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Published on:

June 12, 2023

Harshini

Place of supply under GST - Detailed analysis

According to the Goods and Services Tax (GST) regime, "Place of Supply" is important to stay GST compliant and is used to determine the nature of a supply, whether it is an inter-state supply or an intra-state supply, because the tax liability is determined based on the nature of the supply. If it is an intra-state supply, Central GST (CGST) and State GST (SGST) are applicable, whereas for inter-state supplies, Integrated GST (IGST) is applicable.

What determines the nature of supply?

The determination of the place of supply is based on two main factors

1. The location of the supplier

2. The location of the place of supply.

Section 7 of the IGST Act:

This section specifies the conditions under which a supply of goods or services is treated as a supply in the course of inter-state trade or commerce. The following conditions are considered inter-state supplies:

S.No.	Supply	Terms for Supply to be treated as supply of goods or supply of services in the course of inter-state trade or commerce
1	Supply of Goods or Supply of Services	Subject to the provisions of section 10, supply of goods or 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,
2	Import	Supply of goods or services imported into the territory of India, till they cross the customs frontiers of India. This term for Supply of goods imported
3	Export and SEZ	a)when the supplier is located in India and the place of supply is outside India; (b) Supply to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) Supply in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

Section 8 of the IGST

This section speaks about intra state supply and according to the section 8 following supplies shall be treated as intra state supplies.

S.No.	Supply	Terms for Supply to be treated as supply of goods or supply of services as intra-state Supply
1	Supply of Goods or Supply of Services	Subject to the provisions of section 10, supply of goods or subject to the provisions of section 12, Supply of services, where the location of the supplier and place of supply are in the same State or same Union territory shall be treated as intra-State supply.
2	Supply of goods shall not be treated as intra-state supply.	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.
3	Supply of services shall not be treated as Intra-state supply.	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.

Determination of Place of Supply

Section 10

Place of supply of goods other than supply of goods imported into, or exported from India.

Section 11

Place of supply of goods imported into, or exported from India.

Section 12

Place of supply of services where location of supplier and recipient is in India.

Section 13

Place of supply of services where location of supplier or location of recipient is outside India.

Section 9

Supplies in territorial waters.

Section 10 of the IGST Act – Place of Supply of Goods

Section 10(1)(a)

Movement of Goods

1. Supply involves Movement of Goods

2. Movement by any person i.e. Supplier, Recipient or Any Other Person

3. Place of Supply of such goods shall be the location of goods at the time at which the movement of goods terminates for delivery to the recipient;

Example:

Place of Supply is the location at where movement of goods terminates for delivery to the recipient. It is immaterial who moves the goods. Goods can be moved either by the Supplier or by the Recipient or by Any Other Person.

How the Supplier shall know the termination point? The Address of the Recipient will be termination point. If address of the Recipient is not available to the Supplier the termination point shall be the location of the Supplier.

According to Rule 46 (e) of CGST Act – “name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice.”

The Location of the Supplier ‘A’ is Delhi. The place of supply and nature of supply shall be as under:

Recipient	Place of Supply	Nature of Supply
Registered in Gurgaon	Gurgaon	Inter-state Supply
Unregistered but address provided to the Supplier as of Noida	Noida	Inter-state Supply
Unregistered. Collect the delivery of goods from the Supplier without giving his address and value of supply of goods is less than Rs.50000	Delhi	Intra-state Supply

Section 10(1)(b)

Persons stated for Bill to and for Ship to are differ from each other.

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.

Example:

Under this clause the goods are delivered to the person as per directions received from the Recipient. This is Bill to Ship to model. The Place of Supply is the principal place of business of the person (the Recipient ) who directs to the Supplier to supply the goods to such person.

Location of the Supplier	Location of the Recipient ( Bill To )	Location of the third person to whom goods delivered ( Ship To )	Place of Supply ( Location of the Recipient in whose favour Bill issued by the Supplier )	Nature of Supply
A	B	C	D	E
Delhi	Haryana	Punjab	Haryana	Inter-state
Delhi	Haryana	Haryana	Haryana	Inter-state
Delhi	Delhi	Punjab	Delhi	Intra-state

In Bill to Ship to Model there are minimum two commercial transactions. While consider the above example there is transactions between

1. A and B

2. B and C

1. Place of Supply for first transaction between A and B will be the principal place of the Recipient ( Section 10 (1)(b) be applicable )

2. Place of Supply for second transaction between B and C will be where the movement of goods terminates for delivery. ( Section 10 (1)(a) be applicable )

Section 10(1)(c)

Supply not involve movement of goods

1. Supply does not involve movement of goods

2. Whether by the Supplier or the Recipient

3. place of supply shall be the location of such goods at the time of the delivery to the recipient;

Example

In this section Supply does not involve movement of goods, whether by the Supplier or by the Recipient.

‘B’ a registered person of Delhi purchases a factory from the person ‘A’ of Manesar (Haryana). The sale of factory is comprising of machines, furniture, air-conditions as fixed and installed in factory. Invoices issued by the ‘A’ separately for machines, furniture and air-conditions. Since the movement of goods does not involve in this transaction, therefore, place of supply of such goods shall be location of the goods i.e. Manesar (Haryana). Location of the Supplier and place of supply are in the same state, therefore, transaction shall be treated as intra-state supply.

Section 10(1)(d)

Goods supplied and assembled or installed simultaneously

Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;

Example

The place of supply is where the work of installation or assembly is done.

‘A’ a registered person of Delhi receives order from ‘B’ of Gurgaon for supply of Computers and installed at their different sites.

Location of Supplier for supply of Goods and installation	Recipient Registered Office	Site for installation	Place of Supply	Transaction
Delhi	Gurgaon	Gurgaon	Gurgaon	Inter-state
Delhi	Gurgaon	Delhi	Delhi	Intra-state
Delhi	Gurgaon	Noida	Noida	Inter-state

Section 10(1)(e)

Goods supplied on board

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.

Example

The Supplier is authorized to supply foods and other items in some trains departed from New Delhi and Ghaziabad. Place of Supply will be as under:

Location of the Supplier	Boarding Station from where goods are boarded to be supplied in train	Place of Supply	Transaction
Delhi	New Delhi	Delhi	Intra-state
Delhi	Ghaziabad	Ghaziabad	Inter-state

Section 10(2)

Power to notify place of supply if it ( place of supply ) cannot be determined

Where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed.

Section 11 of the IGST Act

Place of supply of goods imported into, or exported from India.

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 12 of the IGST Act

Place of supply of services where location of supplier and recipient is in India.

Section	Particulars	Place of Supply
12 (2)(a)	Supply of Services made to a Registered Person	Location of such person (Recipient)
12 (2)(b)	Supply of Services made to a Unregistered Person	(i) The location of the recipient where the address on record exists; and (ii) the location of the supplier of services in other cases. > Example – Registered office of the Recipient is in Mumbai. The recipient received consultancy in tax audit matter from the CA company of Delhi in his Delhi office. The place of supply shall be Mumbai.

Example

Registered office of the Recipient is in Mumbai. The recipient received consultancy in tax audit matter from the CA company of Delhi in his Delhi office. The place of supply shall be Mumbai.Example – In the above example staff of the CA Company of Delhi provides services in the office of the Recipient in Mumbai. The place of supply shall be Mumbai.

12 (3)(a)

Services directly in relation to immovable property including services provided by – Architects, Interior Decorators, Surveyors, Engineers, Other related experts and Estate Agents Etc..

The location at which the immovable property is located or intended to be located.

Example

The immovable property is located in Noida. Place of supply shall always be Noida in regard of services directly related to such immovable property. Nature of supply whether it is inter-state supply or intra-state depends upon location of the supplier. If the location of the supplier is in the same state of Noida then nature of supply shall be intra-state supply or if the location of the supplier is other state than state of the Noida then nature of supply shall be inter-state supply.

12 (3)(b)

Services 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.

The location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located.

Example

A business man registered in Delhi visits Banglore to attend the summit in regard of his business. He stays in a Hotel. Place of supply shall be the place where the Hotel is located i.e. Banglore. Transaction will be intra-state supply because location of the Supplier i.e. Hotel owner and location of the Hotel are in same State.

12 (3)(c)	Services 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	The location at which the immovable property is located or intended to be located.
12 (3)(d)	Any services ancillary to the services referred to in clauses (a), (b) and (c),	The location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located.
	Provided that 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.
12 (4)	"The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery" The location where the services are actually performed.

Example

An Advertisement Company of Delhi contracts with a beauty salon firm of Delhi for dressing and beauty work upon their models in Mumbai. According to section 12 (4) the place of supply shall be where the services are provided. In this example the place of supply is Mumbai where the dressing and beauty-work done. Transaction between the Advertisement Company and the Beauty Saloon Firm is inter-state transaction because the location of the supplier and place of supply are in differ states.

12 (5)

Services in relation to training and performance appraisal.

Place of Supply (i) if such services made to Registered Person then Location of such person or (ii) If such services made to the person other than registered person the location where the services are actually performed.

Example

A company registered in Delhi contracts with the person registered in Dehradun to give training to their employees in regard of operating the machine imported from the Japan. The training is provided in Dehradun in the office of the Supplier of Services. The place of supply shall be Delhi because services provided to the recipient company registered in Delhi. > Example – The Charitable Organisation of Haridwar unregistered in GST contracts with the Akash Institute of Delhi to provide training to ten boys to participate in interview for IAS. The training is provided in Delhi. The place of supply shall be Delhi in this case and transaction will be intra-state because the Supplier of Services and place of supply are in same state.

12 (6)	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.	Place of Supply where the event is actually held or where the park or such other place is located.
12 (7)	Services provided by way of a) 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 in clause (a), or assigning of sponsorship to such events,	Place of Supply (i) if such services made to Registered Person then Location of such person or (ii) If such services made to the person other than registered person the place where the event is actually held
12 (8)	Services by way of transportation of goods, including by mail or courier	Place of Supply (i) if such services made to Registered Person then Location of such person or (ii) If such services made to the person other than registered person the location at which such goods are handed over for their transportation. (iii) Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.

Example

The Blue Dart Company Delhi takes a courier from the firm of Delhi to dispatch in London. According to the proviso to the section 12 (8) place of supply in this transaction is London. Nature of Supply is inter-state supply.

12 (9)	Supply of passenger transportation service	Place of Supply (i) if such services made to Registered Person then Location of such person or (ii) If such services made to the person other than registered person the place where the passenger embarks on the conveyance for a continuous journey.
	Provided that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in accordance with the provisions of sub-section (2).
12 (10)	Supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle.	The location of the first scheduled point of departure of that conveyance for the journey.
12 (11)	Supply of telecommunication services including data transfer, broadcasting,cable and direct to home television services to any person.
	(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna (b) in case of mobile connection for telecommunication and internet services provided on post-paid basis. (c) mobile connection/ internet services on pre-payment basis through a voucher or any other means (d) In other casese	(a) place of supply be the location where such instrument is installed for receipt of services. (b) place of supply be the location of billing address of the recipient of services on the record of the supplier of services (c) place of supply be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply of such vouchers or Vouchers supplied by any person to the final subscriber, be the location where such pre-payment is received or such vouchers are sold. (d) place of supply 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.
	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.
12 (12)	Supply of banking and other financial services, including stock broking services to any person.	The location of the recipient of services on the records of the supplier of services.
	Provided that 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.
12 (13)	Supply of insurance services	(a) to a registered person, be the location of such person; (b) to a person other than a registered person, be the location of the recipient of services on the records of the supplier of services.
12 (14)	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 the IGST Act

Place of supply of services where location of supplier or location of recipient is outside India.

Section	Particulars	Place of Supply
13 (2)	Supply of Services except the services specified in sub-sections (3) to (13)	1. Location of the Recipient of Services. 2. 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.

Example

The Delhi based professional firm renders services to the company of London by way of detailed report of feasibility of business in India. Place of Supply will be of London i.e. according to the Location of the Recipient. This will be export services subject to other conditions fulfilled in section 2 (6) of the IGST Act. > Example – The Advertisement based company of the Tripura receives services from the London firm about legal provisions in regard of Advertisement applying in London. Place of Supply will be Tripura i.e. according to the Location of the Recipient. This will be import services according section 2 (11) of the IGST Act.

13 (3)(a)	> Services supplied in respect of goods. > Provided that when such services are provided from a remote location by way of electronic means,	> The location where the services are actually performed for such goods. > 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;
	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;

Example

The Banglore based IT company renders services to the London based Company from its office in Banglore to start a machine equipped with digital software. Such machine is also situated in the office of London based Company. The place of supply is London where the machine is situated.

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.	Place of Supply – The location where the services are actually performed.
13 (4)	Supply of services in relation to immovable property. Such as > Services by experts, > Services by estate agents, > Accommodation services by a hotel, inn, guest house, club or campsite etc. > Rights to use the property, > Construction Services, > Architects services and > Interior Decorators etc..	Place of Supply where the immovable property is located or intended to be located.
13 (5)	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	Place of Supply where the event is actually held.
13 (6)	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	Place of supply shall be the location in the taxable territory.

Example

The Delhi based company renders Demo Services of the newly product launched by the Company of USA in Delhi and in other countries Shri Lanka, Nepal and Bangladesh. Place of Supply will be the location of taxable territory i.e.Delhi in spite of the fact the greatest proportion of services are rendered out of India i.e. in non taxable territories.

13 (7)	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.	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.
13 (8)	For Following Services – (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.	Place of Supply shall be the location of the Supplier of Services.

According to this section location of the supplier and the place of supply will be in the same state. It means that the transaction between the intermediary services provider and the recipient of outside India will be intra-state supply.

13 (9)	Services of transportation of goods, other than by way of mail or courier.	Place of Supply shall be the place of destination of such goods.
13 (10)	Passenger transportation services.	Place of Supply shall be the place where the passenger embarks on the conveyance for a continuous journey.

Place of Supply for single ticket issued for journey Delhi – London – Canada is Delhi. > Place of Supply for separate tickets issued for journey Delhi to London and for journey London to Canada then Place of Supply for ticket issued for Delhi to London will be Delhi and Place of Supply for ticket issued for London to Canada will be London.

13 (11)	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	Place of Supply shall be the first scheduled point of departure of that conveyance for the journey.
13 (12)	> Online information and database access or retrieval services.	> Place of Supply 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 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.
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.

Section 9 of the IGST Act

Supplies in Territorial Waters

Notwithstanding anything contained in this Act

(a) where the location of the supplier is in the territorial waters, the location of such supplier

(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 or Union territory where the nearest point of the appropriate baseline is located.

Conclusion:

In conclusion, It's important for businesses to correctly determine the place of supply to ensure proper tax compliance. If a mistake is made and tax is paid under the wrong head (e.g., CGST and SGST instead of IGST), there is no provision in the GST to adjust such mistakes. The only remedy available is to pay the tax in the correct account and claim a refund for the tax paid under the wrong account. So businesses must be aware of the place of supply and stay compliant.