faq : it is a destination based tax on consumption of...
TRANSCRIPT
FAQ : It is a destination based tax on consumption of goods andservices. It is proposed to be levied at all stages right frommanufacture up to final consumption with credit of taxes paid atprevious stages available as setoff. In a nutshell, only value additionwill be taxed and burden of tax is to be borne by the final consumer.
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GST Law
Article 246A(1)
Every state can make laws w.r.t
goods and service tax imposed by the
union or state.
Article 246A(2)
Parliament has power to make laws
w.r.t goods and service tax where the transaction is
inter-state
Article 269A
Parliament formulate principles
for inter-state supply including
supply in the course of import and
export
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Exports
Imports
Interstate
Where the location of supplier and place of supply:
Section 7 of IGST- Inter state Supply
Two
different
States
Two different
Union
Territories
State and a Union
territory
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Goods imported into India
till they cross custom frontiers
SEC 7(1) / 7(3)
SEC 7(2) / (4)
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Lo
ca
tio
n o
f S
up
plie
r o
f S
erv
ice
Supply made from registered POB
Location of such Place of Business
Supply made from premises other than
POB
The location of such Fixed Establishment
Supply is made from more than 1
establishment
Establishment most directly concerned with provision of the supply
In absence of such places
Place of residence of supplier
Examples
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POS u/s 10/12
Location of Supplier
Supply of Goods or Services
POS u/s 10/12
DNH
Supply of Goods or services
POS u/s 10/12
Between 2 different states
Between 2 UT
Location of Supplier
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Examples of Inter state
Mexico
Custom
Frontier
Mexico
Services
Supply of goods or services or both – Section 7(5)
supplier is located in India and the place of supply is outside India;
to or by a Special Economic Zone developer or a Special Economic Zone unit; or
in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,
Inter state supply
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Intrastate
Section 8 of IGST- Intra state Supply of Goods
Subject to the provisions of section 10, where the location of
supplier and place of supply:
Within same
State
Within same Union
Territory
The following shall not be treated as intra state
supply• supply of goods to or by a Special Economic Zone
developer or a Special Economic Zone unit;
• goods imported into the territory of India till they cross
the customs frontiers of India; or
• supplies made to a tourist referred to in section 15.04.04.2020 © GST & INDIRECT TAXES COMMITTEE, ICAI 11
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Section 8 of IGST- Intra state Supply of Services
Subject to the provisions of section 12, where the
location of supplier and place of supply:
Within same
State
Within same Union
Territory
However supply of services to or by an SEZ shall
not be Intra state
Banglore
SEZ
Intra
state
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Issues w.r.t Hotel services to SEZ
Hotel - Mumbai Company in
SEZLocation of Supplier
POS u/s 12
Intra state
Inter state as per section 7 (5)(b)
Whether Intra state or Inter
state?
Supply to
employees
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Advance ruling no. AAR KAR ADRG 2/2018
Facts of the case
M/s Gogte Infrasturcture Development Corporation Ltd, is engaged in hotel
accommodation and restaurant services. They are providing services to the
employees & guests of some of the units in SEZ, Belgavi, in addition to the
regular customers. They are charging SGST & CGST at the applicable rates.
The SEZ units contended that the services are being supplied / rendered to
SEZ units only and hence rate of GST is NIL as per provisions of section
16(1) of IGST Act’2017. Therefore the applicant filed an application seeking
advance ruling on : “Whether the Hotel Accommodation & Restaurant
services provided by them, within the premises of the Hotel, to the
employees & guests of SEZ units, be treated as supply of goods &
services to SEZ units in Karnataka or not ?”
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1. On reading section 16(1)(b) with rule 46 of CGST Rules
2017, it is clearly evident that the supplies of goods or
services or both towards the authorised operations only
shall be treated as Supplies to SEZ Developer / SEZ Unit.
2. For Hotel accommodation and restaurant services POS is
location of Hotel and place where there is Performance of
services respectively.
3. Therefore the services rendered by the applicant are
neither the part of authorised operations nor consumed
inside the SEZ and hence cannot be said to have been
‘imported or procured’ into SEZ Unit/Developer.
4. Hence in the instant case, the supply is intra state supply.
Ruling
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However the following issues still persists after AAR
Inter state supply
Further as per section 8(1)(i), Supply of
services to or by a SEZ or a SEZ developer
Intra state supply
Shall not be
As per section 7(5)(b) Supply of goods or services or both to or by a Special Economic
Zone developer or a Special Economic Zone unit; or by a Special
Economic Zone developer or a Special Economic Zone unit; or
(‘c) in the taxable territory, not being an intra-State supply and not
covered elsewhere in this section
Section 7 and 8 of IGST does not
consider POS and LOS. However there
is no reference of these sections in
AAR
Circular No. 48/22/2018-GST
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It is an established principle of interpretation of statutes
that in case of an apparent conflict between two
provisions, the specific provision shall prevail over the
general provision.
Section 7(5)(b) of the IGST Act is a specific provision
relating to supplies of goods or services or both made to a
SEZ developer or a SEZ unit, which states that such
supplies shall be treated as inter-State supplies.
clarified that services of short term accommodation,
conferencing, banqueting etc., provided to a SEZ developer
or a SEZ unit shall be treated as an inter-State supply
Examples of Intra State Supplies
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POS u/s 10/12
Location of Supplier
POS u/s 10/12
Location of Supplier
Section 9 of IGST- Intra state Supply
• Location of supplier or
• POS
Location of supplier or POS shall be the coastal state or UT nearest to the baseline
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Off shore Projects
Mumbai-off shore project Supply of Goods /
Services
Location of SupplierPOS
Nearest
coast as
per Sec 9
of IGST
Mumbai
Inter – state supply
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Supply of
services
POS as
per sec
15 Be
yo
nd
12
nm What shall be the
POS?
Issue due to definition of Territorial waters
Territorial waters refers to a distance of 12 nm from the baseline of a coastal state
Need for determining place of supply (FAQ)
• The basic principle of GST is that
• it should effectively tax the consumption of such supplies at the destination thereof or
• as the case may at the point of consumption
• So place of supply provision determine the place i.e. taxable jurisdiction where the tax should reach
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Recipient of Supply of Goods and /or Services 2(93)
Consideration is payable
Person liableto pay
consideration
Consideration is not payable
For supply of Goods
to whom the goods are delivered / made
available/ possession / use goods
For Supply of Service
To whom Service is rendered
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Recipient shall include agent
Why Place of Supply is different for goods and Services
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Goods being tangible do not pose any significant
problems for determination of their place of consumption
Services being intangible pose problems w.r.t
determination of place of supply
Reason for problem in determining POS for Services
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• The manner of delivery of service could be altered easily
• Service provider, service receiver and the service provided may not be ascertainable or may easily be suppressed as nothing tangible moves and there would hardly be a trail
• No fixed location of Service Provide or receiver is require
• Services are continuously evolving and would thus continue to pose newer challenges- online transaction
• Sometime the same element may flow to more than one location
The manner of delivery of service could
be altered easily
Post paid to prepaid , billing address
Onsite or offsite R&M of Software
Now Banking may not require customer to visit bank
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Element may flow in
different state
Interstate
Film distribution of multistate
Delhi metro in NCR
Season ticket
Place of Supply of goods other than export and Import
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Where the supply involves movement of
goods
Whether by the supplier or the recipient or by
any other person
Location of the goods at the time at which
the movement of goods terminates for
delivery to the recipient.
Where the goods are delivered by the
supplier to a recipient or any other person
On the direction of a third person, whether acting as an agent or otherwise, deemed that said 3rd person
has received the goods
place of supply of such goods shall be the principal place of business of such
person
Supply does not involve movement of
goods
Whether by the supplier or the
recipient
Location of such goods at the time of the delivery to
the recipient
Place of Supply of goods other than export and Import
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Goods are assembled or
installed at site
The place of supply shall be
Place of such installation or
assembly
Goods are supplied on board
a conveyance
Such as a vessel, an aircraft, a train
or a motor vehicle
Location at which such goods are taken on board
Place of supply of goods cannot be
determined
To be determined by law made by the Parliament
With the recommendation
of the GST Council
Location of Service Provider
Location of Service Receiver
Place of Performance
Place of Consumption
Place/ person to which benefit actually flown
Element involved to determine POS in case of Services
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location of supplier
location of recipient
Section 12
Place of supply
of services
where the
location of
supplier service
and the location
of the recipient
of service is in
India
Supply
Place of supply of services where the location of supplier service or the
location of the recipient of service is outside India
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location of supplier
location of recipient
location of recipient
Location of Supplier
Supply of Services
Supply of Services
Section 13
Place of Supply of service (Generally)
service receiver is registered?
Yes
Location of Service
Receiver
No
Address record of recipient exist?
Yes
Location of Service Receiver
No
Location of Supplier of Service
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Sec 12(2)&(3)
Place of supply of service (Generally)
Is location of service receiver is available?
Yes
Location of Service Receiver
No
Location of Service Provider
© GST & INDIRECT TAXES COMMITTEE, ICAI04.04.2020 34
Sec 13(2)
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Sec 12(3)
Location of immovable property or boat or vessel or intended
location
Services directly relating to
Immovable property inclcoverage of service providers
providing the following services in relation to such
immovable property
Granting right to use immovable property
Services for carrying out or co-ordination of construction work
architects and interior decorators
surveyor, engineer or experts or estate agents
Lodging accommodation by a hotel, etc. incl house boat, vessel
Accommodation in any imm. Prop. For any marriage or function etc. incl services provided i.r.t. such function at such property
Any services ancillary to the services referred above
Incase of location of immovable property is
outside India POS is location of recipient
Goods Delivered/ Installed at Site
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Contractor
(Reg: Umargam, GJ)Construction Site
(Dahanu, MH)
RMC Vendor
(Ghodbunder,
MH)
Deliver AtBill To
Which GST is leviable –
IGST/CGST/SGST
© GST & INDIRECT TAXES COMMITTEE, ICAI
Tour Operator
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Place of Supply
Location of Hotel – NO ITC
Customer
State C
Place of Supply
Location of Customer
State A
State B
State AState BState A
Customer
State C
Place of Supply
Location of Hotel
ITC available to
State A operator
Place of
Supply
State BPlace of
Supply
Location
of Customer
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Services directly relating to Immovable property
Location/ Intended location of Immovable property
Inclusive Coverage of service providers providing the following services in relation to such immovable property
Hotel accommodation by a hotel, etc
Granting right to use immovable property
Services for carrying out or co-ordination of construction work
Services by architects and interior decorators
Services by Auctioneer or experts and estate agents
© GST & INDIRECT TAXES COMMITTEE, ICAI04.04.2020 38
Sec 13(4)
POS for Cruise
Accommodation on Cruise
Indian Cruise Line
Indian Passenger
POS Location of Cruise
Foreign Passenger
POS Location of Performance of
Service
Foreign Cruise Line
Indian Passenger
POS Location of Performance of
Service
Foreign Passenger
Non Taxable
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Personal Services
The place of supply of• restaurant and catering services
• personal grooming, fitness,
• beauty treatment,
• health service including
cosmetic and plastic surgery
Location where the services are
actually performed.
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Sec 12(4)
Performance based services
Shall be the location of actual performance of service in case
Services requiring physical presence of goods
Made physically available by the recipient of service
To the service provider in order to provide the service*
#
Services provided to an individual who is recipient of service/ person
representing the SR
in the physical presence of the service receiver or a person
acting on behalf of the receiver
With the SP for the provision of service
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Sec 13(3)
Place of supply of performance based services
*remote location by electronic means, place of provision shall be the location of goods at the time of provisions of such service
# this clause shall not apply in the case of a service provided in respect of goods that are temporarily imported into India for repairs or other treatment or process and are exported after the repairs, treatment or process without being put to any use in the taxable territory, other than that which is required for such repair, treatment or process
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Goods Imported for Job Work, etc.
Repair Work Vs Job WorkWould include
• Any repair work
• Undertaken by a person
• on goods
• belonging to another registered or unregistered person
Means
• any treatment or process
• undertaken by a person
• on goods
• belonging to another registered person
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Training and performance appraisal
service receiver is registered?
Yes
Location of Service Receiver
No
Location where services are actually
performed.
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Sec 12(5)
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Services in relation to Admission to events/park
Location of event, park etc shall be place of supply of service in respect of following services
Admission to
Cultural event
Artistic event
Sporting event
Scientific event
Educational event
Entertainment event
Amusement park
Any other place
Any other ancillary services
Sec 12(6)
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Services in relation to events
Location of event shall be place of supply of service in respect of following services
Admission or organisation to
Cultural event
Artistic event
Sporting event
Scientific event
Educational event
Entertainment event
Celebration
Conference
Fair
Exhibition
Any other ancillary services
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Organisation of events
Cultural event
Artistic event
Sporting event
Scientific event
Educational event
Entertainment event
Celebration
Conference
Fair
Exhibition
Any other ancillary services, sponsorship of such events
SR is registered person, location of such person
SR is unregistered
person, place of event.
If event is held outside India POS is location of recipient
Service supplied at more than 1 location including a location in
taxable territory
Gujarat
25%
London
75%
Place of supply shall be Gujarat© GST & INDIRECT TAXES COMMITTEE, ICAI04.04.2020 48
Sec 13(6)
Service supplied in more than one State or UT
Place of supply of service
In the proportion as prescribed in the
agreement
If not given in agreement as may be
prescribed in this behalf
© GST & INDIRECT TAXES COMMITTEE, ICAI04.04.2020 49
Sec 13(7)
Location of Supplier of Service
Service supplied by a Banking Company or a Financial Institution or a NBFC to account holders
Intermediary
Services consisting of hiring of all means transport upto period of 1 month
© GST & INDIRECT TAXES COMMITTEE, ICAI04.04.2020 50
Account means an account which bears an interest to the depositor& includes NRE and NRO account
Intermediary means a broker, an agent or any other person, bywhatever name called, who arranges or facilitates a provision of aservice (hereinafter called the ‘main’ service) or a supply of goods ,between two or more persons, but does not include a person whoprovides the main service or supplies the goods on his account.
Sec 13(8)
Intermediary
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Service Provider (Domestic)
Facilitation Services Principal (Domestic) POSTaxable
Sec 12(2)
Service Provider (Domestic)
Own Account Marketing, promotion
Principal (Domestic) POSTaxable
Sec 12(2)
Service Provider (Domestic)
Principal (International)
POSTaxable
Sec 13(8)
Service Provider (International)
Facilitation Services Principal (Domestic) POSNon
Taxable Sec 13(8)
Service Provider (Domestic)
Principal (International)
POSExport
Sec 13(2)
Facilitation Services
Own Account Marketing, promotion
GoDaddy (AAR)
Place of Supply including by mail or courier
Destination of Goods
Outside India
Destination of the Goods (w.e.f. 01st February, 2019)
Within India
Goods Transportation Services
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Registered Person
UnregisteredPerson
Location of the registered
person
Location at which goods are handed over for
their transportation
Place of supply
Transportation of goods other than by mail or
courier
Place of destination of goods
Goods Transportation Services
© GST & INDIRECT TAXES COMMITTEE, ICAI04.04.2020 53
Sec 13(9)
Place of supply for passenger transportation
service receiver is registered?
Yes
Location of Service Receiver
No
place where the passenger embarks on the conveyance for a continuous journey
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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 as
per general rule
the return
journey shall
be treated as
a separate
journey
2(29) continuous journey
Means a journey for which a single or more than oneticket or invoice is issued at the same time, either by asingle supplier of service or through an agent acting onbehalf of more than one supplier of service, and whichinvolves no stop over between any of the legs of thejourney for which one or more separate tickets or invoicesare issued;
Explanation.- For the purposes of this clause, ‘stopover’means a place where a passenger can disembark either totransfer to another conveyance or break his journey for acertain period in order to resume it at a later point oftime.
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Passenger transportation Service
The place of supply in respect of a passengertransportation service shall be the place where thepassenger embarks on the conveyance for acontinuous journey.
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Sec 13(10)
Services provided on board a conveyance
Place of provision of services provided on board a conveyance such as Vessel aircraft, train ormotor vehicle
shall be the first scheduled point of departure of that conveyance for the journey
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Sec 13(10)
Sec 13(11)
Telecommunication ServicesThe place of supply of telecommunication services incl data
transfer, broadcasting, cable and direct to home television services
Fixed telecommunicati
on line, leased circuits, internet
leased circuit, cable or dish
antenna
Location of installation
Mobile connection and
internet provided on
post-paid basis
Billing address
Mobile connection, Internet or DTH
provided on pre-payment
Add. of selling agent, or re-seller or
distributor as per the record of the supplier
Location where such pre-payment is
received or such vouchers are sold
Payment through E mode add. Of the recipient on
record
Case not covered in (b)
and (c)
Add. of the recipient as
per record of supplier
Add. Not available
location of supplier
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Sec 12(11)
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Place of supply for Banking and other Financial Services including Stock Broking
Address record of recipient exist?
Yes
Location of Service Receiver
No
Location of Service supplier
S.2(17):Online Information And Database Access Or Retrieval Services
Online Information [OIDAR]
• 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
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• includes electronic services such as,-
advertising on the internet
providing cloud services
provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet
providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network
online supplies of digital content (movies, television shows, music, etc.)
digital data storage; and
online gaming
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OIDARContinued…..
Any 2 of the following in Taxable territory
location of address presented
Cr card / Dr card / smart card or any other card by which payment is settle
billing address
IP address of device used
Bank account from payment is settle
SIM card used
Location of Land line through which service is used
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Loca
tio
n o
f Se
rvic
e
Re
cip
ien
t 1
3(1
2)
Notify POS of any description of service and circumstances
POS shall be
effective use and
enjoyment
Prevent double
taxation
Non taxation
Uniform application
of rules
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Sec 13(13)
Supply of OIDAR by person in Non Taxable territory to Non
taxable person
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Supplying OIDAR Service
Non taxable online
recipient
Person Liable to pay
IGST
Sec 14
Non-taxable online recipient 2(16)• means any Government, local authority, governmental
authority, an individual or any other person not registered and • receiving online information and database access or retrieval
services • in relation to any purpose other than commerce, industry or any
other business or profession, • located in taxable territory.• Governmental authority means an authority or a board or any
other body,––(i) set up by an Act of Parliament or a State Legislature; or(ii) established by any Government, with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution
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Person liable to pay IGST
Supplier to take Single
registration under Simplified
Registration Scheme
Representative in India for any
purpose
Such representative
Appoint a person to pay tax
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Non taxable online
recipient
Person Liable to pay
IGST
Intermediary arranges
or facilitates the supply
Deemed Recipien
t
Except
a. the invoice or customer’s bill or receipt issued or made availableby such intermediary taking part in the supply clearly identifies theservice in question and its supplier in non-taxable territory
b. the intermediary involved in the supply does not authorise thecharge to the customer or take part in its charge which is that theintermediary neither collects or processes payment in any mannernor is responsible for the payment between the non-taxableonline recipient and the supplier of such services
c. the intermediary involved in the supply does not authorisedelivery; and
d. the general terms and conditions of the supply are not set by theintermediary involved in the supply but by the supplier of services.
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Opinions or views
are like wrist
watches.
Every watch shows
different time from
others.
But every one
believes that their
time is right!
GST & Indirect Taxes Committee The Institute of Chartered Accountants of India [email protected] ;https://idtc.icai.org/;https://icai.org/
Supply of Goods involve movements
Place of Supply of Goods
State B IGST will be applicable
Termination of movement of goods
State B
Location of goods ready for supply
State A
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Difference between place of supply and Address for Delivery
Place of Supply: Means that location
where good or service is deemed to
be supplied as per chapter V of IGST
Act
Address for the Delivery : Means
location of shipment of goods ,
it can be different from Place of supply
Example: Mr. A ( Maharashtra ) supplies the good to Mr. B
(Delhi). But on the directions of Mr. B , goods are delivered to
Mr. C (Goa). So in this case Place of supply is Delhi but
address of delivery is Goa.04.04.2020 © GST & INDIRECT TAXES COMMITTEE, ICAI 74
Bill to Shipped to• where the goods are delivered by the supplier
to a recipient or any other person on the direction of a third person,
• whether acting as an agent or otherwise,
• before or during movement of goods,
• either by way of transfer of documents of titleto the goods or otherwise
• it shall be deemed that the said third person has received the goods and
• the place of supply of such goods shall be the principal place of business of such person
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• Principal place of business means
• the place of business
• specified as the principal place of business in the certificate of registration
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Supplier
• City A
3rd Person /Buyer
• State B
Goods delivered at
• City A
Bill
Movement of Goods
BillABC & Co XYZ & Co
POS POS
3rd Person is unregistered?
Place of Supply of Goods (Goods not require movement)
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Location of Goods
Supplier
State A State B
Place of Supply of Goods
BuyerABC & Co
• Sale of Factory
with Machine
and Stock
• Sale of Crane
• Sale of Gold
lying with
custodian
Supply of goods assembled/ installed at site
04.04.2020 © GST & INDIRECT TAXES COMMITTEE, ICAI 78
Place of Supply of Service
04.04.2020 © GST & INDIRECT TAXES COMMITTEE, ICAI 79
B2B
Taxable Recipient
Taxable Supplier
State A State B
Place of Supply of Service
B2C Non Taxable
Recipient Place of Supply of
Service if address of recipient not available Place of Supply of Service
if address available
ABC & Co
Mr. XYZ