The liability to pay tax arises at the time of supply and the place of supply under GST law. Furthermore, the nature of supply under GST determines the type of tax to be levied. That is, CGST + SGST is levied if the supply is an intra-state supply. Whereas, IGST is levied if the supply is an inter-state supply.

Therefore, GST lays down provisions regarding the following in order to implement the tax effectively:

• place of supply of goods
• place of supply of services
• time of supply
• value of supply

In this article, we are going to discuss the provisions related to the place of supply of services. Provided these provisions are regarding place of supply where location of supplier and the recipient of services is in India.

Section 12 of the IGST Act lays provisions regarding the place of supply of services. Therefore, following are the provisions covered under different subsections of section 12.

Section 12(2)

This section covers general services that are separate from the services described in the following subsections. Therefore, the place of supply shall be the location of a person to whom the services are provided.

However, there are times when services are supplied to any person other than a registered person. The place of supply in such cases shall be:

• the location of the recipient where the address on record exists and
• location of the supplier of services in other cases.

Section 12(3)

This section pertains to the place of supply of services under special cases. These cases include:

• Supply of services directly related with immovable property. These services include services provided by (i) architects, (ii) interior decorators, (iii) surveyors, (iv) engineers and (v) other related experts or estate agents. It also includes any service granting rights to use immovable property or for carrying out construction work.
• Lodging accommodation supplied by a hotel, inn, guest house, home stay, club or campsite. This also includes services offering house boat or any other vessel.
• Accommodation given in any immovable property in order to organize functions. These functions include social, official, social, cultural, religious or business functions. It also includes other services related to such functions provided at such immovable property.
• Services ancillary to the services referred to in points (1), (2) and (3), above

Now, the place of supply of services in all the above cases is the location of the immovable property or boat or vessel.

However, the place of supply shall be the location of the recipient if the immovable property or boat or vessel is located outside India.

Also, there might be a situation where the immovable property or boat or vessel is located in more than one State or Union territory. So, the place of supply of services in such cases shall be the respective States or Union territories.

Furthermore, the value of such services shall be taken proportionately as per contract or as per the Rules. However, the value of services shall be taken on other prescribed basis in case there is no contract.

Example

Suppose Aarav is a Company Secretary registered at Mumbai. He travels to Bangalore for business purpose and stays at a hotel there. In this case, the place of supply is Bangalore. That is, the place of immovable property.

Section 12(4)

This subsection describes the place of supply in case of the following services:

• Restaurant and catering services
• Personal grooming
• Fitness
• Beauty treatment
• Health service including cosmetic and plastic surgery

Accordingly, the place of supply of services in case of the above services shall be the location where services are actually performed.

Section 12(5)

This section lays down the provisions regarding place of supply of services concerning training and performance appraisal. So there are two cases under this.

• The first case is the one where a registered person is given training and performance appraisal services. So the location of the person shall be the place of supply in this case.
• Second case relates with a scenario where a person other than registered person is given training and performance appraisal services. So, place, where these services are actually performed, shall be the place of supply in this case.

Example

ProTal Consultants is a Human Resource Consultancy. This consultancy is registered in Bangalore. However, it provides training to its client’s employees in Mumbai. And these clients are registered in Chennai.

Now, the place of supply in this case is Chennai. This is because the place of supply shall be the location of the recipient of such services in case he is registered. And in our example, the client or the recipient is registered in Chennai.

As a result, IGST would be levied in this case. This is because the location of supplier (State of Karnataka) and the Place of Supply (State of Tamil Nadu) are different.

However, the place of supply would have been Mumbai in the above example if the client would have been unregistered. Again, IGST would be charged in such a case.

Section 12(6)

This section relates to the provisions with regards to place of supply of services provided by way of:

• admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place
• services ancillary to the above

So, the place of supply of services in this case shall be:

• the place where the event is actually held or
• where the park or such other place is located.

Example

Radhika is a resident of Mumbai. She travels to Bangalore for a vacation. Also, she gets the tickets booked for an event to be held at a water park in Bangalore.

Now, the place of supply in this case is Bangalore as the event takes place in Bangalore itself.

Section 12(7)

This section provides the principles regarding the place of supply of the following services:

• Organisation of a cultural, artistic, sporting, scientific, educational or entertainment event. This also includes supply of services in relation to a conference, fair, exhibition, celebration or similar events.
• Services ancillary to organisation of any of the events or services referred to in the above clause. This also includes assigning sponsorship to a registered person or a person other than a registered person for such events.

So, the place of supply of services for the above cases shall be as per the following rules.

• the place of supply shall be the location of the person if such services are supplied to a registered person.
• But the place of supply shall be the place where the event is actually held if the above services are supplied to a person other than a registered person. However, the place of supply shall be the location of the recipient in case the event is held outside India.

Furthermore, there are times when the event is held in more than one State or Union territory. And a consolidated amount is charged for the supply of services relating to such an event. So, the place of supply in such a situation shall be each of the respective States or Union territories where event is held.

Furthermore, the value of services in such a case shall be taken proportionately as per the contract. However, the value for supply of such a service is considered as per the rules set in case such a contract does not exist.

Example

Shekhar is based in Ahmedabad. He solicits the services of an event management company based in New Delhi for his daughter’s marriage. Also, he plans for a destination wedding at a palace in Udaipur.

So, the place of supply is Ahmedabad (Gujarat) and hence IGST is charged in this case. But the place of supply would be Udaipur (Rajasthan) if Shekhar is unregistered. Again IGST would be charged.

Section 12(8)

This section relates to the place of supply of services provided by the way of transportation of goods, including by mail or courier.

So, the place of supply shall be the location of the person to whom the service of transporting goods by mail or courier is offered. Provided the person is a registered person.

However, the place of supply shall be the location at which such goods are handed over for their transportation if such a service is supplied to a person other than a registered person.

Example

Namit is relocating from Bangalore to Chennai. He calls for packers and movers for packing and relocation and shipping of household effects.

Hence the place of supply is Bangalore since such a supply relates to the transportation services. Thus, CGST + SGST would be applicable assuming that the packers and movers are also from Bangalore. (intra-state supply)

Section 12(9)

This section lays down the rules regarding place of supply of passenger transportation service.

So, the place of supply of passenger transportation service shall be the location of the registered person itself if this service is supplied to a registered person.

And the place of supply shall be the place where the passenger gets on the conveyance for a continuous journey if such a service is supplied to a person other than a registered person. Provided that 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.

Example

Tapsee books a round trip for Ahmedabad – Pune -Bangalore – Pune- Ahmedabad with a stopover at Bangalore. She gets the tickets booked with a Bangalore based airline.

Now this trip is treated as a continuous journey with a stopover. So the place of supply is Ahmedabad for the first leg. And IGST is levied since the location of supplier (Bangalore) and the Place of Supply (Ahmedabad) are different.

However, the place of supply is Bangalore for the second leg of the journey. Thus, CGST + SGST is levied in this leg since the Location of Supplier (Bangalore) and the place of supply (Bangalore) are same.

Section 12(10)

This section deals with the principles regarding the place of supply of services on board a conveyance. This conveyance includes a vessel, an aircraft, a train or a motor vehicle.

So, the place of supply in this case shall be the location of the first scheduled point of departure of that conveyance for the journey.

Section 12(11)

This section lays down the provisions regarding the place of supply of telecommunication services. These services include data transfer, broadcasting, cable and direct to home television services.

Telecommunication Services

The are times when the telecommunication services are supplied through (i) fixed telecommunication line, (ii) leased circuits, (iii) internet leased circuit, and (iv) cable or dish antenna. Thus, the location of supply in this case shall be the place where the telecommunication line or circuit is installed.

Telecommunication Services Through Mobile

On the other hand, there are times when telecommunication services are supplied through a mobile connection. Further, internet services are provided on post-paid basis. So, the place of supply in this case shall be the location of billing address of the recipient. Provided the recipient is on the record of the supplier of services.

Telecommunication Services On Pre-Payment

Then there are cases where mobile connection for telecommunication, internet service and direct to home television services are provided on a pre-payment basis. And such services are provided either through a voucher or any other means.

The place of supply shall be the address of the selling agent if these services are supplied through a selling agent.

However, the place of supply shall be the location where such prepayment is received if these services are supplied by any person to the final subscriber.

Furthermore, the place of supply of telecommunication services shall be the address of the recipient as per the records of the supplier in all the other cases. However, the place of supply shall be the location of the supplier of services in case such address is not available.

Telecommunication Services On Pre-Payment Through Internet

Then, there are cases where such a prepaid service is availed through internet banking or other electronic modes of payment. So, the place of supply of such services shall be the location of the recipient of services on the record of the supplier.

Additional Provisions

Additionally, leased circuit might be installed in more than one State or Union territory. Moreover, a consolidated amount is charged for the supply of services relating to such circuit. Hence, the place of supply in such cases shall be each of the respective States or Union territories where services are given. And the value of such services shall be taken proportionately as per the contract. However, the value for supply of such a service shall be considered as per the rules set in case such a contract does not exist.

Example

Nishant is from Kolkata. He gets a job at Mumbai and gets a landline connection done at Mumbai.

So, the place of supply in this case is Mumbai. However, the place of supply would have been Kolkata if Nishant would have taken a postpaid connection and provided the Billing Address of Kolkata, .

Section 12(12)

This section lays down the provisions for the place of supply of banking and other financial services including stock broking services. So, the place of supply in this case shall be the location of the recipient. Provided such a person is on the records of the supplier of services.

However, the place of supply shall be the location of the supplier if the location of the recipient of services is not on the records of the supplier.

Example

Payal is an unregistered person. She is from New Delhi and has an account with a Bank at New Delhi. At present, she is on a vacation in Nainital and visits a bank for getting a Demand Draft made.

So, the place of supply in this case is New Delhi. This is because the address of the recipient is available in the records of the supplier.

Now consider that she goes to a branch at Nainital for availing currency exchange services which isn’t linked to her account in New Delhi. So, the place of supply in this case is Nainital. This is because the address of the recipient is not available in the records of the supplier.

Section 12(13)

This section lays down the rules to determine the place of supply of insurance services. In this case:

• The location of supply of shall be the location of the person to whom such services are supplied. Provided such insurance services are offered to a registered person.
• However, the place of supply of shall be the location of the recipient if such services are offered to a person other than a registered person.

Section 12(14)

This section deals with the provisions pertaining to the place of supply of advertisement services to (i) the Central Government, (ii) State Government, (iii) a statutory body or a local authority. Provided such an authority is identified in the contract.

Now, the place of supply of services in this case shall be taken as being in each of such States or Union territories. And the value of such supplies specific to each State or Union territory shall be in proportion as determined in terms of the contract.

However, the value of supply of such a service shall be taken as per the rules set in case there is no such contract.

Place of Supply Under GST

Section 13 of the IGST Act deals with the provisions that determine the place of supply of services where the location of the supplier or that of the recipient is outside India.

Section 13(2)

This section lays down the general principles concerning the place of supply of services except the services specified in sub-sections (3) to (13). In this case, the place of supply of services shall be the location of the recipient of services. 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.

Section 13(3)

This subsection deals with the provisions regarding the place of supply of the following services:

1. Services supplied in respect of goods which are required to be made physically available by the recipient to the supplier or to a person acting on behalf of the supplier. Provided that such services are provided from a remote location by way of electronic means.

The place of supply of such supply shall be the location where goods are situated at the time of supply of services. Furthermore, these provisions shall not apply in the cases where services are supplied in respect of goods that are temporarily imported into India for repairs. And after repairs, such goods are exported without being put to any other use in India other than that which is required for such repairs.

1. Supply of services to the recipient of services or a person acting on behalf of the recipient. Further such a supply requires the physical presence of the recipient or the person acting on his behalf with the supplier.

If any of the above situations exists, then the place of supply of services shall be the location where the services are actually performed.

Section 13(4)

This subsection deals with the rules relating to the place of supply of services in relation to immovable property. It includes the following set of services:

1. Services supplied in this regard by experts and estate agents
2. Supply of accommodation by a hotel, inn, guest house, club or campsite
3. Grant of rights to use immovable property
4. Services for carrying out or co-ordination of construction work including that of architects or interior decorators

In case such services pertaining to immovable property are supplied, then the place of supply of such services shall be the place where the immovable property is located or intended to be located.

Section 13(5)

This section defines rules related to the place of supply of services supplied in case of the following services:

1. Services provided by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event
2. A celebration, conference, fair, exhibition or similar events
3. Services ancillary to such admission or organization

If such services are provided, then the place of supply in such cases shall be the place where the event is actually held.

Section 13(6)

Under this section, provisions regarding the place of supply of services referred to in sub-section (3) or sub-section (4) or sub-section (5) supplied at more than one location, including taxable territory. In case such services are offered, then the place of supply in all such situations shall be the location in the taxable territory.

Section 13(7)

This section deals with the principles pertaining to place of supply of services referred to in sub-section (3) or sub-section (4) or sub-section (5) supplied in more than one State or Union territory. In case such services are provided, then the place of supply of such services shall be taken as being in each of the respective States or Union territories. And the value of such supplies specific to each State or Union territory shall be taken proportionately according to the terms of the contract. In case, there is no such contract, then the value of such services are determined as per the rules set.

Section 13(8)

Under this section, the provisions regarding the place of supply of the following services are laid out:

1. Services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders
2. Intermediary services
3. Services consisting of hiring of means of transport, including yachts but excluding aircraft and vessels, up to a period of one month.

In cases where the above services are offered, then the place of supply of such services shall be the location of the supplier of services.

Section 13(9)

This section lays forth the rules regarding the place of supply of services transportation of goods, other than by way of mail or courier. Accordingly, if such services are rendered, then the place of supply shall be the place of destination of such goods.

Section 13(10)

This section deals with the rules of the place of supply in respect of passenger transportation services. Therefore, if these services are supplied by a supplier, then the place of supply shall be the place where the passenger gets on the conveyance for a continuous journey.

Section 13(11)

Under this subsection, provisions regarding the place of supply of services provided on board a conveyance during the course of a passenger transport operation are given. Such a service also includes those services that are intended to be wholly or substantially consumed while on board. Accordingly, if there is such a supply, then the place of supply of such service shall be the first scheduled point of departure of that conveyance for the journey.

Section 13(12)

This section deals with the provisions of the place of supply of online information and database access or retrieval services. In case such services are supplied, then the place of supply of such service shall be the location of the recipient of services.

Furthermore, a person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non-contradictory conditions are satisfied:

1. The location of address presented by the recipient of services through the internet is in the taxable territory
2. Credit card or debit card or any other card by which the recipient of services settles payment has been issued in the taxable territory
3. Billing address of the recipient of services is in the taxable territory
4. Internet protocol address of the device used by the recipient of services is in the taxable territory
5. Bank of the recipient of services in which the account used for payment is maintained is in the taxable territory
6. Country code of the subscriber identity module card used by the recipient of services is of taxable territory
7. The location of the fixed landline through which the service is received by the recipient is in the taxable territory.

Section(13)

This section lays down the powers of the Government under a special case. This case relates to the one where a supply of service leads to double taxation or non-taxation. Hence, to avoid double taxation or non-taxation of s a supply of service, the government has the power to notify the services or the circumstances where the place of supply shall be taken as the place where the service has been effectively used or enjoyed.

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