Place of supply under gst

OBJECTIVE

The place of supply in GST determines the taxable jurisdiction where the tax should reach and ascertains whether the supply is inter-state supply or intra-state supply. This webinar shall deal with the place of supply with regards to various types of goods and services. It shall also throw some light on the valuation criteria in certain cases.

1. Place of Supply Under GST CA Divakar Vijayasarathy

2. Credits & Acknowledgements Anand N Krishna CA Jugal Narendra Gala

3. Presentation Schema

4. Presentation Schema GST Goods and Service Tax OIDAR Online Information and Database Access or Retrieval Services UT Union Territories

5. Introduction

6. Location of Recipient S.No Case Location of Recipient of Service 1 Supply is received at a registered place of business Such place of business 2 Supply is received at a place other than the registered place of business (a fixed establishment elsewhere) Such fixed establishment 3 Supply is received at more than one establishment, whether the place of business or fixed establishment Location of the establishment most directly connected with the receipt of the supply 4 In absence of such places Location of the usual place of residence of the recipient S.No Case Location of Recipient of Service 1 Supply is made from a registered place of business Such place of business 2 Supply is made from a place other than the registered place of business (a fixed establishment elsewhere) Such fixed establishment 3 Supply is made from more than one establishment, whether the place of business or fixed establishment Location of the establishment most directly connected with the provision of the supply 4 In absence of such places Location of the usual place of residence of the supplier Location of Supplier

7. Place of Supply of Goods – Sec 10

8. Supply Involving Movement of Goods The place of supply is the location of the goods at the time when the movement of goods terminates for delivery to the recipient Illustration: Mr. A from Kerala, sells 10 air conditioners to Mr. D in Pune for delivery at D’s place of business in Pune. So the place of supply in this case is Pune Where goods are delivered by the supplier to the recipient at the instruction of the buyer (third person), the place of supply is the principal place of business of the buyer and not of the actual recipient Supplier A (Maharashtra) Recipient C (New Delhi) Buyer B (Haryana) Deemed to be Received by Gives instruction to Goods delivered as per the instruction of B Place of Supply: Location of principal place of business of B i.e., Haryana

9. Supply Not Involving Any Movement The place of supply is the location of goods at the time of delivery to the recipient Illustration: Mr. A (New Delhi) has leased his machine to Mr. B (Uttar Pradesh) for production of goods. After 2 years, Mr. B requested Mr. A to sell the machine to him, which is agreed to by Mr. A. In this case, there will be no movement of goods and the same will be sold on as is where is basis. Thus, the location of the machine at the time of such sale will be the place of supply i.e, Uttar Pradesh For supply of goods which are to be installed or assembled at site , the place of supply is the place of such installation or assembly Illustration: Mr. H (Kerala) has purchased a machine from Mr. T (Karnataka) for being installed in his factory at Kerala. So the place of supply is the place at which the machine is being assembled i.e, Kerala The place of supply of goods supplied on a board a conveyance like aircraft, train, vessel, motor vehicle is the location where such goods have been taken on board Illustration: Mr. X (Tamil Nadu) boards the Chennai-Goa train at Chennai. He sells the goods taken on board by him (at Tamil Nadu), in the train, at Bangalore during the journey. The place of supply of goods is the location at which the goods are taken on board i.e., Tamil Nadu and not the place where they have been sold i.e, Bangalore

10. Place of Supply of Goods Imported into or Exported from India – Sec 11

11. Imports and Exports If the goods have been imported in India, the place of supply of goods is the place where the importer is located Mr. A (India) Mr. B (Germany) IMPORT OF CARS Place of Supply is India The place of supply in case of export of goods is the place where they have been exported i.e, the destination outside India Mr. H (India) Mr. L (Italy) EXPORTS SPICES Place of Supply is Italy

12. Place of Supply in case of Domestic Services – Sec 12

13. Domestic Services

14. General Rule Nature of Supply Place of Supply Recipient is Registered Recipient is Unregistered Address of such person is available in the records of the supplier Other cases General Rule Location of Recipient Such location of unregistered person Location of the supplier of services The above rule is applicable only if the supply of service does not fall in any of the specific cases provided under section 12 (explained in subsequent slide)

15. Services in relation to Immovable Properties Nature of Service Location of Immovable Property/Boat/Vessel Place of Supply Services provided directly in relation to an immovable property including those by architect, engineer, surveyor, estate agent etc. IN INDIA OUTSIDE INDIA Location of such immovable property/ boat/ vessel Location of the Recipient Grant of rights to use immovable property Services provided by way of lodging, accommodation by a hotel, inn, homestay, house boat etc. Services provided by way of accommodation in an immovable property for organizing marriage, functions etc. Services ancillary to the above cases Where the immovable property or boat or vessel is located in more than one State/UT , the service is deemed to have been supplied in each of the respective States/UT, in proportion to the value for the services determined in terms of the contract or agreement entered into in this regard

16. Illustrations Mr. G (Kerala) availed the services of an architect Mr. H (Tamil Nadu) for drawing up a blueprint for the factory i.e, immovable property to be erected by G in Karnataka . The place of supply in this case would be the place at which the factory is intended to be constructed i.e. Karnataka Mr. R, a consultant (New Delhi) travels to Mumbai for business and stays in a hotel there. The place of supply of accommodation service is the place where the hotel is located i.e., Mumbai A hotel chain X charges a consolidated sum of Rs.30,000/- for stay in its two establishments in Delhi and Agra, where the stay in Delhi is for 2 nights and the stay in Agra is for 1 night. The place of supply in this case is both in the UT of Delhi and in the State of Uttar Pradesh and the service shall be deemed to have been provided in the UT of Delhi and in the State of Uttar Pradesh in the ratio 2:1 respectively . The value of services provided will thus be apportioned as Rs.20,000/- in the UT of Delhi and Rs.10,000/- in the State of Uttar Pradesh.

17. Supply by way of Transportation Supply of services in relation to training and performance appraisal Registered Recipient - Location of such recipient Unregistered Recipient - Location where the service is actually performed Nature of Supply Transported Place of Supply Recipient is Registered Recipient is Unregistered Supply of services by way of transportation of goods, including by mail or courier, etc. WITHIN INDIA Location of Recipient Location at which such goods are handed over for their transportation OUTSIDE INDIA Location of destination of the goods Illustration: M/s JKL Pvt. Ltd. is a registered company in Chennai. It ships goods to its customer in London , United Kingdom through M/s Strong Logistics, a shipping company. The goods being transported outside India , the place of supply is the location of destination of such goods i.e., London, (UK)

18. Restaurant Services Supply of Restaurant service, personal grooming/fitness/ beauty and health services Location where such services are actually performed Illustration: Mr. A, a business man from Pune dines in a restaurant at Mumbai while on a business trip. The place of supply of restaurant service is the location where such service is performed i.e., Mumbai.

19. Organisation of Events If the event is held in more than one State/UT and a consolidated amount is charged for services relating to such event, the place of supply of such services is deemed to be in each of the respective States /UT in proportion to the value for services determined in terms of the contract or agreement entered into in this regard Nature of Supply Service Provided Registered/Unregistered recipient Place of Supply Organization of events or services ancillary to the same / assigning sponsorship to such events and services ancillary to the above IN INDIA Registered Unregistered Location of recipient Location of event OUTSIDE INDIA Registered Unregistered Location of recipient

20. Illustrations An event management company E has to organize some promotional events in States S1 and S2 for a recipient R (registered and having principal place of business in Maharashtra). 3 events are to be organized in S1 and 2 in S2. R has no other establishments in States S1 and S2. Regardless of the location of the events being in different states, the place of supply is the place where the recipient is located i.e. Maharashtra. An event management company E has to organize some promotional events for ABC Ltd in Germany. The place of supply in this case would be the location of the recipient i.e, Germany since the service is provided outside India.

21. Admission to Events/ Amusement Parks etc Place of Supply Services provided by way of admission to cultural, sporting, educational, artistic event etc. Services provided by way of admission to amusement park or any other place Services ancillary to the above services Place where the event is actually held or where the park or such other place is located Illustration: Mr. A, a resident of Chennai, Tamil Nadu, buys a ticket for a circus organized at Mumbai, Maharashtra by a circus company based in New Delhi. The place of supply is the location where the circus is located i.e, Maharashtra

22. Passenger Transport Services Illustration: Mr. S, an unregistered person, based in Chennai, Tamil Nadu books a two-way air journey ticket from Chennai to Mumbai on 5 th February. He leaves Chennai on 10 th February in a late-night flight and lands in Mumbai the next day. He leaves Mumbai on 14 th February in a morning flight and lands in Chennai the same day. The return journey is treated as a separate journey , even if the tickets for onward and return journey are issued at the same time Thus, being an unregistered person, the place of supply for the outward and return journeys are the locations where the unregistered person embarks on the conveyance for the continuous journey i.e., Chennai and Mumbai respectively Nature of Supply Place of Supply Registered Recipient Unregistered Recipient Passenger transportation Location of Recipient Location where the passenger embarks on the conveyance of continuous journey Issue of right to passage for future use - point of boarding not known at the time of issue of right If address of recipient available, Location of recipient In other cases, Location of supplier

23. Telecommunication Services Illustration: A company T installs a leased circuit between the Chennai, Bengaluru and Mysuru offices of a company C. The starting point of this circuit is in Chennai and the end point of the circuit is in Mysuru. The circuit also connects Bengaluru. Hence, one point of this circuit is in Tamil Nadu and two points in Karnataka . The place of supply of this service is in the States of Tamil Nadu and Karnataka. The service shall be deemed to have been provided in the ratio of 1:2 in the States of Tamil Nadu and Karnataka, respectively Service Involving Place of Supply Fixed telecommunication line, leased circuits, internet based circuits, cable or dish antenna etc Location of such fixed equipment Mobile/ Internet post-paid services Location of billing address of the recipient (even if the actual address is different). If unavailable, location of the supplier Sale of pre-paid vouchers Location of sale of such vouchers Other cases Address of the recipient in records If the leased circuit is installed in more than one State/UT and a consolidated amount is charged for supply of services, the place of supply is deemed to be in each of the respective States /UT in proportion to the value for services determined in terms of the contract or agreement entered into in this regard

24. On-Board Services and Banking Services The place of supply for services supplied on board a conveyance (like paid food items, purchase of gadgets, wi-fi, etc.) is the location of the first scheduled point of departure of that conveyance of journey Illustration: Mr. X is travelling from Delhi to Mumbai in an Airjet flight. He desires to watch an English movie during the journey by making the necessary payment. The place of supply of such service of showing ‘movie on demand’ is the first scheduled point of departure of the conveyance for the journey i.e., Delhi The place of supply of insurance, banking and other financial services , including stock broking services to any person is the location of the recipient in the records of the supplier . However, if the location of recipient of services is not available in the records of the supplier, the place of supply is the location of the supplier of services Illustration: Mr. C from Varanasi, Uttar Pradesh, visits a bank registered in New Delhi for getting a demand draft made. Mr. C does not have any account with the said bank . Therefore, since the location of recipient is not available in the records of the supplier , the place of supply is the location of the supplier of services i.e., New Delhi

25. Advertisement Service to Government The value of such supplies specific to each State/ UT is in proportion to the amount attributable to the services provided by way of dissemination in the respective States /Union territories determined in terms of the contract or agreement entered into in this regard Illustration: As a part of the campaign ‘Swachh Bharat’, ABC (a local authority) has engaged a company GH for printing of 1,00,000 pamphlets (at a total cost of Rs.1,00,000 ) to be distributed in the States of Haryana, Uttar Pradesh and Rajasthan. In such a case, ABC should ascertain the breakup of the pamphlets to be distributed in each of the three States i.e., Haryana, Uttar Pradesh and Rajasthan from the Ministry or department concerned at the time of giving the print order. Let us assume that this breakup is 20,000, 50,000 and 30,000 respectively. This breakup should be indicated in the print order. The place of supply of this service is in Haryana, Uttar Pradesh and Rajasthan. The ratio of this breakup i.e., 2:5:3 will form the basis of value attributable to the dissemination in each of the three States. Separate invoices will have to be issued State-wise by GH to ABC indicating the value pertaining to that State, i.e., Rs.20,000 - Haryana, Rs.50,000 - Uttar Pradesh and Rs.30,000 - Rajasthan

26. Place of Supply in case of International Services – Sec 13

27. International Services

28. General Rule Nature of Supply Place of Supply Location of Recipient is available Location of Recipient is not available General Rule Location of Recipient of services Location of the supplier of services The principal exceptions to the above general rule relating to place of supply of cross border services are: Performance-based services Services directly in relation to immovable property Admission to and/or organization of events, celebrations etc. Services supplied by a banking company, financial institution, non- banking financial company (NBFC) to account holders Intermediary services Hiring of means of transport other than aircrafts and vessels except yachts, up to a period of one month Transportation of goods, other than by way of mail or courier Passenger transportation services Services on board a conveyance during the course of a passenger transport operation Online information and database access or retrieval services

29. Performance-Based Services The place of supply for goods that are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs/treatment/process, without being put to any other use in India, is the location of the recipient. The place of supply of services supplied in respect of goods, that are provided from a remote location by electronic means, is the location where the goods are situated at the time of supply of services. S.No Nature of Supply Place of Supply 1 Services requiring physical presence of goods Location where service is performed 2 Services supplied to an individual, which require the physical presence of the recipient Location where the service is actually performed 3 Services at 1 and 2 above supplied at more than one taxable territory (refer illustration) Location in the taxable territory 4 Services at 1 and 2 supplied in more than one State/UT (refer illustration) Each State/UT Exception to 1 above

30. Illustrations A software company located in United States of America (USA) takes services of a software company located in Bangalore to service its software in USA. The Indian software company provides its services through electronic means from its office in India. The place of supply is the location where goods are situated at the time of supply of service i.e., USA ABC Ltd., Hyderabad has exported a machine to a company in Indonesia . The machine stops functioning and is thus, imported by ABC Ltd. for free repairs in terms of the sale contract. The machine is exported after repairs. The place of supply of repair service is the location of the recipient i.e., Indonesia PQR Consultants, New Delhi, bags a contract for doing a market research for a vehicle manufacturing company based in South Korea , in respect of its upcoming model of a car. The research is to be carried out in five countries including New Delhi in India . Since the services are supplied at more than one location including a location in the taxable territory , the place of supply for research carried out in New Delhi shall be the location in the taxable territory i.e., New Delhi LMN Consultants, UK provides market research services for a vehicle manufacturing company in India. The research is to be carried out in 3 states viz., Tamil Nadu, Kerala and Karnataka . And the proportionate value of services provided as per the contract is 2:2:1 So the place of supply would be Tamil Nadu, Kerala and Karnataka valued as per the agreed proportion

31. Services in relation to Immovable Properties Nature of Service Place of Supply Services provided directly in relation to an immovable property including those by architect, engineer, surveyor, estate agent etc. Location of the immovable property Grant of rights to use immovable property Services provided by way of lodging, accommodation by a hotel, inn, homestay, house boat etc. Services provided by way of accommodation in an immovable property for organizing marriage, functions etc. Services ancillary to the above cases Above services supplied at more than one location, including a location in the taxable territory (refer illustration) Location in the taxable territory Above services supplied in more than one State/UT (refer illustration) Each of the State/UT Illustration: Mr. C, an architect (New Delhi), enters into a contract with Mr. Z of New York to provide professional services in respect of immovable properties of Mr. Z located in Pune and New York. Since the immovable properties are located in more than one location including a location in the taxable territory , the place of supply for professional services provided in Pune shall be the location in the taxable territory i.e., Pune . Had the service been provided only in Pune and Delhi , the place of supply would be Pune and Delhi valued as per the terms of the contract

32. Admission to and/or Organisation of Events Nature of Service Place of Supply Services provided by way of admission to cultural, sporting, educational, artistic event, etc. Place where the event is held Services provided by way of admission to amusement park or any other place Services ancillary to the above services Above services supplied at more than one location, including a location in the taxable territory (Refer illustration) Location in the taxable territory Above services supplied in more than one State/UT Each of the State/UT Illustration: An event management company registered in New Delhi organizes an art exhibition displaying works of an international painter based in Dubai. The exhibition is organized in 3 countries including New Delhi . Since the service is supplied at more than one location including a location in the taxable territory, the place of supply for event management services in New Delhi shall be the location in the taxable territory i.e., New Delhi

33. Banking and Financial Services, Intermediary Services and Hiring of means of transport Nature of Service Place of Supply Services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders Location of supplier of services *Intermediary Services Services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of 1 month *Intermediary means a broker, an agent or any other person who arranges or facilitates the supply of goods or services or both between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account Illustration: Mr. D, an unregistered person based in New Delhi hires a yacht from a company based in London, UK for 20 days. The place of supply is the location of the supplier of services i.e., London. Had the stay been more than 30 days, the place of supply might be the location of the recipient of the supply (not expressly mentioned under GST laws). Illustration: A travel agent, on behalf of a company registered in New Delhi, books a tour of famous Indian cities for a Dubai resident. The place of supply is the location of the supplier of services i.e., New Delhi

34. Transportation Services Nature of Service Place of Supply Transportation of goods, other than by way of mail or courier Destination of such goods Passenger transportation services Place where the passenger embarks on the conveyance for a continuous journey Services provided on board a conveyance during passenger transportation including services intended to be wholly or substantially consumed while on board First scheduled point of departure of that conveyance for the journey Illustration: A shipping line, Mumbai, Maharashtra transports a shipment of flowers from Mumbai to Paris , for an event management company based in Paris. The place of supply is the location of destination of goods transported i.e., Paris Illustration: Mr. A, a foreign tourist, has booked a ticket for India-Indonesia flight from an airline registered in New Delhi for a journey with a stopover in Thailand. The place of supply provided in the flight from Delhi to Thailand is the place where the passenger embarks on the conveyance for a continuous journey i.e., New Delhi However, the place of supply provided in the flight from Thailand to Indonesia would be Thailand and would not be covered under the ambit of the Indian GST laws.

35. OIDAR Services The place of supply of OIDAR is the location of the recipient of services . However, it is difficult to determine the location of the recipient in case of OIDAR as such recipients normally access the services online and are not required to disclose their location On satisfying any 2 conditions of the following 7 conditions , the service recipient is deemed to be located in the taxable territory i.e., India

36. Illustration

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