Introduction

In Indian taxation, understanding the place where supplies are made is a matter of high concern. Since GST is a destination based tax, the place (state) where goods or services are supplied is entitled to get a portion of the GST. This entirely depends on the nature of the supply which can either be intra state or inter state. Hence, determining place of supply for every transaction is very important so that the right tax can be levied and be handed over to the right State Government. Let's first understand the concept of Nature of Supply and then jump into Place of Supply.

Nature of Supply

Supply can be of 2 types as follows:

1. Inter State Supply

As per Section 7 of the IGST Act 2017, the following scenarios are considered as inter state supplies:

• Supply of goods and services from one state or Union Territory to another state or Union Territory.

• Import and export of goods and services.

• Supply of goods to or by Special Economic Zone.

• Supplies to international tourists.

• Supplies in the taxable territory which is not intra-state supply.

Eg 1. Govardhan Stores, registered in Mumbai, Maharashtra supplied goods to Mr. Khandelwal from Uttar Pradesh. This will be treated as an inter state supply and goods are sold from one state to another. Here, the state of Uttar Pradesh is the consumer state and shall be entitled to receive a portion of GST. Govardhan Stores will issue tax invoice consisting IGST.

Eg 2. Vishal Textiles registered in Pune, Maharashtra sold textile products to Alphatex, a unit located in the Mumbai Special Economic Zone. This supply will be treated as inter state supply of goods and any supply made to a unit in the Special Economic Zone is considered as a deemed export.

2. Intra State Supply

As per Section 8 of the IGST Act 2017, the following scenarios are considered as intra state supplies:

• Supply of goods or services within a same State / Union Territory.

• Supply of goods or services to / by SEZ, even if the SEZ in located in the same state is NOT intra-state supplies.

• Goods/services supplied to an international tourist is NOT intra-state supplies.

Eg. Kamran Electronics, registered in Mangalore, Karnataka sold goods to Ms. Kamala in Bangalore, Karnataka. This will be treated as an intra state supply as goods are sold within the state of Karnataka. Tax Invoice will be issued by Kamran Electronics consisting CGST and SGST. 

Supply of Services within India covered under Section 12 of the IGST Act, 2017.

General Rule for services except specified services as per Section 12 (2) of the IGST Act, 2017.

a. If the recipient is a registered person, then the POS will be the location of such registered place of business of the recipient .

b. If recipient is not a registered person, then POS will be the location of the recipient where address on record exist.

c. If address of the recipient is not available, then POS will be the location of supplier of services.

Read the below table and understand POS - Place of Supply with examples. 

Place of Supply for Import and Export of Goods as per Section 11

For Imports:

The place of supply shall be the location of the recipient.

Precisely, for cases where goods are imported to India, the place of supply shall be the location of the importer.

Examples:

1. Jisha Associates, registered in Ujjain, MP imported raw materials from a mega supplier in Egypt. Here, place of supply will be the location of the importer i.e. location of Jisha Associates which is Ujjain, MP.

2. Dibresh imported goods from 

For Exports:

The place of supply shall be the location outside India.

Precisely, for cases where goods are exported from India to another country, the place of supply shall be that other country.

Place of Supply for Import and Export of Services as per Section 13

This section deals with cases where the recipient of the services is located outside India or when the supplier of services is located outside India. 

The General Rule [Sec 13(2)]

• Place of supply of services is the location of the person receiving such services.

• But if the location of the service recipient is not available, then the Place of supply will be the location of the supplier of services.