Simplified GST Series –

Section 7- IGST Act, 2017 Inter State Supply

(1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in––

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce.

(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in––

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce.

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

(5) Supply of goods or services or both, ––

(a) when the supplier is located in India and the place of supply is outside India;

(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or

(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

Analysis- Section 7(1) and Section 7(2) covers two kinds of supplies –supply of goods with in India and supply of goods imported into India and Section 7(3) and Section 7(4) covers supply of services within India and import of services into India respectively.

In respect of goods if the location of the supplier and the place of supply are in two different States or UT or either, then the supply will be in the course of inter- State trade or commerce (amongst others).

Import of goods- In order to every supply to come with in Section 7(2) it requires that supply must cause the goods to enter territory of India.

Location of supplier of service is defined in the Act and if the location of supplier of services and the place of supply of services are in two different States or UTs or either, such as supply of services shall be in the course of inter-State trade or commerce. Location of supplier of services is defined to mean ‘place of business from where supply is made and duly registered for the purpose’. It also includes other places ‘from where’ supplies are made being a fixed establishment – a place with sufficient degree of permanence and suitable structure to supply services and lastly, the usual place of residence of the service provider.

Special category of inter-State supplies

  • When the supplier is located in India and the place of supply is outside India- Inter state supply but supplier outside India and place of supply outside India then what is GST impact in that case –No GST levied .
  • where the supply is ‘to’ or ‘by’ an SEZ developer or unit-

Here, it is important to note that supply to SEZ (developer or unit) is treated as inter-State supply. Supply ‘by’ SEZ (developer or unit) will also be treated as inter-State supply. Further, the implication of this provision is also that supply by SEZ’s inter se – one SEZ    unit (or developer) to another SEZ unit (or developer) – will also be treated as a supply in the course of inter-State trade or commerce.

Section 8- IGST Act, 2017- Intra-State Supply-

(1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply:

Provided that the following supply of goods shall not be treated as intra-State supply, namely: –

(i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;

(ii) goods imported into the territory of India till they cross the customs frontiers of India; or

(iii) supplies made to a tourist referred to in section 15.

(2) Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply:

Provided that the intra-State supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit.

Explanation 1 ––For the purposes of this Act, where a person has, ––

(i) an establishment in India and any other establishment outside India;

(ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or

(iii) an establishment in a State or Union territory and any other establishment [being a business vertical] registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons.

Explanation 2 ––A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory.

Analysis- Section 8 of the IGST Act provides that where the ‘location of the supplier’ and the ‘place of supply’ are in the same State or same UT, such a supply will be treated as an intra-State supply.

Further, three exceptions have been carved out in this provision to state that a few supplies are to be treated as inter-state even if the supplier and recipient are in the same state:

(1) supply ‘to’ or ‘by’ a SEZ developer or unit;

(2) supply involving goods imported into India but not beyond the customs frontiers;

(3) supply to outbound tourist in terms of Section 15 of the IGST Act.

Intra-State supply of services– With regard to supply of service, if the twin factors – location of supplier of services’ and ‘place of supply of services’ – are in the same State or UT, then such supply will be treated as intra-State supply.

Section 9- IGST Act, 2017- Supplies in Territorial Waters

Notwithstanding anything contained in this Act, ––

(a) where the location of the supplier is in the territorial waters, the location of such supplier; or

(b) where the place of supply is in the territorial waters, the place of supply, shall, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.

Analysis– By applying the provisions of Sections 10 and 12, if it is established that the ‘place of supply’ or ‘the location of the supplier’ is found to be in the territorial waters and not on the land mass, an ambiguity could arise as to where the supplier is required to be registered, or which State the tax on the supply should be apportioned to. To address these situations, the statue lays down, vide this deeming fiction, that such locations – ‘supplier’ or ‘place of supply’ – will be the most proximate State or UT.

Queries/doubts mailed at mamta0581@gmail.com.

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