All about Place of supply of Services relating to Domestic Transactions under GST
Place of supply of Services under GST is a very important concept and it provides guidance as to which tax i.e. CGST/SGST or IGST has to be charged in respect of the particular supply.
The provision of a place of supply of services is covered under Section 12 & 13 of the CGST act.
These can be broadly divided into two parts :
1. Provisions of the place of supply of services in case of International transactions i.e. Imports and Exports
2. Provisions of the place of supply of services in case of Domestic Transactions
First, we shall discuss the provisions relating to the place of supply of services under Domestic Transactions i.e. within India.
1. Place of Supply of Services relating to Domestic Transactions :
As per Section 12 of the Act, there are some specific rules and there is a general rule to determine the place of supply of services.
As per general rule, the place of supply of services will be governed by this rule if it does not fall under any other specific rules provided.
Now we will discuss what is the general rule :
1. If the receiver of service is a registered person under GST, the place of supply of services will be the location of the receiver.
2. If the receiver of services is unregistered, the place of supply of services will be :
(a) If the address of the unregistered person is available to the supplier, the place of supply of services will be the location of the unregistered person
(b) If the address of the unregistered person is not available to the supplier, the place of supply of services will be the location of the supplier
Let us understand the above provision with the help of examples :
(a) Mr. A, a consultant residing in Delhi provides services to his client who is also registered at Lucknow, U.P. In this case the place of supply of services will be Uttar Pradesh and the transaction will be subject to IGST.
(b) Mr. B a consultant residing and registered in Mumbai provides consultancy services to Mr. C (unregistered person) located at Delhi. In this case, if the address of Mr. C is available then the services will be inter-state and place of supply will be Delhi and if the address of Mr. C is not available to Mr. B then the place of supply of services will be Mumbai only and it will be intra-state services liable to CGST/SGST.
Specific Rules :
Having discussed the general rule, now we will discuss specific rules relating to the place of supply of services under GST.
(1) Services in relating to an Immovable Property
There are many services provided which are related to Immovable Property such as lodging, accommodation in a hotel, boat, vessel or performing an event or social functions i.e. marriage, etc. in an immovable property or services relating to architect for drawing/designing, etc. relating to construction of the immovable property.
In all such supply of services, the location of the immovable property will be the place of supply of services.
However, if the place of location of immovable property is outside India, the place of supply of services will be the location of the receiver.
Location of Property is in India - Place of supply will be the location of Immovable Property
Location of Property is outside India - Place of supply will be the location of the recipient
1.Mr. Nitin, Architect in Delhi provides designing services relating to Immovable Property proposed to be constructed in Mumbai. Here the place of supply of services will be Mumbai as the property is located in Mumbai.
2. Mr. X visits Banglore and stays at Hotel Y at Banglore for business purposes. Here the services provided by the Hotel relating to accommodation services will be at Banglore i.e. location of the Hotel only.
However, there are instances where the immovable property is located in more than one state. Then how to determine the place of supply of services in relation to these services.
Here as per rule, the place of supply of services will be in proportion to each state as per the terms of the contract or agreement.
If there is no such contract or agreement, the place of supply of services will be determined as per rule 4 of IGST rules which is as under :
(a) Services in relation to accommodation in a hotel, inn, or guesthouse