PLACE OF SUPPLY

SSGURU CA SURAJ SATIJA

7. PLACE OF SUPPLY
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
determines the place i.e. taxable jurisdiction where the tax should reach.

Thus, the 'location of the supplier' and 'place of supply' is very crucial to determine whether the
supply is an inter-State supply or an intra-State supply. Where location of supplier and place of
supply are in the same State or Union Territory, the supply will be an intra-State supply and shall
be liable to CGST and SGST/UTGST. On the other hand, where the location of the supplier and
the place of supply are in two difference States or in two different Union Territories or in a State
and Union Territory, the supply Will be an inter-State supply and shall be liable to IGST.

Reasons for having separate provisions for place of supply in respect of B2B (supplies to
registered persons) and B2C supplies to unregistered persons) transactions

B2B transactions B2C transactions

(supplies to registered persons) (supplies to unregistered persons)
In this case, the taxes paid are taken as credit In this case, the supply is finally consumed
by the recipient. Thus, such transactions are and the taxes paid by recipient actually come
just pass through transactions. to the Government.
GST collected on B2B supplies effectively
create a liability for the government and an
asset for the recipient of such supplies in as
much as the recipient is entitled to use the
input tax credit for payment of future taxes.

For B2B transactions, the location of recipient

is taken care in almost all situations as further
credit is to be taken by recipient.
The recipient usually further supplies to
another customer. The supply is consumed
only when a B2B transaction is further
converted into B2C transaction.

Location of Supplier of Goods

The "location of the supplier of the services" is defined in section 2(15) of the IGST Act (See
below) but the term "location of supplier of goods" is not defined in law. The word 'location' here
refers to the site or premises (geographical point) where the supplier is situated with the goods
in his control ready to be supplied. In other words, it is the physical point where the goods are
situated under the control of the person wherever incorporated or registered and ready to be
supplied.

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"Location of the supplier of services" [Section 2(15) of the IGST Act, 2017]

"Location of the supplier of services" means, —

Situation Location of the supplier

where a supply is made from a place of It shall be the location of such place of
business for which the registration has been business
obtained
where a supply is made from a place other It shall be the location of such 'fixed
than the place of business for which establishment'
registration has been obtained (a fixed Fixed establishment means a place (other
establishment elsewhere) than the registered place of business) which is
characterized 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.
where a supply is made from more than one It shall be the location of the establishment
establishment, whether the place of business most directly concerned with the provision of
or fixed establishment the supply
in absence of such places It shall be the location of the usual place of
residence of the supplier

Place of supply of goods other than supply of goods imported into, or exported from India
[Section 10 of IGST Act, 2017]

The place of supply of goods, (other than supply of goods imported into, or exported from India),
shall be as under,-

(A) Where the place of supply of goods can be determined [Section 10(1)(a) to (e)]

Applicable Nature of supply of goods Place of Supply

section
10(1)(a) Where the supply involves movement of The location of the goods at the time
goods, whether by the supplier or the at which the movement of goods
recipient or by any other person terminates for delivery to the
recipient
Example 1: R of Delhi makes a supply of goods to G of Noida (UP). The place of
supply in this case shall be Noida where the movement goods terminates and it
will be a case of inter-State supply liable to IGST.
On the other hand, if G is also located in Delhi, the place of supply shall be Delhi
and it will be a case of intra-State supply liable to CGST and Delhi SGST.
Example 2: R of Jaipur (Rajasthan) comes to Delhi and wishes to buy a TV for
his residence at Jaipur. He visited a showroom of TV of G in Delhi. G agreed to

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transport and deliver the TV to R at his residence in Jaipur for a sum of 80,000
including transportation charges. In this case, supply involves movement of
goods from Delhi to Jaipur and responsibility of movement of goods is of the
supplier G. The place of supply in this case shall be Jaipur where the movement
terminates for delivery. Hence, it shall be a case of inter-state supply and liable
to IGST.
The situation will not be different if R agrees that he will himself move the goods
to Jaipur
10(1)(b) Where the goods are delivered by the It shall be deemed that the said third
supplier to a recipient or any other person has received the goods and
person on the direction of a third person, the place of supply of such goods
whether acting as an agent or otherwise, shall be the principal place of
before or during movement of goods, business of such third person
either by way of transfer of documents
of title to the goods or otherwise
Example 1: R of Delhi has supplied goods to G of Surat (Gujarat). During the
movement of goods G directed R to transfer the documents of title to S of
Mumbai. The place of supply of such goods shall be Gujarat and it will be a case
of inter-State supply liable to IGST.
Example 2: R, of Punjab, books an order to supply tools to K of Kanpur (UP). R
places the order on Gedore Tools Ltd. Delhi, the manufacturer of such tools and
instructs Gedore Tools Ltd. to deliver the tools directly to K of Kanpur to save
the transportation cost.
In this case goods are delivered to K in Kanpur by Gedore Tools Ltd. the supplier
of goods located in delhi on the direction of R. Delivery of goods by Gedore of
Delhi to K of Kanpur (UP) shall be considered as supply to R of Punjab and the
place of supply of this transaction shall be Punjab being the principal place of
business of R. This supply shall be considered as inter-State supply and shall be
subject to IGST which will be charged by Gedore Tools Ltd. of Delhi in his invoice
raised to R of Punjab.
10(1)(c) Where the supply does not involve The location of such goods at the time
movement of goods, whether by the of the delivery to the recipient
supplier or the recipient
10(1)(d) Where the goods are assembled or The place of such installation or
installed at site assembly
Example: Suppose R of Delhi enters into an agreement with G of Jaipur
(Rajasthan) for installation of TV tower at Kanpur (U.P.). The place of supply in
this case shall be the place of installation of TV tower i.e. Kanpur (UP). Thus it
will be a case of inter-State supply and R will have to pay IGST at Delhi.
On the other hand, if this TV tower has to be installed by R on behalf of G in Delhi,
it will be a case of intra-State supply and R will have to pay CGST and Delhi SGST
at Delhi.

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10(1)(e) Where the goods are supplied on board The location at which such goods are
a conveyance, including a vessel, an board
aircraft, a train or a motor vehicle However, in respect of services, the
Example: R, a flight caterer, of Delhi has place of supply shall be the location of
loaded food and drinks on Air India the first scheduled point of departure
aircraft at Delhi on its from Mumbai to of that conveyance for the journey.
Chandigarh via Delhi for passengers on (See 12(10) of IGST)
board. The place of supply in this case
shall be
Example: R, a flight caterer, of Delhi has loaded food and drinks on Air India
aircraft at Delhi on its flight from Mumbai to Chandigarh via Delhi for passengers
on board. The place of supply in this case shall be delhi from where foods and
drinks were loaded on the aircraft and it will be a case of intra-State supply and
R will have to pay CGST and Delhi SGST at Delhi
(B) Where the place of supply of goods cannot be determined (i.e. residual provision)
[Section 10(2)]
10(2) Where the place of supply of goods To be determined in such manner as
cannot be determined may be prescribed

The above section 10 can be summed up in the following chart:

Place of Supply
of Goods as per
section 10

Supply Where Supply does Goods are Goods are

involves goods are not involve assembled supplied on Residential
movement delivered to movement or board a provision
of goods a recipient of goods installed conveyance
before or at site
during
movement
of goods at
the
direction of
3rd person

Location Law made

Place of Place of Location at
where Place of by
principle location of which goods
movement assembly or government
place of goods at the taken on
of goods installation on
business of time of board
terminates recommend
third person delivery
for delivery ation of GST
council
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Place of supply of goods imported into, or exported from India [Section 11 of IGST Act,
2017]

Applicable section situation Place of supply

11(a) The place of supply of goods imported into India The location of
the importer
11(b) The place of supply of goods exported from India The location
outside India

1. R of Delhi imported the goods into India from the following countries:

(a) USA; (b) Germany; (c) U.K.; (d) France

Determined the place of supply and nature of GST payable by R.

SOLUTION

In the all the above cases, the place of supply shall be India and nature of GST payable by R at
Indian customs shall be IGST.

2. R of Rajasthan placed an order on G of Germany to dispatch goods to F of France. Determined

the place of supply and nature of GST payable by R.

SOLUTION

In this case, the place of supply shall be outside India and no GST is payable as France is outside
taxable territory.

Place of supply of services where location of supplier and recipient is in India [Section 12
of IGST Act, 2017]

per section 12(1), the provisions of this section shall apply to determine the place of supply of
services where the of supplier of services and the location of the recipient of services is in India.

Further, in the following sub-sections a distention has been made in relation to transactions
between:

i. B2B i.e. business to business and

ii. B2C i.e. business to consumer

Applicable section Nature of supply of services Place of supply

12(2) All services, except the services
specified in subsections (3) to (14)
made to —
(a) a registered person (i.e. B2B); The location of such registered
person

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(b) any person other than a (i) the location of the recipient
registered person (i.e. (ii) the location of the supplier
B2C) of services.
i) where the address of the recipient
exists on record
ii) where the address of the recipient
does not exist on record
12(3) In relation to an immovable property
or by way accommodation in such
property
Services—
(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 The location at which the
construction work; or immovable property or boat or
(b) by way of lodging vessel, as the case may be, is
accommodation by a hotel, inn, guest located or intended to be
house, home stay, club or campsite, located:
by whatever name called, and However, if the location of the
including a house boat or any other immovable property or boat or
vessel; or vessel is located or intended to
(c) by way of accommodation in any be located outside India, the
immovable property for organising place of supply shall be the
any marriage or reception or matters location of the recipient.
related thereto, official, social,
cultural, religious or business
function including services provided
in relation to such function at such
property; or

(d) any services ancillary to the

services referred to in clauses (a), (b)
and (c),
R a civil contractor is located in different States in India providing
services to S for his factories located around the World. Determine the
place of supply and the nature of GST payable in the following cases:

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Location of supplier Location of receiver Location of
of services immovable
property
(1) Delhi Haryana Rajasthan
(2) Punjab Haryana Himachal Pradesh
(3) Delhi Uttar Pradesh USA
(4) Delhi Rajasthan Delhi
(5) Delhi Germany USA

Solution
Place of supply Nature of GST payable
(1) Rajasthan IGST
(2) Himachal Pradesh IGST
(3) Uttar Pradesh (Location of the IGST
recipient of service)
(4) Delhi CGST & Delhi GST
(5) Germany (Location of the Zero rated supply as it is export of
recipient of service) services
Where the immovable property or The supply of services shall be
boat or vessel is located in more than treated as made in each of the
one State or Union territory respective States or Union
[Explanation to section 12(3)] 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.
Example: Suppose a road is
constructed from Delhi to
Mumbai covering multiple
states. The supply of service
shall be treated as made in each
of the States 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

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other reasonable basis as may
be prescribed in this behalf.
12(4) Restaurant and catering The location where the services
services, personal grooming, are actually performed.
fitness, beauty treatment, health
service including cosmetic and
plastic surgery
Example: Assume R runs a restaurant in Noida (UP). In this case, place
of supply shall be Noida (UP) for all shall be CGST and UPGST consumers
who visit the restaurant and nature of GST
12(5) Services in relation to training and The location of such registered
performance appraisal to— person
(a) a registered person, (i.e. B2B)

(b) a person other than a registered The location where the services
person, (i.e. B2C) are actually performed.
12(6) Services provided by way of The place where the event is
admission to a cultural, artistic, actually held or where the park
sporting, scientific, educational, or such other place is located.
entertainment event or amusement
park or any other place and services
ancillary thereto
12(7) Services provided by way of— The location of such registered
(a) organisation of a cultural, person;
artistic, sporting, scientific,
educational or entertainment event
including supply of services in
relation to a conference, fair,
exhibition, celebration or
similar events; or
(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—
(i) a registered person, (i.e. B2B)
(ii) a person other than a The place where the event is
registered person, (i.e. B2C) actually held and if the event is
held outside India, the place of
supply shall be the location of
the recipient.

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Explanation.—Where the event is held in more than one State or Union
territory and a consolidated amount is charged for supply of services
relating to such event, 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.
Example: R Ltd. of Delhi provides services to S Ltd of Rajasthan, both
registered persons, in relation to organization of sporting event at
Bhopal (MP). In this case, the place of supply shall be Rajasthan and the
nature of GST payable shall be IGST. However, if these services were
rendered to S of Rajasthan who is not a registered person, then the place
of supply shall be Bhopal (MP) where the event is actually held and the
nature of GST payable shall be IGST.
12(8) Services by way of transportation of The location of such registered
goods, including by mail or courier person;
to—
(a) a registered person, (i.e. B2B)
(b) a person other than a The location at which such
registered person, (i.e. B2C) goods are handed over for their
transportation.
Where supply of service of
transportation of goods
terminates outside India, then
place of supply will be out of
India, irrespective of location of
supplier and recipient of
service.
12(9) Passenger transportation service
to—
(a) a registered person, (i.e. B2B) The location of such registered
person;
(b) a person other than a The place where the passenger
registered person, (i.e. B2C) embarks on the conveyance for
a continuous journey:
A registered cab service providing company located in Delhi undertakes
the following transactions:
(a) Cab services from Delhi to Rajasthan to employees of S Ltd.
(registered person) located in the state Haryana.
(b) Cab services from Nagpur to Indore to R (unregistered person)
located in the State of Rajasthan.

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(c) Cab services within Delhi to R (unregistered person) located in
the State of Rajasthan.
Determine the place of supply and nature of GST payable.
Solution
Place of supply Nature of GST
(a) Haryana IGST
(b) Nagpur (Maharashtra) IGST
(c) Delhi CGST and Delhi GST
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 section 12(2). [Proviso to section 12(9)]
Example: Suppose a ticket/pass for travel anywhere in India is issued
by Air India to R. In this case the place of embarkation will not be
available at the time of issue of invoice as the right to passage is for
future use. Accordingly, place of supply cannot be the place of
embarkation. In such case, the place of supply of such service shall be
determined in accordance with the provisions of section 12(2) i.e. if the
services are made to—
(a) a registered person, it shall be the location of such registered
person;
(b) any person, other than a registered person it 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.
Explanation. —For the purposes of section 12(9), 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: A person travels from Mumbai to Delhi and back to Mumbai.
The place of supply shall be determined as under:
If the person is registered, the place of supply shall be the location of
registered person. If the person is not registered, the place of supply for
the forward journey from Mumbai to Delhi shall be Mumbai, the place
where he embarks.
However, for the return journey, the place of supply shall be Delhi as the
return journey has to be treated as separate journey.
12(10) Services on board a conveyance, The location of the first
including a vessel, an aircraft, a train scheduled point of departure
or a motor vehicle of that conveyance for the
journey
12(11) Telecommunication services
including data transfer,

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broadcasting, cable and direct to
home television services to any
person—
(a) in case of services The location where the
by way of fixed telecommunication line, leased
telecommunication line, leased circuit or cable connection or
circuits, internet leased circuit, cable dish antenna is installed for
or dish antenna, receipt of services;
(b) in case of mobile The location of billing address of
connection for the recipient of services on the
telecommunication and internet record of the supplier of
services provided on post-paid basis, services;
(c) If such pre-paid service is The location of the recipient of
availed or the recharge is made services on the record of the
through internet banking or other supplier of services.
electronic mode of payment
(d) in cases where mobile The address of the
connection for selling agent or re-seller or
telecommunication, internet service distributor as per the record of
and direct to home television the supplier at the time of
services are provided on pre- supply;
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,
(ii) by any person to the final The location where such pre-
subscriber, payment is received or such
vouchers are sold;
(e) in other cases, 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:

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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.
12(12) Banking and other financial services, The location of the recipient of
including stock broking services to services on the records of the
any person 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.
12(13) Insurance services—
(a) to a registered person, (i.e. The location of such registered
B2B) person;
(b) to a person other than a The location of the recipient of
registered person, (i.e. B2C) services on the records of the
supplier of services.
12(14) Advertisement services to the It shall be taken as being in each
Central Government, a State of such States or Union
Government, a statutory body or a territories and the value of such
local authority meant for the States supplies specific to each State or
or Union territories identified in the Union territory shall be in
contract or agreement proportion to the amount
attributable to services
provided by way of
dissemination in the
respective States or Union
territories as may be

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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.

Place of supply of services where location of supplier or location of recipient is outside

India [Section 13 of IGST Act, 2017]

As per section 13(1), the provisions of this section shall apply to determine the place of supply
of services where the location of the supplier of services or the location of the recipient of
services is outside India

Applicable section Nature of Supply of Services Place of Supply

13(2) All services except the services The location of the recipient of
specified in sub- sections (3) to services:
(13) Provided that where the location
of the recipient of services is not
available in the ordinary course
of business, the place of supply
shall be the location of the
supplier of services.
13(3) services supplied to an individual, The location where the services
represented either as the recipient are actually performed.
of services or a person acting on
behalf of the recipient, which
require the physical presence of the
recipient or the person acting on
his behalf, with the supplier for the
supply of services.
13(4) Services supplied directly in The place where the immovable
relation to an immovable property is located or intended to
property, including services be located.
supplied in this regard by experts
and estate agents, supply of
accommodation by a hotel, inn,
guest house, club or campsite, by
whatever name called, grant of
rights to use immovable property,
services for carrying out or co-
ordination of construction work,

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including that of architects or
interior decorators,
13(5) Services supplied by way of The place where the event is
admission to, or organization of a actually held.
cultural, artistic, sporting,
scientific, educational or
entertainment event, or a
celebration, conference, fair,
exhibition or similar events, and of
services ancillary to such
admission or organisation,
13(6) Where any services referred to in The location in the taxable
sub-section (3) or sub-section (4) territory.
or sub-section (5) is supplied at
more than one location, including a
location in the taxable territory,
13(7) Where the services referred to in The place of supply of such
sub-section (3) or sub-section (4) services shall be taken as being in
or sub-section (5) are supplied in each of the respective States or
more than one State or Union Union territories and the value of
territory, such supplies specific to each
State or Union territory shall be 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.
13(8) (a) services supplied by a
banking company, or a
financial institution, or a
non-banking financial company, to
account holders;
(b) intermediary services; The location of the supplier of
(c) services consisting of hiring services
of means of transport, including
yachts but excluding aircrafts
and vessels, up to a period of 1
month.

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13(9) Services of transportation of goods, The place of destination of such
other than by way of mail or goods.
courier,
13(10) Services in respect of passenger The place where the passenger
transportation services embarks on the conveyance for a
continuous journey.
13(11) Services provided on board a The first scheduled point
conveyance during the course of a of departure of that
passenger transport operation, conveyance for the journey.
including services intended to be
wholly or substantially consumed
while on board,

Special provision for payment of tax by a supplier of online information and database
access or retrieval services [Section 14 of IGST Act, 2017]

Nature of Supply of Services Person responsible for payment of tax

Online information and database access or
retrieval services Section 14(1) : Supply of
online information and database access or
retrieval services by any person located in a
non-taxable territory and received by a non-
taxable online recipient
the supplier of services located in a non-
taxable territory shall be the person liable for
paying integrated tax on such supply of
services

QUESTIONS FOR SELF PRACTICE

1. What is the need for the Place of Supply of Goods and Services under GST?
 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 determines the place i.e. taxable jurisdiction where the tax should reach. The place
of supply determines whether a transaction is intra-state or interstate. In other words, the
place of Supply of Goods or services is required to determine whether a supply is subject to
SGST plus CGST in a given State or union territory or else would attract IGST if it is an inter-
state supply.

2. Why are place of supply provisions different in respect of goods and services?
 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 mainly due to following factors:

(i) The manner of delivery of service could be altered easily. For example, telecom service could
change from mostly post-paid to mostly pre-paid; billing address could be changed, billers
address could be changed, repair or maintenance of software could be changed from onsite to

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online; banking services earlier required the customer to go to the bank, now the customer could
avail service from anywhere;

(ii) 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;

(iii) For supplying a service, a fixed location of service provider is not mandatory and even the
service recipient may receive service while on the move. The location of billing could be changed
overnight;

(iv) Sometime the same element may flow to more than one location, for example, construction
or other services in respect of a railway line, a national highway or a bridge on a river which
originate in one state and end in the other state. Similarly, a copy right for distribution and
exhibition of film could be assigned for many states in single transaction or an advertisement or
a programme is broadcasted across the country at the same time. An airline may issue seasonal
tickets, containing say 10 leafs which could be used for travel between any two locations in the
country. The card issued by Delhi metro could be used by a person located in Noida, or Delhi or
Faridabad, without the Delhi metro being able to distinguish the location or journeys at the time
of receipt of payment;

(v) Services are continuously evolving and would thus continue to pose newer challenges. For
example, 15-20 years back no one could have thought of DTH, online information, online
banking, online booking of tickets, interne, mobile telecommunication etc.

3. What proxies or assumptions in a transaction can be used to determine the place of supply?
 The various element involved in a transaction in services can be used as proxies to determine
the place of supply. An assumption or proxy which gives more appropriate result than others
for determining the place of supply, could be used for determining the place of supply. The
same are discussed below:

(a) location of service provider;

(b) the location of service receiver;

(c) the place where the activity takes place/ place of performance;

(d) the place where it is consumed ;and

(e) the place/person to which actual benefit flows

4. What is the need to have separate rules for place of supply in respect of B2B (supplies to
registered persons) and B2C (supplies to unregistered persons) transactions?
 In respect of B2B transactions, the taxes paid are taken as credit by the recipient so such
transactions are just pass through. GST collected on B2B supplies effectively create a liability
for the government and an asset for the recipient of such supplies in as much as the recipient

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 PLACE OF SUPPLY
SSGURU CA SURAJ SATIJA
is entitled to use the input tax credit for payment of future taxes. For B2B transactions the
location of recipient takes care in almost all situations as further credit is to be taken by
recipient. The recipient usually further supplies to another customer. The supply is
consumed only when a B2B

transaction is further converted into B2C transaction. In respect of B2C transactions, the supply
is finally consumed and the taxes paid actually come to the government.

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