Decoding of \u2018Place of Supply of Goods\u2019 under GST
By: – Venkataprasad Pasupuleti
Goods and Services Tax – GST
Dated:- 26-7-2017<\/p>\n
Conceptually GST is destination\/consumption based tax i.e. person consuming the service\/goods shall bear the burden of such tax and that revenue shall go to the corresponding state but no provision express this concept\/ philosophy. However same was inherent and more adequately embodied in the provisions of 'Place of supply (POS)'.
\nBe that as it may, GST is a two tier structure where CGST and SGST shall be levied on all intra-state supplies (within the state) and IGST shall be levied on all inter-state supplies (between\/outside the state). If the location of the supplier and the place of supply are in the same state then the transaction shall be considered as intra-state supply. If one among them is in different state it shall be considered as inter-state supply. Therefore, POS plays a pivotal role in identifying whether CGST & SGST or IGST <\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n r person = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n gate are destined for a buyer in another state, would IGST apply? Authors views that it would require a lot of documentary support to show that the seller was fully aware that the goods are destined for delivery to the buyer in another state. This is more complicated when transportation is arranged by the buyer, it would be very difficult to prove this beyond doubt as supplier does not have any documents to show the destiny of the goods. Therefore, in this case, a contract or a purchase order that specifically mentions the place of delivery of the goods, irrespective of the person arranging for transportation or bearing risk, would be essential to prove the intent of the buyer and supplier. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n change of vehicle, vehicle breakdowns) are to be ignored. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Quoted: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n rinciple place of business and his location are in same state otherwise IGST. This deeming fiction is departure from the 'CST' Act, 1956 in case of transit sales or bills to & ship to. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n me person which is not the language and context which this clause dealt with. This anomaly can be avoided on careful application of course appreciation of beginning words of section 2 of CGST Act, 2017 which says that 'unless context otherwise requires' the definitions given therein are to be applied. As the context of this clause requires the 'recipient' to understand in different manner, the statutory definition of 'recipient' u\/s. 2(93), ibid shall not be resorted to. Further the legal theory of harmonious construction will supports this. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ll not move in the gamut of supply albeit it has movability. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n y cum installation is relating to the immovable property, then it becomes the 'works contract' thereby this clause does not apply as GST law deemed 'works contract' as service and accordingly POS as applicable the service (immovable property related services) shall be applied. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Decoding of \u2018Place of Supply of Goods\u2019 under GSTBy: – Venkataprasad PasupuletiGoods and Services Tax – GSTDated:- 26-7-2017 Conceptually GST is destination\/consumption based tax i.e. person consuming the service\/goods shall bear the burden of such tax and that revenue shall go to the corresponding state but no provision express this concept\/ philosophy. However same was … Continue reading “Decoding of \u2018Place of Supply of Goods\u2019 under GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-6485","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/6485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6485"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/6485\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n * The term 'any other person' mainly refers to transporter or agent of the supplier or recipient.
\n * Owing to use of the phraseology 'supply involves movement of goods', Movement of goods shall be during the course of supply or such movement is included\/involved in the gamut of 'supply'. In other words, movement is required to conclude\/complete the supply.
\n * The effect of this is practically has huge implications especially in case of Ex-works\/Ex-factory sales, the same is discussed herein below:
\n * In case of Ex-works\/factory sale, Manufacturers or traders completes the sale of goods at the factory gate\/shop of such manufacture\/trader (now termed as supplier under GST) and from that gate, it is buyer who will get the ownership over the goods and all further costs and risks are assumed by the buyer. Thus it can be said that sale being form of supply is getting concluded\/completed at the factory gate of the supplier and movement of goods is commencing after that supply i.<\/p>\n
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\n * The best possible way out seems to be make the contract stating that the suppler will arrange the transportation and takes the responsibility of goods are delivered to the buyer's premises, then it can be said that the supply involves the movement of goods as the delivery is also essential to co<\/p>\n
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\n * The debatable point here is that when one can say that movement is terminated for 'delivery'. The more complication arises when the buyer arranges for the transportation of goods and asks the seller to hand over these goods to the transporter.
\n * In this scenario the main issue arises is whether handing over the goods to the transporter appointed by the buyer amount to giving delivery to the buyer?
\n * GST law does not expressly address this issue but there seems to be some indication with the use of the words 'movement may be by the supplier or recipient or any other person' in which case delivery to the transporter (treating it as movement termination for delivery) will clash with the aspect of movement by the transporter (still there is movement of goods).
\n * In order to avoid that clash, it shall be construed that delivery to the transporter shall not be treated as delivery to the buyer\/recipient and only the point of<\/p>\n
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\n(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 person;
\nUnquoted:
\n * This sub-section has provided deeming provisions with respect to receipt of goods and place of supply in certain type of transactions. This clause covers bill-to-ship-to transactions, sale in transit where three persons are involved in a transactions
\n * First person say 'A' is the supplier of goods;
\n * Second person say 'B' is who actually receives the goods from supplier;
\n * Third person say 'C' is the person who makes the order for supply of goods but directs the delivery to second Person (B) – can be better understood as 'inter<\/p>\n
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\n * As far as second leg of transaction is considered, this deeming fiction has no relevance thereby POS shall be determined applying the other clauses.
\n * The rationale behind this deeming fictionis to bring the third person 'C' in the tax net and also ensure the credit flow among the both the leg of transactions.
\n * The above can be explained with simple example wherein A, supplier of goods is in Andhra Pradesh received purchase order from 'C' in Telangana wherein C directed that goods shall be delivered to 'B' in Andhra Pradesh. Here in absence of this deeming fiction, A should have charged CGST + SGST to 'C' in first leg of transaction and 'C' should have charged 'IGST' in second leg of transaction but unable to avail the GST charged by his vendor thereby breaking the seamless credit. To avoid th<\/p>\n
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\n * Plain understanding of the clause gives a sense that whenever 3 parties are involved then this clause shall be applied but this may not holds good in all the cases. For instance in case Head office\/corporate office and factory are located in different states and both are registered for GST then any purchase order received by head office from the customer but the factory making the actual supply to the customers does not fit here. Because direct<\/p>\n
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\n * This clause covers OTC (Over-the-Counter) sales. In case of OTC transactions, supply will get concluded at the counter without any movement of goods therefore the place of supply shall be the location of goods at the time of delivery to the recipient.
\n * Supplier is not bothered about where the recipient is carrying the goods. For example, person from Pune come to Hyderabad and buys some medicines in the shop located in Hyderabad and carries the same to Pune. Though the goods are moving from Hyderabad (Telangana state) to Pune (Maharashtra), the same is irrelevant and shop location will become the place of supply and accordingly CGST + SGST shall be charged. This is because the supply concludes before movement starts and movement starts after the supply. Same position will apply to the cases of Ex-works sales as discussed supra.
\nQuoted:
\n(d) where the goods are assembled or installed at site, the place of supply shall<\/p>\n
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\nQuoted:
\n(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.
\nUnquoted:
\n * This clause specifies the POS w.r.t goods supplied on board a conveyance.
\n * Conveyance was defined in Section 2 (34) of CGST Act, 2017 which is an inclusive definition and includes a vessel, an aircraft, a train or a motor vehicle.
\n * It is very difficult to determine place of consumption of goods supplied on board a conveyance as the conveyance will keep on moving and goods may be supplied at different parts of journey which may happen in more than one state. For example, train coming fro<\/p>\n
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