a registered person and address of recipient exists on record then POS would be:
* the location of the recipient.
If the address of recipient does not exists on record, then the place of supply of service would be:
* the location of the supplier of service.
Example: A located in Gujarat receives services at Gujarat from B Located in Rajasthan. A is a registered person under Gujarat GST. In this case POS will be Gujarat.
Specific Rules – Section 12(3) to (14) of IGST Act, 2017:-
Section of IGST Act
Situation
Place of Supply
12(3)
Place of supply directly in relation to an immovable property
* directly in relation to an immovable property, including services provided by architects,
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ase would be Mumbai as immovable property is intended to be located in Mumbai.
Example: (2) Geeta is registered in Mumbai. She goes to Kolkata and stays in a hotel at Kolkata. Where she was also charged for use facility of Beauty treatment at hotel. POS would be Kolkata for accommodation service by hotel and Beauty treatment as it is an ancillary service to the accommodation
12(4)
Restaurant and catering services, personal grooming, fitness, beauty treatment, health service
Where the services are actually performed
12(5)
Services in relation to training and performance appraisal
* If recipient is registered than location of such person,
Otherwise
* Location where the service actually performed.
Example: A located at Gurgaon provides training at Bhopal to employees of B Ltd, which is registered at Mumbai. POS will be Mumbai.
If B Ltd is not a registered than POS will be Bhopal.
12(6)
Services provided by way of admission to a cultural artistic, sporting, scientific, edu
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ident in Delhi hires 'Y' who is resident of Bhopal to provide services for organizing an event at USA. POS would be Delhi.
12(8)
Services by way of transportation of goods, including by mail or courier
* If recipient is registered than location of such person,
otherwise
* Location at which such goods are handed over for their transportation
Example: J is registered person in Jaipur. He sends some goods from transportation from Kolkata to Mumbai. POS would be Jaipur.
However if J is not registered person than POS would be Kolkata.
12(9)
Passenger transportation service
* If recipient is registered than location of such person,
otherwise
* The place where the passenger embarks on the conveyance for a continuous journey.
* If the point of embarkation is not known at the time of issue of right to passage, then provisions of section 12(2) shall apply.
* Return Journey shall be treated as a separate journey.
In the below examples recipient is unregistered
Example:1 Jo
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tion for telecommunication and internet services provided on pre payment through a voucher
The address of selling agent or reseller or distributor as per the records of the supplier,
or
Location where such pre payment is received or vouchers are sold by any person to the final subscriber
12(11)(d)
In any other case
The address of the recipient as per the as per the records of the supplier,
Otherwise
The location of supplier
Proviso to section 12(11)
Mobile connection for telecommunication and internet services provided on pre payment through electronic mode or internet
Banking
Location of the recipient of service on record of the supplier of service
12(12)
Banking and other Financial services including stock broking Services
Location of the recipient of services on the records of the supplier of services.
Otherwise
the location of the supplier of services.
Example: A in Mumbai has a bank account with SBI. The address on record available with bank is in Delhi. POS is
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ation of the supplier or the location of the recipient is outside India
General Rule Section 13(2)
Wherein either location of the supplier or location of recipient of service is outside India, the place of supply would be:
a. The location of recipient of services or
b. The location of supplier of services if location of recipient is not available in ordinary course of business.
Specific Rules as per section 13(3) to 13(13) are as below:
Section of IGST Act
Situation
Place of Supply
13(3)(a)
Services supplied in respect of goods that are required to be made physically available by the recipient of service to the supplier of service, or to a person acting on behalf of the supplier of service in order to provide the service.
Location where the services actually performed
Note: The basic requirements of a service to be covered under this rule is that the goods temporarily come into the physical possession or control of the service provider and without this happening, the servic
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or the supply of services.
Location where the services actually performed
13(4)
Services supplied in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of hotel 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 architects or interior decorators
Place where the immovable property is located or intended to be located.
13(5)
Services supplied by way of admission to, or organization of, a cultural, artistic, sporting, scientific, education, or entertainment event, or a celebration, conference, fair, exhibition, or similar event, and of services ancillary to such admission or organization
POS shall be the place where the event is actually held.
Example: X comes from UK and attends a conference at Delhi. POS would be Delhi.
13(6)
Where services referred in above 13(3
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or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.
13(9)
Services of transportation of goods, other than by way of mail or courier
POS would be destination of the goods
Example: X send some goods through transporter from India to UK. POS would be UK
13(10)
Passenger transportation service
Where the passenger embarks on the conveyance for a continuous journey
Example: X resident of UK, goes to UK from India. He embarks from India. POS would be India.
Section 2(3) of the Act defines the expression 'continuous journey' as a journey for which a single or more than one ticket or invoice is issued at the same time, either by a single supplier of service or through an agent acting on behalf of more than one supplier of service, and which involves no stopover between any of the legs of the journey for which one or more separate ti
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taxable territory;
* the billing address of the recipient of services is in the taxable territory;
* the internet protocol address of the device used by the recipient of services is in the taxable territory;
* the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;
* the country code of the subscriber identity module card used by the recipient of services is of taxable territory;
* the location of the fixed land line through which the service is received by the recipient is in the taxable territory.
The author is a practising CA and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com , Mob. +91 9953587496.
Reply By KASTURI SETHI as =
Peerless indeed.
Dated: 20-8-2017
Reply By Raman Singla as =
Seller and consignee belongs to state A.
Buyer belongs to state B, all are registered under GST
Buyer directs the seller to transfer of goods to consignee in state A.
What will
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