How to determine place of supply in various supply of services as per Section 12(1) to 12(14) under IGST Act, 2017

Today I’m going to discuss about ‘How to determine place of supply in various supply of services under GST’. Effective from 01.07.2017 many services are included under Tax Net in India. The Goods and Services Tax Act, 2017 is introduced all over India (Except Jammu and Kashmir up to 7.7.2017). In Jammu and Kashmir GST Act is been applicable from 8.7.2017.

Let us understand what is Place of supply? How to determine Place of supply in various services as per Section 12(1) to Sec.12(14) of IGST Act, 2017? What is the importance of Place of supply in Supply of services under GST Law?. Now we have to study the definitions of Important terms to apply GST Law on Place of supply in various services as per GST Law,2017 for better understanding.

The Goods and Services Tax is a destination based tax. The Government has designed to tax goods and Services under GST Law is based on identifying whether the supply made is Inter Sate supply of services or Intra State supply.

In case of Inter State Supply of services Integrated Goods and Services Tax (IGST ) is applicable and in case of Intra State Supply of Service, Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST) is applicable.

As per Section 2(86) of the CGST Act,2017, states that “Place of Supply” means the place of supply as referred to in Chapter –V of the Integrated Goods and Services Tax Act (IGST ) 2017.

Section 12 (1) to Section 12(14) of IGST Act, 2017 deals with Determination of Place of Supply of Services,i.e. “Services where location of Supplier and recipient of services is in India” in various types of Supply of Services.

Place of Supply of Services

Section 12 of IGST Act, 2017 defines the place of supply of services in the following manner:-

(a) General Principle : As per Section 12(2)(a), Sec. 12(2)(b)(i) and Sec. 12(2)(b)(ii) of IGST Act, 2017, Where supply is made to registered person or any other person,

(b) Specific Situations: As per Section 12(3) to 12(14) of IGST Act, 2017.

General Principle where supply is made to registered person:

As per Section 12(2)(a) of IGST Act,2017, If the supplier made supply of services to a registered person,then the place of supply shall be location of such person.

Example: Madan Interties, Registered taxable person at Telangana State, provide certain services to Subhadra Solutions, registered taxable person at Chennai. In this case the place of supply will be Chennai, Tamil Nadu. Because Subhadra Solutions is a registered person. So, supply made to a registered person by the supplier.

General Principle where supply is made to a person other than a registered person :

As per Section 12(2)(b)of IGST Act, 2017, Where the supply of service is made to a person other than registered person, the place of supply shall be:-

(a) The location of the recipient where the address on record exists, and

(b) The location of the supplier of services in other cases.

As per Section 2(3) of the CGST Act,2017, Address on record means the address of the recipient as available in the records of the supplier.

Example:

(1) M/s. Spectral Corporation, Mumbai (Maharashtra) provides certain services to XYZ company Ltd, Delhi who is not required to get registered under GST Law. The place of supply in such situation will be Delhi.

(2) M/s. Sardar Enterprises, Chennai provides certain services to Sundar Corporation Ltd, who is not registered to get registration under GST Law, 2017. The Place of supply in such situation will be Chennai as the address of the recipient does not exit on record.

Here with I am giving examples to easy understand about determination of place of supply as per Sec.12(2)(a), Sec.12(2)(b)(i) and Sec.12(2)(b)(ii) of IGST Act, 2017.

General Principle:

Section Situation Place of Supply
12(2)(a) Where supply of services made to registered person Location of recipient of service
12(2)(b)(i) Where supply is made to an unregistered person where address is available on record Place of where address is available on record
12(2)(b)(ii) Where supply is made to an unregistered person where address is not available on record. Location of the supplier

Specific Situation: Section 12(3) of IGST Act, 2017 deals with “Supply of services in relation to Immovable Property or Boat or Vessel. These following services are covered in this Specific Situation.

(a) Services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents directly in relation to immovable property,

(b) Services provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work,

(c) 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,

(d) BY way of accommodation in any immovable property for organising any marriage, reception etc.,

(e) Any services ancillary to the above.

i). Determination of place of supply in the above cases shall be “Location of immovable property or boat or vessel”.

ii). 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.

iii). 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 on ”Supply of services in relation to Immovable Property or Board or Vessels as per Sec.12(3) of IGST Act, 2017.

(i) M/s. Vijaya Hotels have multiple hotels in different states and provides hotel accommodation services from each of such hotels. Thus, place of supply of service in each such case will be the place of supply where the hotel is located. This means that place of supply for hotel located in Mumbai and Maharashtra will be Mumbai.

(ii) In the above case if M/s. Vijaya Hotels hires an expert to determine the standard room rent for each of its hotel located in Mumbai, Kolkata and Hyderabad. The expert will charge Rs.1,20,000/-. The place of supply in this case will be Mumbai, Kolkata and Hyderabad and the value of service will be Rs.40,000/- each. (Assume equal service).

(iii) M/s. XYZ Ltd (based in Delhi) plans to open a hotel in Singapore and appoints an architect from Delhi to develop a design. Under that circumstances, place of supply for the services provided by the architect will be Delhi.

(iv) ABC enterprises Limited (Based in Vijayawada, A,P) hired Prasad & Co, to organise an official function in Switzerland for all its finance executives. The place of supply in this case will be Vijayawada.

(v) M/s. XYZ 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 Hyderabad, Telangana to a company which is registered in Delhi. In this case place of supply will be Hyderabad, Telangana and location of supplier of service in Delhi.

(vi) M/s. Rao & Co of Haryana entered into a lease agreement with Mr. Prakash of Kolkata, West Bengal where he leased out his shop in Bengalore, Karnataka. In this case although the supplier and recipient of service is in Rajasthan the place of supply shall be location of shop. i.e. Bengalore, Karnataka.

(vii). Mr.Kumar an executive of ABC Enterprises Limited goes on a site visit to Jaipur, Rajasthan. In view of the close proximity with airport, he choose to stay in a hotel situated in New Delhi. The place of supply of service by Hotel will be New Delhi.

Specific Situation: Section 12(4) of IGST Act, 2017 deals with “Supply of services in relation to Restaurant and Catering Services, Personal Grooming, Fitness etc,. These following services are covered in this Specific Situation:-

(a) Restaurant and Catering Services,

(b) Personal Grooming,

(c) Fitness,

(d) Beauty Treatment,

(e) 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:

(i) Kumar is a freelancer and provides personal grooming service to different people across the country. The place of supply in such case will be the state in which service is provided.

(ii) Prasad Catering Services operates out of Bangalore and provides catering services in various parties and marriage ceremony. Mr. Singh,resident of Bangalore, has appointed Mr. Prasad Catering Services to provide catering services in its destination wedding organized at Visakhapatnam, A.P. In this case place of supply will be Visakhapatnam, A.P. although both Mr. Prasad Catering Services and Mr. Singh are from Bangalore.

Specific Situation: Section 12(5) of IGST Act, 2017 deals with “Supply of services in relation to Training and performance Appraisal Services:-

(i) 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.

(ii) In any other case the place of supply shall be the location where the services are actually performed.

Example:

Mr.Prakash is a servicer and provides training to corporates across the country. He provides training on GST readiness to Bhimeswara &Co Limited. Place of business is Bangalore, Karnataka. However, the training sessions were conducted in Kolkata, West Bengal. In this case although the training sessions were conducted in Kolkata, West Bengal, the place of supply will be Bangalore, Karnataka, because he is a registered person at Bangalore, Karnataka.However, If M/s. Bhimeswara &Co Limited is not registered the place of supply will be Kolkata.

Specific Situation: Section 12(6) of IGST Act, 2017, deals with “ Services for admission to event. These following services are covered in this Specific Situation:-

(a) Services for admission to a culture, artistic, sporting, scientific, educational or entertainment event or amusement park or any other place of and

(b) Services ancillary there to.

Place of supply of services 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:

(i) Jamini Amusement Limited, Delhi operates an amusement park in Kolkata, West Bengal. It provides services by way of admission to the park. In such case the place of supply will be Kolkata, West Bengal.

(ii) M/s. Ramkumar international travels, Vijayawada 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, they are (i) admission to National Park and (ii) hiring of jeep. The place of supply in both these cases will be Rajasthan as the park is situated in Rajasthan.

Specific Situation: Section 12(7) of IGST Act, 2017, deals with” Services for organizing an event. These following services are covered in this Specific Situation:-

(a) Organization of a culture, artistic, sporting, scientific, education or entertainment event including supply of service in relation to a conference, fair, exhibition, celebration or similar events.

(b) Services ancillary to organization of any of the above events or services,

(c) Assigning of sponsorship of any of the above events.

(i) 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.

(ii) 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:

(i) M/s. Murugan Event Management Ltd, Chennai, Tamil Nadu is an event management company and organizes conferences/ event/programs across the country. M/s. Sarat Corporation Ltd, Bangalore, Karnataka, hires M/s. Murugan Event Management Ltd. To organize conference in Delhi. If M/s. Sarat Corporation Ltd, Bangalore, Karnataka is a registered person, then place of supply will be Bangalore, Karnataka, irrespective of the fact that the conference was organized in Delhi.

(ii) In the above case if M/s. Sarat Corporation Ltd, Bangalore, Karnataka, ask M/s. Murugan Event Management Ltd, Chennai, Tamil Nadu, to organize an event in Dubai for all its employee, in such case the Place of Supply will be Bangalore, Karnataka.

Specific Situation: Section 12(8) of IGST Act,2017, deals with” Services for Transportation of Goods “. This services deals for transportation of goods including mail or courier.

(i) 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.

(ii) In any other case the place of supply shall be the location at which such goods are handed over for their transportation.

Exampe:

M/s. VRL Transport Ltd, is a transportation company and provide services for transportation of goods from one place to another. M/s. VRL Transport Ltd provide service to M/s. Pavan Enterprises Ltd, Chennai, Tamil Nadu for transportation of certain goods from Hyderabad, Telangana to Mumbai, Maharashtra. If M/s. Pavan Enterprises Ltd is a registered person, the place of supply will be Chennai, Tamilnadu and if he is not registered, place of supply will be Hyderabad, Telangana.

Specific Situation: Section 12(9) of IGST Act, 2017, deals with” Services for passenger transportation services “. These following services are covered in this Specific Situation:-

The place of supply in this case will be (a) If the services is provided to a registered person, it shall be the location of such person, (b). 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 supply shall be:-

(a) If the supply is made to a registered person then the place of supply shall be the location of such person,

(b) Where the supply of service is made to a person other than registered person, the place of supply shall be (i) the location of the recipient where the address on records exists, and (ii) The location of the supplier of services in other cases.

(c) Return journey shall be treated as a separate journey even if the right is issued along with the onward journey.

What is the meaning of Continuous Journey under GST Law?

As per Section 2(3) of IGST Act,2017 defines the meaning of Continuous Journey as” a journey for which a single or more than one ticket or invoice is issued at the time either by a single supplier of service 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 :- For the purpose of this clause ”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.

What is the meaning of Conveyance under GST Law,2017?

As per Section 2(34) of the CGST Act,2017, “Conveyance “ includes a vessel, an aircraft and a vehicle.

Examples :

(i) Murugan Transport Services, Erode, Tamil Nadu has fleet of buses and provides passenger transportation services. Venkay Corporation Limited, Hyderabad, Telangana hires Murugan Transport Services for transfer of its office employees through its buses to Shiridi and bring back after 3 days. If Venkay Corporation Limited is a registered person, under that circumstances “ the place of supply will be Hyderabad, Telangana.”

(ii) In the above example, if Murugan Transport Services, runs weekly bus from Hyderabad to Shiridi and issue tickets to various people ( not a registered person), under these circumstances “the place of supply will be Hyderabad, Telangana” as the passengers will embark on the journey from Mumbai.

(iii) In the above example, if Murugan Transport Services, runs a weekly bus from Hyderabad to Shiridi and during a festive season, issues right to use the said service to anything during the next 1 year to some of its frequent customers. If the said right is issued to unregistered persons and Murugan Transport Services, Erode has kept address on record of such customer under that circumstance” place of supply will be location as per address on record”.

(iv) In the above example, if Murugan Transport Services, Erode runs a weekly bus from Hyderabad to Shiridi and issues tickets to various people ( Not a registered person), some of the people also purchases return tickets i.e. Hyderabad to Shiridi and Shiridi to Hyderabad, Under that circumstance “ the place of supply for Hyderabad to Shiridi will be Hyderabad and from Shiridi to Hyderabad, Telangana will,be Shiridi even if the tickets was purchased in Hyderabad.

Specific Situation: Section 12(10) of IGST Act,2017, deals with” Services on Board of Conveyance. 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 scheduled 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:

A Video game or movie on demand is provided as on-board entertainment during the course of Visakhapatnam to Mumbai flight. The place of provision of service will be Visakhapatnam. However, of the flight is ultimately bound to Thailand ( Out of India), then it is not liable to GST Tax.

Specific Situation: Section 12(11) of IGST Act,2017, deals with” Telecommunication Services. These following services are covers under Telecommunication services under IGST Act,2017.

(a) Telecommunication Services,

(b) Data Transfer,

(c) Broadcasting,

(d) Cable services,

(e) Direct to home transfer (D2H)

In the above services “ Place of supply” will be given in tabular form to easy understand to the tax fraternity.

Description of Services Determination of Place of supply
Service is provided by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna. Place of supply will be 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. Place of supply will be 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 Cards 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 cases other than above mentioned services. Address of the recipient as per records of the supplier.

However, if the address of the recipient is not available under that circumstance the place of supply will be the location of supplier. Further, if the pre-paid services 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 services.

Specific Situation: Section 12(12) of IGST Act,2017, deals with” Banking and other Financial Services including Stock Broking Services. These following supply of services are covered under Banking and other financial services under GST Law,2017.

(a) Financial Services,

(b) Banking Services,

(c) Stock Broking Services.

In the above case “The place of supply” will be location of recipient of the services on records of the supplier of services. If the location is not on records it shall be the location of supplier.

Examples:

(i) If person in Visakhapatnam, buys shares from a broker in Delhi on NSE (In Mumbai). The place of supply shall be the location of the recipient of services on the record of the supplier of services. So, in this case Visakhapatnam shall be the place of supply.

(ii) If a person from Hyderabad, Telangana goes to Visakhapatnam and undertakes certain services from HDFC Bank then if the service is not linked to the account of person, place of supply shall be Visakhapatnam i.e. the location of the supplier of services. However if the service is linked to the account of the person, the place of supply shall be Hyderabad, Telengana, the location of recipient on the records of the supplier.

Specific Situation: Section 12(13) of IGST Act, 2017, deals with” Insurance Services” under GST Law, 2017.

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 of the recipient of services on the records of the supplier of services.

Example:

If a person from Vijayawada takes a flight from Hyderabad airport for Delhi and takes a travel insurance from Hyderabad. Then the place of supply will be Vijayawada i.e. the location of the recipient of services on the records of the supplier of insurance services.

What is the meaning of Advertisement services under GST Law,2017?

As per Para2(a) of the Notification No. 12/2017 CT(Rate), dated 28th June,2017, Advertisement means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.

Specific Situation: Section 12(14) of IGST Act, 2017, deals with” Advertisement Services under GST Law,2017. These following advertisement services are covered under the above services.

i) Advertisement on newspapers and publications,

ii) Advertisements on printed material like pamphlets, leaflets, diaries, calendars and T.Shirts etc.,

iii) Advertisements on hoardings other than on Trains,

iv) Advertisements placed on Trains,

v) Advertisements on the back side of utility bills of Oil and Gas Companies,

vi) Advertisements on Railway Tickets,

vii) Advertisements over Radio Stations,

viii) Advertisements on Television channels,

ix) Advertisements at Cinema Halls,

x) Advertisements over internet,

xi) Advertisements through short messaging services.

Here with Providing determination of Place of Supply in Advertisement services as per Sec.12 of IGST Act,2017, in Tabular Form for easy understand to Tax Fraternity.

S.No Description of supply of services Place of supply (When the suppler and recipient are located in India.
1 Advertisement hoarding attached to the land or other immovable property (Other than Government) Place of supply shall be at the location at which immovable property is located or intended to be located.

However, if the location of the immovable property is located or intended to be located outside India, under that circumstance the place of supply shall be the location of the recipient as per Section 12(3) of IGST Act,2017

2 Advertisement agency, selling of space in print media, consultants including advertisement hoardings and billboards in Train and Bus etc., (a).If made to a registered person, Place of Supply shall be location of such person.

(b). If made to any person other than a registered person, Place of supply shall be (i).Location of recipient where the address on record exists, and,

(ii). Location of supplier of services in other cases.

3 Supply of advertisement services to the Central/State Government or Statutory Body or a Local Authority meant for identifiable States.UT etc., As per Section 12(14) of IGST Act,  2017, In each of states/UT and the value of such supplies specific to each state/UT shall be in proportion to amount attributable to service provided by way of dissemination in the respective states/UT as may be determined in terms of contract/agreement or in its absence, on such other reasonable basis as may be prescribed.

Important FAQ’s on “Place Of Supply “ in the case of supply of services:

Q.1. What is the default presumption for place of supply in respect of B2B supply of services?

Ans: The terms used in the IGST Act, 2017 are registered taxpayers and non-taxpayers. The presumption in case of supplier to registered person is the location of such person. Since the recipient is registered, address of recipient is always there and the same can be taken as factor for place of supply.

Q.2. What is the default presumption for place f supply in respect of unregistered recipient?

Ans: In respect of unregistered recipients, the usual place of supply is location of recipient. However in many cases, the address of recipient is not available, in such cases location of the supplier of services is taken as factor for place of supply.

Q.3. The place of supply in relation to immovable property is the location of immovable property. Suppose a road is constructed from Delhi to Mumbai covering multiple states. Under that circumstances what will be the place of supply?

Ans: Where the immovable property is located in more than one State, the supply of service shall be treated as made in each of the States in proportion to the value for services separately collected or determined. In terms of the contract or agreement entered into in this regard or in the absence of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf.

Q.4. What would be the place of supply of services provided for organising an event like IPL cricket series which is held in multiple states?

Ans: In case of an event, if the recipient of service is registered, the place of supply of services for organizing the event shall be the location of such person. However, if the recipient is not registered the place of supply shall be the place where event is held. Since the event is being held in multiple states and a consolidated amount is charges for such services, the place of supply shall be taken as being in each state in proportion to the value of services so provided in each state.

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