Daily Dose of GST Update By CA Pradeep Jain
The revised IGST Law has provided separate provisions for determination of place of supply in case of intra state trade/inter-state trade and that in case of import/export of goods. The provisions regarding determination of place of supply of goods other than supply of goods imported into or exported from India are the same as proposed in the erstwhile IGST Law and are not repeated. The revised IGST Law has inserted a new section 8 for place of supply of goods imported into India or exported from India which provides that:-
1. The place of supply of goods imported into India shall be the location of the importer.
2. The place of supply of goods exported from India shall be the location outside India.
The above provisions were not there in the earlier IGST Law and have been inserted in the revised IGST Law.
The revised IGST Law has provided separate provisions for Place of Supply of Services where the location of supplier of service and location of recipient of service is in India. The basic rule that has been incorporated is that except in case of specific situations, if service is supplied to registered person, the place of supply of service shall be location of registered person. However, if service is supplied to any person other than registered person, the place of supply of service will be the location of recipient where address on record exists or location of supplier of services in other cases. The above rule is general rule and the specific provisions have been made for specific nature of services. We will discuss section 9(4) of the IGST Act, 2016 in the present update.
The section 9(4) states that place of supply of services in case of following shall be the location of immovable property, boat or vessel:-
(a) Services directly in relation to immovable property including services of architects, interior decorator, surveyors, engineers or renting of immovable property,
(b) Services of providing accommodation in hotel, inn, guest house, club or campsite, by whatever name called, and including house boat or any other vessel,
(c) Services by way of accommodation in any immovable property for organizing any marriage or function,
(d) Any other ancillary services to above referred services.
In nutshell, we can say that the place of supply of service in relation to immovable property shall be the location of immovable property. The above provision is in line with the Place of Provision of Service Rules, 2012 in force.
A new proviso has been also added which states that if the location of immovable property, boat or vessel is located or intended to be located outside India, place of supply will be location of recipient. This has been added to levy tax under reverse charge mechanism.
An explanation is also provided in this sub-section which clarifies that where the immovable property or boat or vessel is located in more than one State, the supply of service shall be treated in each state in proportion to the value in terms of contract or such other reasonable basis as may be prescribed. This clarification has been provided as there is concept of inter-state and intra-state supply in GST regime. Consequently, the respective States should also get their share in tax if the services are provided at more that one State. However, there may be practical difficulty in ascertaining the tax payable with respect to each State in case of boat or vessels.