PLACE OF SUPPLY OF GOODS:

Relevance and Importance of term Place of Supply:

As we all knows that the Government has introduce dual concurrent GST with the Centre and States simultaneously levying it on a common tax base.

The GST to be levied by the Centre on intra-State supply of goods and / or services would be called the Central GST (CGST) and that to be levied by the States would be called the State GST (SGST).

Similarly Integrated GST (IGST) will be levied and administered by Centre on every inter-state supply of goods and services.

The GST is a destination based tax on consumption of goods and services, the tax would accrue to the taxing authority which has jurisdiction over the place of consumption, which is also termed as place of supply.

Thus it’s very important to determine the place of supply of Goods and Services. In this article we have covered the cases related to supply of goods

In this article we have covered the place of supply of goods, which has further been explained in two parts. In part one we have covered the cases where supplies are within the country, similarly in part two we have covered the international supply (import or export).

Types of situation in case of supply of Goods:

In case of supply there can be number of situations, the legal position of the situation have been covered from section 10 to section 11 of chapter V of Integrated Goods and Service Tax Act, 2017. The place of supply shall vary on the basis of the situation of types of supply of goods.

The situation of types of supply of goods can be as below:-

Where during supply there is movement of goods (refer question-1) and conversely where there is no movement of goods but still supply is there (refer question-2).

The third situation can be where goods are delivered by the supplier to recipient or any other person on the direction of third person (the third person can be the original buyer, agent etc.) refer question-3.

Apart from these situations there are some miscellaneous situation also which have been covered from question-4 to question-7. 

Place of supply of goods other than import and export (supply within country).

In the paragraph below we have explained the above mentioned situations in the shape of question and answer.

Situation-1: Where the supply involves movement of goods:

Place of supply shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. [Section 10 (1) (a) of IGST Act, 2017]

Ex-1: XYZ Ltd. of Mumbai contracted with ABC Ltd. of Delhi for supply of 1000 kg of material “T”. As per the contracts goods were loaded in transport for supply to ZYX Ltd of Mumbai.

Ans. As per the provision of section 10 (1) (a) of the IGST, where supply involve movement of goods, the place of supply shall be the location of the goods at the time at which the movement of the goods terminates for delivery to the recipient.

Hence, as per the above provision the place of supply shall be Mumbai as the movement of goods terminates in Mumbai.

Situation-2: Where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person:

It shall be deemed that the said third person has received the goods and;

The place of supply of such goods shall be the principal place of business of such person (i.e. the third person). [Section 10 (1) (b) of IGST Act, 2017]

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Ex-2: XYZ Ltd. of Delhi has customer PQR Ltd. in Bihar contracted with ABC Ltd. of Mumbai for supply of 1000 Kg of material “R” and directed to ABC Ltd. to deliver the goods to PQR Ltd. in Bihar.

Ans. As per the provision of section 10 (1) (b) of the IGST Act, 2017 where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person, It shall be deemed that the said third person has received the goods and; The place of supply of such goods shall be the principal place of business of such person.

Hence, it shall be deemed that the XYZ Ltd. of Delhi has received the goods and accordingly the principle place of business of XYZ Ltd. (Delhi in this case) shall be the place of supply.

Further XYZ Ltd. will issue invoice in the name of PQR Ltd. and the place of supply shall be determined accordingly.  In the given case place of supply shall be Bihar. 

The above provision can be clearly explained with the help of Table below.

Supplier “A” delivers goods to recipient “B” on instruction of third person “C”

“A” is billing to “C” but shipping to “B”.

Supplier A-Delhi A-Delhi A-Delhi
Billing to C-Delhi C-U.P. C-Maharashtra
Shipping to B-Maharashtra B-Maharashtra B-Maharashtra
Place of supply for-A Delhi (CGST/SGST) U.P. (IGST) Maharashtra (IGST)
Place of supply for-C Maharashtra (IGST) Maharashtra (IGST) Maharashtra (CGST/IGST)

NOTE:-It may be noted that this provision is creating a deeming fiction in case of first transactions, but it is silent in case of second transaction. 

Situation-3: The supply does not involve movement of goods:

The place of supply shall be the location of such goods at the time of the delivery to the recipient. [Section 10 (1) (c) of IGST Act, 2017]

EX-3: Mr. X of Mumbai came to Delhi for official work, while he was in Delhi he visited a mall in Delhi and purchased some clothes from a shop at the mall. Determine place of supply in the given situation.

Ans. As per the provision of section 10 (1) (c) of the IGST Act, 2017 where the supply does not involve movement of goods the place of supply shall be the location of the goods at the time of delivery to the recipient.

Hence, the place of supply in the given case shall be Delhi.

Situation-4: Where the goods are assembled or installed at site:

The place of supply shall be the place of such installation or assembly. [Section 10 (1) (d) of IGST Act, 2017]

EX-4: XYZ Ltd. of Mumbai contracted with ABC Ltd. of Delhi to install a plant at the site of XYZ Ltd. in Bihar and the contract is executed accordingly.

Ans. As per the provision of the section 10 (1) (d) of the IGST Act, 2017 where the goods are assembled or installed at site the place of supply shall be such installation or assembly.

Hence, the place of supply in this case shall be Bihar where the plant is installed.

Situation-5: Where the goods are supplied on board a conveyance, such as 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. [Section 10 (1) (e) of IGST Act, 2017]

EX-5: 500 packets of food loaded in the Rajdhani Express scheduled from New Delhi to Patna (Bihar) for supply to the passenger on board. What will be the place of supply?

Ans. As per the provision of section 10 (1) (e) of the IGST Act, 2017 where the goods are supplied on board a conveyance, such as 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.

Hence, as per the above provision the place of supply shall be Delhi where the foods were loaded.

It may be noted that if goods were loaded at Ghaziabad (U.P), the place of supply shall be Ghaziabad (U.P). It means schedule point, arrival and departure does not matter, only the place where the goods were loaded matters.

Situation-6: Where the place of supply of goods cannot be determined:

The same shall be determined in a manner prescribed by the Central Government on the recommendation of the Council [Section 10 (2) of the IGST Act, 2017] (Yet to be prescribed).

Place of supply of goods import into or exported from of India.

IMPORT: The place of supply of goods imported into India:

Shall be the location of the importer. [Section 11 (a) of IGST Act, 2017]

Ex-6: XYZ Ltd. of Mumbai India imported 5000 kg of raw material “R” by sea route from ABC INC. USA, whit will be the place of supply of the goods?

Ans. As per the provision of section 11 (a) of IGST Act, the place of supply of goods imported into India shall be the location of importer.

Hence, in the given case the pace of supply shall be Mumbai India. I.e. the location of the importer.

EXPORT: The place of supply of goods exported from India

Shall be the location outside India. [Section 11 (b) of IGST Act]

Ex-6: XYZ Ltd. of Mumbai India exported 5000 kg of raw material “R” to ABC INC. USA, whit will be the place of supply of the goods?

Ans.  As per the provision of section 8 (2) of the IGST Act, the place of supply of goods exported from India shall be the location outside India.

Hence, as per the above provision the place of supply shall be USA. I.e. outside India.

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