Place of Supply under GST – Complete Guide to Inter-State and Intra- State Supply

Place of Supply under GST 

Understanding the Place of Supply (POS) is one of the most important aspects of GST because it determines whether a transaction will be treated as an Inter-State Supply or an Intra-State Supply. The nature of supply directly affects the type of tax to be charged—IGST or CGST and SGST/UTGST.

In this article, we will explore the provisions relating to Place of Supply under the IGST Act, 2017 in a simple and exam-oriented manner.

Understanding the Nature of Supply

Under GST, every supply involves two important locations:

1. Location of Supplier (Origin)
2. Place of Supply (Destination or Consumption Point)

The nature of supply is determined by comparing these two locations.

Inter-State Supply

A supply is treated as an Inter-State Supply when the location of the supplier and the place of supply are situated in:

• Two different States;
• Two different Union Territories; or
• A State and a Union Territory.

In such cases, Integrated GST (IGST) is levied.

Intra-State Supply

A supply is treated as an Intra-State Supply when both the location of the supplier and the place of supply are in the same State or the same Union Territory.

In such cases, CGST and SGST/UTGST are charged.

Special Cases Always Treated as Inter-State Supply

Certain transactions are treated as Inter-State supplies irrespective of the location of the supplier and recipient.

Supply to or by SEZ

Any supply made to or by:

• A Special Economic Zone (SEZ) Developer; or
• An SEZ Unit

is always considered an Inter-State Supply.

Import of Goods and Services

• Import of Goods is treated as an Inter-State Supply.
• Import of Services is also treated as an Inter-State Supply.

Export of Goods and Services

Where the supplier is located in India and the place of supply is outside India, the transaction is treated as an Inter-State Supply.

Supplies to Tourists

Supply of goods to a tourist who claims a refund at an international airport is also treated as an Inter-State Supply.

Supplies in Territorial Waters

Where the location of the supplier or the place of supply is in territorial waters, such location shall be deemed to be in the nearest coastal State or Union Territory for GST purposes.

Place of Supply of Goods

The place of supply provisions for goods is primarily covered under Sections 10 and 11 of the IGST Act.

1. Movement of Goods Involved

When the supply involves movement of goods, the place of supply is the location where the goods are delivered to the recipient. Example: Goods are dispatched from Delhi and delivered in Mumbai. The place of supply will be Mumbai.

2. Bill-to Ship-to Transactions

In a Bill-to Ship-to model, the place of supply is the location of the person who places the order (Bill-to party), even though the goods may be delivered elsewhere.

3. No Movement of Goods

Where no movement of goods is involved, the place of supply is the location of the goods at the time of delivery. Example: Sale and lease-back transactions.

4. Supply to Unregistered Persons (B2C)

For supplies made to an unregistered recipient:

• If the recipient's address is available on the invoice, the place of supply is that address.
• If the address is not available, the supplier's location becomes the place of supply.

5. Assembly or Installation at Site

Where goods are assembled or installed at a specific location, the place of supply is the place where such assembly or installation occurs.

6. Goods Supplied on Board a Conveyance

For goods supplied on board an aircraft, train, or vessel, the place of supply is the location where the goods were taken on board.

Import and Export of Goods

• Import of Goods: The place of supply is the location of the importer.
• Export of Goods: The place of supply is considered to be outside India.

Place of Supply of Services

• Section 12 applies when both the supplier and recipient are located in India.

General Rule (Residuary Provision)

• Business-to-Business (B2B) - The place of supply is the location of the recipient.
• Business-to-Consumer (B2C) - If the recipient's address is available, the place of supply is the recipient's location. Otherwise, it is the supplier's location.

Immovable Property Related Services

This category includes:

• Construction services
• Architect services
• Interior decoration
• Renting of property
• Hotel accommodation
• Houseboat and cruise accommodation
• The place of supply is the location of the immovable property.

If the property is situated outside India, the place of supply becomes the recipient's location. Where the property is located across multiple States, the value must be allocated proportionately.

Performance-Based Services

The place of supply for the following services is the actual place where the service is performed:

• Restaurant services
• Catering services
• Personal grooming
• Beauty treatment
• Cosmetic and plastic surgery
• Fitness services
• Healthcare services

Training and Performance Appraisal Services

1. B2B Transactions = Place of supply = Location of recipient.
2. B2C Transactions = Place of supply = Actual place where the training is conducted.

Event-Related Services

Admission to Events (Front-End Services)

Examples include tickets for:

• Concerts
• Exhibitions
• Conferences
• Sporting events

The place of supply is the location where the event is held.

Event Management and Related Services (Back-End Services)

1. B2B = Place of supply = Recipient's location.
2. B2C = Place of supply = Event location.

If the event is conducted outside India, the place of supply becomes the recipient's location.

Transportation Services

Transportation of Goods

• B2B = Place of supply = Recipient's location.
• B2C = Place of supply = Place where goods are handed over for transportation.

Passenger Transportation Services

• B2B = Place of supply = Recipient's location.
• B2C = Place of supply = Place where the passenger boards the conveyance.

On-Board Services

Services provided on board a train, vessel, or aircraft are taxable at the place of the first scheduled point of departure of the conveyance.

Telecommunication Services

The place of supply depends on the nature of the connection:

• Fixed line or broadband: Location of the fixed device.
• Post-paid mobile connection: Billing address of the subscriber.
• Prepaid connection through physical recharge: Place where recharge is sold.
• Online recharge of prepaid connection: Recipient's location.

Banking, Financial and Stock Broker Services

The place of supply is:

• Recipient's location, if available in the supplier's records.
• Supplier's location, if recipient information is unavailable.

Insurance Services

For both B2B and B2C transactions, the place of supply is generally the location of the recipient.

Advertisement Services Provided to Government

When advertisement services are supplied to the Central Government, State Government, statutory bodies, or local authorities and are disseminated across multiple States, the value is allocated proportionately based on the reach of the advertisement.

Examples include allocation based on:

• Newspaper readership
• Number of pamphlets distributed
• Number of hoardings installed
• Railway stations covered
• Television viewers
• Radio listeners
• Internet subscribers
• Cinema screens

For internet advertisements, the value attributable to each State or Union Territory is determined based on the number of internet subscribers in that region.

Conclusion

The concept of Place of Supply forms the backbone of GST taxation because it determines whether a transaction is Inter-State or Intra-State and consequently whether IGST or CGST and SGST/UTGST will apply. A clear understanding of Sections 7, 8, 9, 10, 11, and 12 of the IGST Act is essential for students, professionals, and businesses to ensure correct tax compliance and avoid disputes.