Question: Mr. A is an interior decorator having registered office in Faridabad. He has been assigned with the interior work of a company located in Bhiwadi.

Or

Question: Mr. A is a landowner who is located in Faridabad and owns an immovable commercial property in Bhiwadi. Now there are two questions which comes in our mind:

1. Will he charge IGST or SGST/CGST?

2. Will he have to take separate registration in Bhiwadi?

The answers in relation to the above questions will depend upon 2 factors – whether the transaction is an inter-state or intra-state supply of services. For this purpose we need to understand 2 Factors:

1. Location of Supplier

2. Place of Supply

If the location of the supplier and place of supply are in two different states, the transaction is an inter-state supply. If they are in the same state, then it is an intra-state supply.

Rental & Interior Decoration Services under GST

Place of Supply

Section 12(3) of IGST Act, 2017 states that the place of supply services, directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work, shall be the location at which the immovable property is located or intended to be located.

*Therefore in the above cases, the place of supply is undisputedly Bhiwadi since the property is located there. 

Location of Supplier

Section 2(15) of IGST Act, 2017 specifies “location of supplier of services” in the following 4 clauses:

  • Where a supply is made from a place of business for which registration has been obtained, the location of such place of business.

To fulfill this test, it is important to check whether theMr. A is having any place of business in Bhiwadi just by having an immovable property there at.

Section 2(85) of CGST Act, 2017 states that ‘place of business’ is a place wherefrom a business isordinarily carried on and/or where a warehouse or godown or any other place for storage of goods is located and/or books of accounts are maintained and/or the business through agent is carried on.

Just having an immovable property doesn’t qualify this test as per section 2(85) of CGST Act, 2017 so in our examples there is no ‘place of business’ of the Mr. A in Bhiwadi.

  • 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.

To fulfill this test, it is important to check whether the supplier is having fixed establishment in Bhiwadi.

“fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure  in terms of human and technical resources to supply services or to receive and use services for its own needs .

This test of having human and technical resources is  also not qualified by just having immovable property at Bhiwadi.

So Clause (b) has no application in our case.

  • Where 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 provision of the supply.

It pertains to a supply of service from more than one establishment and thus has no application in our case.

  • In the absence of such places, the location of the usual place of residence of the supplier.

Since our case does not fall in (a),(b),(c) therefore in our case location of supplier is Faridabad.

Conclusion

1. The supply of interior decorator services/ Rental Services is an inter-state supply since the location of supplier is in Faridabad and the place of supply is in Bhiwadi and both are in two different states.

2. IGST will be charged on the interior decorator services/ Rental Services.

So, there is no need for Mr. A to take GST registration in Bhiwadi unless he intends to open a branch office there. In case, it is a new branch, then GST registration is mandatory. But if he works on assignment basis in various states, with no fixed establishment in any of them, then no separate registration is required.

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