In my last article I had written about Time of Supply of Goods & Services under Model GST Law. Now in this article I continue to explain about the provisions of Place of Supply of Goods & Services.
First, we should try to understand why we need to emphasise and understand Place of Supply. Since GST Law is based on point of supply ie. Destination based, the State in which they are consumed. CGSt & SGST is levied on intra-state supplies. Therefore, to know whether the supply is intra-state or inter-state, we need to know the rules of Place of Supply. The Revenue Department will frame rules for Place of Supply. Intra-State supplies are defined in Draft IGST Act u/s 3A. Place of Supply of Goods is described u/s 5 and Place of Supply of Services is described u/s 6 of Draft IGST Act. For Ecommerce, Banking, Insurance, Telecom it is not easy to locate recipient of Goods or Services.
We should understand the Definition of recipient:
Recipient is defined to mean a person liable to pay consideration for the supply and, where no consideration is payable, the person who receives the supply. It also includes an agent acting as such on behalf of the recipient
As per section 5 Place of Supply of Goods can be understood as follows:
1. Where the supply involves movement of Goods, the place of at which the Goods are delivered to the receiver will be the Place of Supply.
2. Where the Supply does not involve movement of Goods then in such case the Place of Supply shall be location of such place at the time of delivery to the receiver.
3. Where goods are assembled or installed at site, Place of Supply shall be place of such installation or assembly.
4. Where Goods Are Supplied on board of a conveyance say and aircraft, ship, train or motor vehicle the Place of Supply will be the location at which such Goods are taken on Board.
5. Where Place of Supply cannot be determined by above then the Place of Supply shall be determined in accordance with the Law made by the Parliament on the recommendation of the Council.
Now let us understand section 6 Place of Supply of Services. First, let us know the location of Service provider.
1. Location of Business Establishment where it is registered under the GST Act.
2. Location of Fixed Establishment where supply is made from a place not registered under GST.
3. Where Supply is made from more than one establishment, the location of establishment most directly concerned with the provision of Supply.
4. In absence of such places the location of the usual residence of such person shall be Place of Supply.
Now, let us understand location of Service Receiver.
Location of Business Establishment where Supply is received at a place registered under the GST Act.
1. Location of Fixed Establishment where supply is received from a place not registered under GST.
2. Where Supply is made from more than one establishment, the location of establishment most directly concerned with the receipt of the Supply.
3. In absence of such places the location of the usual residence of such person shall be Place of Supply.
On the basis of above we can find the place of Supply.
1. Where the service is provided to a registered person then the location of such service receiver.
2. Where services provided to an unregistered person then it will be the address of such recipient and if it is not available then the location of such receiver.
3. In case of immovable property Place of supply of services will be the place of immovable property where it is located or likely to be located.
4. In other cases, place of supply of services will be the actual place of supply where the services are provided such as restaurant & catering, training, fitness etc.
5. In case of events, the place of supply of services will be on the admission to such event at the actual place where the event takes place.
6. In case of services provided for conference, fair, exhibition etc. then the registered place of such recipient or the location of such event if the recipient is not registered.
7. In case of services of transportation of goods, then the registered place of such recipient or the location of such goods handed over if not registered.
8. In case of service by way transportation of passengers, if registered person then location of such person otherwise location of embarkation of the person.
9. Services under telecommunication, such as data transfer, broadcasting etc. services under fixed line then location where such fixed lines are installed, in case of mobile connection – the location of billing address, in case of prepaid services for mobile or internet then the location where such payment is received.
We will have to take each individual case to understand the place of supply of services. In case of banking, financial services, insurance, lodging services by hotels, property on rentals, it would differ.
Let us take a few examples to understand the various aspects of supply of services.
1. Supply of food by a private caterer in the train – the place of supply of service will be the first point of departure of the conveyance.
2. Transportation of goods – a business located in Mumbai which is registered under GST has to transport goods to Delhi, then the place of service will be Mumbai but when the business of Mumbai based businessmen is not registered under GST then the location where the goods are handed over to the transporter ie Mumbai.
3. In case of insurance business – Mr X is residing at Mumbai and is registered under GST, avails insurance service from company located at Kolkata, the place of service will be Mumbai, but, if Mr X is not registered under GST then the location of the service receiver in the records of the service provider that is Mumbai.
To conclude in general, we take the following as place of services
a. when supply is made to a registered person then location of such registered person.
b. when supply is made to other person then address on records of such person or location of the recipient otherwise location of supplier.
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Source: place of supply under Model GST Law.
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