Since the liability of GST is determined based on the supply, the place of supply under GST is necessary to be determined to conclude on the nature of supply, whether a transaction is an Intra state supply or an Interstate supply. The place of supply is determined as per Section 10 of IGST Act, discussed below:
Place of Supply of Goods other than Imported or Exported
♣ Supply involves movement of goods, whether by the supplier or the recipient or by any other person – the place of supply is the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.
Example 1: A (Supplier), from Tamilnadu delivers goods to B (Recipient) in Kerala, the place of supply is Kerala where the movement of goods terminates after delivery to B (Recipient) – IGST will be levied because it is interstate transaction.
Example 2: A (Supplier), from Tamilnadu deliver goods to C (Recipient), in Tamilnadu, the place of supply is Tamilnadu where the movement of goods terminates after delivery to C (Recipient) – CGST & SGST will be levied because it is intra-state transaction.
Example 3: B (Recipient), from Kerala takes delivery of goods from A (Supplier), in Tamilnadu at the business place of the supplier, i.e. in Tamilnadu, arranges his own transportation to take the goods to Kerala – the place of supply is Tamilnadu because the movement of goods terminates in Tamilnadu itself after deliver to B (Recipient) – CGST & SGST will be levied.
♣ When the Goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as on agent or otherwise, before or during the 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 1: B (Buyer) from Kerala purchases the goods from A (Supplier) in Tamilnadu and asks him to deliver the goods directly to C (Recipient) in Andhra Pradesh – the place of supply is Kerala as ‘B’ is the third person who directs ‘A’ to deliver the goods to ‘C’ and third person ‘B’ is deemed to have received the goods – IGST will be levied for the interstate transaction between Tamilnadu and Kerala.
Example 2: B (Buyer) from Kerala purchases the goods from A (Supplier) in Tamilnadu and asks him to deliver the goods directly to C (Recipient) in Tamilnadu – the place of supply is Kerala, the place of third person. – IGST will be levied for the interstate transaction between Tamilnadu and Kerala.
♣ Supply does not involve movement of goods, whether by the supplier or recipient, the place of supply shall be the location of such goods at the time of delivery to recipient.
Example: A (Recipient) from Tamilnadu buys a factory building in Mumbai along with pre installed machineries in the factory from B (Supplier) in Delhi – the place of supply is Mumbai as there is no movement of machineries and they are located in Mumbai.
1. Goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.
Example: A (Buyer) from Tamilnadu asks B (Supplier) in Kolkata to install a Waste water plant at his factory in Kolkata – the place of supply is Kolkata where the plant is installed – CGST & SGST will be levied.
2. 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: A (Buyer) travels on the plane from Kolkata to Mumbai and buys lunch on board, the lunch were taken on board at Kolkata; the place of supply is Kolkata – CGST & SGST will be levied.
Where the place of supply of goods cannot be determined
Where the place of supply of goods cannot be determined from the above mentioned provisions, the place of supply shall be determined in such manner as may be prescribed by the Government on the recommendations of GST Council.
Import and Export of Goods
- Goods imported into India – Location of the importer
- Goods exported from India – Location outside India
Example 1: A (Importer) from Bangalore imports goods from China – place of supply is the location of importer i.e. Bangalore – IGST will be levied as the import is considered as interstate transaction
Example 2: C (Exporter) from Chennai exports goods to Japan – place of supply is outside India i.e. Japan – No GST as export is considered as zero rated supply
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