Place of Supply – Advanced Tax Laws and Practice Important Questions
Question 1.
Sakshitha Dancers, owned by Mrs. Lasliya, a famous Bharata Natyam dancer, wishes to organise a ‘Lasliya Dance Concert’ in Chandigarh (Haryana). Sakshitha Dancers is registered in Jaipur, Rajasthan. It enters into a contract with an event management company, Hasan Arts (P.) Ltd. (registered in Delhi) for organising the said dance concert at an agreed consideration of ₹10,00,000.
Hasan Arts (P) Ltd. books the lawns of Hotel Sky Dine, Chandigarh (registered in Haryana) for holding the dance concert, for a lump sum consideration of ₹6,00,000. Sakshitha Dancers fixes the entry fee to the dance event at ₹6,000; 600 tickets for ‘Lasliya Dance Concert’ are sold. From the aforesaid details, identify the different supplies which are involved and determine the CGST & SGST or IGST liability, as the case may be, in respect of all the supplies involved in the outlined situation. Rate of GST may be taken as under:
SGST: 9%
CGST: 9%
IGST: 18%
Answer:
Identification of supplies involved and GST payable:
In the given problem, three supplies are involved:
(i) Services provided by Sakshitha Dancers to audiences by way of ad-mission to dance event.
(ii) Services provided by Hasan Arts (P.) Ltd. to Sakshitha Dancers by way of organising the dance event.
(iii) Services provided by Hotel Sky Dine to Hasan Arts (P.) Ltd. by way of accommodation in the hotel lawns for organising the dance concert. The CGST and SGST or IGST liability in respect of each of the above supplies is determined as under:
(i) Services provided by Sakshitha Dancers to audiences by way of admission to dance event
As per the provisions of section 12(6) of the IGST Act, 2017, the place of supply of services provided by way of admission to, inter alia, a cultural event shall be the place where the event is actually held. Therefore, the place of supply of services supplied by Sakshitha Dancers to audiences by way of admission to the music concert is the location of the Hotel Sky Dine, i.e. Chandigarh, Haryana.
Since the location of the supplier (Jaipur, Rajasthan) and the place of supply (Chandigarh, Haryana) are in different States, IGST will be leviable.
Therefore, IGST leviable will be computed as follows:
Consideration for supply 600 tickets @ ₹6,000 per ticket = ₹36,00,000 IGST @ 18% on value of supply = ₹36,00,000 × 18% = ₹6,48,000.
(ii) Services provided by Hasan Arts (P) Ltd. to Sakshitha Dancers by way of organising the dance event.
Section 12(7)(a)(i) of IGST Act, 2017 stipulates that the place of supply of services provided by way of organization of, inter alia, a cultural event to a registered person is the location of such person.
Therefore, the place of supply of services supplied by Hasan Arts (P.) Ltd. to Sakshitha Dancers (Jaipur, Rajasthan) by way of organising the music concert is the location of the recipient, ie. Jaipur (Rajasthan). Since the location of the supplier (Delhi) and the place of supply (Jai¬pur, Rajasthan) are in different States, IGST will be leviable.
Consideration for supply = ₹10,00,000.
IGST @ 18% on value of supply = ₹10,00,000 × 18% = ₹1,80,000
(iii) Services provided by Hotel Sky Dine to Hasan Arts (P.) Ltd. by way of accommodation in the Hotel lawns for organising the dance concert
As per the provisions of section 12(3)(c) of the IGST Act, 2017, the place of supply of services, by way of accommodation in any immovable property for organizing, inter alia, any cultural function shall be the place where such immovable property is located. Therefore, the place of supply of services supplied by Hotel Sky Dine (Chandigarh, Haryana) to Hasan Arts (R) Ltd. by way of accommodation is the place where immovable property ie. Hotel Sky Dine is located.
Since the location of the supplier (Chandigarh, Haryana) and the place of supply (Chandigarh, Haryana) are in the same State, CGST and SGST will be leviable.
Therefore, CGST and SGST leviable will be computed as follows: Consideration for supply = ₹6,00,000 CGST @ 9% on value of supply = ₹6,00,000 × 9% = ₹54,000 SGST @ 9% on value of supply = ₹6,00,000 × 9% = ₹54,000
Author’s note:
Only this one-time ICSI asked a single question of having weightage of 15 marks. Otherwise, maximum marks allotted to each question is 5.
Question 2.
Mrs. Bharghavi is a registered supplier under GST law in Coimbatore, Tamil Nadu, running a factory for manufacture of electric motors. For giving training to her employees, she has utilized the services of Vibrant Trainers Pvt. Ltd., a registered supplier in Trissur, Kerala. The training programs are to be held at Trissur.
(i) What will be the place of supply of services provided by Vibrant Trainers Pvt. Ltd. to Mrs. Bharghavi?
(ii) Will your answer be different, if Mrs. Bharghavi is not a registered supplier?
(iii) In the situation given in the problem, if the training is to be provided at Singapore, what will be the place of supply?
Answer:
(i) As per section 12(5) of IGST Act, 2017, when service in relation to training is provided to a registered person, place of supply is the location of recipient. Therefore, if Mrs. Bharghavi is a registered person, the place of supply will be the location of recipient, i.e., Coimbatore, Tamil Nadu.
(ii) As per section 12(5) of IGST Act, 2017, when service in relation to training is provided to an unregistered person, the place of supply is the location where the services are actually performed. Therefore, in this case, place of supply will be Trissur, Kerala.
(iii) When the training takes place outside India (Singapore), the place of supply will be the location of recipient i.e. Coimbatore, Tamil Nadu as Mrs. Bharghavi ie. recipient of supply is registered under GST.
Question 3.
Determine the place of supply according to the provisions of Integrated Goods and Services Tax Act, 2017 in the following cases:
(i) K of Kerala places an order to H of Gurgaon (Haryana) to supply motor parts and instructs him to deliver the spare parts to U of Kanpur (U.P.) directly to save transportation cost.
(ii) P Ltd. registered in Punjab sold its pre-installed transformer tower of electricity located at Himachal Pradesh to Bharat Ltd. registered in Delhi.
(iii) M from Mumbai enters into contract with the Indian Railways controlling office situated in U.P. for sale of food items in the trains from Mumbai to Delhi.
(iv) D of Delhi has a savings bank account with HDFC Bank in Delhi. When he was in Mumbai for official tour, he gets a DD (Demand Draft) from HDFC Bank in Mumbai.
(v) K of Kerala avails architect services for his property located in Chennai (Tamil Nadu) from an architect H of Hyderabad in Telangana State.
Answer:
(i) Goods are delivered to U (Kanpur, U.P.) the recipient of goods on the direction of K of Kerala. As per section 10(1)(b) of IGST Act, 2017, where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person 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, therefore in the given case, place of supply shall be the location of principal place of K ie. Kerala.
(ii) As per section 10(1)(c) of IGST Act, 2017, where supply does not involve movement of goods, place of supply shall be the location of goods at the time of delivery to the recipient. In the given case, the location of pre-installed tower is in Himachal Pradesh, therefore, place of supply is 3 Himachal Pradesh.
(iii) As per section 10(1)(e) of IGST Act, 2017, where the goods are supplied 5 on board a conveyance, the place of supply shall be the location at which such goods are taken on board. In the given case, M from Mumbai supplying food items in the train from Mumbai to Delhi, assuming that food items are taken on board at Mumbai, therefore, place of supply shall be Mumbai.
(iv) As per section 12(12) of IGST Act, 2017, place of supply of banking services shall be location of recipient of services on the records of supplier of services. However, if location of recipient of service is not on the records of supplier, the place of supply shall be location of supplier of services. In given case, assuming that D has Bank Account with HDFC Bank and on records of HDFC Bank, address of D is of Delhi, place of supply shall be Delhi.
(v) As per section 12(3) of IGST Act, 2017, place of supply of services of architects in relation to immovable property, shall be the location where immovable property is located. Therefore, in the given case place of supply shall be Chennai (Tamil Nadu).
Question 4.
Mr. Yogesh is working in Infosys Company having office in Bengaluru. Infosys Company is registered under GST. Mr. Yogesh purchased the ticket from Hyderabad for transportation as passenger by Air from Hyderabad to Chennai. Mr. Yogesh discloses the name of the organization and its registration number and the place where the organization is registered. Supplier of service is located at Hyderabad.
Find the following:
(i) Place of supply of service and GST liability.
(ii) Whether your answer is different if Mr. Yogesh has not disclosed the name of the organization and its registration number?
Answer:
(i) Place of Supply shall be Bengaluru (i.e. location of recipient of service) in terms of section 12(9) of IGST Act, 2017 as the passenger transportation service is supplied to a registered person. Further, IGST is liable to be paid by Air Travel Operator as location of supplier (Hyderabad, Telangana) and place of supply (Bengaluru, Karnataka) is in different states.
(ii) Place of Supply shall be Hyderabad (i.e. Place where the passenger embarks on the continuous journey) in terms of section 12(9) of IGST Act, 2017 as the supply of passenger transportation service is to a person other than registered person.
Further, CGST & SGST is liable to be paid by Air Travel Operator as location of supplier and place of supply is in same state i.e. Telangana.
Question 5.
Mr. Mahendra Goyal, an interior decorator provides professional services to Mr. Harish Jain in relation to two of his immovable properties. Determine the place of supply in the transactions below as per provisions of GST law in the following independent situations:
| CASE | LOCATION OF MR.MAHENDRA COYAL | LOCATION OF MR.HARISH JAIN | PROPERTIES SITUATED AT |
| I | Delhi | Mumbai | New York (USA) |
| II | Delhi | New York | Paris (France) |
Answer:
Case I:
As per section 12(3) of IGST Act, 2017, where both the service provider and service recipient are located in India, the place of supply of services directly in relation to an immovable property, including services provided by interior decorators is the location of immovable property.
However, if the immovable property is located outside India, the place of supply is the location of recipient. Since in the given case, both the service provider (Mr. Mahindra Goyal) and the service recipient (Mr. Harish Jain) are located in India and the immovable property is located outside India (New York), the place of supply will be location of recipient le. Mumbai.
Case II:
As per section 13(4) of IGST Act, 2017, where either the service provider or recipient of service is located outside India, the place of supply of services directly in relation to an immovable property including services of interior decorators is the location of immovable property.
Since, in given case, service recipient (Mr. Harish Jain) is located outside India (New York), the place of supply will be location of immovable property ie. Paris (France).
Place Of Supply Notes
- “Location of supplier” and “PLACE OF SUPPLY” determine the nature of the transaction i.e. whether the supply is “Intrastate” or “Inter-state” 1 and accordingly whether “CGST + SGST/UTGST” or “IGST” is 5 chargeable.
- Sections 10, 11, 12 & 13 of the IGST Act determine the Place of Supply. Section 10: Place of supply of goods other than supply of goods imported into, or exported from India.
| Case | Place of supply |
| (1)(a) Supply involves the movement of goods. | Location of goods at the time at which movement of goods terminates for delivery to the recipient. |
| (1)(b) Goods are delivered by the supplier to a recipient on the direction of a third person. | Principal place of business of such third person. |
| (1 )(c) Supply does not involve the movement of goods. | Location of such goods at the time of delivery to the recipient. |
| (1 )(d) Goods are assembled or installed at site. | Place of such installation or assembly. |
| (1)(e) Goods are supplied on board a conveyance. | Location at which such goods are taken on board. |
| (2) Supply of goods cannot be determined. | Determined in such manner as may be prescribed. |
Section 11: Place of supply of goods imported into, or exported from India.
| Case | Place of supply |
| (a) Goods imported into India | Location of the importer. |
| (b) Goods exported from India | Location outside India |
Section 12: Place of supply of services where the location of supplier and recipient is in India.
| Case | Place of supply |
| (2) Other than cases specified in (3) to (14) – GENERAL CLAUSE | (a) Supply is to a REGISTERED person – Location of such person |
| (b) When supply is to any person other than a registered person –
(i) Address on record exists: Location of recipient. (ii) In other cases: Location of supplier of services. |
|
| (3) Services in relation to immovable property, lodging accommodation services. | Location at which the immovable property is located or intended to be located. However, if the location of immovable property is outside India:- Location of the recipient.
Explanation: If immovable property is in more than one state or Union Territory:- Each such state or union territories in specific proportion. |
| (4) Restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery. | The location where the services are actually performed. |
| (5) Training and performance appraisal services | (a) To a registered person: Location of such person
(b) To an Unregistered Person: Location where services are actually performed |
| (6) Services by way of admission to events or amusement park or any other place and services ancillary thereto | Place where the event is actually held or where the park or such other place is located. |
| (7) Services by way of organization of events or services ancillary to organization of events or assigning of sponsorship to such events | (i) To registered person: Location of such person.
(ii) To an unregistered Person: Place where the event is actually held. But if the event is held outside India: Location of the recipient. Explanation: If the event is held in more than one state/UT: Each of such state/ UT in specific proportion. |
| (8) Services by way of transportation of goods, including by mail or courier | (a) To a Registered Person: Location of such person.
(b) To an unregistered Person: Location where such goods are handed over for their transportation. Proviso: Where transportation is to a place outside India: Place of destination of such goods. |
| (9) Passenger Transportation services | To a Registered person: location of such person.
To an unregistered person: Place where the passenger embarks on the conveyance for continuous journey*. ’Continuous journey: Return journey shall be treated as a separate journey. Proviso: Right to passage is given for future use and point of embarkation is not known: As per section 12(2) of the IGST Act. |
| (10) Services on board a conveyance | Location of first scheduled point of departure of that conveyance for the journey. |
| (11) Telecommunication services including data transfer, broadcasting cable & DTH services. | (a) Services by Fixed Telecommunication line: Location where such telecommunication line is installed for receipt of services.
(b) Mobile connection on post- paid basis: Location of billing address of the Recipient of services on records of supplier of services. (c) Mobile connection on pre-paid basis through voucher or any other means: (i) Through a selling agent, etc.: Address of selling agent, etc. as per records of supplier. (ii) By any other person to final subscriber: Location where such pre-payment is received or such vouchers are sold. (d) In other cases: Address of recipient as per records of supplier of services and where such address is not available, then location of supplier of services. Proviso: Pre-paid service is availed/Re-charge is done through internet banking or other electronic mode: Location of recipient of services on record of supplier of services. Explanation: Leased circuit line is installed in more than one state/UT: It shall be each state/UT in which it is installed in specific proportion. |
| (12) Banking and other financial services | To any person: Location of recipient of services on the records of supplier of services.
Proviso: If location of recipient of services is not on records of supplier: Location of supplier of services. |
| (13) Insurance Services | (a) To a Registered Person: Location of such person.
(b) To an unregistered person: Location of recipient of services on the records of supplier of services. |
| (14) Advertising Services to Central Government, State Government, a statutory body or a local authority | Each of such state/UT in specific proportion of the amount attributable to services by way of dissemination in respective states/UT. |
Section 13 of IGST Act: Place of supply of service where the location of supplier or recipient of the supply is outside India
| Case | Place of supply |
| (2) General provisions: For services not covered in sub-sections (3) to (13) | Location of recipient of services |
| If in above case, location of Recipient of services is not available in ordinary course of business | Location of supplier of services |
| (3) Performance based services:
(a) Services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services.
When such services are provided from a remote location by way of electronic means
Services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process
(b) Services supplied to an individual, represented either as the recipient of services or a person acting on behalf of recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for supply of services.
|
Location where services are actually performed
Location where goods are situated at the time of supply of services.
Provisions of section 13(3) will not apply and place of supply shall be determined as per section 13(2).
Location where services are actually performed.
|
| (4) Services relating to immovable property | Place where immovable property is located or intended to be located. |
| (5) Services relating to events | Place where the event is actually held. |
| (6) Services mentioned in (3), (4) and (5) provided at more than one location including a location in taxable territory. | Location in Taxable territory |
| (7) Services referred in (3), (4) or (5) are supplied in more than one state or Union Territory. | Each of the respective states or Union Territories and value of such supplies shall be in proportion to value for services separately collected or determined in terms of the contract or in absence of such contract, on such other basis as may be prescribed. |
| (8) Specified Services:
(a) Services supplied by a banking company or financial institution or a non-banking financial company to account holders (b) Intermediary Services (c) Services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month |
Location of supplier of services
Location of supplier of services Location of supplier of services
|
| (9) Services of transportation of goods, other than by way of mail or courier | Place of destination of such goods |
| (10) Passenger Transportation services | Place where the passenger embarks on the conveyance for continuous journey. |
| (11) Services provided on board a conveyance | First scheduled point of departure of that conveyance for the journey |
| (12) Online Information and Database access or Retrieval services (OIDAR) | Location of recipient of services* |
* Person receiving OIDAR services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied –
a. location of address is in the taxable territory
b. Credit Card/Debit Card etc. by which the recipient of services settles payment has been issued in the taxable territory.
c. Billing address of the Recipient of services is in the taxable territory.
d. IP Address of device used by Recipient of services is in the taxable territory.
e. Bank of Recipient of services in which account used for payment is maintained is in the taxable territory.
f. Country code of SIM card used by the recipient of services is of taxable territory.
g. Location of the fixed land line through which service is received by the recipient is in the taxable territory.
Section 13(13): To prevent double taxation or non-taxation of supply of a service, or for uniform application of rules – Government has the power to notify any description of services or circumstances in which place of supply shall be a place of effective use and enjoyment of a service.