Place of supply in GST law is of primary importance in GST. When location of the supplier and the place of supply falls in the same state, the supply is treated as intra-state supply CGST and SGST is payable. However when location of the supplier and place of supply falls in different states, the supply is treated as inter-state supply and IGST is payable.
Place of supply has been defined in Chapter V of the IGST Act.
Supply of Goods:
Section 10 of the IGST Act defines place of supply in case of supply of goods. Section 10 provides for following provisions:-
- If supply involves movements of goods, place of supply is the place where the moment terminates.
- If supply of goods does not involve movement of goods, place of delivery of goods.
- If the goods are assembled or installed at site, place of such site.
- If the goods are supplied on board, place of supply is the place where such goods are taken on board.
- In case of supply by transfer of documents, place of supply is principal place of business of the person receiving the supply.
- In case of import, place of supply is location of the importer. In case of export, place of supply is outside India.
Section 12 of the IGST Act makes provision for determination of place of supply in case of supply of services, when location of the supplier and recipient is in India. Basic gist of the provisions are as follows:
- In general, in case of registered person, place of supply of services is place of location of the registered recipient of services. If the recipient is not registered, place of supply is address on record of the recipient. In other cases, it is location of supplier of services.
- Place of supply of services in case of services related to immovable property like architects, interior decorator, property agents, surveyors, engineers, hotels, inns, guest houses, lodges, club, banquet halls etc. shall be the location of the immovable property.
- In case of restaurant and catering, personal grooming services like beauty treatment, health, fitness etc. shall be the place of performance of these services.
- Various other services has been defined where in case of registered person, place of supply shall be the location of registered person. These services includes transportation of goods, transportation of passengers, Insurance. In case of banking, place of supply is location of the recipient on record.
- In case of telecommunication services involving fixed line, circuits, dish etc., place of supply is location of such fixed equipment. In case of mobile/ internet post-paid services, it is location of billing address of the recipient. In case of sale of pre-paid voucher, place of supply is place of sale of such vouchers. In other cases it is address of the recipient in records.
Section 13 of the IGST Act makes provision for determination of location of place of supply when either the supplier or the recipient is location outside India. The provision is important determine whether such supply is import of service attracting IGST on import of services. Further if the place of supply is outside India, such supply may not not attract GST or treated as export of services if other conditions are satisfied..
- Generally place of supply is location of the recipient of service. If location of the recipient is not known, place of supply is location of the supplier of services.
- Services involving actual performance, place of actual performance of services. When supply of service involves doing some activity on some goods, place of supply is location of goods.
- Services related to immovable property, place of supply of services is location of immovable property.
- Place of supply with respect to event based services like exhibition, conference, fair etc. shall be place where such events are held.
- In case of banking company, or intermediary services or hiring of menas of transport etc. shall be location of the supplier of services.
- Place of supply in case of transportation shall be place of destination of such goods.
- In case of transportation of passengers, place where the passenger embarks on the conveyance.
- Place of supply of services in case of online information and database access, place of recipient of services.
The provisions looks a bit complicated. However, considering nature and complexity of present day transactions, it may not have been possible for the drafters of law to draft anything simpler. The provisions are logical and drafted in such a way that taxes are not exported outside India.