gst one nation, one taxestv.in/icai/idtc/pdf/ca bimal jain_gst_place of supply.pdfrelevant...

Bimal JainFCA, FCS, LLB, B.Com (Hons)

GST – One Nation, One Tax

Bimal Jain Privilege and Confidential

1

Index


2

Particulars

Need for principles of Place of Supply (“POS”)

POS of Goods – Domestic

POS of Goods – Import/Export

POS of Services – Domestic

POS of Services – Import/Export

Multiple examples and likely issues

POS provisions Vs. Registration

POS provisions Vs. ITC


3

Need for Place of Supply principles in

GST

Nature of Supply – Intra-State/ Inter-State


4

t

Location of Supplier

Place of Supply Place of Supply

CGST+

SGST

Exports – Zero-rated

Imports – Treated as Inter-State supply (BCD+IGST)


5

Principles for determining supply in the course of Intra/Inter- State trade or commerce

Intra-State supply of Goods/Services[Sec 8 of IGST Act, 2017]

Inter-State supply of Goods/Services[Sec 7 of IGST Act, 2017]

Location of Supplier & Place of SupplySame State/ UT

Location of Supplier & Place of Supply Two differentStates/UTs, a State and a UT

Supply of goods in the course of import into the territory ofIndia till they cross the customs frontiers of India

Supply of services in the course of import into the territory ofIndia

Supply of goods/services, when the supplier is located in Indiaand the place of supply is outside India [Exports]

Supply of goods/services to or by a SEZ developer or a SEZ unit

Any supply of goods/services in the taxable territory, not beingan Intra-State supply and not covered elsewhere in this section

Location of Supplier of Goods –Not defined in GST Law

Tax wrongfully collected and deposited with the CG/SG


6

t


Place of Supply Place of Supply

CGST+

SGST

Pay*

Refund

*No InterestSec 77 of the CGST Act, 2017

Sec 12 of the UTGST Act, 2017

Sec 19 of the IGST Act, 2017

Later on

Vice Versa

&

Needs for principles of Place of Supply in GST


7

Need for principles of Place

of Supply

Taxpayer Government

To determine the nature of

supply i.e. Intra-

State/Inter-State/Import/

Export

To determine the State

where the State

component of GST would

accrueWhether POS principles relevant for identifying State of

Registration?????

Relevant Provisions – IGST Act, 2017

Chapter/ Section Particulars

Chapter V: Place of supply of goods or services or both

Section 10 Place of supply of goods other than supply of goods importedinto, or exported from India

Section 11 Place of supply of goods imported into, or exported from India

Section 12 Place of supply of services where location of supplier andrecipient is in India

Section 13 Place of supply of services where location of supplier orlocation of recipient is outside India

Section 14 Special Provision for payment of tax by a supplier of OIDARservices


8

GOODS

PLACE OF SUPPLY PROVISIONS

SERVICES


9

Principles of Place of Supply – Goods (Domestic)

Sec 10 (Goods) – To determine POS Supplies within India


10

Supply of Goods

Within India

Sec 10 applicable

POS when supply of goods involve movement

Sec Provision (IGST Act, 2017)

10(1)

POS when supply involves movement --> Location at the time movement terminates

(a) Where the supply involves movement of goods, whether by the supplier or the recipient or by anyother person, the place of supply of such goods shall be the location of the goods at the time at whichthe movement of goods terminates for delivery to the recipient;


11

tSupply of Machinery

IGST

CGST + SGST

POS when supply of goods does not involve movement


10(1)

POS when supply does not involves movement --> Location at the time of delivery

(c) Where the supply does not involve movement of goods, whether by the supplier or therecipient, the place of supply shall be the location of such goods at the time of the delivery tothe recipient.


12

Means goods are placed at the disposal of recipient

Physically not capable of being moved – M/c embed to earth

Supplied in assembled or installed form

Supplier to his agent or his principal

Case Study - Identify Place of Supply?


13

tCustomer taking the machine to Maharashtra

Place of Supply – Delhi or Maharashtra

Purchased from factory of supplier in Delhi

POS when goods are delivered on direction of third person


10(1)

POS when goods are delivered on direction of third person --> Place of business of third person

(b) Where the goods are delivered by the supplier to a recipient or any other person, on thedirection of a third person, whether acting as an agent or otherwise, before or duringmovement of goods, either by way of transfer of documents of title to the goods orotherwise, it shall be deemed that the said third person has received the goods and the placeof supply of such goods shall be the principal place of business of such person.


14

In-transit sales in GST


15

tBill to

Bill to

First Supply

Second Supply

Delivery

POS Principal Place of business of First Purchaser

POS Location of goods where movement

terminates for delivery

IGST

IGST

No concept of EI-EII sales in GST

Requires business restructuring

Bill-to Ship-to Model in GST


16

Ship

to

tBill to

First Supply

Second Supply

Delivery

POS Principal Place of business of First Purchaser

POS Location of goods where movement

terminates for delivery

IGST

IGST

POS when goods are assembled/installed at site


10(1)

POS when goods are assembled/installed at site --> Place of installation/assembly

(d) Where the goods are assembled or installed at site, the place of supply shall be the place of suchinstallation or assembly.


17

tComponents taken to Maharashtra for assembling at site

IGST

CGST + SGST

Supply with installation – Works contract?

Composite or Mixed supply?

POS for supply of goods or supply of services?

POS when goods are supplied on board a conveyance


10(1)

POS when goods are supplied on board a conveyance --> Location at which goods are taken on board

(e) Where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train ora motor vehicle, the place of supply shall be the location at which such goods are taken on board.


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12

POS of Passenger Transportation services --> B2B and B2C

(9) The place of supply of passenger transportation service to(a) a registered person, shall be the location of such person;(b) a person other than a registered person, shall be the place where the passenger embarks onthe conveyance for a continuous journey:PROVIDED that where the right to passage is given for future use and the point of embarkation isnot known at the time of issue of right to passage, the place of supply of such service shall bedetermined in accordance with the provisions of sub-section (2).Explanation: For the purposes of this sub-section, the return journey shall be treated as a separatejourney, even if the right to passage for onward and return journey is issued at the same time.

Eg: POS when goods are supplied on board a conveyance


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Transportation services to passengers + Food

Supply of basic food to Indian

Railways

Composite supply

Place of Supply UP

CGST + SGST

Indian Railways

CG power to prescribe manner of POS – Residuary cases


10

Residuary cases --> POS manner to be prescribed

(2) Where the place of supply of goods cannot be determined, the place of supply shall bedetermined in such manner as may be prescribed.


20


21

Principles of Place of Supply – Services (Domestic)

Sec 12 (Services) – To determine POS Supplies within India


22

Supply of Services

Within India

Sec 12 applicable


Location of Recipient

Definition: Location of supplier/recipient of services


23

Sec 2(14) of the IGST Act, 2017 “location of the recipient of services” means:

(a) where a supply is received at a place of business for which registration has been obtained, the locationof such place of business;(b) where a supply is received at a place other than the place of business for which registration has beenobtained (a fixed establishment elsewhere), the location of such fixed establishment;(c) where a supply is received at more than one establishment, whether the place of business or fixedestablishment, the location of the establishment most directly concerned with the receipt of the supply;and(d) in absence of such places, the location of the usual place of residence of the recipient;

Sec 2(15) of the IGST Act, 2017 “location of the supplier of services” means:

(a) where a supply is made from a place of business for which registration has been obtained, the locationof such place of business;(b) where a supply is made from a place other than the place of business for which registration has beenobtained (a fixed establishment elsewhere), the location of such fixed establishment;(c) where a supply is made from more than one establishment, whether the place of business or fixedestablishment, the location of the establishment most directly concerned with the provision of the supply;and(d) in absence of such places, the location of the usual place of residence of the supplier;

Default Rule [Sec 12(2)]: POS for supply of services


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Supply of services

B2B

B2C


If address on record exists Location of Recipient

Otherwise Location of Supplier

Similar to Rule 3 of the POPS Rules,

2012

Sec 2(3) of the CGST Act, 2017 “address on record” means the address of the recipient as available in the records of the supplier;

Eg of General Rule: POS for supply of services


25

tCA providing opinion/ Stock Audit

B2B Location of recipient

POS Maharasthra

IGST


26

POS of Immovable Property Related Services – Sec 12(3)

Nature of service Provision -POPS Rules,

2012

Provisions under GST Law

Services related to immovable property: Services DIRECTLY related to immovable property

including services provided by architects, interiordecorators, surveyors, engineers and other relatedexperts or estate agents, any service provided byway of grant of rights to use immovable property orfor carrying out or co-ordination of constructionwork; or;

Lodging accommodation by a hotel, inn, guesthouse, homestay, club or campsite, by whatevername called, and including a house boat or anyother vessel; or

Accommodation in any immovable property fororganizing any marriage, official, social, cultural,religious, business function etc.

Ancillary services to the services referred above

Rule 5

Location ofimmovableproperty

Location at which the immovableproperty/boat/vessel is located orintended to be located

Where property/boat/vessellocated in more than one State/UT Proportionate allocationamongst States/UTs as per thecontract or on reasonable basis

Where location of the immovableproperty/boat/vessel is located orintended to be located outsideIndia Place of supply shall bethe location of the recipient


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tDesigning services pertaining to office

being constructed in Mumbai

POS Location of immovable property

POS Maharasthra

IGST

Architect

Client

t

Proportionate allocation to be made

Construction of road

How?Value?

Builder

Client

Office in Dubai

POS Location of Recipient i.e. Delhi

Eg: POS of Immovable Property Related Services


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tAppearing on behalf of client in Mumbai

& staying in Hotel in Mumbai

POS Location of immovable property

POS Maharashtra

CGST + Maharashtra SGST

CA

Client

Hotel

Hotel raising invoice on CAWhether ITC available to Delhi CA?

Eg: Impact on credit availment on POS of Immovable Property Services

POS of specified performance based Services – Sec 12(4)


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Nature of service Provision as per POPS Rules, 2012 Provisions under GST Law

Following performance based services: Restaurant and catering services; Personal grooming Fitness Beauty treatment Health service including cosmetic

and plastic surgery

Rule 4:Place of actual performance Wheregoods are required to be made physicallyavailable or where physical presence of therecipient is requiredLocation of goods Where servicesprovided from a remote location by way ofelectronic means

Location wherethe services areactuallyperformed

What about other performance based services such as installation services, repair of goods, repairthrough remote access ????

On Board catering: S. 12(4) Vs. 12(10)

Unlike Rule 14 of the POPS Rules, 2012 No separate Sec of Order of application of rules


30

t

Coming for Plastic surgery

POS Place where services are performed

POS Delhi

CGST + Delhi SGST

Hospital Patient

Hospital raising invoice on Patient

Eg: POS of specified performance based Services

POS of Training & Performance Appraisal Services – Sec 12(5)


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Training &Performance appraisalservices

Rule 4(a):Place of actual performance

Where physical presence of therecipient is required

B2BLocation of recipientB2C Location where theservices are actually performed

POPS Rules, 2012 Vs. GST Law


32

t

Approached CA for training in GST while their team visit to Delhi

POS (B2B) Location of Recipient

POS Maharashtra

IGST

CA raising invoice on Company

Eg: POS of Training & Performance Appraisal Services

CA

Venue

Client


33

Training Classes on GST to various professionals (Satellite classes)

Eg: POS of Training & Performance Appraisal Services

Place of Supply ????

Students attending classes at various

locations

CA

B2B Location of RecipientB2C Place where services areperformed i.e. Delhi

CGST + SGST


34

POS of Event Based Services – Sec 12(6) & 12(7)

Nature of service Provision as per POPS Rules, 2012

Provisions under GST Law

Admission to Cultural, artistic,sporting, scientific, educational,or entertainment event

Admission to amusementpark/any other place andservices ancillary thereto

Services ancillary thereto

Rule 6 Place wherethe event is actuallyheld

(Services by way ofadmission to, ororganization of, acultural, artistic,sporting, scientific,educational, orentertainment event,or a celebration,conference, fair,exhibition, or similarevents, and of servicesancillary to suchadmission)

Place where the event is actually held orwhere the park or such other place is located

Organisation of Cultural,artistic, sporting, scientific,educational, or entertainmentevent including supply ofservices in relation to aconference, fair, exhibition,celebration or similar events; or

Services ancillary toorganization

Assigning of sponsorship tosuch events

B2B Location of RecipientB2C Place where the event is actually held

Where event is held in more than oneState/UT Proportionate allocationamongst States/UTs as per the contract or onreasonable basis

Where event is held outside India Place ofsupply shall be the location of the recipient


35

t

Admission to event on GST

POS Place where event is held

POS Maharashtra

IGST

Participation fees to various professionals

Eg: POS of admission to event

Chamber of Professionals

Venue

POS of Goods Transportation Services – Sec 12(8)


36


Goods transportationservices, including bymail or courier

Rule 10: Place of destination of thegoods(Services of transportation of goods,other than by way of mail or courier)

B2BLocation of recipientB2C Location at which such goodsare handed over for theirtransportation

POPS Rules, 2012 Vs. GST Law:Contrast Provisions

POS of Passenger Transportation Services – Sec 12(9)


37


Passenger transportation services

Rule 11: Place where the passengerembarks on the conveyance for acontinuous journey

B2BLocation of recipientB2C Place where the passengerembarks on the conveyance for acontinuous journey

POPS Rules, 2012 Vs. GST Law: Same in B2C

Sec 2(3) of IGST Act, 2017 “continuous journey” means ajourney for which a single or more than one ticket or invoice isissued at the same time, either by a single supplier of serviceor through an agent acting on behalf of more than one supplierof service, and which involves no stopover between any of thelegs of the journey for which one or more separate tickets orinvoices are issued.

Explanation For the purposes of thisclause, ‘stopover’ means a place where apassenger can disembark either totransfer to another conveyance or breakhis journey for a certain period in order toresume it at a later point of time;

POS of services on board a conveyance – Sec 12(10)


38

Nature of service Provision as per POPS Rules, 2012 Provisions GST Law

Services on board aconveyance, includinga vessel, an aircraft, atrain, or a motorvehicle

Rule 12: Place of first scheduled pointof departure of that conveyance for thejourney

Location of the first scheduledpoint of departure of thatconveyance for the journey

POPS Rules, 2012 Vs. GST Law: Same

POS when services are supplied on board a conveyance


39

Service of video game provided on board

Place of Supply Delhi

Intra or Inter

Indian Railways

POS of Telecommunication Services – Sec 12(11)


40

Nature of Telecommunication services Place of Supply

Services by way of fixed telecommunicationline, leased circuits, internet leased circuit,cable or dish antenna

Location where the telecommunication line, leased circuit orcable connection or dish antenna is installed for receipt ofservices

Post – Paid mobile connection(telecommunication + internet services)

Location of billing address of the recipient on record of thesupplier

Pre – Paid mobile connection(telecommunication + internet services +DTH television services)

Through selling agent or a re-seller or a distributor of SIMcard or re-charge voucher Address of the selling agent orre-seller or distributor as per the record of the supplier

By any person to the final subscriber Location where suchpre-payment is received or such vouchers are sold

Other cases Address of the recipient as per records of the supplier

1st Proviso Where address of the recipient asper records of the supplier is not available POS Location of the supplier of service

2nd Proviso Pre-Paid service availed/rechargemade through internet internet banking or otherelectronic mode POS Location of recipient onrecord of the supplier

Leased circuit is installed in more than 1 State/UT Proportionate allocation amongst States/UTs as per the contract or on reasonable basis

POS of other services


41

Sec Nature of services Place of Supply

12(12) Banking and other financial servicesincluding stock broking services

Location of the recipient of services on the records ofthe supplier of services

Location of the recipient of services is not on therecordsPOS Location of the supplier of services

12(13) Insurance services B2B Location of RecipientB2C Location of the Recipient of services on therecords of the supplier of services

12(14) Advertisement services to the CentralGovernment, a State Government, astatutory body or a local authority meantfor identifiable States/UTs

Taken as located in each of such States/UTs Proportionate allocation amongst States/UTs as perthe contract or on reasonable basis


42

Meaning of Export and Import (Goods)

Meaning of Export and Import of Goods


2(5)

Definition of term ‘export of goods’

“export of goods” with its grammatical variations and cognate expressions, means taking goodsout of India to a place outside India;


43


2 (10)

Definition of term ‘import of goods’

“import of goods” with its grammatical variations and cognate expressions, means bringinggoods into India from a place outside India;


44

Place of Supply of Goods (Imports

and Exports)

Principles of place of supply: Export and Import of Goods


45

Section Nature of supply POS under GST Law

Sec 11(a) Goods imported into India Location of the importer

Sec 11(b) Goods exported from India Location outside India

Proviso to Sec 5(1) of the IGST Act, 2017 Provided that the integrated tax on goods imported into Indiashall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975on the value as determined under the said Act at the point when duties of customs are levied on the saidgoods under section 12 of the Customs Act, 1962.

S. 7(2) of the IGST Act, 2017 Supply of goods in the course of import into the territory of India till theycross the customs frontiers of India in the course of inter-state trade or commerce.


46

Meaning of Export and Import (Services)

Meaning of Export and Import of Services


2(6)

Definition of term ‘export of services’

“export of services” means the supply of any service when

(a) the supplier of service is located in India,(b) the recipient of service is located outside India,(c) the place of supply of service is outside India,(d) the payment for such service has been received by the supplier of service in convertible foreign exchange, and(e) the supplier of service and recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;


47


2 (11)

Definition of term ‘import of services’

“import of services” means the supply of any service, where

(a) the supplier of service is located outside India,(b) the recipient of service is located in India, and(c) the place of supply of service is in India;

Constituents: Export of Services Vs. Import of Services


48

Particulars Export of Services Import of Services

Location of Supplier India Outside India

Location of Recipient Outside India India

Place of supply Outside India India

Manner of payment In Convertible ForeignExchange

Relationship between Supplier and Recipient

Not merely establishmentsof distinct person

[Explanation 1 to Sec 8]

Explanation1: For the purposes of this Act, where a person has,-

(i) an establishment in India and any other establishment outside India,(ii) an establishment in a State or Union Territory and any other establishment outside that State; or(iii) an establishment in a State or Union Territory and any other establishment being a business vertical registered within that State or Union Territory,

then such establishments shall be treated as establishments of distinct persons.

Inter-Company supply: Export of Services Vs. Import of Services


49

Branch OfficeHead Office

Export of Services

Import of Services

RCM liability


50

Place of Supply of Services (Imports

and Exports)

Sec 13 (Services) – To determine POS Imports/Exports


51

Supply of Services

Imports/Exports

Sec 13 applicable



Either of

POS of Services: Domestic Vs. Import


52

SecDomestic/

Outside

Nature of Services Place of supply of services(Domestic)

Place of supply of services

(Exports/Imports)

12(2)/13(2) Default Rule B2B Location of Recipient (“R”)B2C Location of R if address exists/Otherwise Location of Supplier (“S”)

Location of RNot available

Location of S

12(4&5)/13(3)

Performance based services

Specified services like catering etc. Place of actual performance of serviceTraining & Performance appraisal:B2B Location of RB2C Place of actual performance ofservice

Place of actualperformance of service

---/13(3) Performance based services provided remotelythrough electronic means

Location where goodsare situated at the timeof supply of service

12(3)/13(4) Immovable property related services

Location of the immovableproperty/boat/vessel

Location of theimmovable property


53

SecDomesti

c/ Outside


Place of supply of services

(Exports/Imports)

12(6&7)/

13(5)

Service by way of admission/organization of a cultural, artistic event, etc.

Admission Place whereevent is actually heldOrganization B2B:Location of RB2C: Place where event isactually held

Place where event isactually held

13(6) Performance based services, ImmovableProperty related services and event relatedservices supplied at more than onelocation, including a location in the taxableterritory

Immovable Property relatedservices and event relatedservices Proportionateallocation amongst States

Location in taxableterritory where thegreatest proportion ofservice is provided

13(7) Performance based services, ImmovableProperty related services and event relatedservices supplied at more than onelocation, including a location in the taxableterritory involving more than 1 State/UT

Each of the states inproportionate valueallocable to each states



54

SecDomestic/

Outside


Place of supply of services(Exports/Imports)

12(12)/13(8) Banking/FI/NBFC (to account holders)/Intermediary services

Banking & other Financial services(any person Location of RNo available Location of S

Location of supplier ofservice

12(8)/13(9) Transportation of goods other than mail/courier

Transportation of goods includingmail/courier:B2B Location of RB2C Location at which are goodsare handed over for theirtransportation

Place of destination ofgoods

12(9)/13(10) Passenger Transportation B2B Location of RB2C Place of embarkation for acontinuous journey

Place of embarkation for acontinuous journey

12(10)/ 13(11)

Services provided on board a conveyance

Location of first scheduled pointdeparture

Place of first scheduledpoint of departure forcontinuous journey



55

SecDomestic/

Outside

Nature of Services

POS of services

(Domestic)

Place of supply of services(Exports/Imports)

----/13(12) Online Informati

on and Database

Access Retrieval (OIDAR) services

Location of R If 2 of following non-contradictory conditions satisfied, R deemed to be located inIndia:(a) the location of address presented by the recipient of services through internetis in the taxable territory;(b) the credit card or debit card or store value card or charge card or smart cardor any other card by which the recipient of services settles payment has beenissued in the taxable territory;(c) the billing address of the recipient of services is in the taxable territory;(d) the internet protocol address of the device used by the recipient of services is inthe taxable territory;(e) the bank of the recipient of services in which the account used for payment ismaintained is in the taxable territory;(f) the country code of the subscriber identity module card used by the recipient ofservices is of taxable territory;(g) the location of the fixed land line through which the service is received by therecipient is in the taxable territory


Power of CG


56

SecDomestic/

Outside

Particulars

----/13(13) In order to prevent double taxation or non-taxation of the supply of a service, or forthe uniform application of rules, the Government shall have the power to notify anydescription of services or circumstances in which the place of supply shall be the placeof effective use and enjoyment of a service.


57

Special provision for payment of tax by supplier of OIDAR services

OIDAR supplier of services located in non-taxable territory to Non-taxable online recipient in India

IGST to be paid by the supplier located in non-taxable territory

Intermediary located in non-taxable territory, who arranges or facilitates the supply of suchservices deemed to be the recipient of such services from the supplier in non-taxable territoryand in non-taxable territory and supplying such services to the non-taxable online recipientexcept when such intermediary satisfies the following conditions:

(a) the invoice or customer’s bill or receipt issued or made available by such intermediary takingpart in the supply clearly identifies the service in question and its supplier in non-taxable territory;(b) the intermediary involved in the supply does not authorise the charge to the customer or takepart in its charge which is that the intermediary neither collects or processes payment in anymanner nor is responsible for the payment between the non-taxable online recipient and thesupplier of such services;(c) the intermediary involved in the supply does not authorise delivery; and(d) the general terms and conditions of the supply are not set by the intermediary involved in thesupply but by the supplier of services


58

Special provision for payment of tax by supplier of OIDAR services

OIDAR supplier of services located in non-taxable territory Single registration under theSimplified Registration Scheme to be notified by the Government

Any person located in the taxable territory representing such supplier for any purpose in thetaxable territory shall get registered and pay IGST on behalf of the supplier

If such supplier does not have a physical presence or does not have a representative for anypurpose in the taxable territory, he may appoint a person in the taxable territory for the purposeof paying IGST and such person shall be liable for payment of such tax

Email id: [email protected]

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