Place of Supply

SECTION : Overview of the IGST Act

DESCRIPTION
  • Lesson Objectives

    On completion of this lesson, you will be able to understand:


    ·     Place of Supply in case of movement of goods

    ·     Supply does not involve movement of goods

    ·     Supply of goods assembled / installed at a site

    ·     Goods supplied on board a conveyance

    ·      Settlement System between Governments

     

    Please go through the Second Video of Chapter 13.

    IGST Act is very small with very few definitions and major part catering to settlement commissioner. Provisions in CGST or SGST Act will apply to IGST Act also. Various provisions as mentioned therein shall apply under IGST Act as they apply in relation to levy under the CGST Act.

     

    In this chapter we will look upon two main points.

    ·        Place of Supply

    ·        Settlement System

     

    Determination of Place of Supply

    The draft, inter alia, sets out the rules for determination of the place of supply of goods.

     

    ·        Where the supply involves movement of goods, the place of supply shall be the location of goods at the time at which the movement of goods terminates for delivery to the recipient.

    ·        Where goods are delivered by the supplier to the recipient but at the instruction of a third person – Place of supply will be determined to be the place of supply which will be the principal place of business of such third party and not of the actual recipient.

    ·        Where the supply does not involve movement of goods, the place of supply shall be the location of such goods at the time of delivery to the recipient.

    ·        In the case of goods assembled or installed at site, the place of supply shall be the place of such installation or assembly.

    ·        Finally, where the goods are supplied on board a conveyance, the place of supply shall be the location at which such goods are taken on board.

     Illustrations

    Section 10(1) (a): Supply involves movement of goods

     

    Particulars

    Supplier's

    factory from

    where goods

    are removed

     

    Termination

    of

    movement

    for delivery

    Place

    of

    supply

     

    Tax Payable

     

    Movement of goods by the supplier (goods dispatched by supplier)

    [Section 10(1)(a) read with

    section 2(96)(a) of CGST Act]

     

    Orissa

    Assam

    Assam

    IGST payable at Orissa

     

    Orissa

    Orissa

    Orissa

    CGST / SGST

    payable at

    Orissa

     

    Movement of goods by the

    recipient (goods collected by

    recipient)

    [Section 10(1)(a) read with

    section 2(96)(b) of CGST Act]

     

    Kerala

    Goa

    Goa

    IGST payable

    at Kerala

     

    Kerala

    Kerala

    Kerala

    CGST / SGST

    payable at

    Kerala

     

     

     Section 10(1)(c): Supply does not involve movement of goods

     

    Particulars

    Location

    of

    supplier

     

    Location

    of

    recipient

     

    Location

    of goods

    at the

    time of

    delivery

    Place

    of

    supply

     

    Tax Payable

     

    Sale of pre-installed DG Set

    Delhi

    Bhopal

    Bhopal

    Bhopal

    IGST payable at

    Delhi*

     

    Manufacture of moulds by

    job-worker (supplier),

    sold to the Principal, but

    retained in job worker’s

    premises

     

    Tamil

    Nadu

     

    Kerala

    Tamil

    Nadu

     

    Tamil

    Nadu

     

    CGST + Tamil

    Nadu GST

    payable at Tamil

    Nadu

     

     

    *Note: Some experts are of the view that the supplier may be required to obtain registration in Bhopal, and pay CGST + SGST at Bhopal.

     

    Section 10(1)(d): Supply of goods assembled/ installed at site

     

    Particulars

    Location

    of

    supplier

     

    Registered

    office of

    recipient

     

    Installation

    / Assembly

    Site

     

    Place of

    supply

     

    Tax Payable

     

    Installation of

    weigh bridge

    Delhi

    Bhopal

    Bhopal

    Bhopal

    IGST payable

    at Delhi

     

    Servers supplied and installed at an

    office

     

    Karnataka

    Goa

    Karnataka

    Karnataka

    CGST + Karnataka

    GST payable

    at Karnataka

     

    Supply of workstations

     

    Gujarat

    Gujarat

    Kerala

    Kerala

    IGST payable

    at Gujarat

     

     

    Section 10(1)(e): Supply of goods supplied on board a conveyance

     

    Particulars

    Location

    of

    supplier

     

    Loading

    of goods

     

    Passenger

    boards at

     

    Place of

    supply

     

    Tax Payable

     

    Supply of canned

    aerated drinks on a

    flight

     

    Punjab

    Punjab

    Delhi

    Punjab

    CGST + Punjab

    GST payable

    at Punjab

     

    Sale of packaged

    snacks during the

    journey

     

    Pune

    Goa

    Hyderabad

    Goa

    IGST payable

    at Pune

     

    Sale of sun-glasses

    on a ship

     

    Bangalore

    Chennai

    Cochin

    Chennai

    IGST payable

    at Bangalore

     

     

    A detailed discussion on Place of supply is available in GST Intermediate Course.

     

    Settlement System

    The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds.

     

    Seller and Exporting State

    The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. So the IGST liability can be set off against the Input Tax Credit available – IGST, CGST and SGST on his purchases.

    ü  SGST Credit is set off against the IGST liability.

     

    The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. That is the Exporting Sate Govt. has to pay an amount (equal to the SGST credit availed by the Supplier) to the Central Government. The exporting state shall pay the amount equal to the ITC of SGST used by the supplier in the exporting state to the Centre.

     Buyer and Importing State

    The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State.

     

    §  IGST Credit is set off against the SGST Liability.

     

    The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The centre shall pay the amount equal to the ITC of IGST used by a dealer for payment of SGST on intra- state supplies. The importing State Govt. will get an amount (equal to the IGST Credit availed by the Buyer) from the Central Government.

     

    The settlement would be on cumulative basis for a state taking into account the details furnished by all dealers in the settlement period. Similar settlement of amount would also be undertaken between CGST and IGST account.

     


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