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Place of Supply of services under GST

MARCH 11, 2017

By Hiral Raja

PRESENTLY Service tax is collected by the Central Government and hence the relevance of Place of provision of services rules is limited only for the purpose of determination of export and import of services. As we usher the regime of one of the largest Indirect tax reform in India i.e. Goods and Service Tax (GST), it would be a destination based tax and hence the concept of place of supply shall become very important to decide the nature of supply as well as the concerned Government entitled to receive its share of GST.

Model IGST law unveiled by the GST Council in November 2016 provides key insights into the concept of Place of Supply as well as approach to be adopted for determination of Place of supply for various services.

- Export of service shall mean supply of any service when:

- The supplier of service is located in India;

- Recipient of service is located outside India;

- Place of supply of service is outside India;

- Payment for such service is received by supplier of such service in convertible foreign exchange;

- Supplier of service and recipient of service are not branch office or agency or representational office of the supplier of service.

- Import of service shall mean supply of any service where:

- Supplier of service is located outside India;

- Recipient of service is located in India; and

- Place of supply of service is in India.

- Interstate supply of services:

- Subject to provisions of Section 9, Interstate supply of services means any supply where the location of the supplier and the place of supply are in different states.

- Following transactions will be treated as Interstate supply of services:

- Supply of services in the course of import into India;

- Supply of services when the supplier is located in India and the Place of supply is located outside India;

- Supply of services to or by a SEZ developer or a SEZ unit;

- Supply of services in the course of interstate trade or commerce:

- Subject to provisions of Section 9, intra state supply of services means any supply of services wherein the location the supplier and the place of supply are in the same state.

It can be seen from the above that determination of place of supply of service will play a key role in determining whether the supply of service is an intra-state supply, interstate supply, export or import of services.

Chapter IV of the Model IGST Law lays down the principle for determination of place of supply of Goods and/or Services:

A. Place of Supply of services where the location of the supplier of service and location of recipient of service is in India (Section 9):

Sr. No.

 

Nature of Service

Place of Supply

1.

(a)

(b)

(c)

(d)

In relation to immovable property:

- Architects;

- Interior decorator

- Surveyors

- Engineers and other related expert services

- Estate Agents

- Renting of Immovable property

- Co-ordination of construction work

Lodging accommodation in a hotel, inn, guesthouse, homestay, club or campsite, by whatever name called, house boat or any other vessel.

Accommodation in any immovable property for organizing marriages, reception, - official, social, cultural or business function and all services provided in relation to such function at such property.

All services ancillary to the above

Location where immovable property/boat/vessel is located/ intended to be located.

However if the immovable property/boat/vessel is located/ intended to be located is outside India, then place of supply shall be location of the recipient.

2.

 

Restaurant and catering service;

Personal Grooming;

Beauty Treatment;

Health service (incl. Cosmetic and plastic surgery)

Location where the services are actually performed.

3.

(a)

(b)

Training and Performance appraisals provided to:

Registered person

Person other than the registered person

Location of such registered person

Location where the services are actually performed.

4.

 

Admission to cultural, artistic, sporting, scientific, educational, or entertainment event or amusement park or any other place or any activities incidental thereto

Place of holding of the event or location of amusement park or such other place.

5.

(a)

(b)

Organising cultural, artistic, sporting, scientific, educational or entertainment event including supply of service in relation to a conference, fair, exhibition, celebration or similar events

Services ancillary in relation to organizing above events/services or providing sponsorship to any of the above events.

Services provided to :

(a) Registered Person –Location of such person

(b) Any other person – place where the event is actually held.

If the event is held outside India, place of supply will be location of the recipient.

6.

(a)

(b)

Transportation of goods (including by mail or courier to:

Registered person;

Other than registered person

Location of such person

Location at which goods are handed over for their transportation

7

(a)

(b)

Passenger Transportation to:

Registered person;

Other than registered person

Location of such person

Place where passenger embarks on conveyance for continuous journey

8

 

On board a conveyance such as vessel, aircraft, train or motor vehicle

Location of the first scheduled point of departure of the conveyance for journey.

9

(a)

(b)

(c)

Telecommunication services, including data transfer, broad casting, cable and direct to home television services:

Fixed telecommunication line, leased line, internet leased circuit, cable or dish antenna

Mobile connection for telecommunication and internet services provided on post paid basis

Mobile connection for telecommunication, internet services and direct to home television services provided on pre payment through voucher or any other means

(i) Through selling agent or reselling agent or a distributor of SIM card or recharge voucher;

(ii) By any person to the final subscriber

Location of installation of telecommunication line, leased circuit, cable connection or dish antenna.

Location of the billing address of the service recipient on record of supplier of services.

Address of the selling agent/reselling agent or distributor as per the records of the supplier at the time of supply

Location where such prepayment is received or such vouchers are sold.

 

(d)

In other cases not covered under (b) or (c) above

Address of the recipient as per the records of the supplier. In case address of recipient is not available, then place of supply shall be location of supplier.

10

 

Banking and other financial services including stock broking services

Location of the recipient of the service on the record of supplier of service.

If location of recipient is not available, then it shall be location of the supplier of service.

11

(a)

(b)

Insurance services:

Registered Person

Person other than registered person

Location of such person

Location of the recipient of the service on the record of supplier of service.

12

 

Supply of advertisement services to the Central Government, State Government, Statutory meant for Identifiable States

Located in such states and value for each state shall be in proportion to the service provided by way of dissemination as provided in the contract or if absence of contract, on a reasonable basis.

13

(a)

(b)

For services [other than mentioned in 1 to 12 above] provided to

Registered Person

Person other than registered person

Location of such person

i. Location of the recipient where the address on record exists;

ii. Location of supplier of service in other cases.

B. Place of Supply of services where the location of the Supplier of service or the location of recipient of service is outside India (Section 10):

Sr. No.

 

Nature of Service

Place of Supply

1

(a)

(b)

Services supplied in respect of goods that are required to be made physically available by the recipient of service to the supplier of service, or to a person acting on behalf of the supplier of service in order to provide the service.

Services supplied to the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the recipient, with the supplier for the supply of the service.

Location where services are actually performed.

If such services are provided from remote location by way of electronic means, place of supply shall be location where goods are situated at the time of supply of service.

- Not applicable to services provided with respect to goods temporarily imported into India for repairs and re-exported without use in India.

Location where services are actually performed

2

 

In relation to immovable property:

- Architects;

- Interior decorator

- Surveyors

- Other related expert services

- Estate Agents

- Renting of Immovable property

- Co-ordination of construction work

- Lodging accommodation in a hotel, inn, guesthouse, club or campsite, by whatever name called. 

Location of immovable or location where it is intended to be located.

3

 

Admission to or Organising cultural, artistic, sporting, scientific, educational or entertainment event or celebration, conference, fair, exhibition, or similar events and services ancillary in relation to such admission.

Place where event is actually held.

4

(a)

(b)

(c)

Services provided by a Banking Company/Financial Institution or a NBFC to its account holders.

Intermediary services i.e. a broker, an agent or any other person, by whatever name called, who arranges/facilitates the supply of a service or the supply of goods, between two or more persons

Services consisting of hiring of means of transport other than aircrafts and vessels except yachts, up to a period of one month.

Location of Supplier of service.

5

 

Transportation of goods, other than by way of mail or courier.

Place of destination of goods.

6

 

Passenger Transportation service

Place where the passenger embarks on conveyance for continuous journey.

7

 

Supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board.

First scheduled point of departure of the conveyance for continuous journey.

8

 

Online information and database access or retrieval services

Location of recipient of service.

Person receiving the service shall be deemed to be located in taxable territory if certain conditions are satisfied.

9

 

For services [other than mentioned in 1 to 12 above]

Location of recipient of service.

In case location of recipient of service is not available in ordinary course of business, then it shall be location of service provider.

The above principles would go a long way in providing ease to taxpayers to identify the nature of nature of transaction viz. intra state supply, inter state supply, Export or import or services and accordingly levy tax based on the same. It would also bring certainty in the entitlement of respective Governments to receive the tax amounts.

(The views expressed are strictly personal.)

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

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