Place of Supply of Goods under GST

GST operates as a destination-based tax, implying that products and services are taxed where they are ultimately consumed, rather than at their point of origin. Consequently, the state where consumption occurs holds the authority to collect GST.

Understanding the place of supply is therefore fundamental to GST, as all its provisions depend on this determination. For goods, identifying the place of supply under GST dictates whether a transaction is classified as intrastate or interstate. This classification then determines the appropriate levy of SGST, CGST & IGST.

Place of Supply for Goods with Physical Movement

When goods are physically moved, whether by the supplier, the buyer, or another party, the place of supply is established as the location where the movement concludes for delivery to the recipient.

If a seller delivers goods to a buyer based on a third party’s instructions (who may or may not be an agent), either before or during the movement, through transfer of title or documents, or by other means, it is presumed that the third party has received the goods. In such scenarios, the place of supply will be the third party’s primary business location.

Illustrative Examples:

1. Intra-state Sales:
   When Mr. Raj from Mumbai, Maharashtra, sells 10 television sets to Mr. Vijay in Nagpur, Maharashtra, the supply location is Nagpur, Maharashtra. As this transaction occurs within the same state, both CGST and SGST will be applicable.
2. Inter-State Sales:
   If Mr. Raj in Mumbai, Maharashtra, sells 30 television sets to Mr. Vinod in Bangalore, Karnataka, the place of supply is Bangalore, Karnataka. Since this involves different states, IGST will be imposed.
3. Delivery to a Third Party by Instruction:
   Consider Anand in Lucknow who purchases goods from Mr. Raj in Mumbai (Maharashtra) and requests the seller to dispatch them to Nagpur (Maharashtra). In this instance, Anand, the buyer in Lucknow, is deemed to have received the goods, and IGST will be charged. The place of supply is Lucknow (Uttar Pradesh), and the tax is IGST.
4. Receiver Collects Goods Ex-Factory:
   Mr. Raj in Mumbai, Maharashtra, receives an order for 100 television sets from Sales Heaven Ltd. in Chennai, Tamil Nadu. Sales Heaven arranges its own transport to collect the TV sets directly from Mr. Raj’s factory. The place of supply is Chennai, Tamil Nadu, and IGST is applicable. Even though the goods are picked up from the factory in Maharashtra, the movement concludes for delivery to the recipient only in Chennai, Tamil Nadu. Regardless of who arranges the transportation, the supply location is where the goods’ movement ends for recipient delivery.
5. E-commerce Transaction:
   Mr. Raj in Mumbai, Maharashtra, orders a mobile phone from Amazon to be delivered to his mother in Lucknow (UP) as a gift. M/s ABC, an online seller registered in Gujarat, processes and dispatches the mobile, with Amazon billing Mr. Raj. Similar to example 3, Mr. Raj, the buyer in Mumbai, is considered to have received the goods, and IGST will be charged. The place of supply is Mumbai, Maharashtra, and the tax is IGST.

Place of Supply for Goods Without Physical Movement

When goods do not move, either by the supplier or the recipient, the place of supply is the location of those goods at the time of their delivery to the recipient (i.e., when ownership is transferred).

If goods are assembled or installed at a specific site, the place of supply is the site of installation or assembly.

Illustrative Examples:

1. No Movement of Goods:
   Sales Heaven Ltd. (Chennai) establishes a new showroom in Bangalore. It acquires a building for the showroom from ABC Realtors (Bangalore), including pre-installed workstations. The place of supply is Bangalore, with CGST and SGST levied. Since there is no physical movement of the workstations, the supply location is where they are situated at the time of delivery (handover) to the recipient.Note: The purchase of a building or part of it is exempt from GST; however, commercial space rent is subject to GST.
2. Installing Goods at Site:
   Strong Iron & Steel Ltd. (Jharkhand) contracts M/s SAAS Constructions (West Bengal) to construct a blast furnace at its Jharkhand steel plant. The place of supply is Jharkhand, with CGST and SGST levied. Despite M/s SAAS being based in West Bengal, the blast furnace is installed at the Jharkhand site, which becomes the place of supply.Note: M/s SAAS must register in Jharkhand to undertake this contract. They can choose to register as a casual taxable person, valid for 90 days (extendable by an additional 90 days with reasonable justification).

Place of Supply for Goods Provided Onboard a Conveyance

When goods are supplied on a conveyance such as a vessel, train, aircraft, or motor vehicle, the place of supply is the location where these goods were initially loaded onto the conveyance.

Illustrative Examples:

1. In-flight Purchase:
   Mr. Ajay travels from Mumbai to Delhi by air and buys coffee and snacks during the flight. The airline is registered in both Mumbai and Delhi. The place of supply is Mumbai, and CGST & SGST are charged because the food items were loaded onto the plane in Mumbai.
2. Business Travel In-flight Purchase:
   Mr. Ajay, on a business trip from Mumbai to Chennai for his company Ram Gopal and Sons (registered in Bangalore), purchases lunch on the flight. The airline is registered in Mumbai and Chennai. The place of supply is Mumbai, with CGST & SGST levied, as the food was loaded in Mumbai. The buyer’s registration location is irrelevant.In many instances, CGST and SGST are applied because most airlines have a nationwide presence and are registered across various states.
3. Train Journey Purchase:
   Mr. Vinod travels to Mumbai by train, boarding at Vadodara (Gujarat). The train originated in Delhi. He buys lunch on board, which was loaded in Delhi. The place of supply is Delhi, with CGST & UTGST charged. The food items were loaded onto the train in Delhi, making Delhi the supply location.CGST and SGST are charged because Indian Railways operates nationwide and is registered in all states. The buyer’s registration location is not a factor.

If the place of supply cannot be determined for any reason, Parliament rules, based on GST Council recommendations, will govern its determination.

Place of Supply for Imports and Exports

The place of supply for goods:

• Imported into India is the importer’s location.
• Exported from India is a location outside India.

Furthermore, when an Indian entity issues an invoice in foreign currency, it can also charge GST in that foreign currency. However, the invoice must also display the INR conversion rate and the corresponding INR values. For instance, if an invoice is raised in US Dollars (USD), GST can be charged in USD, but the USD to INR conversion ratio and invoice values in INR must also be indicated.

Illustrative Examples:

1. Import Scenario:
   Ms. Malini imports school bags from China for her shop, which is registered in Mumbai. The place of supply is Mumbai, and IGST is applicable.
2. Export Scenario:
   Ms. Anita from Kolkata exports Indian perfumes to the UK. The place of supply is the UK, and this transaction is exempted from GST.