B. S. Seethapathi Rao
IGST ACT means any transaction relating to Inter-State supply of goods and services or both between two taxable persons (Previously CST Sales or Purchases) situated in different States now treated as IGST transaction under Integrated Goods and Services Tax (IGST) Act, 2017. As per Article 269A (1) of Constitution of India inserted by on 16.09.2016, tax is imposed on such transactions by the Government of India and also IGST tax leviable on imports.
As per Section 2(12) of IGST Act, 2017, integrated tax means the integrated goods and services tax levied under IGST Act,2017.
The rate of IGST Tax is double the CGST rate. IGST and CGST rates will be same all over India and there are no differences in IGST rates between States to State. IGST is payable on inter-State stock transfers and branch transfers etc. The basic aspects of IGST are as follows:
I. IGST is payable on supply of goods or services or both in inter-State supplies,
II. IGST is intermediary tax mainly on business to business (B2B) transactions. It is not envisaged as final tax since input tax credit of IGST will be available to recipient in another State.
III. If IGST is paid on Business to Customers ( B2C) transactions , the State where goods or services or both are consumed will get their share of SGST.
IV. IGST Rate is double the CGST rate and will be uniform al over India.
V. IGST will ensure that goods or services or both and taxes move together across the country, which will ensure seamless and tax free movement of goods and services within the country.
VI. In view of IGST , there will be no need to claim refund of input taxes, except in case of physical exports and supplies to SEZ.
VII. Export and supplies to Special Economic Zones (SEZ) are zero rated .so, Input Tax Credit is available even if tax is not paid on output. This will make exports and supplies to SEZ actually tax free.
VIII. IGST, concept of supply instated of sales and removal of distinction between goods and services are game changers in GST.
Inter-State supply of aircraft engines, parts and accessories by airlines to own branch: Inter – State supply of aircraft engines, parts and accessories by airlines to own branch in another State will be subject to IGST. The Input Tax Credit can be availed for payment of tax on inter-State supply even if the airlines are not allowed to take input tax credit for supply of services of transport of passengers by air in economy class as per circular no. MF(DR) 16/16/2017 – GST dated.15.11.2017.
According to section 5(3) of IGST Act makes provisions in respect of reverse charge in case of notified services. Section 5(4) of IGST Act provides for reverse charge when supplies are received from un-registered person.
Determination of place of supply and when supply is inter-State : Parliament may, by law, formulate principle for determining (a) place of supply of goods or services (b) when supply of goods or services or both are in the course of inter-State or commerce as per Article 269A(2) of Constitution of India inserted w.e.f. 16.09.2016. Following provisions of Integrated Goods and Services Tax Act, 2017 deals with the determination of Place of Supply:-
| Section | Description |
| Section.10 | Determination of Place of Supply of Goods ( other than goods imported into or exported from India) |
| Section.11 | Determination of Place of Supply for Goods Imported into India and Exported from India |
| Section.12 | Determination of Place of Supply of Services where location of supplier and recipient of service is in India |
| Section .13 | Determination of Place of Supply of Services where location of suppler or location of recipient is outside India |
| Section .14 | Special provision for payment of tax by supplier of online information and database access or retrieval services (OIDAR) |
Location of the Recipient of the Services: As per Sec.2(70) of the Goods and Services Tax Act,2017, “ Location of the Recipient of the Services” means :-
(i) Where a supply is received at a place of business for which the registration has been obtained, the location of such place of business,
(ii) Where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment.
(iii) Where a supply is received at more than one establishment , whether the place of business or fixed establishment , the location of the establishment most directly concerned with the receipt of the supply , and
(iv) In absence of such places, the location of the usual place of residence of the recipient.
1. Location of the Supplier of Services: As per Sec.2(71) of the Goods and Services Tax Act,2017, “ Location of the Supplier of Services” means :-
(i) Where a supply is made from a place of business for which the registration has been obtained, the location of such place of business,
(ii) Where a supply is made from a place other than the place of business for which registration has been obtained ( a fixed establishment elsewhere ), the location of such fixed establishment,
(iii) Where a supply is made from more than one establishment , whether the place of business or fixed establishment , the location of the establishment most directly concerned with the provisions of the supply, and
(iv) In absence of such places, the location of the usual place of residence of the supplier.
Section 10. Place of Supply of Goods other than goods imported into or exported from India:
As per Section 10 (1)(a) of IGST Act,2017: Supply involves movement of Goods : This provision deals with the determination of place of supply where the supply of goods involvement movement of goods . The movement of goods may be by the supplier, recipient or any other person . The place of supply of goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. This indicates that even if goods are moved by some other person the place of supply will be the place of where such movement of goods is terminated for delivery to the recipient.
Example:1 . If A BC Limited is a supplier and situated in Orissa supply goods to XYZ company Ltd, situated in Tamil Nadu , then the movement of goods and the place of supply will be Tamil Nadu where the movement terminates for delivery. Even if during such movement of goods, it passes through some other states, the place of supply will be Tamil Nadu.
As per Section 10(1)(b) of IGST Act,2017: Goods are delivered by the supplier to a recipient or any other person , on the direction of a third person. This provision deals with the situation wherein the goods are delivered by the supplier to:-
(i) A recipient on the direction of a third person or
(ii) Any other person, on the direction of a third person,
Before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise.
In such situation by way of deeming provisions the principle place of business of such third person shall be treated as place of supply. Such transaction are also commonly known as Bill-to-Ship transaction.
Example: II .
(i) If X Ltd ( In Delhi) supplies goods to Y Ltd . ( in Maharashtra) and during the course of movement of goods, Y Ltd , directs X ltd to deliver the goods to Z Ltd (Agent to Gujarat). In such case although the goods are delivered in Maharashtra , by way of deeming provisions the place of supply will be considered Gujarat. In this case X Ltd will raise an invoice on Y Ltd and Y ltd will raise a separate invoice on Z.
(ii) A Ltd , based out of West Bengal is an agent of C Ltd, based out of Maharashtra. A Ltd purchase certain materials from F Ltd, based our of Rajasthan and directs to send the material directly to the premises of C ltd in Maharashtra. In this situation place of supply will be West Bengal.
As per section 10(1)( c) of IGST Act,2017,Supply does not involve movement of goods : whether by the supplier or the recipient , the place of supply shall be the location of such goods at the time of the delivery to the recipient.
Example: III . A manufacturer in Andhra Pradesh hires a machine in Andhra Pradesh from a supplier in Telangana and later on decides to purchase the said machine. The place of supply in such case will be Andhra Pradesh as this does not involve any movement of goods.
As per section 10(1)(d) of IGST Act,2017: Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.
Example: IV . If a supplier from Tamil Nadu installs a machinery in Andhra Pradesh, the place of supply will be Andhra Pradesh, If the suppler supplies the machinery which is not assembled in Tamil Nadu and the buyer himself assembles it in Andhra Pradesh then place of supply will be Tamil Nadu.
As per Section 10(1) (e) of IGST Act,2017: Where the 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. V.
1. If a vessel starts from Goa for Mumbai and goods are sold in the vessel. The place of
2. X boards a flight for Chennai from Kolkata and purchases a bottle of water in the flight during his journey. As Mr. X. had boarded the flight from Kolkata the place of supply is Kolkata.
Place of supply of goods imported into, or Exported from India:
As per Section 11 of the IGST Act, 2017, provides the place of supply of goods in case of Imports and Exports. It states that place of supply in case of Imports is the location of supplier and in case of exports it is the location outside India.
Examples. VI.
(i) A Ltd, a manufacturer of Andhra Pradesh imports certain commodity from Singapore. In such case place of supply will be Andhra Pradesh.
(ii) In the above example if the goods are unloaded at the Kochi Port and then trough road/railway transported to Andhra Pradesh, in such case also the place of supply will be Andhra Pradesh,
(iii) However, in the above example if the A Ltd has a warehouse in Kochi where the imported goods are stored, in such case the place of supply should be Kerala.
Section 12 of IGST Act,2017,Determination of Place of Supply of Services where location of supplier and recipient of service is in India :Sec.12 deals with the identification of place of supply of services where the location of supplier of service and the location of the recipient of service is in India. In case either the location of supplier of services or the location of the recipient of services is outside India. i.e. Import or Export of services, the place of supply shall be determined as per the Sec.13.
Section 12 defines the place of supply f services in the following manner:-
(i) General Principle: As per Section 12 (2) of IGST Act,2017,Where supply is made to registered person or any other person,
(ii) Specific Situations: As per Section 12(3) to 12(14).
A. As per section 12(2)(a) of IGST Act,2017,”General Principle where supply is made to registered person “. As a general principle if the supply is made to a registered person then the place of supply shall be the location of such person.
Example: 1.
(a) A Ltd, based in A.P provides certain services to B Ltd based in Maharashtra who is registered under GST Law in such case the place of supply will be Maharashtra.
(b) In the above case if B Ltd is not required to get himself registered under the provisions of GST Law, however it chooses to get himself registered voluntary. In such situation also the place of supply will be the locations of recipient of supply. i. e. Maharashtra.
B. As per section 12(2)(b) of IGST Act,2017,”General Principle where supply is made to a person other than a registered person.
Where the supply of service is made to a person other than a registered person , the place of supply shall be:-
(i) The location of the recipient where the address on record exits, and
(ii) The location of the supplier of services in other cases.
Addresses on record means the addresses of the recipient as available in the records of the supplier.
Example.2.
(a) A Ltd, based in Vijayawada provides certain services to Y Ltd, based in Orissa who is not required to het registered under the GST Law. The place of supply in such situation will be Orissa.
(b) B Ltd, based in Telangana provides certain services to X Ltd, who is not required to get registered under GST Law. The place of supply in such situation will be Telangana as the address of the recipient does not exist on record.
c. Specific Situations:
1. As per Section 12 (3) of IGST Act,2017, Supply of services in relation to Immovable Property or Boat or Vessels.
Following services are covered under this:
1) Services provided by architects, interior decorators, surveyors, engineers and other related experts or estates agents directly in relation to immovable property.
2) Services provided by way of grant of rights to use immovable property or for carrying out co-ordination of construction work.
3) Lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called and including a house boat or any other vessel,
4) By way of accommodation in any immovable property for organizing nay marriage, reception , etc.,
5) Any services ancillary to the above.
The place of supply in above cases shall be the location of immovable property or boat or vessel.
However, if the immovable property or board or vessel for which services are provided is located outside India or is intended to be located outside India in such case the place of supply shall be the location of recipient.
Further , if the immovable property or board or vessel is located in more than one state then the supply shall be treated as made to each state in proportion to the value of services collected or determined.
Examples.3.
(1) X Ltd . have multiple hotels in different states and provides hotel accommodation services from each of such hotels. Thus , place of supply of services in each such case will be the place where the hotel is located. This means that place of supply for hotel located in Tamil Nadu will be Tamil Nadu.
(2) In the above case if X Ltd .hires an expert to determine the standard room rent for each f its hotel located in Kolkata, Mumbai and Chennai. The expert will charge Rs.1,50,000/-. The place of supply in this case will be Kolkata, Mumbai and Chennai and the value of services will be Rs.50,000/- each.
(3) Y Ltd. Based in Chennai plans to open a hotel in Dubai and appoints an architect from Chennai to develop a design. The place of supply for the services provided by the architect will be Chennai.
(4) X Ltd. Based in Mumbai hired Y ltd. to organize an official function in Dubai for all its Finance Executives. The place of supply in this case will be Mumbai.
(5) X ltd , invest in properties across the country with an aim to let out for commercial purpose. It has entered into a lease agreement for letting out its property in West Bengal to a company which is registered in Maharashtra. In this case place of supply will be West Bengal and location of supplier of service will be Chennai.
(6) Mr. X Ltd, of Jodhpur entered into a lease agreement with Mr. Y of Jaipur whereby he leased out his shop in Nagpur to Mr. Y. In this case although the supplier and recipient of service is in Rajasthan the place of supply shall be location of shop. i.e .Nagapur.
(7) Mr. A. an executive of XYZ Ltd., goes on a site visit to Noida (Uttar Pradesh). In view of the close proximity with airport, he chooses to stay in a hotel situated in New Delhi. The place of supply of services by Hotel will be New Delhi.
2.Section .12(4) of IGST Act,2017,Restaurant and Catering Services, Personal Grooming, Fitness etc:
Following services are covered:
(1) Restaurant and Catering Services,
(2) Personal Grooming,
(3) Fitness,
(4) Beauty Treatment,
(5) Health Services ( including cosmetic and plastic surgery),
In the above cases the place of supply will be the place where the service is actually performed.
Example .VII.
1. Mr. Y is a freelancer and provides personal grooming services to different people across the country. The place of supply in such case will be the state in which service is provided.
2. Mr. A operates out of Patna and provides catering services in various parties and marriage ceremony. Mr. B, resident of Patna, has appointed Mr. A to provide catering services in its destination wedding organized at Puri, Odisha. In this case place of supply will be Puri although the both Mr. A and Mr. B are from Patna.
3.Section 12(5) of IGST Act, 2017, Training and Performance Appraisal services: This provision covers “training and performance appraisal services. If the aforesaid services are provided to registered person, place of supply will be the location of such person i.e. Location of registered person.
In any other case the place of supply hall be the location where the services are actually performed.
Example. VIII.
Mr. D is a freelancer and provides training to corporates across the country. He provides training on GST readiness to XYZ Ltd, place of business in Kolkata. However, the training sessions were conducted in Chennai. In this case although the training sessions were conducted in Chennai the pace of supply will be Kolkata ( Assuming XYZ Ltd is a registered person). However, if XYZ Ltd. is not registered the place of supply will be Chennai.
4.Section 12(6) of IGST Act, 2017, Services for admission to even: The following services are covered under this:
(i) Services for admission to a culture, artistic, sporting, scientific, educational or entertainment event or amusement park or any other place and
(ii) service ancillary thereto.
Place of supply in relation to the above shall be the place where the event is actually held or where the park or such other place is located.
Example. IX.
a. B ltd, based on Chennai operates an amusement park in Maharashtra. It provides services by way of admission to the said park. In such case the place of supply will be Maharashtra.
b. Mr. D of Kolkata , booked an online Tiger safari at the Ranthambor National Park, Rajasthan and hired a jeep to be taken around for the safari. Determine the place of supply of services. In this case there are two services, admission to National Park and hiring of jeep. The place of supply in both these cases will be Rajasthan as the park is situated in Rajasthan.
5. Section 12(7) of IGST Act,2017, Services for organizing an even: The flowing services are covered under this clause:-
i) Organizing of a cultural, artistic, sporting, scientific , educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebrations or similar events,
ii) Services ancillary to organization of any of the above events or services,
iii) Assigning of sponsorship of any of the above events.
If the aforesaid services are provided to a registered person, place of supply will be the location of such person. i.e. Location of registered person.
In any other case the place of supply shall be the location where the event is held. However, if the event is held outside India the place of supply shall be the location of recipient.
Example. X.
(i) C ltd. based in West Bengal is an event management company and organizes conferences/event/programs across the country. ABC Ltd, is based in Karnataka hires C ltd to organize conference in Jaipur. If ABC Ltd, is a registered person then place of supply will be Karnataka irrespective of the fact that the conference was organized in Jaipur. However, if ABC ltd, is not registered, place of supply will be Jaipur (Rajasthan).
(ii) In the above case if ABC Ltd. ask C Ltd.to organize an event in Singapore for all its employee, in such case the place of supply will be Karnataka.
6. As per Section 12(8) of IGST Act, 2017, Services for Transportation of Goods: This covers services for transportation of goods including by mail or courier. If the aforesaid services are provided to a registered person, place of supply will be the location of such person i.e. Location of registered person. In any other case the place of supply shall be the location at which such goods are handed over for their transportation.
Example. XI.
S Ltd. is a transportation company and provide services for transportation of goods from one place to another . S Ltd. provide service to A Ltd. based in Chennai, Tamil Nadu for transportation certain materials from Uttar Pradesh to West Bengal. If A Ltd. is a registered person, place of supply will be Tamil Nadu and if he is not registered place of supply will be Uttar Pradesh.
7. Section 12(9) of IGST Act,2017 Passenger transport Services: This covers services for transportation of passenger. The place of supply in this case will be :-
(i). If the services is provided to a registered person it shall be the location of such person,
(ii). If the services is provided to a person other than the registered person, place of supply shall be the place where the person embarks on the conveyance for a continuous journey.
However, if the right to passage is given for future use and the point of embarkation is not known at the time of issue of right, place of the supply shall be:-
(1). If the supply is made to a registered person then the place of supply shall be the location of such person.
(2). Where the supply of service is made to a person other than registered person, the place of supply shall be:-
> The location of the recipient where the addresses on record exists, and
>The location of the supplier of services in other cases.
> Return journey shall be treated as a separate journey even if the right is issued along with the onward journey.
Examples. XII.
(i) A Ltd. based in Gujarat has fleet of business and provides passenger transportation services. XYZ Ltd. based in Mumbai hires A Ltd. for transfer of its office employees through its buses to Goa and bring back after 3 days. If XYZ Ltd is a registered person, the place of supply will be Mumbai ( Maharashtra).
(ii) In the above example ,If A ltd, runs a weekly bus from Mumbai to Goa and issues tickets to various people (not a registered person), the place of supply will be Mumbai , Maharashtra as the passengers will embark on the journey from Mumbai.
(iii) In the above example , If A Ltd, runs a weekly bus from Mumbai to Goa and during a festive season, issues right to use the said service to anytime during the next 1 year to some of its frequent customers . If the said right is issued to unregistered persons and A ltd has kept address on record of such customer, place of supply will be location as per address of record.
(iv) In the above example, if A ltd , runs a weekly bus from Mumbai to Goa and issues tickets to various people ( not a registered person), some of the people also purchases return tickets i.e. from Mumbai to Goa will be Mumbai and from Goa to Mumbai. In such situation the place of supply for Mumbai to Goa will be Mumbai and from Goa to Mumbai will be Goa even if the ticket was purchased in Mumbai.
8. As per Section,12(10) of IGST Act, 2017: It covers the supply of services on board a conveyance such as vessel, aircraft, train or motor vehicle. The place of supply in such case will be the first schedule point of departure of that conveyance for the journey. This rule intends to cover the services like movie, music, video, software games, etc., provided on board against a specific charge which is not supplied as part of the fare.
Example. XIII.
A video game or movie on demand is provided as on-board entertainment curing the course of Hyderabad to Delhi Flight. The place of provision of service will be Hyderabad. However, of the flight is ultimately bound to Switzerland. (Out Side India), then it is not liable to GST.
9. As per Section 12(11) of IGST Act, 2017, Telecommunication Services: It covers the supply of following services.
(i) Telecommunication Services,
(ii) Data Transfer,
(iii) Broadcasting,
(iv) Cable,
(v) Direct to home transfer (DTH),
The place of supply in this case will be:-
| Service is provided by way of fixed telecommunication line, leased circuits, internet leased circuit , cable or dash antenna. | Place where the telecommunication line, leased circuit or cable connection or dish antenna is installed. |
| Mobile connection for telecommunication and internet services provided on post-paid basis | Location of billing address of the recipient of services on record of the supplier. |
| Where mobile connection for telecommunication, internet service and direct to home television services are provided on prepayment through a voucher or any other means. | 1.Through selling agent or a reseller or a distributor of SIM card or re-charge voucher, shall be address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply, or
2. By any person to the final subscriber shall be the location where such pre-payment is received or such vouchers are sold. |
| Any other case | Address of the recipient as per records of the supplier. |
However, if the address of the recipient is not available, the place of supply will be the location of supplier. Further, if the pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on record of the supplier of services shall be the place of supply of such service.
10. As per Section 12(12) of IGST Act, 2017,Banking and other Financial Services including Stock Broking Services: It covers the supply of following services:-
i). Financial Services,
ii). Baking Services,
iii). Stock Broking Services.
The place of supply will be location of recipient of the services on records of the supplies of services. If the Location is not on records it shall be the location of supplier.
Examples. XIV.
(i) If person in Andhra Pradesh buys shares from a broker in Delhi on NSE (in Maharashtra) . The place of supply shall be the location of the recipient of services on the records of the supplier of services. So, Andhra Pradesh shall be the place of supply.
(ii) If a person from Rajasthan goes to West Bengal and undertakes certain services from HDFC Bank then if the service is not linked to the account of person , place of supply shall be West Bengal , i.e. the Location of the supplier of services . However if the service is linked to the account of the account , the place of supply shall be Rajasthan, the location of recipient on the records of the supplier.
11. As per Section .12(13) of IGST Act, 2017, Insurance Services: It covers the supply of Insurance service. If the afore said services are provided to a registered person, place of supply will be the location of such person, i.e. Location of registered person. In any other case the place of supply shall be the location of recipient of services on the records of the supplier of services.
Example. XV.
If a person from Bihar takes a flight from Kolkata airport for Mumbai and takes travel insurance from Kolkata. Then the place of supply will be Bihar. i.e. the location of the recipient of services on records of the supplier of insurance services.
Section.13 of IGST Act 2017, Place of supply of services where the Location of supplier or the Location of recipient of services is outside India: Section 13 deals with the identification of place of supply of services where the location of supplier of service or the location of the recipient of service is outside India. The provision aims to identify the import and export of services.
Meaning of the term Import of Services: The term “ Import of Services “ is defined under Section 2(11) of IGST Act,2017. It reads as:-
Import of service means the supply of any service, where:
(i) The supplier of service is located outside India,
(ii) The recipient of service is located in India, and
(iii) The place of supply of service is in India.
Meaning of the term “ Export of Service” : The term “ Export of Services” means the supply of any service when:
(i) The supplier of service is located in India,
(ii) The recipient of service is located outside India,
(iii) The place of supply of services is outside India,
(iv) The payment for such service has been received by the supplier of service in convertible foreign exchange and
(v) The supplier of service and recipient of service are not merely establishments of a distinct person in accordance with explanation 1 in section .8.
Section defines the place of supply of services in the following manner:
(A) General Principle as per section 13(2) of IGST Act,2017,
(B) Specific Situations as per section 13(3) to 13 (13) of IGST Act, 2017.
(A). General Principle: In general the place of supply of services shall be the location of the recipient of service. However, if the location of the recipient of service is not available in the ordinary course of business, the place of supply shall be the location of the supplier of service.
(B). Specific Situation:
1. As per Sec.13 ((3) (a) of CGST Act,2017, Services supplied in respect of goods that are required to be made physically available by the recipient . This aims to cover those situations where the services are performed by the supplier of services on the goods that are made available by the recipient of services or any person acting on his behalf .In such situation the place where the services are performed shall be the place of supply. However, if the services are performed from a remote location through electronics means, the place of supply shall be the place where the goods were situated.
This provision does not cover situations where the goods are imported temporarily into India for repair and are exported after repairs.
Where the service is provided in more than one location, including a location in taxable territory its place of supply shall be the location in the taxable territory (Sec.13 (6) of IGST Act,2017).
Example: XVI.
Mr. X .Ltd based out of Switzerland hires a service provider in India (BCD Ltd) to perform quality check on all its goods to India (Mumbai) after clearance from the custom authorities. The goods will be supplied by its custom clearing agent (C Ltd) to perform quality check. In this case, place of supply for services provided by both BCD Ltd, and C Ltd to X LTD will be Chennai.
2. As per sec.13(3) (b) of CGST Act, 2017,Services supplied to an individual which require physical presence: It covers situation where the services supplied to an individual, represented either as the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the recipient, with the supplier for the supply of the service. Where the service is provided in more than one location, including a location in taxable territory its place of supply shall be the location in the taxable territory (Sec.13(6) of IGST Act, 2017.
3. As per Sec.13(4) of IGST Act, ”Supply of service in relation to Immovable Property”:
The place of supply in the following cases will be the place of supply where the immovable property is located or is intended to be located:-
(i) Services supplied directly in relation to an immovable property , including services supplied in this regard by experts and estate agents,
(ii) Supply of hotel accommodation by a hotel, inn, guest house, club or camp site,
(iii) Grant of rights to use immovable property,
(iv) Services for carrying out or co-ordination of construction work, including architects or interior decorators.
Where the service is not provided in more than one location , including a location in taxable territory its place of supply shall be the location in the taxable territory as per section 13(6).
Examples. XVII.
A. B Ltd. is a famous interior decorator from Mumbai who provides services across the world. Mr. P of Dubai hires B.Ltd for interior decoration of his hotel in Bangkok. The place of supply of service in this case will be Bangkok.
B. Mr.C is a Non Resident Indian (NRI) and has several properties in different parts of the country. He has appointed Mr. S to give the properties on lease on his behalf and also collect rent from the said properties. In this case, place of supply will be the location of such immovable properties.
4. As per section 13 (5) of IGST Act,2017 , “Services by way of admission to events”: The place of supply services by way of admission o , or organization of , a cultural, artistic, sporting, scientific, educational , or entertainment event, or a celebration, conference, fair, exhibition, or similar events, and of services ancillary to such admission, shall be the place where such event is actually held.
Where the service is provided in more than one location, including location in taxable territory its place of supply shall be the location in the taxable territory as per section 3(6).
Example. XVIII.
XYZ Ltd is of United states is organizing a World Dance Championship for which they have to identify the best dance teams from different countries. They have appointed B Ltd for organizing the events in all four metro cities of India to identify the dance troops which can represent India at World Dance Championship finals to be held in Dubai. The place of supply for service in this case will be each such metro cities.
5. As per Sec.13(8) of IGST Act,2017,Cases where place of supply is location of supplier of services:
i) Non-banking financial company, to account holders,
ii) Intermediary services.
iii) Services consisting of hiring of means of transport including yachts but excluding aircraft and vessels, up to one month.
As per Section 2(13) of IGST Act,2017, Meaning of Intermediary, “ Intermediary “means a broker an agent or any other person, by whatever name called , who arranges or facilities he supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own.
6. Supply of services for transportation:
(A). Section 13(9)of IGST Act,2017: Transportation of supply of goods, other than mail or courier : The place of supply of services shall be the place of destination of goods.
(B). Section.13(10) of IGST Act 2017: Passenger transportation : Place of supply shall be the place where the passenger embarks on the conveyance for a continuous journey.
As per Sec.2(3) of IGST Act,2017, Continuous Journey means:-
> A journey for which a single or more than one ticket or invoice is issued at the same time,
> Either by a single supplier of services or through an agent acting on behalf of more than one supplier of service , and
>Which involves no stopover between any of the legs of the journey for which one or more separate tickets or invoices are issued .
> Explanation:- the term “stopover” means a place where a passenger can disembark either to transfer to another conveyance or break his journey for a certain period in order to resume it at a later point of time.
7. As per Section 13(11) of IGST Act, 2017, Services provided on board a conveyance: Place of supply of services provided on board a conveyance during the curse of a passenger transport operation , including services intended to be wholly or substantially consumed while on board , shall be the first schedule point of departure of that conveyance for the journey.
8. As Section 13(12) of IGST Act, 2017, Services for online information and database access or retrieval service:
The place of supply of service in this case shall be the location of recipient of services. For this purposes of this section , person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied, namely:
(a) The location of address presented by the recipient of service via internet is in taxable territory,
(b) The credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of service settles payment has been issued in the taxable territory,
(c) The bill addresses of recipient of service in which the account used for payment is maintained is in the taxable territory,
(d) The internet protocol address of the device used by the recipient of service is in the taxable territory,
(e) The bank of recipient of service in which the account used for payment is maintained is in the taxable territory,
(f) The country code of the subscriber identity module (SIM) card used by the recipient is in the taxable territory,
(g) The location of the fixed land line through which the services is received by the recipient is in taxable territory,
Meaning of Online information and database access or retrieval services : As per section 2(17) of IGST Act, 2017, “ Online information and database access or retrieval services “ means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as;
1) Advertising on the internet,
2) Providing cloud services,
3) Provisions of e-books, movie, music, software and other intangibles via telecommunication networks or internet,
4) Providing data or information retrieval or otherwise to any person, in electronic form through a computer network,
5) Online supplies of digital content (movies, television shows, music etc.,),
6) Digital data storage, and
7) Online gaming.
9. Section 13(13) of IGST Act, 2017, Power of Central Government: In order to prevent double taxation or non-taxation of the supply of a service , or for the uniform application of rules, the Government shall have power to notify any description of service or circumstances in which place of supply shall be the place of effective use and enjoyment of a service.
10.Section 14 of IGST Act, 2017,Special provision for payment of tax by a supplier of online information and data base access or retrieval services:
1. Applicability: This provision applies on:
> Supply of online information and database access or retrieval services,
> By any person located in a non-taxable territory and
> Received by a non-taxable online recipient.
2. Payment of Tax: In this case the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services.
3. Intermediary deemed to be recipient of services: An intermediary located in the non-taxable territory , who arranges or facilities the supply of such services, shall be deemed to the recipient of such services from the supplier of services in non-taxable territory and supplying such services to the non-taxable online recipient except when intermediary satisfies the following conditions, namely:-
(a) The invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory,
(b) The intermediary involved in the supply does not authorize the charge to the customer or take part in its charge which is that the intermediary neither collects or processes payment in any manner not is responsible for the payment between the non-taxable online recipient and the supplier of such services,
(c) The intermediary involved in the supply does not authorize delivery , and
(d) The general terms and conditions of the supplier are not set by the intermediary involved in the supply but by the supplier of services.
4. Simplified Registration: The supplier of online information and database access or retrieval services shall, for payment of integrated tax, take a single registration under the Simplified Registration Scheme to be notified by the Government.
5. Evaluation of services whether or not OIDAR Service:
| SERVICE | WHETHER PROVISION OF SERVICE MEDIATED BY INFORMATION TECHNOLOGY OVER THE INTERNET R AN ELECTRONIC NETWORK | WHETHER IT IS AUTOMATED AND IMPOSSIBLE TO ENSURE IN THE ABSENCE OF INFORMATION TECHNOLOGY | OIDAR SERVICE
( YES OR NO) |
| Pdf document manually emailed by provider | YES | NO | NO |
| Pdf document automatically emailed by providers system | YES | NO | NO |
| PDF document automatically downloaded from site | YES | YES | YES |
| Stock photographs available for automatic download | YES | YES | YES |
| Online course consisting of pre-recorded videos and downloadable | YES | YES | YES |
| Online course consisting of pre-recorded videos and downloadable pdf plus support from a live tutor | Yes | NO | NO |
| Individual commissioned content sent
Indigitaal form like photographs, reports, etc., |
YES | NO | NO |
Example .XIX.
List of OIDAR Services:
| Website supply, web hosting, distance maintenance of programs and equipment’s. | a. Website and webpage hosting,
b. Automated, online and distance maintenance of programs, c. Remote systems administration, d. Online data warehousing where specific data is stored and retrieved electronically, e. Online supply of on demand disc space. |
| Supply of software and updating thereof | a. Accessing or downloading software (including procurement/ accountancy programs and anti-virus software) plus updates,
b. Software to block banner adverts showing, otherwise known as banner blockers, c. Download drivers, such as software that interfaces computers with peripheral equipment (such as printers), d. Online automated installation of filters on websites, e. Online automated installation of firewalls. |
| Supply of images, text and information and making available of database | a. Accessing or downloading desktop themes,
b. Accessing or downloading photographic or pictorial images or screensaver, c. The digitized content of books and other electronic publications, d. Subscription to online newspaper and journals, e. Weblogs and website statistics, f. Online news, traffic information and weather reports, g. Online information generated automatically by software from specific data (in particular such data as continually updated stock market, in real time), h. The provision of advertising space including banner ads on a website/web page, i. Use of search engines and internet directories. |
| Supply of music , films, and games including games of chance and gambling games and of political, cultural, artistic , sporting, scientific and entertainment broadcasts and events. | a. Accessing or downloading of music on to computers and mobile phones,
b. Accessing or downloading of jingles, excerpts, ringtones, or other sounds, c. Accessing r downloading of films, d. Downloading of games on to computers and mobile phones, e. Accessing automated online games which are dependent on the internet or other similar electronic networks, where players are geographically remote from one another. |
| Supply of distance teaching | a. Automated distance teaching dependent on the internet or similar electronic networks to function and the supply of which requires limited or no human interventions, including virtual classrooms except where the internet or similar electronic networks is used as a tool simply for communication between the teacher and the student,
b. Workbook completed by pupils online and marked automatically without human interventions. |
NOTE: Central Government through Notification No. 2/2017 Integrated Tax dated 19th June, 2017 notified the Principal Commissioner of Central Tax, Bengaluru West and all the officers subordinate to him as the officers empowered to grant registration in case of online information and database access or retrieval services provided or agreed to be provided by a person located in non-taxable territory and received by a non-taxable online recipient.
Author – B.S.Seethapathi Rao, Chairman, AIFTP(Southern Zone), BSR Associates, Tax Consultants, Kakinada
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