How to determine place of supply in various supply of services as per Section 13(1) to 13(13) under IGST Law, 2017
Dear Colleagues, Greetings of the day. Today I’m going to discuss about “How to determine place of supply in various supply of services under GST” under Sec.13 of IGST Act, 2017. Effective from 01.07.2017 many services are included under Tax Net in India. The Goods and Services Tax Act, 2017 is introduced all over India (Except Jammu and Kashmir up to 7.7.2017). In Jammu and Kashmir GST Act is been applicable from 8.7.2017.
Let us understand what is Place of supply? How to determine Place of supply in various services as per Section 13(1) to Sec.13(13) of IGST Act, 2017? What is the importance of Place of supply in Supply of services under GST Law?. Now we have to study the definitions of Important terms to apply GST Law on Place of supply in various services as per GST Law, 2017 for better understanding.
Section 13 deals with the determination of place of supply of services where the Location of supplier of service or the Location of the recipient of services is outside India. The provisions of Sec 13 of IGST Acts to determine the Import and Export of Services in various types of Supply of Services.
The Goods and Services Tax is a destination based tax. The Government has designed to tax goods and Services under GST Law based on identifying whether the supply made is Inter Sate supply of services or Intra State supply.
In case of Inter State Supply of services Integrated Goods and Services Tax (IGST ) is applicable and in case of Intra State Supply of Service Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST) is applicable.
As per Section 2(86) of the CGST Act, 2017, states that “Place of Supply” means the place of supply as referred to in Chapter –V of the Integrated Goods and Services Tax Act (IGST) 2017.
What is the meaning of “Export of Service” under IGST Act,2017?
Export of Services is defined under Section 2(6) of the IGST Act,2017, Export of services means the supply of any service when:-
(a) The supplier of services is Located in India,
(b) The recipient of service is located outside India,
(c) The place of supply of service is outside India,
(d) The payment for such service has been received by the supplier of service in convertible foreign exchange, and
(e) The supplier of service and recipient of service are not merely establishments of a distinct person in accordance with explanation1 of Sec.8.
Section 13 defines the place of supply of services in the following manner:-
(a) General Principle as per Section 13(2) of IGST Act,2017, and
(b) Specific Situations as per Section 13(3) to Section 13(13) of IGST Act,2017.
A. General Principle.13(2) of IGST Act, 2017.
As per Section 13(2), generally the place of supply of services shall be the location of the recipient of service. However, if the location of the recipient of service is not available in the ordinary course of business, the place of supply shall be the location of the supplier of service.
B. Specific Situation. Sec.13(3) to 13(13) of IGST Act, 2017:
Section 13(3)(a) of IGST Act, 2017, deals with : Services supplied in respect of goods that are required to be made physically available by the recipient. The intention of this section is “Where the services are performed by the supplier of services on the goods that are made available by the recipient of services or any person acting on his behalf, then the place of supply where the services are performed shall be the place of supply. However, if the services are performed from a remote location through electronics means, the place of supply shall be the place where the goods were situated.
This provision does not cover situations where the goods are imported temporarily into India for repairs and are exported after repairs. Where the seller is provided in more than one location, including a location in taxable territory its place of supply shall be the location in the taxability territory as per Sec.13(6) of IGST Act,2017.
M/s. Cheran Export & Imports, (Based out of USA )hires a service provider in India Manoj Imports & Exports, Kolkata, West Bengal to perform quality check on all its goods exported to India , Kolkata, West Bengal after clearance from the custom authorities. The goods will be supplied by its custom clearing agent ( M/s. Sundaram C&F agents) to perform quality check. In this case , place of supply for services provided by both Manoj Imports & Exports and M/s. Sundaram C&F Agents to Cheran Exports & Imports will be Kolkata, West Bengal.
Specific Situation: Section 13(3)(b) of IGST Act,2017, deals with : Services supplied to an individual which require physical presence.
This section covers the scenario where the services supplied to an individual , represented either as the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the recipient, with the supplier for the supply of the service.
Where the services provided in more than one location , including a location in taxable territory its place of supply shall be the Location in the taxable territory as per Sec.13(6) of IGST Act, 2017.
Specific Situation: Section 13(4) of IGST Act, 2017, deals with” Supply of service in relation to Immovable Property”.
This section defines about the cases where the place of supply will be the place where the immovable property is located or is intended to be located:-
(a) Services supplied directly in relation to an immovable property including services supplied in this regard by experts and estate agents,
(b) Supply of hotel accommodation by a hotel, inn, guest house, club or campsite,
(c) Grant of rights to use immovable property,
(d) Services for carrying out or co-ordination of construction work including architects or interior decorators,
Where the service is provided in more than one location including a location in taxable territory its place of supply shall be the location in the taxable territory as per Section 13(6) of IGST Act, 2017.
(i) Chandana Interior Limited is a famous interior decorator from Chennai who provided services across the world. Mr. B of Dubai hires Chandana Interior Limited for interior decoration of their hotel in Singapore. The place of supply of service in this case will be Singapore.
(ii) Sardar Sing is a NRI (Non-Resident Indian) and has several properties in different parts of the Country. He has appointed Mr. Prakash to give the properties on lease on his behalf and also collect rent from the said properties. In this case Place of Supply will be the location of such immovable Properties.
Specific Situation: Section 13(5) of IGST Act, 2017, deals with” Supply of service in relation to admission to events”.
This section covers services by way of admission to or organization of, a cultural, artistic, sporting, scientific, educational or entertainment event to celebration, conference, fair, exhibition or similar events and of services ancillary to such admission shall be the place where such event is actually held.
Where the service is provided in more than one location including a location in taxable territory its place of supply shall be the location in the taxable territory as per section 13(6) of IGST Act,2017.
Mahmud Corporation of U.K. is organizing a World Dance Championship for which they have to identify the best dance team from different countries. They appointed Suresh Corporation Limited for organizing the events in all four metro cities of India to identify the dance troops which can represent India at World Dance Championship finals to be held in Singapore. The place of supply for services in this case will be each metro cities.
Specific Situation: Section 13(6) and 13(7) of IGST Act,2017, deals with Supply of services as referred in section 13(3) to 13(5) is supplied both in foreign countries and in India.
In the above cases “the place of supply “is Location in India.
Specific Situation: Section 13(8) of IGST Act, 2017, deals with” supply of services by Banking Companies, NBFC, Intermediaries etc.,
These following services are covered in the above services.
(a) Non-Banking financial company to their account holders,
(b) Intermediary services,
(c) Services consisting of hiring of means of transport including Yachts but excluding aircrafts and vessels, up to a period of one month.
In the above cases “The Place of Supply “ is Location of service Providers.
What is the meaning of” Intermediary “ under IGST Act,2017?
As per Section 2(13) of IGST Act,2017, the meaning of “Intermediary” means 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.
Specific Situation: Section 13(9) of IGST Act,2017, deals with” Supply of services by way of transportation of goods other than courier and mail.
In the above case “Place of supply “ is “Destination of the goods”.
Specific Situation: Section 13(10) of IGST Act, 2017, deals with” Supply of passenger transportation services”.
The place of supply of services in the above case will be “the place where the passenger embarks on the conveyance for a continuous journey”.
Specific Situation: Section 13(11) of IGST Act, 2017, deals with” Supply of services on board a conveyance.
Place of supply of services provided on board a conveyance during the course of a passenger transport operation including services intended to be wholly or substantially consumed while on board shall be the first scheduled point of departure of that conveyance of the journey i.e. “ Location from where the conveyance started its journey”.
Specific Situation: Section 13(12) of IGST Act, 2017, deals with” services provided for online information and database access or retrieval services”.
In the above case “ the place of supply of service shall be the location of recipient of service. For the purpose of this sub-section, person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied , they are”:-
(i) The location of address presented by the recipient of service via internet is in taxable territory,
(ii) The credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of service settles payment has been issued in the taxable territory,
(iii) The bill address of recipient of service is in the taxable territory,
(iv) The internet protocol address of the device used by the recipient of service is in the taxable territory,
(v) The bank of recipient of service in which the account used for payment is maintained is in the taxable territory,
(vi) The country code of the subscriber identity module i.e. SIM Card , used by the recipient of service is of taxable territory,
(vii) The location of the fixed land line through which the service is received by the recipient is in taxable territory.
What is the meaning of “Online information and database access or retrieval services under IGST Act,2017?
As per section 2(17) of IGST Act, 2017, Online information and data base access or retrieval services means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as:-
(a) Advertising on the internet,
(b) Providing cloud services,
(c) Provision of e-books , movie, music, software and other intangibles via telecommunication networks or internet,
(d) Providing data or information , retrievable or otherwise to any person, in electronic form through a computer network,
(e) Online supplies of digital content i.e. movies, television shows, music etc.,
(f) Digital data storage, and
(g) Online gaming.
Specific Situation: Section 13(13) of IGST Act,2017, deals with” Power of Central Government.
In order to prevent double taxation or no-taxation of the supply of a service or for the uniform application of rules the Government shall have the power to notify any description of service or circumstance in which the place of supply shall be the place of effective use and enjoyment of a service.