Ans. 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 determine the place i.e. taxable
jurisdiction where the tax should reach. The place of
supply determines whether a transaction is intra-state or
inter-state. In other words, the place of Supply of Goods is
required to determine whether a supply is subject to SGST
plus CGSTin a given State or else would attract IGST if it is
an inter-state supply.
Ans. 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 online; banking services were earlier required 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 location 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, internet, mobile telecommunication etc.
Ans. 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
Ans. 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 B2 B 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 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.
Ans. The place of supply of goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. (Section 5(2) of IGST Act)
Ans. It would be deemed that the third person has received the goods and the place of supply of such goods shall be the principal place of business of such person. (Section 5(2A) of IGST Act)
Ans. In respect of goods, the place of supply shall be the location at which such goods are taken on board. (Section 5(5)of IGST Act)
However, in respect of services, the place of supply shall be the location of the first scheduled point of departure of that conveyance for the journey. (Section 6(11)of IGST Act)
Ans. The terms used in the IGST Act are registered
taxpayers and non-registered taxpayers. The presumption
in case of supplies to registered person is the location of
such person. Since the recipient is registered, address of
recipient is always there and the same can be taken as
proxy for place of supply.
Ans. In respect of unregistered recipients, the usual place of supply is location of recipient. However in many cases, the address of recipient is not available, in such cases, location of the supplier of services is taken as proxy for place of supply.
Ans. Where the immovable property is located in more
than one State, 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 oragreement, on such other
reasonable basis as may be prescribed in this behalf. (The
Explanation clause to section 6(5) of the IGST Act)
Ans. In case of an event, if the recipient of service is registered, the place of supply of services for organizing the event shall be the location of such person.
However, if the recipient is not registered, the place of supply shall be the place where event is held. Since the event is being held in multiple states and a consolidated amount is charges for such services, the place of supply shall be taken as being in each state in proportion to the value of services so provided in each state. (The Explanation clause to section 6(8) of the IGST Act)
Ans. In case the recipient is registered, the location of such person shall be the place of supply. However, if the recipient is not registered, the place of supply shall be the place where the goods are handed over for transportation.
Ans. If the person is registered, the place of supply shall be the location of recipient.
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. (The Explanation clause to section 6(11) of the IGST Act)
Ans. In the above 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 cases, the default rule shall apply. (The proviso clause to section 6(10) (b) of the IGST Act)
Ans. The location of supplier of mobile services cannot be the place of supply as the mobile companies are providing services in multiple states and many of these services are inter-state. The consumption principle will be broken if the location of supplier is taken as place of supply and all the revenue may go to a few states where the suppliers are located.
The place of supply for mobile connection would depend on whether the connection is on postpaid or prepaid basis.
In case of postpaid connections, the place of supply shall be the location of billing address of the recipient of service.
In case of pre-paid connections, the place of supply shall be the place where payment for such connection is received or such pre-paid vouchers are sold. However if the recharge is done through internet/e-payment, the location of recipient of service on record shall be the taken as the place of service.
Ans. The place of supply shall be the location of the recipient of services on the records of the supplier of services. So Goa shall be the place of supply.
Ans. If the service is not linked to the account of person, place of supply shall be Kullu i.e. the location of the supplier of services. However if the service is linked to the account of the person, the place of supply shall be Mumbai, the location of recipient on the records of the supplier.
Ans. The location of the recipient of services on the records of the supplier of insurance services shall be the place of supply. So Gurgaon shall be the place of supply. (proviso clause to section 6(14) of the IGST Act)