PLACE OF SUPPLY - Goods & Service Tax (GST) Indirect Tax

 

PLACE OF SUPPLY

Place of supply of goods under GST defines whether the transaction will be counted as intra-state or inter-state, and accordingly levy of SGST, CGST & IGST will be determined.

•       Movement of goods

•       No movement of goods

•       Goods supplied on a vessel/conveyance

•       Imports & exports

Example 1- Intra-state sales

Mr. Raj of Mumbai, Maharashtra sells 10 TV sets to Mr. Vijay of Nagpur, Maharashtra

The place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST will be charged.

Example 2-Inter-State sales

Mr. Raj of Mumbai, Maharashtra sells 30 TV sets to Mr. Vinod of Bangalore, Karnataka

The place of supply is Bangalore in Karnataka. Since it is a different state IGST will be charged.

Example 3- Deliver to a 3rd party as per instructions

Anand in Lucknow buys goods from Mr. Raj in Mumbai (Maharashtra). The buyer requests the seller to send the goods to Nagpur (Maharashtra)

In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST will be charged.

Place of supply: Lucknow (UP)

GST: IGST

Example 4- Receiver takes the goods ex-factory

Mr. Raj of Mumbai, Maharashtra gets an order of 100 TV sets from Sales Heaven Ltd. of Chennai, Tamil Nadu. Sales Heaven mentions that it will arrange its own transportation and take TV sets from Mr. Raj ex-factory

Place of supply: Chennai, Tamil Nadu

GST: IGST

Although the goods are received ex-factory i.e in Maharashtra by the recipient, the movement of the goods terminates for delivery to the recipient only at Chennai, Tamil Nadu. Irrespective of whether the supplier or the recipient is actually undertaking the movement of goods, the place of supply is the location of goods where movement of goods terminates for delivery to the recipient which is at Chennai. Hence, IGST is applicable.

 

Example 5 – E-commerce sale

Mr. Raj of Mumbai, Maharashtra orders a mobile from Amazon to be delivered to his mother in Lucknow (UP) as a gift. M/s ABC (online seller registered in Gujarat) processes the order and sends the mobile accordingly and Mr. Raj is billed by Amazon.   

Similar to example 3, it will be assumed that the buyer in Mumbai has received the goods & IGST will be charged.

Place of supply: Mumbai, Maharashtra

GST: IGST

 No Movement of Goods

 

Example 1- No movement of goods

Sales Heaven Ltd. (Chennai) opens a new showroom in Bangalore. It purchases a building for showroom from ABC Realtors (Bangalore) along with pre-installed workstations Place of supply: Bangalore

GST: CGST& SGST

There is no movement of goods (work stations), so the place of supply will be the location of such goods at the time of delivery (handing over) to the receiver.

Note: There is no GST on purchase of building or part thereof. RENT of commercial space attracts GST

Example 2- Installing goods

Strong Iron & Steel Ltd. (Jharkhand) asks M/s SAAS Constructions (West Bengal) to build a blast furnace in their Jharkhand steel plant

Place of supply: Jharkhand

GST: CGST & SGST

Although M/s SAAS is in West Bengal, the goods (blast furnace) is being installed at site in Jharkhand which will be the place of supply.

 Note: M/s SAAS will have to be registered in Jharkhand to take up this contract. They can opt to register as a casual taxable person which will be valid for 90 days (extendable by 90 days more, on basis of a reasonable cause).

Goods Supplied on a Vessel/Conveyance

 

Example 1- Plane

Mr. Ajay is travelling from Mumbai to Delhi by air. He purchases coffee and snacks while on the plane. The airline is registered in both Mumbai and Delhi.

Place of supply: Mumbai

GST: CGST& SGST

The food items were loaded into the plane at Mumbai. So, place of supply becomes Mumbai.

Example 2- Plane- Business travel

Mr. Ajay is travelling from Mumbai to Chennai by air on behalf of his company Ram Gopal and Sons (registered in Bangalore). In the plane he purchases lunch. The airlines is registered in Mumbai & Chennai. Place of supply: Mumbai

GST: CGST & SGST

The food items were loaded into the plane at Mumbai. So, place of supply becomes Mumbai. It does not matter where the buyer is registered.

In most cases CGST & SGST is charged because most airlines have a pan-India presence and will be registered in all states.

Example 3- Train

Mr. Vinod is travelling to Mumbai via train. The train starts at Delhi and stops at certain stations before Mumbai. Vinod boards the train at Vadodara (Gujarat) and promptly purchases lunch on board. The lunch had been boarded in Delhi.

Place of supply: Delhi

GST: CGST & UTGST

The food items were loaded into the train at Delhi. So, place of supply becomes Delhi.

CGST & SGST is charged because Indian railways has a pan-India presence and will be registered in all states. It does not matter where the buyer is registered.

 

Imports & Exports

The place of supply of goods:

•       imported into India will be the location of the importer.

•       exported from India shall be the location outside India.

 

 

Example 1- Import

Ms. Malini imports school bags from China for her shop (registered in Mumbai)

Place of supply: Mumbai

GST: IGST

Example 2- Export

Ms. Anita (Kolkata) exports Indian perfumes to UK

Place of supply: Kolkata

GST: Exempted

 

SUMMARY 

DETRMINATION OF PLACE OF SUPPLY OF SERVICE WHERE LOCATION OF SUPPLIER AND RECIPIENT IN INDIA.

Sec	Description of service	Supply to unregistered person
	Default rule for all services	If Address available: Location of Recipient

 

		If Address not available: Location of Supplier
12(5)	Training & performance appraisal	Place of performance
12(7)	Organization of events including ancillary services, sponsorship.	Place where event is actually held If event held outside India: Location of Recipient.
12(8)	Transportation of Good including mail or courier	Place where goods are handed over for their transportation.
12(9)	Passenger transport service	Place where person embarks on the conveyance for continuous journey.
12(13)	Insurance service	Location of Recipient of service
12(3)	Service directly related to immovable property including agent, experts, lodging , hotels , accommodation for functions and ancillary services	Place where immovable property is located If immovable property is located outside India: Location of Recipient
12(4)	Restaurant catering, personal grooming fitness, beauty treatment , health services including plastic surgery	Place where the service is actually performed.
12(6)	Admission to events or amusement park	Place where event actually held or park is located
12(10)	Service on board a conveyance includes Vessel and Aircraft	Location of 1st scheduled point of departure of that conveyance for the journey.
12(11)	Supply of telecom services including date transfer, broadcast, cable or DTH
	1. Fixed lease or cable line	Location of installation
	2. Postpaid mobile , internet DTH	Billing address available: LOR If Billing address not available: LOS
	3. Prepaid mobile , internet DTH	1. Supply       through       agent: Location of agent

		2. Location     of         payment received or voucher sold
	4. In all other cases	If Address available: Location of Recipient If Address not available: Location of Supplier
	Prepaid electronic payment	Location of Recipient
12(12)	Banking       and      Financial       sector including stock broking	If Address available: Location of Recipient If Address not available: Location of Supplier
12(14)	Advertising sevices to GOvt or local authority	Each of such state/UT where advertisement broadcasted, run played

Practical Problems

Q1 From the following details determine the place of supply, if supply involve movement of goods.

Particulars	Suppliers factory from where goods are Removed	Termination                of movement for delivery	Place of supply
Movement of goods by supplier (goods dispatched by supplier)	Orissa	Assam	Assam
Movement of goods by the recipient (goods collected by recipient)	Orissa	Orissa	Orissa

 

 

 

Q2 Mr A (New Delhi) has leased his machine (cost Rs 5,00,000) to MR B (Noida, Uttar Pradesh) for production of goods on a monthly rent of Rs 30,000. After 14months Mr A agree to sell the machine to Mr B for Rs 3,50,000. Determine the place of supply.

Solution: Place of supply Noida, Uttar Pradesh 

Q3. XZ ltd (Mumbai) open a new branch office at Gurugram , Haryana. It purchases a building for office from KTS Builders (Gurugram) along with pre installed office furniture and fixtures.

Determine the place of supply?

Solution: KTS Builders, Gurugram.

 

Q4. MR A (Mumbai) purchases a machine from MR B (New Delhi) to be installed inhis factory at Chennai TN. Determine the place of supply?

Solution: Place of supply is Chennai

Q5 Pure Refineries (Mumbai) gives a contract to PA ltd (Ranchi, Jharkhand) to assemble a power plant in its Kutch, Gujarat refinery. Determine the place of supply? 

Solution : Place of Supply is Kutch, Gujarat.

 

Q6. Determine the place of supply of goods assembled /installed at site

Solution :

Particulars	Location supplier	of	Registered office of Recipient	Installation Assembly site	/	Place              of supply
Installation of weigh bride	Delhi		Bhopal	Bhopal		Bhopal
Servers supplied and installed at an office	Karnataka		Goa	Karnataka		Karnataka
Supply        of       work stations	Gujarat		Gujarat	Kerala		Kerala

 

 

Illustration 07

The time group being an event organizer located at New Delhi organized Miss India 2017 beauty pageant in India in the following cites of M/s Famina miss India , a registered person located in Mumbai:

City	No of Days	Fees Rs
New Delhi Chennai Mumbai Total	12 18 20 50	12 crores 18 crores 20 crores 50 crores

Find the place of supply of services if there is  a separate contract for each event.

Fine the place of supply of services if contract specifies lump sum amount of Rs 48 coroes

 

 

Illustration 08

Jet airways registered under GST and located in Mumbai operates flight form Mumbai- Delhi-

Mumbai. Mr TYN who is unregistered person, purchase air ticket  for Mumbai Mumbai – Delhi – Mumbai . Only one ticket is issued to him showing both the routes. Find the place of supply of services and GST liability? 

Solution: Place of Supply is Mumbai

 

Illustration 09

From the following detail find out the place of supply:

a. Gujarat government gives an advertising contract to an advertising agency to promote Gujarat tourism throughout the country. 

Solution: Place of Supply is Gujarat

b. Delhi government gives an advertising contract to an advertising agency registered in Delhi to promote its “Every child can Read” campaign in Delhi.

Solution: Place of Supply is Delhi

c.       MR X of Kolkata gets a landline phone installed at his home from Skybel ltd. 

        Solution: Place of Supply is Kolkata

 

d.      Mr A resident of Bangalore takes post paid mobile connection from Aritel limited, a company based out of New Delhi. He uses the mobile for his travel throughout India. 

    

    Solution: Place of Supply is Bangalore

 

e.       Mr. X is travelling from Delhi to Mumbai in an Airjet flight. He watches an English movie during the journey , when the aircraft is flying over Rajasthan, by making necessary payment. 

Solution: Place of Supply is Delhi

f. Mr. A CEO of XY ltd Mumbai (a company registered in Maharashtra) buys insurance cover for the inventory stored in company’s factory located at Mumbai from Excellent insurers, Chennai (registered in Tamil Nadu)

Solution: Place of Supply is Mumbai

g.      Mr. B (unregistered person of Kolkata) goes to his native place Patna, Bihar and buys a medical insurance policy for his parents there from safe insurer, patna (registered in Bihar). 

    Solution: Place of Supply is patna, Bihar

 

h.      Mr. A of Chennai whose KYC is complete buys share form a broker in BSE (Mumbai).  

    Solution: Place of Supply is Chennai

 

i.        Deo consultant of Mumbai impact gst training to accounts and finance personal of GEO ltd , Gujarat at the company Ahmadabad office.

Solution: Place of Supply is Gujarat.

 

j.        Mr. Suresh (unregistered person based in Noida) signs up with Excellent ltd (new Delhi) for training on English speaking  at their New Delhi centre.

Solution: Place of Supply is New Delhi

k. If Mr. as Resident of Bangalore , conduct training for employees of software ltd , a company out of New Delhi , in shimala resort located in Shimala. What will be place of supply if Software Company is registered or unregistered?

Solution: Place of Supply is Shimala

 

 Q10. Mr. X (New Delhi) imports a machine from Germany for being installed in his factory at New Delhi. To install such machine Mr. X takes the service of an engineer who comes to India from Germany for this specific installation. Determine the place of supply? 

Solution: Place of supply is New Delhi.

 

Q11. A software company located in USA takes service of a software company located in Bangalore to service its software in USA. The Indian software company provides the services through electronic means for its office in India. Determine the place of supply? 

Solution : Place of Supply USA 

 

Q12 Mr. X a Hair stylist registered in New Delhi travels to Singapore to provide his service to Ms Y a resident of Singapore. Determine the place of supply?

Solution: Place of Supply is Singapore

Q13 PQR consultants New Delhi bags a contract for doing a market research for a vehicles manufacturing company based in South Korea, in respect of its upcoming model of car. The research is to carried out in five countries including New Delhi. Determine place of supply?

Solution: Place of Supply is South Korea.