Apeksha Bansal


Post introduction of GST law on 01st July 2017, the need was felt by the government to bring amendments in the law to keep it at par with the underlying objective and demands of the industry. The proposal for amending Acts was circulated in the public domain in the month of July 2018 for comments from the stakeholders. The proposal had clearly listed down the rationale for bringing changes in the provisions of GST law. The amendments have been made effective from 01st February 2019.

In this article, we shall be discussing the amendment brought in the provision relating to place of supply for transportation of goods service i.e. Section 12(8) of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as ‘IGST Act’).

Section 12 of the IGST Act deals with the place of supply of services where location of supplier and recipient is in India.

Prior to the amendment, Section 12(8) of the IGST Act read as under:

The place of supply of services by way of transportation of goods, including by mail or courier to, –

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

The amendment has inserted the following proviso:

Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.

The applicability of the above amendment can be understood by an illustration:

Suppose, the registered person (‘XYZ’) in India has to export certain goods to China. The contract to transport goods by road (‘GTA service’) has been entered with the goods transport agency (‘supplier’) located in India. In light of the amended provision, the place of supply of service provided by the supplier shall be the destination of goods i.e. China. The place of supply shall neither be the location of XYZ nor the location of the supplier in India.


In the above illustration, the place of supply of service is outside India and supplier is located in India, it shall be treated to be a supply in the course of inter-state trade or commerce [Section 7(5)(a) of IGST Act].

Here, attention is drawn to Section 2(22) of IGST Act which defines the term ‘taxable territory’ to mean the territory to which the provisions of this Act apply. As per Section 1 of the IGST Act, the provisions of the IGST Act shall apply to the whole of India.

In the above illustration, the place of supply of service is outside India, a doubt as to whether it should be leviable to IGST at all arises since it can be argued that supply has occurred outside the taxable territory.

Export of Service?

Further, it is worthwhile to understand whether the service supplied by the supplier, in the above illustration, can qualify to be an export of service. Since the recipient is located in India, one of the conditions prescribed for an export of service under IGST Act would be said to have not been satisfied.  Therefore, the said service would not qualify to be an export of service. 

Rationale of the Amendment:

In the proposal, the rationale of the above amendment was stated as:

In order to provide a level playing field to the domestic transportation companies and promote export of goods, it is proposed that the transportation of goods from a place in India to a place outside India by a transporter located in India would not be chargeable to GST, as place of supply will be outside India. This is a taxpayer-friendly amendment”.

On reading the proposal, it appears that the government intended to promote export of goods by not charging tax on transportation of goods service where destination of goods is outside India. Further, the government also intended to put domestic transporters at par with the foreign transporters who are providing same nature of services without payment of tax.

Based on the above discussion, it appears that the above intention does not get fulfilled since tax may require to be discharged on said nature of services.

Availability of Input Tax Credit:

Analogy is drawn to the provision relating to place of supply of an immovable property, where the place of supply is the location at which the immovable property is located. It is to be noted that if the recipient is located in a state other than that of an immovable property, then availability of credit to such recipient is disputable. Similarly, in the instant case, place of supply of transportation of goods service and location of recipient are different, therefore, the availability of credit can be doubted.

Further, IGST, if payable on the above illustrated transaction, may be said to have not belong to any particular state or union territory. Thus, another doubt on availability of input tax credit in the hands of recipient can also arise.

Disclosure in returns:

As discussed above, the illustrated transaction would not qualify to be an export of service. The said transaction cannot be disclosed as exports in GSTR-1. Further, in case of payment under reverse charge mechanism by the recipient for GTA service, details have to be disclosed in GSTR-2. The details like place of supply (name of state/ Union Territory) will be required. In the absence of any state / Union Territory being a place of supply, confusion at the compliance level may also exist.


The amendment should further be made by the government to align it with the intention. In the absence of further amendment, doubt on availability of input tax credit in the hands of recipient exporting goods would continue.

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