Location of supply, Interstate and Intrastate supply
In this Mail, we deal with Location of supply, to determine whether it is Interstate supply or intrastate supply and accordingly which tax is to be collected and paid.
Paradigm Shift
As discussed in earlier communications, GST is expected to be a 'destination based consumption tax', like, the present law of taxation of services. Presently, this is not the case with some other taxes levied under the present laws. Destination principle ensures that Tax revenue generated in transaction is towards benefit of the location of supply. In that light determination of the 'location of supply' is an important topic of conisderation.
IGST Law [sections 7 & 8] defines or explains Interstate supply or intrastate supply and that may be summarised as follows:
Nature of Supply- Inter-State/ Intra-State
| Location of supplier | Place of supply | Nature of Supply | Same /Different state or union territory (Tax leviable) |
| In a State/Union territory | To another State/Union territory | Interstate supply of goods [section 7(1)] | Different States/UT (tax under IGST) |
| In a State/Union territory | To another State/Union territory | Interstate supply of Services [section 7(3)] | Different States/UT (tax under IGST) |
| In a State/Union territory | In that same State/Union territory | Intrastate supply of goods [section 8(1)] | Same (tax under CGST / SGST) |
| In a State/Union territory | In that same State/Union territory | Intrastate supply of services [section 8(2)] | Same (tax under CGST / SGST) |
CGST/SGST Act defines and explains "location of supplier of services" and "location of recipient of services" as follows:
Location of Service Provider/ Recipient
Provider [section 2(15) of IGST Act & 2(71) of CGST Act]
| Supply from | Location |
| Registered Place of Business | Registered Place |
| Fixed Establishment (other than Registered place) | Fixed Place |
| From more than one establishment | Place most directly connected |
| None of the above | Usual place of residence |
Recipient [section 2(14) of IGST Act & 2(70) of CGST Act]
| Received at | Location |
| Registered Place of Business | Registered Place |
| Fixed Establishment (other than Registered place) | Fixed Place |
| From more than one establishment | Place most directly connected |
| None of the above | Usual place of residence |
Usual place of residence [Section 2(113) of CGST Act]
| In case of individual | His ordinary place of residence |
| In case of other persons | Place of incorporation or otherwise legal constitution of person |
Thus, it may be inferred that Relevant Factors considered by the Laws are:
Ø Destination principle
Ø Different criteria
Ø Different situations in location of supplier/ recipient and/ or place of supply
Ø Accordingly, determination of inter-state or intra-state supply
If inter-state, effect of casual trading in case of service supply
Place of Supply of Goods
(As explained and defined in section 10 & 11 of IGST Law)
Generally stated, having regard to nature of movement or transaction, either location of goods or location of recipient are considered as place of supply
| Sr. No. | Nature of Movement or Transaction | Place of supply |
| 1 | Supply involves movement of goods by Supplier / recipient / other person | Location at which movement terminates for delivery |
| 2 | Delivery of goods by Supplier on direction of a Third person, agent or otherwise, by way of transfer of document of title to goods or otherwise, delivery shall be deemed to be Third person | Principal place of business of Third person |
| 3 | Supply - No movement | Location of such goods at the time of delivery to recipient |
| 4 | Goods are assembled or installed at site | Place of installation or assembly |
| 5 | Goods are supplied on board a conveyance (including vessel, an aircraft, a train or motor vehicle) | Location at which goods are taken on board |
| 6 | If the above does not apply | In the manner as may be prescribed. |
Place of Supply of Services
(As explained and defined in section 10 & 12 of IGST Law, the place of supply of service is summarised here after in 2 Tables A & B.)
Generally, it may be inferred that to determine place of supply in respect of services "destination principle" is applied and depending on it's nature, place of supply could be:
· Location of immovable property (in case of immovable property related services)
· Location of actual performance of services
· Location of service recipient, whether registered or unregistered
· Location of service provider.
Where Place of supply of Service where the location of the supplier or recipient is India- then the provisions of Section 12 [sub-sections (2) to (14)] shall apply.
The above provisions have been tabulated as under:
Table A
| Sr.No. | Section No. of IGST Act | Services Expressly Included | Place of Supply |
| Immovable Property Related Services (Note 1 & 2) | |||
| 1. | 12(3)(b) | Accommodation in an Hotel, Inn, Guest House, homestay, club, campsite, etc. | Location of IP |
| 2. | 12(3)(a) | Architect Services | Location of IP |
| 3. | 12(3)(a) | Engineer's Services | Location of IP |
| 4. | 12(3)(a) | Surveyor Services | Location of IP |
| 5. | 12(3)(a) | Construction Activity Services | Location of IP |
| 6. | 12(3)(a) | Co-ordination of Construction Activity Services | Location of IP |
| 7. | 12(3)(a) | Interior Decorator Services | Location of IP |
| 8. | 12(3)(a) | Real Estate Agent's Services | Location of IP |
| 9. | 12(3)(a) | Other experts | Location of IP |
| 10. | 12(3)(a) | Renting of Immovable Property | Location of IP |
| 11. | 12(3)(c) | Renting of Immovable Property for social, cultural, religious, official matters, marriages and related services at such property | Location of IP |
| 12. | 12(3)(a) | Immovable property related services | Location of IP |
| 13. | 12(3)(d) | Ancillary services relating to above | Location of IP |
| 14. | 12(6) | Admission to Events or Amusement parks | (i) Where the event is actually held; or (ii)where the park or such other place is located |
| Banking & Other Financial Services | |||
| 15. | 12(12) | Banking Services | Place where recipient is located as per service providers records |
| 16. | 12(12) | Financial Services | |
| 17. | 12(12) | Stock Broking Services | |
| 18. | Proviso to 12(12) | Banking & Other Financial service are not linked to the account of the recipient | Place where supplier is located |
| Telecommunication (Note 3) | |||
| 19. | 12(11)(a) | Cable & Dish Antenna related satellite communication | Location of the 'Line' providing the Communication Service |
| 20. | 12(11)(a) | Fixed Line Communication Services | |
| 21. | 12(11)(a) | Internet Lease Circuits based communication Services | |
| 22. | 12(11)(a) | Leased Line Circuit based communication Services | |
| 23. | 12(11)(b) | Post Paid Mobile Communication & Data Services | Billing address of the recipient of services on records of the service provider |
| 24. | 12(11)(c) | Pre-Paid Mobile Communication & Data Services | (i) address of selling agent, re-seller, distributor as per supplier's record (ii) Place where prepayment is received or where prepayment vouchers are sold |
| 25. | 12(11)(d) | In cases other than Sr No. 19 to 24 as mentioned above | Recipient's location, if address on record |
| 26. | 2nd Proviso to 12(11)(d) | Pre-paid service availed/ recharge through internet banking/ other electronic mode of payment | Recipient's location, if address on record |
| Transportation & Conveyance | |||
| 27. | 12(3)(b) | Accommodation on Board a Vessel or a Houseboat | Location of Vessel |
| 28. | 12(10) | On Board Services provided on a Conveyance | Place of First Scheduled point of departure |
| Advertisement services (Note 4) | |||
| 29. | 12(14) | Advertisement services to Central/ State Government, statutory body, Local authority | Location of each such state |
Notes:
1. In case of IP and vessels related services (listed in Sr Nos 1 to 13), if IP or vessel is located in more than one states, Each State [in proportion to: value billed (as per the terms of contract) or as may be prescribed (in absence of contract)].
2. If IP/Boat/Vessel is outside India, place of supply shall be the location of Recipient.
3. In case address of recipient is unknown, place of supply shall be the location of service provider.
4. In case of advertisement services provided (listed in Sr No 29), if services are provided to identifiable States, Each State [in proportion to: value billed (as per the terms of contract) or as may be prescribed (in absence of contract)].
Table B (Determination depending on Recipient whether registered or not)
| Sr.No.
|
Section No. | Services Expressly Included | Place of Supply | |
| When provided to a registered person | When provided to an unregistered person | |||
| Performance Based Services
| ||||
| 1. | 12(5)(a)/(b) | Training & Performance Appraisals | Location of the registered person | Place of actual performance |
| 2. | 12(4) | Beauty Treatment | Place of actual performance | |
| 3. | 12(4) | Cosmetic & Plastic Surgery | Place of actual performance | |
| 4. | 12(4) | Fitness & personal grooming | Place of actual performance | |
| 5. | 12(4) | Health Services | Place of actual performance | |
| 6. | 12(4) | Restaurant & Catering Services | Place of actual performance | |
| Event Based Services (Note 1) | ||||
| 7. | 12(7)(a) | Event related service rendition | Location of the registered person | Location of place where event is held |
| 8. | 12(7)(b)(i)/(ii) | Organisation of Events | Location of the registered person | Location of place where event is held |
| 9. | 12(7)(i)/(ii) | Sponsorship for Events | Location of the registered person | Location of place where event is held |
| Transportation & Conveyance
| ||||
| 10. | 12(8)(a)/(b) | Goods Transportation | Location of the registered person Place | where the goods are handed over for transportation |
| 11. | 12(9)(a)/(b) | Passenger Transportation | Location of the registered person | Place embarkment for a continuous journey |
| 12. | 12(9)(b) | Passenger Transportation where place of embarkment & future journey is not known | Location of the registered person | (i) Recipient's location, if address on record (ii) Otherwise location of supplier |
| 13. | Passenger Transportation where place of embarkment, future journey & address of recipient is not known | Location of the registered person | Location of the service provider | |
| Insurance
| ||||
| 14. | 12(13)(a)/(b) | Insurance of any Form | Location of the registered person | Location of the service recipient |
Notes:
1. In case where event is held (listed in Sr No's 7 to 9), if event is held in more than one state, Each State [in proportion to: value billed (as per the terms of contract) or as may be prescribed (in absence of contract)].
2. In case of Transportation of passengers, the return journey should be treated as separate journey.
Table C
| Other (not covered above) | ||
| Services Expressly Included
|
Place of Supply | |
| When provided to a registered person | When provided to an unregistered person | |
| Other Services
|
Location of RTP [Section 12(2)] | (i) Recipient's location, if address on record; or (ii) Otherwise location of supplier [Section 9(3)] |
The principles for determination of "interstate" or "intrastate" sale, as such, are plain and simple. However, on account of multiple situations to determine Place of supply either in case of goods or services, a number of permutations and combinations may have to be worked out and that could be an exercise (would be carried out by Instavat Team having regard to feedback and other exposure in due course)
For a complete and thorough understanding, reference may be made to "Provisions at Glance" and "Explained +" in Instavat's eGST laws.
Thanks,
Your Sincerely,
In the Service of Taxpayers
Team, Instavat
