Case Studies :
1. Determination of Place of Supply in E-Commerce transactions
2.Determination of Place of Supply in Telecom transactions –Prepaid
3. Determination of Place of Supply of goods in normal business transactions
4.Determination of place of supply of services in different cases
5. Scope of Supply
Place of Supply:
- Supply is taxable event in GST.
- Supply means all forms of supply of goods & services such as sale , transfer, barter, exchange, license, rental, lease or disposal made or agreed for a consideration by a person in the course or furtherance of business.
- It will include import of service whether or not for consideration and whether or not in the course or furtherance of business.
- Supply to also include matters specified in Schedule I and II as deemed supply.
Supply and GST :
CGST and SGST to be levied concurrently on Intra and Inter state supply whereas Inter-state supply including import of service & goods to attract IGST which is sum total of CGST & SGST.
Page Contents
- Case Study -1 Determination of Place of Supply in case of E-commerce transactions:
- Case Study 2 Determination of Place of Supply in Telecom transactions – Prepaid
- Case Study-3 Determination of Place of Supply of goods in normal business transactions
- Case Study-4 Determination of Place of Supply of Service in different cases:
Case Study -1 Determination of Place of Supply in case of E-commerce transactions:
Mr. Vivek of Pune, Maharashtra gifted an I-Phone to his friend Mr. Ajay of Chennai by using pack as gift facility of Flipkart. Flipkart arranged delivery of I-phone to Ajay from supplier True value mobiles a company having its store at Mumbai through First Flight Couriers.
Flipkart is a registered taxable person with Karnataka Govt. & GOI having its HO at Bangalore , True value mobiles is registered with Maharashtra Govt. & GOI and First flight couriers across India.
Questions arising out of case study:
Q-1 Identify the taxable transactions?
Ans- There are three taxable transactions in the above case study:
i) Transaction between Flipkart and True Value – wherein Flipkart providing True Value a platform to sell its goods in lieu of a Business to Business Transaction (B2B) –Supply of Service
ii) Transaction between True Value and Vivek wherein True value delivering goods Ajay on the direction of Vivek. Business to Customer (B2C) – Supply of goods.
iii) Transaction between Flipkart and First Flight Courier wherein First Flight providing courier service to Flipkart . B2B transaction- Supply of Service.
Q-2 What is Place of Supply and taxes applicable in these taxable transactions:
i) Transaction b/w Flipkart and True Value :
- As per general rule of place of supply of service place of supply of service shall be the location of registered taxable person.
- Place of Supply of service is Mumbai , IGST payable by Flipkart .
ii) Transaction between True Value and Mr. Vivek :
- As per specific rule , in case the goods are to be delivered to a person other than the buyer on its direction than it shall be deemed as supply is made to buyer itself and the place of supply shall be the location of buyer.
- Therefore , place of supply shall be location of Mr. Vivek i.e. Pune. CGST and SGST payable in Pune.
iii) Transaction b/w Flipkart and First Flight Couriers:
- As per specific rule ,the place of supply of services by way of transportation of goods, including by mail or courier to a registered person, shall be the location of such person.
- Therefore, place of supply shall be location of Flipkart that is Bangalore , IGST payable by First flight couriers.
Determination of Place of Supply in Prepaid Telecom Transactions
Case Study 2 Determination of Place of Supply in Telecom transactions – Prepaid
Mr. Raghav of Bangalore is a prepaid customer of Bharti Airtel, Karnataka Circle. For a official work he went to Noida (UP) . He recharged his mobile in manner as follows:
| S.no. | Manner of recharge |
| 1. | Purchasing physical vouchers from retail store of UP circle office at Noida , Raghav recharged mobile by scratching voucher at Delhi. |
| 2. | Online recharge using airtel’s website |
| 3. | Online recharge using mobile application of Paytm , a Noida based e- commerce operator registered as taxable person with UP govt and GOI. |
Determine place of supply and taxes applicable in each of the above case?
Case 1 Purchasing physical vouchers from retail store of UP circle office at Noida :
- As per rules , in case of prepaid mobile recharge transactions place of supply shall be the place at which vouchers are sold.
- Voucher sold to Raghav at Noida , place of supply is Noida. Therefore , CGST & SGST payable by Airtel UP Circle in Noida.
Case 2 Online recharge using airtel’s website:
- As per rules , when pre-paid mobile recharge is made through electronic means , place of supply shall be the location of the subscriber on the record of telecom company.
- Place of Supply is Bangalore being the location of Raghav , CGST & SGST payable in Bangalore by Karnataka Circle.
Case 3 Online recharge using mobile application of Paytm:
- Paytm is a payment gateway providing facility to pay to telecom companies and charging commission in lieu of the same. Again , it is a case of electronic recharge so place of supply will be the location of subscriber on record of telecom company.
- Place of Supply is Bangalore being the location of Raghav , CGST & SGST payable in Bangalore by Karnataka Circle.
- Note: Paytm will charge IGST to Airtel Karnataka Circle on commission because as per general rule place of supply is location of registered person.
Case Study-3 Determination of Place of Supply of goods in normal business transactions
Mr. Vinit of Ajmer an electronics wholesale dealer registered with Rajasthan Govt and Central Govt went to Mumbai on holidays. He purchased electronic items in bulk from Tata Croma Store and arranged its shipping to Ajmer on its own by a GTA.
Q-1 What will be the place of supply and taxes applicable?
- As per the rules, where the goods require movement either by supplier , buyer or by any other person , place of supply of goods shall be the place where the delivery terminate (complete).
- Since ,Mr. Vinit arranged transportation of his own the delivery completed at Mumbai itself . Place of service is Mumbai , CGST & SGST payable by Tata Croma .
2 Will your answer change if Store deliver goods to Mr. Vikas of Delhi (agent of Mr Vinit) on request of Mr. Vinit.?
- Yes. As per the rules , in case the goods are to be delivered to a person other than the buyer on its direction than it shall be deemed as supply is made to buyer itself and the place of supply shall be the location of buyer.
- Place of Supply shall be Ajmer being the location of Mr. Vinit , IGST payable by Tata Croma.
Case Study-4 Determination of Place of Supply of Service in different cases:
1. Wipro Ltd , Bangalore organized an annual conference of its Fin-ops. employees working across India at a Uday resort in Udaipur (Rajasthan). It hired M/s Red Events Ltd. a Jaipur based event Management Company for managing the event.
What will be the place of supply and tax implications?
Ans – In case of supply of services provided by way of organizing any type of event , conference , seminar , webinar , exhibition , celebration ,fair etc. including services ancillary to organizations of such events , the place of supply of such services when provided to a registered person shall be the location of such person.
- Place of supply shall be the location of Wipro i.e. Bangalore , IGST payable both by Uday resort and Red Events.
2. SAP India Ltd. registered with Telangana Govt. & GOI under an agreement with Vodafone India Ltd., Mumbai arranged a training session on GST for all fin-ops employees working in Vodafone across India. Training Programme was organized in a hotel at Hyderabad. What will be the place of supply and tax implications?
Ans- As per rules , for services provided by way of training and performance appraisal to a registered person , place of supply shall be the location of such registered person.
- Place of Supply is Mumbai , IGST payable by SAP.
Case Study-5 Scope of Supply :
1. Mr. Sunil of Jaipur is a GST registered store owner, he transferred his business to XYZ Ltd. a registered taxable person with Delhi Govt and GOI. So, he applied for surrender of registration, at the time of deregistration he has goods on hand valued at Rs. 5 lacs .
Q- What will be tax implications? Will your answer change if the business has been closed down without any transfer?
Ans- Where any person ceases to be a taxable person , the undisposed stock and assets in hands of the person shall be treated as supply made by him and chargeable to GST unless the business is transferred as a going concern to another person.
- Therefore, transfer to XYZ LTd. not to attract GST whereas closing down business without transfer shall be deemed as self supply and chargeable to CGST and SGST.
2. Supertech Ltd. an IT company as a part of employees welfare scheme provides free usage of its car by employees for their personal purposes. What will be tax implications?
Ans- Free usage of company’s goods by the employees to be treated as deemed supply unless the goods are given for usage without any consideration and not entitled to input tax credit.
- Same as that of Cenvat credit rules , motor vehicles not eligible capital goods unless the same is used directly in core business activities.
- Therefore , for IT company cars are not eligible capital goods and ,thus, the transaction not supply and bot chargeable to GST.
Courtesy:
- Background material on GST by IDT Committee ,ICAI
- Handbook on Supply by CS Vineet Sahay, Lucknow.
Author Bio
Free usage of company’s goods by the employees
According to me giving the cars to employees for the personal purposes will make them liable for payment of GST u/s 3(1)(iii) read with Schedule 1 entry no. 5, i.e.,
Supply of goods and / or services by a taxable person to another taxable or nontaxable
person in the course or furtherance of business.