Place of Supply

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

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

*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

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

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.