PLACE OF SUPPLY OF GOODS – SEC. 10 AND 11 OF THE IGST ACT, 2017

PLACE OF SUPPLY OF GOODS – SEC. 10 AND 11 OF THE IGST ACT, 2017

The Goods and Service Tax is a destination based tax and levied on the single point of consumption. It makes it mandatory to ascertain the place where the supply of Goods or Services is made. On the basis of place of supply, a supplier decides he has to pay CGST/SGST or IGST.

The provisions related to place of supply are explained under following sections of IGST Act, 2017 :

In this article we shall discuss Sec. 10 and 11 which are related to place of supply of Goods.

In this section we shall understand the place of supply when goods are sold and purchased within Indian territory.

Sec.10(1)(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.

Points-to-note:

1. There must be a movement of Goods – Unless there is a movement of goods, this section does not apply.
2. The movement can be done :

1. By supplier – A(seller) sends goods to B(buyer) by transport from Jaipur to Mumbai
2. By Recipient – B(Buyer) comes to Jaipur and buys goods from A(seller). B sends the goods from Jaipur to Mumbai by transport.
3. A third person – B(buyer) orders goods and asks A(seller) to deliver them to C (third person) so that C sends them form Jaipur to Mumbai.

In such a case place of supply shall be – Mumbai as the movement of Goods ends there only.

Sec.10(1)(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.

Points-to-note:

1. In this case the goods are delivered to a person(recipient) other than actual buyer;
2. This case can be called “Bill to Ship to” sale;
3. That person(recipient) may be an agent or act otherwise, for the actual buyer;
4. The title in such goods may or may not be transferred to the actual buyer by the supplier;
5. All this happens with the instruction of actual buyer. Such instructions are given before or during the movement of goods.

In such case the place of supply shall be the place of actual buyer and not the place of recipient.

Let us take an example:

Mr. A instructs an agent Mr. C (New Delhi) to take delivery of goods for and on his behalf.

In this case, although the delivery is taken in New Delhi only but the place of supply shall be Haryana (which is place of actual buyer).

Sec.10(1)(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.

Points-to-note:

1. In this case there is no movement of Goods either by the supplier or recipient which means goods are either immovable or in such a way that they can not be or need not be moved from one place to other.

In such a case the place of supply shall be the place where the goods are kept and recipient comes and take the delivery or charge of the goods.

Let us take an example:

A ltd. Based in Delhi buys an office building in Noida from a builder. In this case there is no movement of goods. Sale of building is not chargeable to tax but assume the office is fully furnished. In that case also no movement of goods is there. Recipient comes and takes the delivery of the goods where they are based. In that case the place of supply shall be Delhi.

Sec.10(1)(d): Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.

Points-to-note:

1. In this case the goods are assembled or installed on a particular site or location
2. The place of supply shall be where such goods are assembled or installed.

In such a case the place of supply shall be the place where the goods are assembled or installed.

Let us take an example:

A Ltd. (Mumbai) places an order for a machinery to B Ltd. (Noida). The machine needs to be assembled and installed in the factory of A Ltd. Located in Ranchi, Jharkhand.

In this case the place of supply shall be Ranchi, Jharkhand.

Sec.10(1)(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.   

Points-to-note:

1. The goods are supplied on a conveyance boarded, which may be vehicle, train, aircraft or vessel
2. Goods may be supplied by the carrier of the conveyance, or a vendor, a passenger or any other person

In such case the place of supply shall be the location at which such goods are taken on board.

Let us take an example:

Mr. A boards a train in Delhi. He sells goods at Jaipur – Place of supply shall be Delhi as the goods are taken on board in Delhi.

Mr. A boards a train in Jaipur. He sells goods at Kota – Place of supply shall be Jaipur as the goods are taken on board in Jaipur.

The place of Supply of goods –

When goods are imported into India, it is deemed as Inter-State supply and accordingly IGST is charged in addition to the customs duties.

Place of Supply in such cases shall be the location of Importer.

Place of supply shall be outside India.