As per the GST definition, the liability to pay taxes arise at the time and place of supply. And both time and place of supply depend upon whether the supply is intra-state or inter-state. Hence, to guide the taxation under GST, the law lays down provisions regarding the nature of supply, place of supply of goods, place of supply of services, time of supply and value of supply. So, to understand each of these, it’s first important to know what is place of supply.
Place of Supply
Place of Supply is nothing but the place of delivery of goods or consumption of service. In other words, it is the registered location of recipient of a good or service. Thus, Place of supply under GST is divided into the following categories :
- Place of supply of Goods
- The place of supply of Services
- where location of supplier and recipient is in India
- where location of supplier and recipient is outside India
- Place of supply in case of Imports/exports
This article deals with just the place of supply of goods.
Place of Supply of Goods
Section 10 of the IGST Act lays down the provisions to determine the place of supply of goods in domestic transactions. Accordingly, following are the rules to determine the place of supply of goods other than imports or exports:
Movement of Goods
There are situations when a supply involves movement of goods. Hence, the place of supply of goods in such cases is the location where goods have been delivered to the recipient. Furthermore, the supplier or the recipient or any other person can undertake such a supply.
Say for instance, Kabir from Mumbai sells refrigerators to M/s Sharma Traders from Ahmedabad. Since such a supply involves movement of goods from Mumbai to Ahmedabad, therefore the place of supply would be Ahmedabad. Additionally, on such a supply, IGST would be charged. This is because the location of the supplier (Maharashtra) is separate from the place of supply (Gujarat).
Goods Delivered On Behalf Of Third Party
There are scenarios when a supplier delivers goods to a recipient or any other person on the direction of a third party. Furthermore, the supplier delivers such goods either as an agent or otherwise before or during movement of goods. Also, the supplier supplies the goods either by way of transfer of documents of title to the goods or otherwise. In such situations, the supply is deemed to be received by the third person. And the place of supply of such goods is the principal place of business of such person.
Let’s say Akram has a registered place of business at Pune. He places an order to Vipul Ltd. in New Delhi, for delivering a parcel to Aditya who is at Nasik. Since, goods are delivered by Akram to Aditya via a third party (Vipul Ltd), the place of supply is Pune. That is the registered place of business of Akram. Furthermore, IGST would be charged on such a supply since the location of supplier (New Delhi) and place of supply (Maharashtra) are different.
No Movement of Goods
At times the supplier or the recipient make a supply that does not involve any movement of goods. In such situations, the place of supply is the location of goods at the time of delivery to the recipient.
Shiva from Bangalore travels to Chennai for a vacation. He purchases a laptop from the Croma store at Chennai. Since such a supply does not involve any movement of goods, the place of supply shall be Chennai itself. This is because Chennai is the location of goods at the time the delivery is made to the recipient. Now, since the location of supplier and place of supply are the same, it is an intra-state supply. And hence CGST + SGST would be charged.
Installation or Assembly of Goods at a Site
Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.
Chandra Shekhar from Jamshedpur orders a machine to be installed in his factory at Jamshedpur. The supplier, from Kolkata, sources the parts from various states across the country. Finally,he successfully installs the machine at Chandra Shekhar’s factory at Jamshedpur. In this case, since the machine parts were installed at Jamshedpur, the place of supply would be Jamshedpur. Such a supply attracts IGST since the location of the supplier (West Bengal) and the place of supply (Jharkhand) are different.
Goods Supplied On Board A Conveyance
Next, there are cases when a supplier supplies goods on board a conveyance. Such a conveyance includes a vessel, an aircraft, a train or a motor vehicle. Hence the place of supply in such cases is the location at which the goods are taken on board.
Howrah – New Delhi Rajdhani Express supplies food during the journey from Kolkata to New Delhi. The train takes food on board at Mugalsarai in Uttar Pradesh. In this case, since the goods are taken on board in Mugalsarai, the place of supply would be Mugalsarai (Uttar Pradesh).
Now, there are also cases where the place of supply of goods cannot be determined. In such situations, the place of supply shall be determined in such manner as may be prescribed.