Registered and Unregistered Persons
Registered Persons are those Business Persons or Taxable Persons those who have registered under the GST Law. Transactions with such persons are called B2B (Business to Business) Transactions.
Unregistered persons, usually customers are not registered under the GST Law. Transactions with such persons are called B2C (Business to Customer) Transactions.
Specialty of B2B Transactions
In respect of B2B transactions, the taxes paid are taken as credit by the recipient so such transactions are just pass through.
§ GST collected on B2B supplies effectively create a liability for the government.
§ The recipient is entitled to use the input tax credit for payment of future taxes and it is an asset for the recipient.
For B2B transactions the location of recipient takes care in almost all situations as further credit is to be taken by recipient. The recipient usually further supplies to another customer.
§ The supply is consumed only when a B2B transaction is further converted into B2C transaction.
§ In respect of B2C transactions, the supply is finally consumed and the taxes paid actually come to the government.
Place of supply in respect of B2B supply of services
The terms used in the IGST Act are registered taxpayers and non-registered taxpayers. The presumption in case of supplies to registered person is the location of such person. Since the recipient is registered, address of recipient is always there and the same can be taken as proxy for place of supply.
In case of transaction by Business to Customer the tax collected and remitted by the Business is income for the Government. The reason is that the Customers cannot claim Input Tax Credit in GST scenario.
Place of supply in respect of unregistered recipients
In respect of unregistered recipients,
1. The usual place of supply is location of recipient.
2. However in many cases, the address of recipient is not available, in such cases, location of the supplier of services is taken as proxy for place of supply.