lockdown time of gst study a detailed study...nature & place of supply under gst -by sudhir...
TRANSCRIPT
1
Lockdown Time of GST Study
A Detailed Study NATURE & PLACE OF SUPPLY UNDER GST
-BY SUDHIR HALAKHANDI-
Dear Friends 4th Aril 2020
Here is a detailed study of Nature and Place of supply of Goods and
Services under GST. The study was started by me 10 days before and
completed today. I covered lot of issues related to the subject but I know it
required still suggestions to improve it. Besides professionals it will be very
useful for Students of Professional courses and academic courses of
various universities. Please point out Mistakes, shortcoming and
suggestions. In coming days I will take up other important matters related
to Goods and Service Tax.
Incidentally ICAI has a webcast on the subject today hence you will attend
it with better understanding after reading this material. It will certainly
give you the basic insight of the subject.
Stay at home, Read and study as much as possible. Keep Distance and be
safe and Healthy and follow all the instructions given by the Government.
- Regards
SUDHIR HALAKHANDI
BY SUDHIR HALAKHANDI
2
GST
NATURE OF SUPPPLY & PALCE OF SUPPLY
OF GOODS AND SERVICES
- SUDHIR HALAKHANDI-
WHAT IS THE IMPORATCNE OF NATURE & PLACE
OF SUPPLY
The goods and service tax is payable on a transaction on the basis of Intra-
state supply of goods and services and Inter-state Supply of Goods and
Services. If the supply is intra-state then SGTS and CGST is payable and if the
supply is inter-state then IGST is payable. The nature of transaction can
only be decided if the Location of supplier and place of supply is determined.
In this study we are taking up the Nature of Supply and the Place of supply and
in the next study we will take up Location of supplier and other related matters.
All the sections mentioned in this study is from Integrated Goods and
Service tax Act, 2017 unless otherwise specifically mentioned.
A. NATURE OF SUPPLY
Let us first have a look an inter-state supply and inter-state supply of Goods
and Services.
The arrangement of Sections 7 is as under:-
S.NO. Section Subject of the Section
1.` 7(1) Inter-state supply of Gods
2. 7(2) Import of Goods
3 7(3) Inter-state supply of Services
4. 7(4) Import of Services
5 7(5) Other Exceptional Situations of Inter-State Supply
3
INTER-STATE SUPPLY OF GOODS
Section 7(1)
As per Section 7 (1) of the IGST Act., supply of goods in the course of Inter-
state trade or commerce means any supply where the Location of the supplier
and the place of supply are in two difference states or in two different Union
Territories or a state and Union Territory. The Section 7(1) is being reproduced
herewith:-
7.Inter-State supply: (1) Subject to the provisions of section 10, supply of
goods, where the location of the supplier and the place of supply are in––
(a) two different States;
(b) two different Union territories; or
(c) a State and a Union territory,
Shall be treated as a supply of goods in the course of inter-State trade or
commerce.-Section 7(1).
In the simple words the interstate supply of goods means where Place of
supply and the Location of supplier is not in the same state or in the same
union territory.
EXAMPLES
X and company from Gujarat (State) have purchased some goods from Y and
company of Rajasthan (State). It is Inter-state supply of Goods Since Location
of supplier is Rajasthan and Place of Supply is Gujarat and these two are
different states.
In this case Location of Supplier and Place of supply are in two different states
hence it is Inter-state supply of Goods.
X and company from Puducherry (UT) have purchased some goods from Y
and company of Delhi (UT). It is Inter-state supply of Goods Since Location of
supplier is in Delhi (UT) and Place of Supply is Puducherry (UT) and both
are different union Territories.
In this case Location of Supplier is in Union territory of Delhi and Place of
supply is in Puducherry which is also a union Territory and both are separate
Union territories hence it is an Inter-state supply of Goods.
4
X and company from Puducherry (UT) have purchased some goods from Y
and company of Gujarat (State). It is Inter-state supply of Goods Since
Location of supplier is in Gujarat and Place of Supply is Puducherry.
In this case Location of Supplier is in State of Gujarat and Place of supply is in
Puducherry which is a union territory and it is an interstate Supply of Goods.
IMPORT OF GOODS
Section 7(2)
There is one more section and it is section 7(2) and it is related to the Import of
Goods. Let us see this definition:-
Supply of goods imported into the territory of India, till they cross the customs
frontiers of India, shall be treated to be a supply of goods in the course of inter-
State trade or commerce.
In case of import of Goods the Importer has to pay tax and the tax in such
circumstances in addition to the custom duty paid by him. The tax as per section
7(2) shall be IGST.
INTERS-TATE SUPPLY OF SERVICES
Section 7(3)
As per Section 7(3) of the IGST Act. 2017, supply of service in the course of
Inter-state trade or commerce means any supply where Location of the
supplier and the place of supply are in different state or two different union
territories or a state and a union territory.
Subject to the provisions of section 12, supply of services, where the location of
the supplier and the place of supply are in––
(a) two different States;
(b) two different Union territories; or
(c) a State and a Union territory,
Shall be treated as a supply of services in the course of inter-State trade or
commerce.-Section 7(3).
5
It is clear from the above definition that if the Location of supplier of service
and Place of Supply of service is in different state/union territories then it will
be inter-state supply of service.
Let us try to understand it in the convenient format:-
Location of Supplier Place of Supply of
Service
Tax Payable
Rajasthan Maharashtra IGST
Delhi Puducherry IGST
Rajasthan Delhi IGST
In the simple words the inter-state supply of service means where Place of
supply and the Location of supplier is not in the same state or in the same
union territory.
This is the brief description of supply of Inter-state goods and service as per
section 7(1) and Section 7(3) which is subject to Section 10 and Section 12
respectively and we will take up Section 10 and Section 12 at later stage in this
Study.
IMPORT OF SERVICE
Section 7(4)
Supply of services imported into the territory of India shall be treated to be a
supply of services in the course of inter-State trade or commerce.-Section 7(4)
In case of import of Service the Importer has to pay tax and the tax in such
circumstances shall be IGST. This is clearly a situation where Place of supply of
service is in India and the location of supplier is outside India.
6
OTHER SITUATIONS OF INTER-STATE SUPPPLY
Section 7(5)
Section 7(5) envisages three specific situations where the supply shall be treated
as Interstate supply and L
Let us see these three situations:-
S.NO. SITUATION WHERE SUPPLY OF GOODS OR SERVICES OR
BOTHE SHALL BE TREATED AS INTER-STATE SUPPPLY
1. When supplier is located in India and the Place of supply is Located
outside India.
2. When supply is made to or by a Special Economic Zone Developer or
by a special Economic zone unit.
3. A supply which is in taxable territory and which is not an intra-state
and not covered in this section.
The Section 7(5) is reproduced here:-
Supply of goods or services or both,––
(a) when the supplier is located in India and the place of supply is outside
India;
(b) to or by a Special Economic Zone developer or a Special Economic Zone
unit; or
(c) in the taxable territory, not being an intra-State supply and not covered
elsewhere in this section,
Shall be treated to be a supply of goods or services or both in the course of
inter-State trade or commerce.-Section 7(5)
This is fiction of Law and like other laws GST Laws are not free from it and
it is mentioned in Section 7(5) of the IGST Act and these three types of supply
shall be treated as Inter-state supply.
INTRA-STATE SUPPLY
When Location of the supplier and Place of supply is in the same State or in
the same Union territory then it shall be Intra-state supply. The section 8 of
the IGST Act, 20017 deals with this subject.
The arrangement of Sections 8 is as under:-
7
S.NO. Section Subject of the Section
1.` 8(1) Intra-state supply of Goods
2. 8(2) Intra-state supply of Service
INTRA-STATE SUPPLY OF GOODS
Section 8(1)
When Location of the supplier and Place of supply is in the same State or in
the same Union territory then it shall be Intra-state supply of goods.
As per Section 8(1) of the IGST Act where Location of supplier and Place of
Supplier is in the same state or in the same union territory shall be treated as
Intra-state supply of goods.
The relevant section is Reproduced below:-
8. Inter-State supply: (1) Subject to the provisions of section 10, supply of goods
where the location of the supplier and the place of supply of goods are in the
same State or same Union territory shall be treated as intra-State supply:
Provided that the following supply of goods shall not be treated as intra-State
supply, namely:––
(i) supply of goods to or by a Special Economic Zone developer or a Special
Economic Zone unit;
(ii) goods imported into the territory of India till they cross the customs
frontiers of India; or
(iii) Supplies made to a tourist referred to in section 15.- Section 8(1)
Further it should be noted here that Section 8(1) has three specific exceptions
which are as under:-
S.NO. EXCEPTIONS MENTIONED IN SECTION 8(1)
1. When supply is made to or by a Special Economic Zone developer or
by a special Economic zone unit.
2. Goods imported into the territory of India till they cross the customs
frontiers of India.
3. supplies made to a tourist referred to in section 15
8
These three shall be treated as Inter-state supply of Goods as per the exceptions
mentioned in Section 8(1) though in some cases they may be Intra-State
delivery of Goods.
Here supply to or by SEZ Developer or SEZ Unit shall invariably be
interstate Supply of Goods. Import of Goods shall also be Inter-state supply of
Goods and third one is very interesting supply made to a tourist refereed in
Section 15 shall also be an Interstate supply of Goods.
Let us see section 15 of the IGST Act to understand the importance of this
Exception with respect to the Tourists:-
Sec.15. Refund of integrated tax paid on supply of goods to tourist leaving
India: The integrated tax paid by tourist leaving India on any supply of goods
taken out of India by him shall be refunded in such manner and subject to such
conditions and safeguards as may be prescribed.
Explanation.––For the purposes of this section, the term “tourist” means a
person not normally resident in India, who enters India for a stay of not more
than six months for legitimate non-immigrant purposes.
This Exception is related to Foreign Tourist and any supply made to them shall
be Inter-state supply of goods which shall be refunded to them hence it is
specifically categories as IGST so that refund can easily be made to them. For
this exception and to be eligible for refund a Person:-
Should not normally be a resident of India and
Stays in India for a period less than 6 Months.
Here note the word used is “Person not normally resident in India” hence
even Indian citizens like NRI can also take the benefit of this exception if other
terms are satisfied and get the refund. Here we are not concerned with the
procedure and eligibility of the International tourist to get the refund in this
study but in any case the supply shall be treated as Inter-state supply.
L
9
INTRA-STATE SUPPLY OF SERVICE
Section 8(2)
As per Section 8(2) of the IGST Act, Where Location of supplier and Place of
Supplier is in the same state or in the same union territory shall be treated as
Intra-state supply of service.
Subject to the provisions of section 12, supply of services where the
location of the supplier and the place of supply of services are in the same
State or same Union territory shall be treated as intra-State supply:
Provided that the intra-State supply of services shall not include supply of
services to or by a Special Economic Zone developer or a Special
Economic Zone unit.- Section 8(2)
The supply made by or to the special Economic zone developer and Special
Economic zone unit shall be excluded as exception from section 8(2) and shall
be treated as Inter-state supply of service.
Explanations to Section 8:-
Explanation 1.––For the purposes of this Act, where a person has,––
(i) an establishment in India and any other establishment
outside India;
(ii) an establishment in a State or Union territory and any
other establishment outside that State or Union territory; or
(iii) An establishment in a State or Union territory and any
other establishment registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons.
Explanation 2.–A person carrying on a business through a branch or an
agency or a representational office in any territory shall be treated as
having an establishment in that territory.
Two Explanations have been added to Section 8 but a plain reading of these 2
Explanations made it clear that these two explanations have nothing to do
directly with section 8 and these two are applicable to the whole Act specially
the explanation 1.
See the initial wording of the Explanation 1:-
10
Explanation 1.––For the purposes of this Act, where a person
has,––
Let us see the situation as mentioned in these explanations with respect
to a “Distinct Person”
S.NO. SITUATION FOR DISTINCT PERSON 1. an establishment in India and any other establishment outside India
2. an establishment in a State or Union territory and any other
establishment outside that State or Union territory.
3. an establishment in a State or Union territory and any other
establishment registered within that State or Union territory
In these three situations these establishments shall be treated as “Distinct
Entities”. See here if a person has two establishments in a single state
and having separate Registration numbers then both the establishments
though having same Pan shall be categorized as distinct Entities and
have to charge tax on their supplies to each other. It is natural for entities
established by a single person in two different states or outside India to
be categories as distinct entities but in the same state or in the same
Union territory they shall be considered on the same footing. Let us try
to understand this explanation with the help of these examples:-
X and Company has incorporated in Rajasthan and having its subsidiary
in South Africa also. Both these establishment shall be treated as Distinct
Entities.
X and Company has incorporated in Rajasthan and having it
establishment in Madhya Pradesh also. Both these establishment shall be
treated as Distinct Entities.
If X and Company supplies any goods to its establishment in Madhya
Pradesh from Rajasthan it has to charge IGST.
X and Company has incorporated in Ajmer Rajasthan and having it
establishment in Jaipur also. Both these establishment shall be treated as
Distinct Entities.
Please Note here in this particular case , X and Company has the option
to take separate GSTN for its Jaipur Establishment and if it is taken then
Ajmer entity has to charged Tax but if no separate number is taken then
there is no need to charge Tax (SGST/CGST)
11
SUPPLIES IN TERRITORIAL WATER
Sec.9
9. Supplies in territorial water: Notwithstanding anything contained in this Act,––
(a).where the location of the supplier is in the territorial waters, the location of such supplier; or (b).where the place of supply is in the territorial waters, the place of supply, Shall, for the purposes of this Act, be deemed to be in the coastal State or
Union territory where the nearest point of the appropriate baseline is located.
Section 9 is related to the supplied in territorial water and it is related to the
Location of supplier and the Place of supply in the case Location of supplier and
Place of supply is in the territorial waters. Let us see the provision in simpler
form to understand it:-
If the Location of the supplier is in the
territorial water
The location of the supplier shall be
the coastal State or Union territory
where the nearest point of appropriate
base line is situated.
If the Place of supply is in the
territorial water
The Place of supply shall be the
coastal State or Union territory where
the nearest point of appropriate base
line is situated.
12
B. PLACE OF SUPPLY
Now here while deciding the Nature of supply whether it is Inter-state
or Intra-state there is immense importance of Place of Supply of Goods
and Services and Location of Supplier.
Our subject in the Next part of this study is Place of supply and we will take
up the Location of Supplier in this Next study.
Let us see how Place of Supply of Goods is determined in the Goods and
Service Tax regime to know whether the transaction attracts the SGST/CGST
or IGST.
Here it is to be noted that bifurcation of inter-state supply and intra-state supply
is based on Location of Supply and Place of Supply of Goods and Services.
Here we are doing our study on Place of supply. Here our study is divided in
two parts:-
S.NO. PARTICULARS
1. PLACE OF SUPPLY OF GOODS
2. PLACE OF SUPPLY OF SERVICES
PLACE OF SUPPLY OF GOODS
Section10
Section 10 is applicable for Place of Supply of Goods and it is applicable on
supply of Goods other than Supply of Goods imported into or exported From
India. Let us first have a Look at section 10(1) before going for the other sub-
sections:-
Sec.10:- Place of supply of goods other than supply of goods imported into, or
exported from India.: (1) The place of supply of goods, other than supply of
goods imported into, or exported from India, shall be as under,––
13
The Place of supply of goods imported into and exported from India has been
discussed in Section 11 which we will take up after Section 10.
Now Section 10(1) has 5 Parts and the arrangement of this section is as under:-
S.NO. Section Description
1. 10(1)(a) Where Movement of Goods Involved.
2. 10(1)(b) Goods are delivered on the direction of third person.
3. 10(1)(c) Where Movement of Goods not Involved.
4. 10(1)(d) Where Goods are assembled or installed at site.
5. 10(1)(e) Where Goods are supplied on Board a Conveyance.
The Place of supply of Goods in these different abovementioned situations
can be understood in details as under:-
WHERE MOVEMENT OF GOODS INVOLVED
Section 10(1)(a)
As per section 10(1)(a) of the IGST Act where the supply involves movement
of Goods whether by the supplier or recipient or any other person then place of
supply is the Location of Goods where the movement of goods terminates at the
time of delivery of goods to the recipient.
Let us see the exact working of the section 10(1) (a):-
Where the supply involves movement of goods, whether by the supplier or the
recipient or by any other person, the place of supply of such goods shall be the
location of the goods at the time at which the movement of goods terminates for
delivery to the recipient.
Your attention is drawn on the fact that movement of goods is material here and
who is doing it is immaterial. The movement of goods can be done by either of
the three:-
Supplier of the Goods
Recipient of the Goods
Any other person
14
Here some of the unique Examples are here to understand this place of supply
concept as mentioned in the section 10(1) (a) of the IGST Act.:-
S.NO. EXAMPLE
1. X and Company from Mumbai comes to Ajmer and Purchased some
goods from Y and Company of Ajmer and given the GSTIN to the
dealer of Ajmer and he himself arranged the transport of Goods on his
own. The Place of supply in this case will be Mumbai. The tax shall be
IGST,
Here movement of Goods is done by the recipient. Hence it should be
noted that Movement of goods should be there and it is immaterial who
is doing it or on whose behalf this is done.
2 X from Jaipur (Rajasthan) comes to Ajmer and Purchased some goods
from Y and Company of Ajmer and he is Registered person then X
and company will charge SGST and CGST. The Place of supply in this
case will be Rajasthan.
3. X from Mumbai comes to Ajmer and he Purchased some goods over
the counter from Y and Company of Ajmer and he is unregistered
person then X and company will charge SGST and CGST. The Place of
supply in this case will be Rajasthan.
This case we will discuss later where no movement of goods involved
in supply of Goods under section 10(1) (c).
We can Summarise the situations as under:-
Particulars Suppliers
Place from
where deliver
Started
Termination
of Movement
of Delivery
Place of
Supply of
Goods
Tax to be
charged
Movement of
Goods done by
the supplier
Rajasthan Maharashtra Maharashtra IGST payable
in Rajasthan
Movement of
Goods done by
the supplier
Rajasthan Rajasthan Rajasthan SGST /CGST
Payable in
Rajasthan
15
GOODS ARE DELIVERED ON THE DIRECTION OF THIRD PERSON
Section 10(1)(b)
Here see one unique situation where Goods delivered on direction of third
person then the place of supply in this case will be the Principle Place of
business of such person.
Here see one person needs goods but he has no contract with the supplier of
goods but has a contract with the third person. Now this third person ordered
goods to be supplied to this person who needs goods. The supplier supplies the
goods to this person on the direction of third person. Now in this case actual
place of delivery does not matter and in this case the Principal place of business
of that third person shall be the Place of supply of goods. Later we will try to
understand it with the help of an example.
Let us see the relevant section 10(1) (b):-
Where the goods are delivered by the supplier to a recipient or to any other
person on the direction of a third person, whether acting as an agent or
otherwise , before or during the movement of goods , either by way of transfer
of document of title to the goods or otherwise , it shall be deemed that the said
person has received the goods and the place of supply of goods shall be the
principal place of business of such person.
This will cover Bill to ship to Transactions also. Here note that if on the
direction of the recipient the delivery is given to any other person then place of
supply shall be the place of recipient of Goods. Let us try to understand this
situation in the form of an Example:-
X and Company of New Delhi has placed an order of some goods to Y and
Company of Ajmer (Rajasthan) with an instruction to deliver the same to Z
and company Udaipur (Raj.).
Here in this case the supplier is Y and Company and Z and company is the
person receiving the goods and see both the persons are in the same state i.e. in
Rajasthan and X and Company Ajmer (Raj) is the third person on whose
direction goods are supplied to Z and Company Udaipur (Raj.).
The delivery of goods is made from Ajmer to Udaipur and both the places are
situated in one state i.e. in Rajasthan but the case is covered in the section 10(1)
(b) and place of supply shall be Principal Place of Business of the third person
i.e. of X and Company and Y and Company will charge IGST though goods
16
are delivered in the Same state i.e. in Rajasthan.
Let us summarise the Transactions covered under Section 10(1) (b) for better
understanding:-
Location of
Supplier
Principal
Place of
business of
Third person
who ordered
the goods (to
whom goods
are billed by
the supplier)
Place of
Delivery of
Goods to the
recipient of
goods on the
instruction of
Third person
Location of
Supply
Tax to be
payable
Rajasthan Delhi Rajasthan Delhi IGST in
Rajasthan
Rajasthan Rajasthan Delhi Rajasthan SGST /CGST
in Rajasthan
WHERE NO MOVEMENT OF GOODS INVOLVED
Section 10(1)(c)
Sometimes supply of goods does not involve the movement of goods and in that
case the place of supply of goods shall be the Location of goods at the time of
supply. Here is the section 10(1) (c):-
Where the supply does not involve movement of goods, whether by the
supplier or the recipient, the place of supply shall be the location of such goods
at the time of the delivery to the recipient- Section 10(1)(c)
Over the counter sale is covered under this section where there is no movement
of goods is involved at the time of supply of the Goods. Further one more
example can be considered under this Section 10(1) (c) and that is related to sale
of the Leased financed Asset. Let us see the Example:-
X and Company of Jaipur took a Big Machine on Lease from Y and Company
on Lease rent but after some months it is agreed to sale the machine to X by Y
and in that case No movement of goods involved and the Place of supply of
such machinery shall be the Location of such Goods at the time of Delivery and
17
that is Jaipur since no movement of Goods is involved.
PLACE OF SUPPLY OF GOODS IN CASE OF ISNTALLATION OR
ASSEMBLY
Section 10(1)(d)
Here the case is where the goods are installed or assembled at the site then the
place of supply of goods shall be such place of Installation or assemble. The
exact wording of the section 10(1) (d) is as under:-
Where the goods are assembled or installed at site, the place of supply shall be
the place of such installation or assembly- Section 10(1)(d)
Let us see an FAQ on the subject issued by the CBIC:
Q. What is the place of supply in case of assembly or installation of goods at
site?
Ans. The place of supply of goods, where the goods are installed or assembled
at the site, will be the place of such installation or assembly. (Section 10(1)(d)
of IGST Act)
First it should be noted that Section 10(1) (d) is applicable on supply of goods
only and it is not applicable on works contract service. The supply of goods
may involve some service contents also but in that case the principal supply
should be the supply of goods.
Let us try to understand the concept with the help of an Example:-
Description Location
of
supplier
Registered
office of the
recipient
Assembly
site
Place of
supply
Tax
applicable
Machinery Rajasthan Maharashtra Rajasthan Rajasthan SGST+CGST
Machinery Rajasthan Maharashtra Maharashtra Maharashtra IGST
Machinery Rajasthan Maharashtra Karnataka Karnataka IGST
18
PLACE OF SUPPLY ON BORAD A CONVEYANCE
Section 10(1)(e)
Where goods are supplied on board a conveyance then the Place of supply
of shall be the location at which such goods are taken on board. Here
conveyance includes aircraft, train, and motor vehicle also. Sometimes goods
are loaded on the conveyance and same was supplied on board of such
conveyance. Now at the time of actual supply as such it is not possible always
to track where the Place of supply was hence in such cases a provision is made
itself in the Act and in case of such supply which is made on the board of a
conveyance then place of supply of goods shall be Location at which such
goods are taken board.
See Section 10(1) (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.
Here we are trying to understand the same with the help of an Example:-
X and Company Ajmer supplied some Goods to Y and Company of Delhi
and loaded these goods on the Rajdhani Express at Ajmer Railway Station. The
goods Loaded were 100 units. Y and Company supplied 80 units out of these
goods to the Passengers on the board of Rajdhani Express from Ajmer to Delhi
on different stations. Now the Place of supply for the transaction between Y
and Company and the passengers i.e. 80 units shall be Ajmer i.e. the Location
at which goods are loaded on the train.
Here section 10(1) (e) only deals about the supply on the board a
conveyance only and in the above illustration one more supply is involved
and that is between X and Company and Y and Company and in that
case the place of supply shall be determined as per the provisions of
section 10(1) (a) and in that case the Place of supply shall be Delhi where
the delivery terminates.
19
Here we can simplify the illustration given above in the following format:-
Units Description Place of Supply
80 Supplied between
Ajmer to Delhi
Ajmer
20 Unsold Wait for actual supply
of goods
WHEN PLACE OF SUPPLY CAN NOT BE DETERMINED
Section 10(2)
Where the place of supply cannot be determined by any of the way mentioned
above then it shall be determined in the manner prescribed. The Section 10(2) is
reproduced herewith:-
Where the place of supply of goods cannot be determined, the place of supply
shall be determined in such manner as may be prescribed.
Now there is section 11 which is related to the exception mentioned in Section
10(1) i.e. Goods imported into and Exported from India. Let us have a look at
this Section 11.
GOODS IMPORTED INTO OR EXPORTED FROM INDIA
Section 11
The place of supply in case of Import of goods is the location of Importer and in
case of Export of goods from India shall be the location outside India. This
provision is given in section 11 and the same is being reproduced below:-
Section 11 :- The place of supply of goods,–
(a)Imported into India shall be the location of the importer;
(b) Exported from India shall be the location outside India.
Section 11 is very clear in itself but in case of Import of Goods in India the
Location of importer is very important to know the place of supply of Goods.
Here one Example given from the FAQs issued by the CBIC:-
20
Q 11. What is the place of supply of goods imported into India?
Ans. The place of supply of goods imported into India shall be the location of
the importer.
Illustration: An importer from Jaipur, Rajasthan imports goods from China
through Mumbai Air Cargo and declared the GSTIN of Rajasthan. The place of
supply of goods shall be Rajasthan. Thus, the state tax component of the
integrated tax would accrue to Rajasthan.
2.PLACE OF SUPPPLY OF SERVICE
We have seen section 10 which is exclusively for Place of supply of Goods
and now we are taking up Place of supply of services. Section 12 is there for it
and it is little bit complex than place of supply of Goods. Let us start it and try
to understand its complexities:-
The place of supply of service is somewhat complicated issue than place of
supply of Goods because there is no Movement is involved in supply of service.
Section 12 of the IGST Act is there to tackle this issue. Section 12 has
bifurcated the services in two parts First for Normal and unspecified Services
and second one is specified services.
Section 12(2) has the provisions for Normal and unspecified Services and
section 12(3) to Section 12(14) has the provisions for services specified in these
sections. Here for simplification of subject matter we have given the
nomenclature to services which are not specified in 12(3) to 12(14) as “General
or unspecified services”.
First see section 12(1) and which is very clear about applicability of
the Section 12. Let us first see the Section 12(1):-
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)
21
PLACE OF SUPPLY IN CASE OF GENERAL SERVICES
First part this provision is for General or unspecified services with respect
to Place of supply of Services and it is mentioned in Section 12(2) and in
Second part some specific services mentioned in Section 12(3) to Section
12(14) and there place of supply is mentioned in these relevant sub-sections.
Let us first take the Normal services and here General or unspecified services
mean which are not specified in Section in Section 12(3) to 12(14). There is a
general provision to know the place of Supply of service and this is mentioned
in Section 12(2). This provision are summarised as under:-
S.NO. RECIPIENT OF SERVICE PLACE OF SUPPLY
OF SERVICE
1. Registered Person i.e. B to B The Location of Such
Person.
2. Unregistered Person B to C If the Location of
Recipient is available on
the records then Location
of Recipient.
If address of the
Recipient is not available
on records then the
Location of supplier.
Let us have a Look at Section 12(2) as it is appeared in IGST Act, 2017:-
Sec. 12(2)- The place of supply of services, except the services specified in sub-
sections (3) to (14),–
(a) made to a registered person shall be the location of such person;
(b) made to any person other than a registered person shall be,––
(i) the location of the recipient where the address on record exists; and
(ii) The location of the supplier of services in other cases.
22
PALCE OF SUPPLY OF SPECIFIED SERVICES
Let us have a Look at the second part services for which Place of supply is
mentioned in that section i.e. Section 12(3) to 12(14). Let us first take up these
services and their place of supply:-
Section Description of Service Place of Supply of Service
1. SERVICES IN RELATION TO A IMMOVABLE PROPERTY
12(3)(a) Service Provided in relation to
an Immovable Property by
Anybody including Architect,
Interior Decorator, Surveyors,
engineers and other related
experts or estate agents, any
service provided by way of
grant of rights to use
immovable property or carrying
out or coordination of
construction work.
Location of Such immovable
property.
Here note that the Location
of supplier and the recipient
is irrelevant and Location of
the immovable property shall
be the deciding factor.
The service of Architect,
Interior Decorator,
Surveyors, engineers and
other exerts etc. Are included
in this provision and it
should be noted that the list
is not exhaustive.
2. LODGING ACCOMODATION IN A HOTEL, INN ETC.
12(3)(b) Lodging Accommodation in A
hotel, inn, guest house, home
stay, club or campsite by
whatever named called and
including a House boat or any
other vessel.
Location of Such Hotel, inn,
gust house etc. Here
Location means where it is
located or intended to be
located.
3. USE OF IMMOVABLE PROPERTY FOR ORGNISING A MAARIEGE , FUNCTION ETC.
12(3)(c) By way of organising any
marriage or reception or matters
related thereto, official, social,
cultural, religious or business
function including service
provided in relation to such
service.
Location of such immovable
property.
4. ANY SERVICE ANCILLARY TO THE SERVICE IN 1 TO 3 ABOVE
12(3)(d) Any service ancillary to the
services referred to in 12(3)(a)
to 12(3)(c)
Location of such immovable
property, boat or vessel. The
Location means it is Located
23
to intended to be Located.
It should be noted here that if the Location of immovable property or boat or
vessel is Located or intended to be located outside India, the place of supply
shall be the Location of Recipient of Service.
One Explanation is also added to section 12(3) which is related to
Proportion of supply of Service where the immovable property or boat or
vessel is located in more than one State or Union territory. Let us see the
Explanation:-
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.
Please refer – Rule 4 of Integrated goods and Service Tax Rules, 2017
5. RESTAURANT , CATERING , FITNESS SERVICE ETC.
12(4) Supply of Restaurant and
catering service, personal
grooming, fitness, beauty
treatment, health service
including cosmetic and Plastic
surgery.
Location where such services
are performed.
6. TRAINING AND PERFORMMANCE APPRISAL SERVICE
12(5) Service in relation to training
and performance appraisal.
(i). Where service receiver is
a registered person than the
Location of such person.
(ii).Where service receiver is
an unregistered person then
the place where service is
actually performed.
7. ADMISSION TO CULTURAL , ARTISTIC , SPORTING EVENT
ETC.
12(6) Service 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 such event
is actually held or such place
is located.
8. ORGANISATION OF A CULTURAL , ARTISTIC, SPORTING
EVENT ETC.
12(7)(a) and Organisation of a cultural , (i). Where service receiver is
24
(b) artistic, sporting , scientific,
educational or entertainment
event including supply of
services in relation to a
conference , fair, exhibition,
celebration or similar events
Or
Services ancillary to
organization of any of the
events mentioned above or
assigning of sponsorship to
such events.
a Registered person than the
Location of such person.
(ii).Where service receiver is
an unregistered person then
the place where event is
actually held and if the event
is held outside India, the
place of supply shall be the
Location of the Recipient.
One Explanation is also added this section 12(7) which is related to
Proportion of supply of Service where the event is held in more than one
State or Union territory. Let us see the Explanation:-
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.
Please refer – Rule 5 of Integrated goods and Service Tax Rules, 2017
9. TRANSPORTATION OF GOODS
12(8) Service by way of
Transportation of Goods
including by mail or courier.
If service is provided to a
Registered person then the
Location of such person.
If service is provided to an
unregistered person then the
place where the goods are
handed over for their
transportation.
Further it should be noted
here that if Transportation of
Goods is to a place outside
India, the Place of supply
shall be the destination of
such Goods.
10. PASSENGER TRANSPORTATION SERVICE
12(9) Passenger Transportation
Service
If service is provided to a
registered person then the
Location of such person.
If service is provided to an
25
unregistered person then the
place where the passenger
embark on the conveyance
for a continuous journey.
Further if right of passage is
given for future use and the
point of embarkation is not
known at the time of issue of
right of passage then the
place of supply will be
determined as per provisions
of section 12(2) which we
have already discussed in
earlier part of this study.
An Explanation is added to Section 12 (9) with respect to return Journey.
Let us have a Look at it:-
Explanation.––For the purposes of this sub-section, the return journey shall
be treated as a separate journey, even if the right to passage for onward and
return journey is issued at the same time.
11. SUPPLY OF SERVICE ON BOARD A CONVEYANCE
12(10) Supply of service on board a
conveyance including a vessel,
an aircraft, a train or a motor
vehicle.
First schedule point of
departure of such
conveyance for the journey.
12. SECTION 12(11):- SUPPLY OF TELECOMMUNICATION
SERVICES INCLUDING DATA TRANSFER, BROADCASTING,
CABLE AND DIRECT TO HOME TELEVISION SERVICE.
12(11)(a) Services by way of fixed
telecommunication line, leased
circuits, and internet leased
circuit, cable or dish antenna.
Location where the
telecommunication line,
leased circuit or cable
connection or dish antenna is
installed for receipt of
services.
12(11)(b) In case of mobile connection
for telecommunication and
internet services provided on
post-paid basis.
Location of billing address of
the recipient of services on
the record of the supplier of
services.
12(11)(c) Mobile connection for telecommunication, internet service and
direct to home television services are provided on pre-payment
basis through a voucher or any other means
12(11)(c)(i) When this service is provided
through a selling agent or a re-
seller or a distributor of
Address of the selling agent
or re-seller or distributor as
per the record of the supplier
26
subscriber identity module card
or re-charge voucher.
at the time of supply.
12(11)(c)(ii) By any person to the final
subscriber.
Location where such
prepayment is received or
such vouchers are sold.
12(11)(d) In other cases. 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 State 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.
Please refer Rule 6 of the Integrated Goods and Service Tax Rules 2017.
13. BANKING AND OTHER FINANCIAL SERVICES
12(12) Banking and other financial
services, including stock
broking services to any person.
Location of the recipient of
services on the records of the
supplier of services.
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.
14. INSURANCE SERVICES
12(13) Insurance Service To a registered person, be the
location of such person;
To a person other than a
registered person, is the
location of the recipient of
services on the records of
27
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.
The Place of Supply shall be
taken as being in each of
such States or Union
territories and the value of
such supplies specific to each
State or Union territory shall
be in proportion to the
amount attributable to
services provided by way of
dissemination in the
respective States or Union
territories as may be
determined in terms of the
contract or agreement
entered into in this regard or,
in the absence of such
contract or agreement, on
such other basis as may be
prescribed.
Please refer Rule 3 of the Integrated Goods and Service Tax Rules 2017.
28
PLACE OF SUPPLY OF SERVICE WHERE LOCATION OF SUPPLIER
OR LOCATION OF RECIPIENT IS OUTSIDE INDIA
SECTION 13
From the heading of Section 13 it is clear that for which situation the above
section is created and this situation is if Location of supplier of the service or
the Location of recipient of service is outside India. We have already read that
the Place of supply with respect to the Services is a very complicated matter so
section 13 is not an exception.
It has also two parts and first one was for General and unspecified services
and second one is for specified services. For General and unspecified services
the provisions are given in the Section 13(2). For specified services the
provisions are given in Section 13(3) to Section 13(13).
PLACE OF SUPPLY OF SERVICE IN CASE OF UNSPECIFIED
SERVICES
As per sections 13(2) the place of supply shall be the Location of the recipient
of the service except services mentioned in section 13(3) to 13(13). Further if
the location of recipient of service is not available in the ordinary course of
business then the place of supply of service shall be the location of the supplier
of service.
Let us have a look at section 13(2):-
Section 13(2):-The place of supply of services except the services specified in
sub-sections (3) to (13) shall be 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.
29
PLACE OF SUPPLY OF SERVICE IN CASE OF SPECIFIED
SERVICES
The place of supply of service with respect to certain service is mentioned in
section 13(3) to Section 13(13) and we are taking up the same one by one as
under:-
SECTION PROVISION AS PER LAW
1. THE PLACE OF SUPPLY OF THE FOLLOWING SERVICES
SHALL BE THE LOCATION WHERE THE SERVICES ARE
ACTUALLY PERFORMED- Section 13(3)(a) & 13(3)(b)
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:
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 or for any other
treatment or process and are exported after such repairs or
treatment or process without being put to any use in India, other
than that which is required for such repairs or treatment or
process.
13(3)(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.
2. SERVICE DIRECTLY IN RALATION TO IMMOVABLE
PROPERTY
13(4) The place of supply of 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 co-ordination of construction work, including that of
architects or interior decorators, shall be the place where the
30
immovable property is located or intended to be located.
3. ADMISSION TO ORGANIZATION OF A CULTURAL,
ARTISTIC, SPORTING.... EVENT
13(5) The place of supply of services supplied by way of admission to,
or organization 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, shall be the place where the event is
actually held.
4. WHEN ABOVE SERVICES AS MENTIONED IN 13(3) TO 13(5)
ARE PROVIDED AT MORE THAN ONE LOCATION
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, its place of supply shall be the
location in the taxable territory.
5. WHEN ABOVE SERVICES AS MENTIONED IN 13(3) TO 13(5)
ARE SUPPLIED IN MORE THAN ONE STATE OR UNION
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.
Please refer Rule 8 and Rule 9 of the Integrated Goods and
Service Tax Rules, 2017 Read with Rule 4 & 5 of the Integrated
Goods and Service Tax Rules 2017.
6. SERVICES BY BANKING COMPANIES , FINANCIAL
INSTITUTIONS ETC.
13(8) The place of supply of the following services shall be the location
of the supplier of services, namely:––
(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 one
month.
Explanation.––For the purposes of this sub-section, the
expression,––
31
(a).“account” means an account bearing interest to the depositor,
and includes a non-resident external account and a non-resident
ordinary account;
(b). “banking company” shall have the same meaning as assigned
to it under clause (a) of section 45A of the Reserve Bank of India
Act, 1934; (2 of 1934)
(c). „„financial institution” shall have the same meaning as
assigned to it in clause (c) of section 45-I of the Reserve Bank of
India Act, 1934; (2 of 1934)
(d). “non-banking financial company” means,––
(i).a financial institution which is a company;
(ii).a non-banking institution which is a company and which has
as its principal business the receiving of deposits, under any
scheme or arrangement or in any other manner, or lending in any
manner; or
(iii).such other non-banking institution or class of such
institutions, as the Reserve Bank of India may, with the previous
approval of the Central Government and by notification in the
Official Gazette, specify.
7. TRANSPORTATION OF GOODS
13(9) The place of supply of services of transportation of goods, other
than by way of mail or courier, shall be the place of destination of
such goods.
8. PASSENGER TRANSPORTATION SERVICE
13(10) The place of supply in respect of passenger transportation services
shall be the place where the passenger embarks on the
conveyance for a continuous journey.
9. SERVICES PROVIDED ON BOARD A CONVEYANCE
13(11) The place of supply of 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, shall be the first scheduled point of departure of that
conveyance for the journey.
10. ONLINE INFORMATION AND DATABASE ACCESS OR
RETRIEVAL SERVICES
13(12) The place of supply of online information and database access or
retrieval services shall be 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
32
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.
11. PREVENTION DOUBLE TAXATION OR NON-TAXATION OF
THE SUPPLY OF A SERVICE
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.
END