Place of supply of services in India- Part 2

Section 12 of the IGST Act, 2017 provides the set of rules for determining the place of supply of services within India.

General rule for determination of place of supply-

Section 12 (2) – The place of supply of services, except the services specified in sub-sections (3) to (14),––

(a) made to a registered person shall be the location of such person;

(b) made to any person other than a registered person shall be,––

           (i) the location of the recipient where the address on record exists; and

          (ii) the location of the supplier of services in other cases.

General Rule:

1. If a CA located in Mumbai registered under GST provides services to his client in Madhya Pradesh who is also registered person, then place of supply will be Madhya Pradesh.

1. If a barber in Bhopal provides services to Mr. X an unregistered person of Patna, then place of supply will be Bhopal if address of Mr. X does not exist in the records of the barber.

Section 12 (3) Services relating to the immovable property –

12(3) (a) – directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work

Example – Mr D an architect based in Amravati, Andhra Pradesh, provides services to a housing scheme of New Cuff Parade in Wadala, Mumbai, and place of supply will be Mumbai.

12(3) (b) – by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel

Example – Services provided in the house boat in Dal Lake at Srinagar, Jammu & Kashmir, are taxable at Srinagar for the tourists.

12(3) (c) – by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property

Example – Banquet halls will charge GST based on their location.

12 (3) (d) – any services ancillary to the services referred to in clauses (a), (b) and (c)

The place of supply of the support services provided in relation to the immovable property, is the location of such property.

Points to remember:

1. if the location of property is outside India, the place of supply will be the location of the recipient. Example, If Mr D an architect based in Amravati, provides services to developer of Mumbai, for his project in London, the place of supply will be Mumbai.
2. If services are provided at more than one State or Union Territory, the place of supply will be each such State or Union Territory.

Section 12 (4) – The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed.

Example – The place of supply of a gym located in Mumbai will be Mumbai.

Section 12 (5) – The place of supply of services in relation to training and performance appraisal to,––

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location where the services are actually performed.

Example –

1. 12 (5) (a) – DEO Services, Kolkata provided corporate trainings to CEO Ltd, Guwahati, Assam, at their Jamshedpur Branch, the place of supply will be Guwahati.
2. 12 (5) (b) – DEO Service, Kolkata provided marketing consultancy services to Mr. E an unregistered person in Patna, the place of supply is Patna.

Section 12 (6) – The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located

Example – The place of supply of a IPL match in Pune, will be Pune.

Section 12 (7) (a) – The place of supply of services provided by way of organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events;

Example –The place of supply for trade fair organized by trade association, at Osmanabad, will be location of the trade fair.

Section 12 (7) (b) – services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of sponsorship to such events,––

• to a registered person, shall be the location of such person;
• to a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient.

Example – The place of supply for the person providing support services, located in Surat to the trade fair, at Osmanabad, will be Surat. In case of unregistered person place of supply will be Osmanabad.

Section 12 (8) – The place of supply of services by way of transportation of goods, including by mail or courier to,––

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

Example –

1. S a person registered in Haryana, handed over goods to a courier agency YZ Ltd in Delhi, to transport them to Mumbai. The place of supply in this case will be Haryana, the location of Mr. S and will charge IGST on the invoice.
2. In the given case, if Mr. S is unregistered person place of supply will be Delhi and will charge CGST and SGST on invoice.

Section 12 (9) – The place of supply of passenger transportation service to,—

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey:

Provided that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in accordance with the provisions of sub-section (2).

Explanation.––For the purposes of this sub-section, the return journey shall be treated as a separate journey, even if the right to passage for onward and return journey is issued at the same time

Example –

1. Jackson, a registered person in Himachal Pradesh, books a railway ticket to travel from Dehradun to Kolkata on the travel.com, the place of supply will be Himachal Pradesh.
2. If Mr Jackson is an unregistered person, the place of supply will be Dehradun, Uttrakhand.

Right to passage is given for future use and the point of embarkation is not known:

Example – An airlines issues seasonal tickets containing 10 leaves, to travel from one part of the country to another, to its regular travelers, in that case, place of supply will be point from where the journey starts.

Section 12 (10) – The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey.

Example – The place of supply of services, on an aircraft from New York to New Delhi, will be New York, hence, no GST is chargeable.

Section 12 (11) – The place of supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person shall,—

(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;

(b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services;

(c) in cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means,––

(i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or

(ii) by any person to the final subscriber,

 be the location where such prepayment is received or such vouchers are sold;

(d) in other cases, be the address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services:

Provided that where the address of the recipient as per the records of the supplier of services is not available, the place of supply shall be location of the supplier of services:

Provided further that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall be the place of supply of such services.

Explanation.––Where the leased circuit is installed in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such circuit, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

Interpretation –

In case of landline telephone, mobile phones and direct to home television connections, the place of supply will be the location, where the payment is made to the supplier of services.

If the location of services receiver is known, place of supply will be location of service receiver, in any other case it will be the location of service provider.

Section 12 (12) – The place of supply of banking and other financial services, including stock broking services to any person shall be the location of the recipient of services on the records of the supplier of services:

Provided that if the location of recipient of services is not on the records of the supplier, the place of supply shall be the location of the supplier of services.

Interpretation: The place of supply in case of banking and other financial services will be the address of recipient of services in the records of service provider. If such address is not available the place of supply will be the location of supplier of services.

Section 12 (13) – The place of supply of insurance services shall,––

(a) to a registered person, be the location of such person;

(b) to a person other than a registered person, be the location of the recipient of services on the records of the supplier of services.

Example

Mr. J (CEO of YZ Ltd.) buys insurance cover for the inventory in his factory located in Jamshedpur, Jharkhand, from an insurance company of Thiruvananthapuram, Kerala. The place of supply in this case will be Jharkhand.

Mr. Y a salaried person of Lucknow buys medical insurance policy from an insurance company in Lucknow. The place of supply will be Lucknow, since it is the address of the service recipient.

Section 12 (14) – The place of supply of advertisement services to the Central Government, a State Government, a statutory body or a local authority meant for the States or Union territories identified in the contract or agreement shall be taken as being in each of such States or Union territories and the value of such supplies specific to each State or Union territory shall be in proportion to the amount attributable to services provided by way of dissemination in the respective States or Union territories as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

Example –

1. Maharashtra Government gives contract to an advertisement agency, to promote its tourism in all the States and Union Territories of the country. In this case, place of supply will be each such State and Union Territory.
2. Delhi Government gives contract of poster advertisement of “Beti Bacho Beti Padhao” scheme all over Delhi. The place of supply will be Delhi.