Place of Supply In GST – Section 10 & Section 13

GST – Goods and Services Tax being a tax on supply, the Place of Supply is a very vital concept in levy and collection of tax. The destination based tax aims to tax at the point of consumption. Thus, the place of supply determines taxable jurisdiction where the tax levy and collection pertains to.Place of Supply concept gains its importance because it is the defining factor whether the transaction will be classified as intra-state or inter-state, based on which applicability and levy of SGST, CGST & IGST will be determined.A simple rule of tax nature of Place of Supply under GST can be read as:

• Intra-State Supply – CGST & SGST
• Inter-State Supply – IGST

Being this article headed with IGST Act, we will exclusively deal with the Inter-State supply and related provisions.

INTER-STATE SUPPLY – SECTION 7

As per the provisions of Section 7 of IGST Act, it lays down the list of supplies that are construes as inter-state supply. A granulated version of the provisions is given below for better understanding, the list includes:

• Supply of goods (Section 10) or Supply of services (Section 12) – where the location of the supplier and the place of supply are in-

– two different States;
– two different Union territories; or
– a State and a Union territory,

shall be treated as a supply of goods or services in the course of inter-State trade or commerce.

• 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. (Customs frontiers means the limits of a customs area as defined under the Customs Act, 1962).
• 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.

Supply of goods or services or both–

• when the supplier is located in India and the place of supply is outside India;
• to or by a Special Economic Zone developer or a Special Economic Zone unit; or
• 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.

 

PLACE OF SUPPLY UNDER GST – SECTION 10

Under IGST Act, 2017, Sections 10 to 14 under Chapter V deals with the place of supply of goods or services or both. The provisions under the Section 10 determine the place of supply under the various scenarios:

Section 10 of GST Act – Place of supply of goods (excluding supply of goods import or export)

Under the provisions of Section 10, the place of supply of goods (this excludes supply of goods imported into, or exported from India) shall be as under, 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 goodsat the time at which the movement of goods terminates for delivery to the recipient;
• 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;
• 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;
• goods are assembledor installed at site, the place of supply shall be the place of such installation or assembly
• 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

However, where the place of supply of goods cannot be determined in any of the above scenarios, the place of supply shall be determined in such manner as may be prescribed by the Government.

 

Section 11 of GST Act – Place of supply of goods imported into, or exported from India

In the case of goods imported into or exported from India, the provisions are much simpler in determining the place of supply of goods, if–

• Imported into India shall be the location of the importer;
• Exported from India shall be the location outside India.

 

Section 12 of GST Act – Place of supply of services where location of supplier and recipient is in India

The provisions under Section 12 are quite extensive trying to cover a vast range of supply determinants. This can be applied to determine the place of supply of services only where the location of supplier of services and the location of the recipient of services is in India.

Predominantly the place of supply of services, shall be the place at which the service has been rendered or –

• made to a registered person shall be the location of such person;
• made to any person other than a registered person shall be,––

-the location of the recipient where the address on record exists; and
-the location of the supplier of services in other cases.

 

However there is a series of exception to the above provision. This is basically due to the relevance of determining the place of supply. As we see one by one we will get to know the necessity of the exception has been given to place of supply in relation to those services. So in those cases, the place of supply of services, shall be –

Place of service, wherein-

 

• directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or
• by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or
• by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or
• any services ancillary to the services referred above shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located:

However, if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient. If the same 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.

• place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed
• The place of supply of services in relation to training and performance appraisal to,-

– a registered person, shall be the location of such person;
– a person other than a registered person, shall be the location where the services are actually performed.

• The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located.

The place of supply of services provided by way of –

• organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or
• (b) services ancillary to organisation of any of the events or services referred to herein or assigning of sponsorship to such events,–

– to a registered person, shall be the location of such person;
– to a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient.

 

Similar to provisions of immovable property, boar or a vessel, If 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.

 

• The place of supply of services by way of transportation of goods, including by mail or courier to, –

– a registered person, shall be the location of such person;
– a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

However, where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.

 

The place of supply of passenger transportation service to,-

• a registered person, shall be the location of such person;
• a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey

Further, 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.

 

• The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey.
• The place of supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person shall,

– in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cableor dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;

– in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services;

– in cases where 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, –

— through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or

— by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold;

• in other cases, be 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:

 

However 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 and 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.

Similar to the few provisions, 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.

 

• The place of supply of banking and other financial services, including stock broking services to any person shall be the 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.
• The place of supply of insurance services shall,–

– to a registered person, be the location of such person;
– to a person other than a registered person, be the location of the recipient of services on the records of the supplier of services.

 

• The place of supply of 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 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

Section 13 of GST Act – Place of supply of services where location of supplier or location of recipient is outside India

Alike Section 12, Section 13 also details the list of place of supply of services as applicable from case to case. These provisions are specifically for determining the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India.

It should be understood that the place of supply of services listed below. Exception has been given only if 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.

 

Now the place of supply of services shall be-

The place of supply of the following services shall be the location where the services are actually performed, namely:—

• 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.This applies only if, 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 and the 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;
• services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.

 

 

• The 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 immovable property is located or intended to be located
• The place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held.
• Where any services referred 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.

The place of supply of the following services shall be the location of the supplier of services, namely: –

• 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 one month.

 

• 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.
• 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.
• (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 firstscheduled point of departure of that conveyance for the journey.
• The place of supply of online information and database access or retrieval services shall be the location of the recipient of services.

 

Note: 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.

Section 14 deals with the Special provision for payment of tax by a supplier of online information and database access or retrieval services. It is more a provision relating to tax payment by the supplier at the non-taxable territory than determination of place of services of service.

SUGGESTED READING:
Levy and Collection of GST
EXEMPTION UNDER GST
GST Composition Scheme Rules

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