The concept of “Place of Supply” is a crucial element under the Goods and Services Tax (GST) law in India. As defined in Section 2(86) of the CGST Act, 2017, it refers to the provisions outlined in Chapter V of the Integrated Goods and Services Tax (IGST) Act. The primary significance of the Place of Supply lies in determining whether a transaction is an inter-state supply (attracting IGST) or an intra-state supply (attracting CGST and SGST/UTGST).
Chapter V of the IGST Act, specifically Sections 10 to 13, elaborates on the rules for determining the Place of Supply:
- Section 10: Governs the Place of Supply for goods, excluding exports and imports.
- Section 11: Addresses the Place of Supply for goods in the course of export and import.
- Section 12: Deals with the Place of Supply for services when both the supplier and recipient are located in India.
- Section 13: Specifies the Place of Supply for services when either the supplier or the recipient (or both) are located outside India.
Registration Obligation and the “Place of Supply” vs. “Place of Making Supply” Conundrum
Under Section 22 of the CGST Act, 2017, every supplier is liable to register in the State or Union Territory (excluding special category States) from where they make a taxable supply of goods or services, if their aggregate turnover exceeds the prescribed threshold limit in a financial year.
This wording, “from where supplier makes a taxable supply,” often creates confusion when juxtaposed with the “Place of Supply” definition. The definition of a “supplier” under Section 2(105) of the CGST Act, 2017, merely states that it’s the person “supplying the said goods or services or both,” without any explicit reference to the Place of Supply.
This distinction is critical for compliance with registration obligations. A supplier must register in the state from which they initiate or facilitate the taxable supply of goods or services. Interestingly, this provision doesn’t directly refer to the “Place of Business” as defined in Section 2(85) of the CGST Act, 2017, which includes:
- A place where business is ordinarily carried on, including warehouses, godowns, or places where goods are stored or received.
- A place where books of account are maintained.
- A place where business is conducted through an agent.
Let’s illustrate the difference between “from where supplier makes a taxable supply” and “Place of Supply” with an example:
Example: A GST-registered individual in Andhra Pradesh owns a commercial building in Telangana from which they receive rent exceeding the ₹20 lakh threshold. They have no other business activities in Telangana.
In this scenario, the Place of Supply for the rental service is undoubtedly Telangana State, as per the provisions of Section 12(2) of the IGST Act, 2017. However, the crucial question for GST registration is: from which State does the registered person make this supply of service? Do they make the supply from Andhra Pradesh (their primary registration location) or Telangana (where the property is located)? The answer determines where they are required to obtain GST registration.
Insights from Departmental FAQs
Guidance from departmental Frequently Asked Questions (FAQs) sheds light on this distinction:
Q: If a company in Maharashtra holds only one event in Delhi, will they have to register in Delhi? Will paying IGST from Maharashtra suffice? Ans: Only if you provide any supply from Delhi do you need to take registration in Delhi. Otherwise, registration at Mumbai is sufficient (and you pay IGST on supplies made from Mumbai to Delhi).
Q: I am from MP and providing service to a customer in Maharashtra. I outsource the work to a service provider in Maharashtra. What tax do I need to charge? Ans: Generally, these will be two supplies. The supplier from MP will charge IGST from the recipient in Maharashtra. The service provider in Maharashtra will charge IGST from the recipient in MP.
These answers clarify that merely having a Place of Supply in another state (e.g., rental service from a building) does not automatically mean the supply is made from that other state.
Therefore, in our example, the supplier registered in Andhra Pradesh would not be required to obtain a separate GST registration in Telangana State solely for the rental service of the building located there. The supply is considered to be “made from” their registered location in Andhra Pradesh.
The interplay between the Place of Supply and the State from which a supply is made forms a crucial matrix under GST law, and a clear understanding of its rationale is essential for accurate compliance.
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