PLACE OF SUPPLY OF GOODS/SERVICES
GST regime provides for taxation on the basis of intra-state or inter-state supply of Goods and Services. In the case of intra-state supply, CGST/SGST is levied and in case of inter-state supply, IGST is levied. It is of paramount importance to correctly classify the supply either intra-state or inter-state at the time of transaction. In case of wrong classification i.e. Intra-state sale as inter-state sale and vice-versa, sec. 53 of the CGST Act and sec. 30 of the IGST Act provides for hardship to the taxpayers. For reference both of the above sections has been reproduced below:
As per Section 53 of the CGST Act 2016, A taxable person who has paid CGST/SGST (in SGST Act) on a transaction considered by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, shall, upon payment of IGST, be allowed to take the amount of CGST /SGST (in SGST Act) so paid as refund subject to the provisions of section 38 of the CGST Act, 2016 and subject to such other conditions as may be prescribed.
As per Section 30 of the IGST Act 2016, A taxable person who has paid IGST on a transaction considered by him to be an interstate supply, but which is subsequently held to be an intra-state supply, shall, upon payment of CGST and SGST in the appropriate State, be allowed to take the amount of IGST so paid as refund subject to the provisions of section 38 of the CGST Act, 2016 and such other conditions as may be prescribed.
To classify supply as intra state or inter-state two components are important:
1) Location of supplier
2) Place of supply
In case location of supplier and place of supply are in same state, supply will be intra state. In case location of supplier and place of supply are in different states the supply will be inter-state. (Reference: section 3 and 3A of the IGST Act.)
|
Sl. No. |
Location of supplier |
Place of supply |
Intra state/Inter state |
Tax Applicable |
|
1 |
State ‘A’ |
State ‘A’ |
Intra state supply |
CGST and SGST |
|
2 |
State ’A’ |
State ‘B’ |
Interstate supply |
IGST |
There are different provisions to determine location of supplier and place of supply for supply of Goods and for supply of services.
Attached discussion paper covers provisions related to location of supplier and place of supply for Services.
