Section 10 of the IGST Act, 2017 provides the set of rules to determine the place of supply of goods to enable the charging of GST to the customer.
As per section 10 (1) of the IGST Act, 2017, The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under,––
10(1) (a) – where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.
Example – Mr. A of Mumbai is selling his goods to Mr. B of Delhi, then place of supply will be Delhi and IGST is chargeable on the goods.
10(1) (b) – where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, 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.
Example – Mr A of Mumbai, a trader, instructs Mr B of Pune, also a trader, to deliver goods to X Ltd of Kolkata. Here, there are 2 parts of the transaction:
i. Mr A to Mr B – The place of supply for Mr B will be Mumbai and he will charge CGST and SGST on the invoice and ship the goods to X Ltd.
ii. Mr A to X Ltd – The place of supply for Mr A, as per section 10 (1) (a) of IGST Act, 2017 will be location of X Ltd and he will charge IGST on the invoice.
10(1) (c) – where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient.
Example – A Ltd, located in Jharkhand has leased the assets, located in Delhi, of B Ltd located in West Bengal. After 14 months A Ltd requested B Ltd to sell the assets to A Ltd. Here the place of supply will be Delhi because goods cannot be moved.
10 (1) (d) – where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly
Example – IOC Ltd of Kerala gives contract to BOC Ltd of Tamil Nadu to install an oil refinery in Panipat Haryana, the place of supply will be Panipat, because machinery is installed in Haryana.
10 (1) (e) – where the goods are supplied on board a conveyance, including 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
Example – Indian Airlines sold coffee to the passengers in the New Delhi to Patna flight. The coffee was purchased from New Delhi, hence, place of supply will be New Delhi and not Patna.