As far as Fiscal Federalism is concerned, the GST Regime has brought about a revolutionary changes and it can even be seen as new chapter in collaborative federalism
Justice K.M. Joseph, Supreme Court
Goods and Service Tax is a Destination based Consumption Tax, so taxable jurisdiction will be the place of consumption i.e., the place where tax should reach. GST follows dual model system and tax to be charged depends upon interstate or intrastate transaction, i.e., CGST/SGST will be levied or IGST, it will depend on Place of Supply Provisions and Location of Supplier.
Place of Supply Provisions are prescribed in Chapter V in Section 10 to 13 of IGST Act, prescribing the provisions for Cross-Border Transactions as well as Domestic Transactions.
We will discuss Place of Supply provisions with respect to Goods only. Though place of supply of goods is place where goods are delivered but there are many other cases such as no movement of goods, etc so it is important to determine how to know place of supply in such cases.
Domestic Transaction of Goods – Section 10
In case of supply of goods other than goods imported into or exported out of India, Place of Supply shall be determined as under:
1. Movement of Goods
a. Mr A of Jaipur, Rajasthan sell 5 Laptops to Mr B of Ahmedabad, Gujarat . Delivery is taken by Mr B by arranging his own transportation, however,delivery is taken in Jaipur but movement terminates in Ahmedabad – Place of Supplywill be Ahmedabad Gujarat. since different states it is Interstate Transaction, IGST will be levied.
b. Mr A of Jaipur, Rajasthan sell 5 Laptops to Mr C of Udaipur, Rajasthan . Place of Supply will be Udaipur, Rajasthan, Since same state it is intra state transaction so CGST/SGST will be levied.
2. Bill to ship to Model: Goods delivered to recipient or other person on direction of 3rd person(buyer), as agent or otherwise, before or during movement of goods by transfer of document of title of goods or otherwise: Place of Supply will be deemed to principal place of business of 3rd person
Example: Seller – Maharashtra, Buyer(3rd Person) – Karnataka, Recipient – Rajasthan
Place of Supply – Karnataka
2. No Movement of Goods
1. Supply don’t involve movement of goods – Place of Supply will be location of goods at the time of delivery to recipient.
Example: Mr A of Rajasthan, purchased a building from Mr Z, in Punjab along with pre installed office furnitures and fixtures. No GST will be levied in case of purchase of building but GST will be payable on Office Furniture and Fixtures and Place of Supply will be Punjab.
2. Goods Assembled or Installed at site: Place of Supply will be Place of Installation or Assembly.
Example: Mr A of Rajasthan, purchases a machinery unit from Mr D of Gujarat, to be installed at his factory unit in Ajmer, Rajasthan, Place of Supply will be Ajmer, Rajasthan.
3. Goods Supplied on Conveyance
Goods supplied on board a conveyance including a vessel, aircraft, train or motor vehicle –Place of Supply will be location at which such goods are taken on board.
Example: Mr A sells his magazines in his journey in Intercity Express from Jodhpur to Indore boarding from Jaipur Station, the Place of Supply will be Jaipur from where goods were taken on board not Jodhpur or Indore.
4. Place of Supply cannot be determined
In such cases the government will prescribe the manner to ascertain the same.
5. Cross Border Transactions – Section 11
The Place of Supply of Goods:
1. Imported into India – Place of Supply will be Location of Importer.
Import of Goods means bringing goods into India from Place outside India. All imports are deemed as interstate supplies and IGST is levied along with custom duties.
2. Exported out of India – Place of Supply will be location outside India.
Export of goods means taking goods out of India to a place outside India. These are treated as interstate supply and Zero Rated supply.