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Section 10 of IGST Act

Place of Supply of Goods in case of Bill To Ship To transactions

Deeming Fiction

Section 10 - Place of supply of goods other than supply of goods imported into, or exported from India

10.

(1) The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under,––

...

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

...

 

How to determine Place of Supply of Goods in case of Bill to Ship to transactions?

Clause (b) of sub-section (1) of section 10 of IGST Act is the governing rule for deciding place of supply in case of bill to ship to transactions. This clause creates a deeming fiction and focus on the person from where directions for delivery is coming rather than focusing on place of actual delivery. As per this clause, place of actual delivery is to be ignored while deciding nature of transaction and GST is charged as per the location of person giving directions for delivery. 

Below are some examples for better understanding of above provision. 

Ex 1) 

Supplier of Delhi (A) receives an order from Buyer of Maharashtra (B) but buyer directs the supplier to directly deliver the goods to one of its customer located in Delhi (C).

(Bill to B in Maharashtra & Ship to C in Delhi)

Location of Supplier – Delhi

Place of Supply – Maharashtra (Although goods have been actually delivered to C in Delhi, but supplier did the same on the direction of B, therefore it shall be deemed that B has received the goods and place of supply shall be the principal place of business of B i.e. Maharashtra)

Nature of Supply – Inter State Supply

Type of GST applicable - IGST

 

Ex 2)

Supplier of Delhi (A) receives an order from Buyer of Delhi (B) and buyer directs the supplier to deliver the goods to one of its customer located in Maharashtra (C).

(Bill to B in Delhi & Ship to C in Maharashtra)

Location of Supplier – Delhi

Place of Supply – Delhi (Although goods have been delivered to C in Maharashtra,  but supplier did the same on the direction of B, therefore it shall be deemed that B has received the goods and place of supply shall be the principal place of business of B i.e. Delhi)

Nature of Supply – Intra State Supply

Type of GST applicable – CGST & SGST
 

Whether clause (b) applies to branches also?

If, in the above examples, C is the branch of B instead of its customer, then also clause (b) would come into play. Under GST regime all branches located in different states are treated as distinct persons and are under compulsion to get separate GST Number. Therefore clause (b) would apply in case of branches also. 

Now ideally B would raise an invoice on its branch C to transfer the credit of GST into the hands of C. And B would also charge IGST on the same.

(Ex-1)

(Ex-2)

 


★ Section 10 of IGST Act ★


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Author:

TaxReply


Aug 21, 2020

Comments


Bill to ship case is applicable only on material . Shall we use same or manpower supply service.
By: Ashish Bajoai | Dt: Aug 21, 2020
Replied to Ashish Bajoai
Yes.
By: Sumit Chakraborty | Dt: Aug 22, 2020
Nice article . Keep it up👍
By: Jitendra Kumar Dagar | Dt: Aug 21, 2020
what will be treatment for E-way Bill in this Case (Bill to Ship to) ?
By: Kamlesh Kumar | Dt: Aug 21, 2020
Very good explained. also explain treatment of eway bill.
By: Satish Chand Garg | Dt: Aug 21, 2020


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