CA Sandeep Salve
CA Sandeep Salve

In the earlier article, I had covered Place of Supply of Goods as per IGST Act, 2017 as passed by Lok Sabha on 29th March 2017. This article is about principles to determine the place of supply of services when the location of supplier of service and the location of the recipient of services is in India. Just to reiterate, that the provisions of place of supply of goods and services are given in Chapter V of The IGST Act. There are in all five sections under this chapter. Two sections are to determine place of supply of goods and the remaining three sections determine the place of supply of services. This article is based on section 12 which is titled as “Place of supply of services where the location of supplier of service and the location of the recipient of service is in India”.

Simplification of place of supply of services when location of supplier of service and location of recipient of service is in india

Section 12 provides separate principles for determining place of supply for specified services. If services are other than specified services, then general rule has to be followed. Let’s start with the general rule which is tabulated below:

Section Nature Place of Supply
12(2) General Rule Service To Registered Dealer (RD)

Location of such person

Services to Unregistered Dealer (URD)

Check 1: Address on record

Location of recipient

Check 2: No address on record

Location of supplier of services

It is important to understand what is :

1. Location of recipient of services, and

2. Location of supplier of services

These terms are defined under section 2(14) and 2(15) respectively of the IGST Act, 2017 which are as follows :

1. Location of recipient of services

“location of the recipient of services” means,-

(a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and

(d) in absence of such places, the location of the usual place of residence of the recipient;

2. Location of supplier of services

“location of the supplier of services” means,––

(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;

(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and

(d) in absence of such places, the location of the usual place of residence of the supplier;

The term “fixed establishment” is used in the above mentioned definitions. So, it is also important to know the definition of fixed establishment which is defined under section 2(7) which is quoted below :

“fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs;

The simplification of place of supply of specified services is tabulated below :

Sl. No. Section   Nature Place of Supply
1. 12(3) POS of services relating to:

1. Immovable property

2. Lodging accommodation

3. Accommodation for organizing event

4. Any ancillary services to above

Check 1 : Property In India

Location at which immovable property is located

Check 2 : Property outside India

Location of recipient

Check 3 : Property located in multiple States and Union  territories (UT)

Location shall be respective State or UT in proportion to the value of services in terms of agreement. In absence of agreement, POS will on basis as may be prescribed.

2. 12(4) Place of supply of :

1. Restaurant & catering services

2. Personal grooming

3. Fitness, beauty treatment

4. Health services including cosmetic and  plastic surgery

Location where services are actually performed
3. 12(5) Training & performance appraisal To RD

Location of RD

To URD

Location where services are actually performed

4. 12(6) Admission to events and parks Place where event is held or park is located
     
5. 12(7) 1. Organizing event

2. Services ancillary to organization

3. Assigning sponsorship to events

Check 1 : Event In India

To RD

Location of such person

To URD

Place where event is held

Check 2 : Event outside India

Location of recipient

Check 3 : Property located in more than one States and Union territories

Location shall be respective State or UT in proportion to the value of services in terms of agreement. In absence of agreement, POS will on basis as may be prescribed.

     
6. 12(8) Transportation of goods including by mail or courier To RD

Location of such person

To URD

Location where goods are handed over for transportation

     
7. 12(9) Passenger transportation services To RD

Location of such person

To URD

Check 1: Point of embarkation is known

Place where passenger embarks on conveyance for continuous journey

Check 2: Point of embarkation is not known at the time of issue of right to passage

POS will be as per general rule

     
8. 12(10) Services on board a conveyance Location of first scheduled point of departure of conveyance
     
9(1). 12(11)(a) Services by way of :

1. Fixed telecommunication line

2. Leased circuits

3. Internet leased circuits

4. Cable or dish antenna

Location where it is installed

In case where leased  circuit is installed in more than one Sate or UT

Location shall be respective State or UT in proportion to the value of services in terms of agreement. In absence of agreement, POS will on basis as may be prescribed.

9(2). 12(11)(b) Services of :

1. Mobile connection for telecommunication

2. Internet services provided on postpaid basis

Check 1: Address of recipient is available

Location of billing address of recipient

Check 2: Address of recipient is not available

POS will be location of supplier

9(3). 12(11)(c) Services of :

1. Mobile connection for telecommunication

2. Internet services

3. DTH services

provided on pre-payment basis :

(a) Through selling agent or reseller or distributor of SIM or recharge voucher

(b) By any person to the final subscriber

POS for (a)

Address of agent, reseller or distributor a per record of supplier

POS for (b)

Location where pre-payment is received or voucher is sold

9(4). Proviso to 12(11) Pre-paid service availed through electronic mode of payment Location of recipient of services on record of supplier
     
10. 12(12) Banking, financial and stock broking service Check 1: Address available

Location of recipient of service

Check 2 : Address not available

Location of supplier of service

     
11. 12(13) Insurance services To RD

Location of such person

To URD

Location of recipient on record of supplier of service

     
12. 12(14) Advertisement services to Government meant for identifiable State Check 1: Contract exits

Location shall be respective State or UT in proportion to the value of services in terms of contract.

Check 2: Agreement does not exists

In absence of agreement, POS will on basis as may be prescribed.

     

I will be covering the principles of place of supply of services where the location of the supplier or the location of the recipient is outside India in a separate article.

More Under Goods and Services Tax

Posted Under

Category : Goods and Services Tax (4556)
Type : Articles (14319)
Tags : goods and services tax (3118) GST (2705)

2 responses to “Simplification of place of supply of services when location of supplier of service and location of recipient of service is in India”

  1. A N Parnaik says:

    Good analysis in simple language.

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