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How to determine place of supply of goods in GST?

Clause wise analysis of section 10 for determining place of supply in different situations.


 

Place of Supply of Goods - Section 10 of IGST Act
Clauses of Section 10(1) Place of supply shall be
Clause (a) - Where the supply involves movement of goods the location of goods, at the time when movement of goods terminates
Clause (b) - Where goods are delivered to any person on the direction of a third person (whether acting as agent or otherwise) the Principal place of business of said third person
Clause (c) - Where the supply does not involve movement of goods the Location of goods at the time of delivery
Clause (d) - Where goods are assembled or installed at site the place of such installation or assembly
Clause (e) -  Where goods are supplied on board (a vehicle, vessel, aircraft, train, motor vehicle) the location at which such goods are taken on board

 

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,––

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

(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;

(c) where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient;

(d) where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;

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

 

Clause (a)

Where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.

Ex 1)

Supplier of Delhi receives an order from Buyer of Maharashtra and the goods are to be dispatched by supplier to the buyer in Maharashtra office.

Location of Supplier – Delhi

Place of Supply – Maharashtra (Since delivery terminates in Maharashtra)

Nature of Supply – Inter State Supply

Type of GST applicable - IGST

 

Ex 2)

Supplier of Delhi receives an order from Buyer of Maharashtra and the buyer decides to take delivery ex-factory of supplier i.e. from the factory of supplier in Delhi.  

Location of Supplier – Delhi

Place of Supply – Delhi (Since delivery for supplier terminates in Delhi)

Nature of Supply – Intra State Supply  (This view has also been confirmed by CBEC through its FAQ Qus -64. Click here to view CBEC FAQ)

Type of GST applicable – CGST & SGST

Here arises the issue regarding the input credit of tax paid by buyer in Delhi. Becuase local GST paid in one state cannot be utilized for discharging the output GST of another state. 

Please note that although the rate of "IGST" and "CGST + SGST" are same but charging wrong tax would create trouble for supplier. Because if supplier charges IGST on a transaction which was otherwise liable to CGST + SGST, then on being caught by tax authorities, he would have to pay CGST + SGST seperately and go for refund of IGST. So supplier has to decide the nature of supply carefully.

Considering the above issues in this B2B transaction, people should avoid these situations to happen.

 

Ex 3)

Supplier of Delhi receives an order from Buyer of Delhi and the goods are to be dispatched by supplier to the buyer in Delhi.

Location of Supplier – Delhi

Place of Supply – Delhi (Since delivery terminates in Delhi)

Nature of Supply – Intra State Supply

Type of GST applicable – CGST & SGST

 

Clause (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

We have already discussed clause (b) in detail in other article. Click here to read the same.

 

Clause (c)

Where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient

Ex 4) 

A Buyer of Delhi opens a new branch in Mumbai and they purchased few goods / assets pre-installed and lying at that new premises from supplier of Mumbai.

Location of Supplier – Maharashtra (Mumbai)

Place of Supply – Maharashtra (Since this supply does not require any movement of goods therefore place of supply shall be the location of such goods at the time of delivery i.e. Maharashtra)

Nature of Supply – Intra State Supply

Type of GST applicable – CGST & SGST

 

Clause (d)

where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly

Ex 5) 

A Buyer of Delhi opens a new branch in Mumbai and they purchased a lift to be installed and fitted at Mumbai premises from a supplier of Mumbai.

Location of Supplier – Maharashtra (Mumbai)

Place of Supply – Maharashtra (Since the goods are assembled & installed at Mumbai location therefore place of supply shall be the location of such installation i.e. Maharashtra)

Nature of Supply – Intra State Supply

Type of GST applicable – CGST & SGST

 

Ex 6) 

A Buyer of Delhi opens a new branch in Mumbai and they purchased a lift to be installed and fitted at Mumbai premises from a supplier of Delhi.

Location of Supplier – Delhi

Place of Supply – Maharashtra (Since the goods are assembled & installed at Mumbai location therefore place of supply shall be the location of such installation i.e. Maharashtra)

Nature of Supply – Inter State Supply

Type of GST applicable – IGST

 

Clause (e)

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

Ex 7) 

A train starts its journey from Delhi & ends in Maharashtra and in-between it passes through many states. The food served on board the train shall be considered as supply of goods.

Place of supply shall be considered as Delhi, being the first location of the goods.

 

Click here to read case laws on Section 10 of IGST Act


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Author:

TaxReply


Aug 27, 2020

Comments


If a contractor from Delhi purchase from my shop at Chennai for his work at Chennai . How can I generate eway bill with cgst sgst invoice with Delhi GST no. When we upload GSTR-1 it shows mis match also.
By: Mansor Ahmed
Sep 12, 2020


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