Jul 182017
 

Legal provision:

Legal provisions as to determination of place of supply of goods and / or services are provided under section 10 of the The Integrated Goods and Services Tax Act. The legal provision is reproduced as below:

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

  1. 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;
  2. 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;
  3. 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;
  4. where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;
  5. 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.

(2) Where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed.

Analysis:

Part A: Where the supply involves movement of goods:

S. No. Circumstances Place of supply
1 Movement of goods by:·         Whether by the supplier or·         The recipient or·         Any other person The location of the goods at the time at which the movement of goods terminates for delivery to the recipient.
2 Delivery of goods by supplier to recipient or any third person:·         On the direction of third person The principal place of business of such person
3 Goods are assembled or installed at site Place of such installation or assembly
Goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle Location at which such goods are taken on board

The movements of goods would cover stock transfer to branches also. In the case of inter state branch transfer, though the goods are being transferred within the same legal entity, yet these are transferred from one GSTIN to another GSTIN and hence would be deemed to be supply between distinct person as per provisions of section 25(4) of the CGST act.

Examples:

S. No. Circumstances Important point
LOS = Location of supplier
POS = Place of supply
IGST / CGST
1 M/s P Ltd of Delhi ask M/s A Ltd of Delhi to supply goods at its Delhi office. Supply start point (LOS): Delhi
Supply termination point (POS): Delhi
CGST + Delhi SGST
2 M/s P Ltd of Maharashtra ask M/s A Ltd of Delhi to supply goods at its Maharashtra office. Supply start point (LOS): Delhi
Supply termination point (POS): Maharashtra
IGST
3 M/s P Ltd of Maharashtra ask M/s A Ltd of Delhi to supply goods to M/s X Ltd in Gujarat(M/s P Ltd is selling goods directly to M/s X Ltd) For M/s P Ltd (Deemed receiver):Supply start point (LOS): Delhi
Supply termination point (POS): Maharashtra
For X Ltd (Actual Receiver):Supply start point (LOS): MaharashtraSupply termination point (POS): Gujarat
IGST 

IGST

4 M/s P Ltd of Maharashtra ask M/s A Ltd of Delhi to supply goods to M/s K Ltd in Delhi(M/s P Ltd is selling goods directly to M/s K Ltd) For M/s P Ltd (Deemed receiver):Supply start point (LOS): Delhi
Supply termination point (POS): Maharashtra
For X Ltd (Actual Receiver):Supply start point (LOS): MaharashtraSupply termination point (POS): Delhi
IGST 

IGST

5 M/s P Ltd of Maharashtra ask M/s A Ltd of Maharashtra to supply goods to M/s K Ltd in Gujarat(M/s P Ltd is selling goods directly to M/s K Ltd) For M/s P Ltd (Deemed receiver):Supply start point (LOS): Maharashtra
Supply termination point (POS): Maharashtra
For X Ltd (Actual Receiver):Supply start point (LOS): MaharashtraSupply termination point (POS): Gujarat
CGST + Maharashtra SGSTIGST
6 Over the counter sale:Delhi registered buyer comes in Maharashtra and goods and take them back to Delhi Supply start point (LOS): Maharashtra
Supply termination point (POS): Delhi
IGST
7 Mr. A having fixed place of business in Delhi comes to Maharashtra – purchase goods in Maharashtra and sells within Maharashtra to M/s P Ltd Supply start point (LOS): Maharashtra
Supply termination point (POS): Maharashtra
CGST + Maharashtra SGST

 

Part B: Where the supply involves movement of goods:

8 A trader in Maharashtra hires a computer from a company in Gujarat and at the later date decides to buy the computer at the time of supply in Maharashtra. At the time of hire purchase (Actual movement of goods at the time of hire purchase of computer):
Supply start point (LOS): Gujarat
Supply termination point (POS): Maharashtra
At the time of purchase at later stage:
Supply start point (LOS): MaharashtraSupply termination point (POS is deemed POS): Maharashtra
IGST 

 

CGST + Maharashtra SGST