Place of supply is an important point in determining the kind of GST to apply. When the location of supplier and the place of supply are in the two different states, then it will be an inter-state supply and IGST applies. And when they are in the same state, then it will be an intrastate supply and CGST and SGST applies. ‘Place of Supply ‘ is not a phrase of common understanding. It is a legal term, their common understanding must not be applied but the meaning assigned to them by law must be followed.
This article deals with the place of supply in relation to domestic supply of goods ( other than imported or exported from India).
While determining the levy (charge) based on place of supply, two things are considered namely:
- Location of supplier: It is the registered place of business of the supplier
- Place of supply: It is the registered place of business of the recipient
Example:
X ltd. Located in Mumbai, Maharashtra receives order from M/s YLtd. Located in Ahmedabad, Gujarat for supply of one machine.
Find the place of supply and applicable GST?
Answer-
- Location of supplier: Mumbai, Maharashtra
- Place of supply: Ahmedabad, Gujarat
Since the movement of goods terminate (comes to an end) at Ahmedabad, applicable GST = IGST
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GST Law provides how to determine the place of supply in various situations. These are as follows-:
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Supply involves movement of goods {Section 10(1) (a) of the IGST Act, 2017},
Nature of supply |
Place of supply of goods |
| Supply involves movement of goods whether by supplier or 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. |
Example:
Mr.C of Tamil Nadu received purchase order from Mr. H of Telangana for want of commercial goods. Now supply involves movement of goods by supplier from Tamil Nadu to Telangana in a truck by a road.
Answer; Place of supply of goods = Telangana, IGST will be levied, Supplier should indicate place of supply where location of supplier and recipient are different.
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The supplier delivers goods to a recipient or any other person on the direction of a third party person by way of transfer of documents of title to the goods or otherwise {Section 10(1)(b) of the IGST Act,2017},- Bill to; Ship to.
Nature of supply |
Place of supply of goods |
| 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 by way of transfer of documents of title to 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.
|
Example :
Mr. C of Tamil Nadu received purchase order from Mr. H of Telangana for want of commercial goods. Now supply involves movement of goods by supplier from Tamil Nadu to Telangana by road in a truck.
Upon the direction of Mr. H of Telangana these goods are redirect to Branch office of Mr. H located in Vijayawada, (in Andhra Pradesh) by way of transfer of documents of title to the goods (i.e. Lorry Receipt or LR copy).
Answer, Place of supply goods = Telangana. IGST will be levied.
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 (billing party).
GST Calendar
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Supply does not involve movement of goods [Section 10(1)(c) of the IGST Act, 2017]:
Nature of supply |
Place of supply of goods |
| Where the 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 (This place of supply is irrespective of the location of the buyer and seller) |
Example:
M/s Karina Ltd. incorporated in Maharashtra and own a godown in Tamil Nadu. Mr. M of Maharashtra approached M/s Karina Ltd. of Maharashtra for purchase of goods lying in godown at Tamil Nadu. Mr M further informs that he does not want delivery of goods in Maharashtra. M/s Karina Ltd. issues invoice for sale of goods in Maharashtra.
Find the place of supply of goods and levy of tax?
Answer,
Place of supply goods = Tamil Nadu
IGST will be levied. Location of such goods at the time of the delivery to the recipient where supply does not involve movement of goods. This place of supply is irrespective of the location of the buyer and seller.
TDS under GST
Two other situations
- Where goods are assembled or installed at site – The place of supply is where the goods are assembled or installed. For Example- Assembling of power plant.
- Where the goods are supplied on-board a conveyance like a vessel, aircraft, train or motor vehicle – The place os supply is where such goods are taken on board the conveyance. For Example- BabaTax purchase the coffee in a flight( Mumbai to New Delhi). As the food items were loaded into the flight at Mumbai. Therefore, the place of supply will be Mumbai.
The author of above article is CMA Hritik Barthwal, the Institute of Cost Accountants of India (ICMAI)
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