Whenever a person supplies goods via movement or delivery, the place of supply is the establishment or residence from where the recipient receives the delivered goods from a particular location. However, the determination of the place of supply has special provisions and exceptions based on diverse situations. These include goods delivered on a conveyance board and goods installed or assembled at the recipient’s location.
Likewise, the place of supply for services will be different for an individual recipient or a business entity. The supply place also depends on the type of offered services. Such services are telecommunications, transportation, accommodation, and professional services. The inter-state place of supply rules may depend on the recipient’s location and the use of a particular service.
What is An Intra-State Supply?
General Principles to Determine the Place of Supply
When Goods are in Movement
The updated GST law has specified a few general principles for inter-state supply places when the goods remain in movement. Such guidelines ensure consistency and clarity in identifying the tax jurisdictions related to such transactions.
Table to Determine the Place of Supply based on Scenarios
| Scenarios | Place of Supply/Location
|
| Supplier Delivers the Goods | Delivery Location itself
|
| Goods delivered to Third Parties | Third-parties goods delivery location
|
| Goods Delivery on a Conveyance Board | Commencement Place and/or Destination of the Goods
|
| Bill-to-Ship-to Model | Place of Supply Location as per the Recipient’s Instructions
|
Now, we will discuss each of the scenarios in detail-
When Supplier Delivers the Goods
When a supplier delivers the goods to a recipient, the supply place is the delivery location only. For instance, if a manufacturer is in Pune and transports goods to a buyer in Mumbai, the supply place will be Gujarat.
Goods Delivered on Behalf of a Recipient to a Third Party
Depending on specific scenarios, the suppliers may deliver their goods to third parties based on the recipients’ instructions. In such situations, the supply place becomes the location of the goods delivered to the third party. However, the recipient should instruct the third party before transporting the goods.
Goods Delivered on a Conveyance Board
When you deliver the goods on a conveyance board, like an aircraft, a train, or a vessel, the supply place may vary on the following factors-
- The place where the journey commences
- The destination of the moved goods
Excluding this, the place of supply criteria also depends on a few additional agreed-upon delivery points.
Delivery of Goods Done via Bill-to-Ship-to Model
Bill-to-Ship-to Model refers to the scenario when the shipping recipient and the bill recipient differ. In this situation, the latest GST intra-state transaction guidelines determine the place of supply according to the delivery location as per the instructions given by the recipient. The involved parties should prepare and maintain the necessary documentation appropriately. Simultaneously, the movement of goods supports their corresponding delivery challans and invoices.
Principles to Find the Supply Place for Services
According to the general principles for intra-state supply for services, the supply place will be the service recipient’s location. However, the recipient must be a registered individual. On the other hand, when an individual delivers services to any unregistered person, the supply place will be either of the following-
- The location of the recipient if his address is available on the document
- Alternatively, the supply place will be the service provider’s location
The supply place further depends on diverse cases for both the recipients’ and the suppliers’ locations in the case of services. Accordingly-
Cases and Locations for Service Recipients
| Cases | Supply Place
|
| Supply at a registered business establishment | The same business establishment
|
| Supply at a fixed establishment | The same fixed establishment
|
| Supply at multiple establishments | Directly related establishment
|
| Supply received in the absence of an establishment
|
Recipient’s residence or its recommended place |
Case 1-Supply Received at a Registered Business Place
When the involved parties receive a supply at a registered business place, the respective office becomes the place of supply.
Case 2-Supply Received at a Fixed Establishment
A person receives a supply at a fixed establishment rather than in his registered business place. In such situations, the fixed establishment becomes the supply place.
Case 3-Supply Received at Multiple Establishments
In this case, the recipient gets the supplied goods at multiple establishments. These include the registered business place and other fixed establishments. Hence, the intra-state place of supply rules says that the location of the most directly related establishment with the supply receipt becomes the supply place.
Case 4-Supply Received when There is No Establishment
If there is no fixed establishment or registered business place to receive the supplied goods, the place of supply becomes the residence of the recipient or his recommended location.
Cases and Locations for Service Providers
| Cases | Supply Place
|
| Supply done at a registered business establishment | The same business establishment
|
| Supply done at a fixed establishment | The same fixed establishment
|
| Supply done at multiple establishments | Directly related establishment
|
| Supply is done when there is no establishment
|
Recipient’s residence or its recommended place |
Case 1-Supply Made from a Registered Business Place
If the supply is from any registered business place, the same place/establishment becomes the supply place.
Case 2-Supply Made from a Fixed Establishment
If the supply occurs from a fixed establishment, the corresponding establishment constitutes the supply place. Here, the chosen fixed establishment is different from the supplier’s registered business establishment.
Case 3-Supply Made from Multiple Establishments
When the supply is done from different establishments, including the registered and/or the fixed establishment, the most directly related establishment becomes the place of supply.
Case 4-Supply Made in the Absence of any Establishment
If an establishment remains absent from the picture, the supplier’s chosen location or his residence becomes the place of supply in the transaction.
Conclusion
Overall, place of supply is a crucial aspect associated with the intra-state transaction of goods and services. It also determines the applicable levies in any transaction to constitute an utmost significant factor in the framework of GST. However, the supply place varies depending on the supply of goods, services, and the locations of suppliers/recipients. Therefore, whether you are at the supplier or the recipient side, you must make sure to stay aware of the latest GST guidelines on the place of supply to accomplish your project.
Frequently Asked Questions
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Why place of supply for goods and services is essential under GST?
The basic GST principle of including the place of supply factor is that it effectively taxes the supply consumption at the destination or the consumption point.
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How does the place of supply determine the type of GST applicable?
The place of supply determines the type of transaction, which may be interstate or intrastate. It determines whether a supply applies to the combination of CGST and SGST or IGST. Here, IGST is applicable for interstate while the combination of CGST and SGST is for intrastate supplies.
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Why do the provisions related to the place of supply differ for goods and services?
Goods are tangible and they do not have problems finding the consumption place. On the other hand, services are intangible. Hence, their determination to supply places poses many issues.
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What are the assumptions in a transaction used primarily to determine the supply place?
Determination of a supply place involves many elements to use as assumptions or proxies. These include the service provider and service receiver’s locations, the place of activity or performance, the consumption place, and the person/place receiving the benefit.
