CA Sandeep Salve

CA Sandeep Salve

One of the key areas of litigation in GST will be which tax (i.e. IGST or CGST and SGST) is applicable on a transaction. Therefore, it is very important to understand the provisions of place of supply.

The determination of nature of supply of goods or services or both is given in Chapter V of The Integrated Goods and Service Tax Act (IGST), 2017 as passed by Lok Sabha on 29th March 2017. There are in all five sections under this chapter. Two sections are to determine place of supply of goods and the remaining three sections are to determine the place of supply of services. The heading of these sections is as follows :

1) GOODS

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.

2) SERVICES

Section  12 : Place of supply of services where location of supplier and recipient is in India.

Section 13 : Place of supply of services where the location of supplier or location of recipient is outside India.

Section 14 : Special provision for payment of tax by a supplier of online information and database access or retrieval services.

This article covers the place of supply of goods i.e. section 10 and section 11. Before getting into the simplification of these sections, I want to explain the need for the place of supply rules.

Firstly, GST is said to be destination based or consumption based tax. The location of supplier and the place of consumption can be in the same State or Union Territory or in a different State or Union Territory. The Place of Supply rules will help to identify whether a transaction is interstate or intrastate. In short, it will help to identify whether IGST is applicable or CGST and SGST or CGST and UTGST is applicable.

Secondly, as stated earlier, there are separate rule for goods and services. The reason for this is that goods are tangible whose destination or consumption can be traced whereas services are intangible whose exact provision of services is difficult to determine. This ambiguity is addressed through Place of Supply rules.

The simplification of place of supply of goods within India as covered in section 10 of IGST Act, 2017 is as follows :

A. PLACE OF SUPPLY OF GOODS OTHER THAN SUPPLY OF GOODS IMPORTED INTO, OR EXPORTED FROM INDIA

Sl. No. Section Nature Place of Supply
1. 10(1)(a) Where supply involves movement of goods, whether by :

1. Supplier

2. Recipient

3. Any other person

Location of goods at the time at which the movement of goods terminates for delivery to the recipient
2. 10(1)(b) Goods are delivered by supplier to a recipient, or any other person, on the direction of third person, whether acting as an agent or otherwise, either by way of transfer of document or otherwise Principal place of business of third person
3. 10(1)(c) Supply does not involve movement of goods Location of such goods at the time of delivery to the recipient
4. 10(1)(d) Goods assembled or installed at site Place of such installation or assembly
5. 10(1)(e) Supply of goods on board  a conveyance Location at which goods are taken of board
6. 10(2) Place of supply cannot be determined as per above sub-sections POS will be determined in such manner as may be prescribed

The simplification of place of supply of goods imported in India and exported out of India as covered in section 11 of IGST Act, 2017 is as follows :

B. PLACE OF SUPPLY OF GOODS IMPORTED INTO, OR EXPORTED FROM INDIA

Sl. No. Section Nature Place of Supply
1. 11(a) Goods imported into India Location of Importer
2. 11(b) Goods exported from India Location outside India

I will be covering the Place of Supply of services in separate articles.

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Category : Goods and Services Tax (2792)
Type : Articles (12556)
Tags : goods and services tax (1378) GST (962) GST Rules (25)

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