Place of supply for Commission Agent under GST

Introduction: This article discusses in detail about place of supply for Commission Agent, its importance & determination of nature of supply under GST.

Query 1: I am a commission agent based & registered in Maharashtra. I facilitate the sale of machinery in Mahrashtra, Gujarat, MP through my office in Mumbai. These machinery are manufactured in Tamilnadu & are delivered from Tamilnadu itself. I raise commission bill on the manufacturer for supply of my services.

• What would be the place of supply & nature services rendered by me?
• Whether it in inter-state or intra-state?
• Whether such supply be considered as intra-state supply as I have done all the activities only by sitting in my office in Mumbai in relation to subject transaction & charge thereon CGST & SGST?

Ans.  For deciding place of supply, below 2 points are to considered:-

• Location of Supplier: Generally, It is the registered place of business of the supplier

• Place of Supply: Generally,It is the registered place of business of the recipient.

Domestic supply can be further categorized as below:

• Inter-State (i.e between two different states)
• Intra-State (i.e within the same state)

Section 12 of IGST Act defines place of supply of services where location of both the  supplier and recipient is in India. As per the section 12 of IGST Act, there are below 2 rules for deciding place of supply of services:

• General rule as per section 12(2)
• Specific rules as per sections 12(3) to 12(13)

General Rule – Section 12(2) of IGST Act, 2017:-

If the recipient is a registered person then the place of supply would be:

• the location of recipient of service {Sec 12(2)(a)}.

If recipient is not a registered person and address of recipient exists on record then POS would be:

• the location of the recipient{Sec 12(2)(b)(i)}.

If the address of recipient does not exists on record, then the place of supply of service would be:

• the location of the supplier of service{Sec 12(2)(b)(ii)} .

Example: A located in Gujarat receives services at Gujarat from B Located in Rajasthan. A is a registered person under Gujarat GST. In this case POS will be Gujarat.

Specific Rules – Section 12(3) to (13) of IGST Act, 2017:-

………………

…………………

…………………

Those specific rules as contained in sections in 12(3) to 12(13) have not covered commission agent. So, it may be construed that the general rule as contained in section 12(2) shall to commission agent.

So in given situation,

• the commission agent being the supplier of services is located in Maharashtra &
• the Manufacturer being the recipient of services is located in Tamilnadu

The place of supply shall be inter-state supply & IGST shall be charged on the value of supply.

The said transaction cannot be considered as Intra-state supply & CGST/SGST shall not be levied thereon.

Query 2: In continuation to above situation,

• What If the location of recipient of commission agent services (i.e. Manufacturer) is outside India?
• Whether it can be considered as export of services?
• Whether refund can be claimed of taxes paid or services can be provided without payment of taxes.

Ans. Then position would be different.

Section 13 of IGST Act defines place of supply of services where location of either of the supplier or recipient is outside India.

Section 13(8)(b) is specific rule which covers the ‘ Intermediary Services’. As per section 13(8), the place of supply shall be the location of the supplier of services.

Section 2(13) of the Act defines the term ‘intermediary’ as a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.

“Place of supply” is also required for determining whether any supply is “export of service” or not

If location of supplier of services and place of supply are in the same state or union territory, CGST and SGST / UTGST payable.

In given in case:-

Location of supplier is Mumbai, &

Place of supply of “intermediary’ services”  is Mumbai

So both being within same state, it is a intra-state supply and CGST/ SGST shall be paid.

And, no refund of taxes paid as it not being a export of services.

The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com , Mob. +91 9953587496. 

Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.