Determination of place of supply is very important as it helps to determine if the supply is intra-state or inter-state. In case supply is intra-state, CGST and SGST is payable whereas if the supply is inter-state IGST is payable. In case of intra-state supply (i.e., supply within a state or union territory), GST rate gets bifurcated into two equal components CGST ( 50%) and SGST (50%). CGST is payable to central government whereas SGST is payable to state government. In case of inter-state supply (i.e., supply from one state of union territory to another state or union territory) IGST is payable to the central government.
Now that we have understood the importance of place of supply, next question will be how to find the place of supply. Sections 10,11,12 and 13 of the IGST Act give us the required guidance on the subject.
Section 10 IGST Act – Place of supply of goods other than (imported/exported) :
In case of goods general thumb rule is location at which movement of goods terminates is considered to be the place of supply. Where the movement of goods from one person to another is caused at the direction of a third person who may be an agent or otherwise, the place of supply will be the principal place of business of such a person. Where supply does not involve movement, the location of goods at time of delivery to recipient is the place of supply. In case of goods requiring assembling/installation at a particular site, place of supply is such site. In case where goods are supplied onboard a conveyance like aircraft, train, vessel or a motor vehicle, place of supply is location at which goods are taken onboard.
Section 11 IGST Act – Place of supply of imported/ exported goods
(a) place of supply of imported goods shall be location of the importer
(b) place of supply of exported goods shall be the location outside India where goods are exported
Section 12 and 13 of the IGST Act help us identify place of supply of services. Essence of both these sections is that if the location of recipient is available then place of supply will be the location of recipient or else the location of the supplier will be taken to be the place of supply of the services.
Certain exceptions to the above rules are contained within section 12 (3) have been briefly enumerated below:
(a) In case of services directly related to immovable property like services provided by architects, interior decorators, surveyors, engineers, valuers, or services physically performed on immovable property – place of supply will be location of immovable property
(b) In case of services by way of lodging or accommodation in hotel/inn/guest house (which is immovable), the place of supply will the place at which the immovable property is location. In case accommodation service is provided within a moving boat or vessel, the place of supply will be such place of location of the boat/ vessel. In case the boat or vessel is moving between 2 states/union territories, the place of supply will be based on the proportional value collected as can be determined from the terms of agreement or contract.
(c) In case of performance based services like restaurant, beauty treatment, health and fitness, personal grooming, ( including cosmetics and plastic surgery, the place of supply will be the location where such services are performed. In case of trainings, admission to sporting or cultural events or services pertaining to organization of such events, place of supply will be taken to be location of recipient if supply is provided to a registered person else it will be taken to be a place where such event is conducted or services are performed.
(d) In case of services pertaining to transportation of goods or passengers is provided to a registered person then the place of supply will be location of the recipient, or else the place of supply will be place where goods/passenger first on boarded the conveyance for a continuous journey.
(e) Banking, insurance and telecommunication service- Place of supply will be the location of recipient as per the records of supplier, where such record is not available it will be the location of the supplier of the service.
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