ICAI Notes: Place of Supply | Taxation for CA Intermediate PDF Download

 Page 1


LEARNING OUTCOMES 
a
CHAPTER 
4 
PLACE OF SUPPLY 
The section numbers referred to in the Chapter pertain to the IGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023.
After studying this chapter, you would be able to - 
? explain the provisions relating to determination of place of 
supply of goods, in case of domestic transactions and analyse 
the same to determine the place of supply in a given situation 
? explain the provisions relating to determination of place of 
supply of services, in case of domestic transactions and 
analyse the same to determine the place of supply in a given 
situation 
© The Institute of Chartered Accountants of India
Page 2


LEARNING OUTCOMES 
a
CHAPTER 
4 
PLACE OF SUPPLY 
The section numbers referred to in the Chapter pertain to the IGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023.
After studying this chapter, you would be able to - 
? explain the provisions relating to determination of place of 
supply of goods, in case of domestic transactions and analyse 
the same to determine the place of supply in a given situation 
? explain the provisions relating to determination of place of 
supply of services, in case of domestic transactions and 
analyse the same to determine the place of supply in a given 
situation 
© The Institute of Chartered Accountants of India
a
 
4.2
GOODS AND SERVICES TAX 
1. INTRODUCTION
GST is a destination-based tax, i.e the tax is levied at the place where the goods or 
services are consumed, rather than the place 
where they are produced.  
The determination of ‘place of supply’ and 
the ‘location of the supplier’ is essential to 
ascertain the nature of supply, i.e. whether a 
supply is intra-State or inter- State. In other 
words, these two factors are required to 
determine whether a supply is subject to 
SGST/UTGST plus CGST in a given State/ 
Union territory or else would attract IGST if it 
is an inter-State supply.   
If an inter-State transaction is wrongly treated as intra-State or vice-versa and tax 
paid accordingly, the correct tax will be required to be paid and refund to be 
Place of supply
Place of supply of goods other than
supply of goods imported into, or
exported from INDIA [Section 10]
Place of supply of services where location
of supplier of service and the location of
the recipient of service is in INDIA
[Section 12]
CHAPTER OVERVIEW
© The Institute of Chartered Accountants of India
Page 3


LEARNING OUTCOMES 
a
CHAPTER 
4 
PLACE OF SUPPLY 
The section numbers referred to in the Chapter pertain to the IGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023.
After studying this chapter, you would be able to - 
? explain the provisions relating to determination of place of 
supply of goods, in case of domestic transactions and analyse 
the same to determine the place of supply in a given situation 
? explain the provisions relating to determination of place of 
supply of services, in case of domestic transactions and 
analyse the same to determine the place of supply in a given 
situation 
© The Institute of Chartered Accountants of India
a
 
4.2
GOODS AND SERVICES TAX 
1. INTRODUCTION
GST is a destination-based tax, i.e the tax is levied at the place where the goods or 
services are consumed, rather than the place 
where they are produced.  
The determination of ‘place of supply’ and 
the ‘location of the supplier’ is essential to 
ascertain the nature of supply, i.e. whether a 
supply is intra-State or inter- State. In other 
words, these two factors are required to 
determine whether a supply is subject to 
SGST/UTGST plus CGST in a given State/ 
Union territory or else would attract IGST if it 
is an inter-State supply.   
If an inter-State transaction is wrongly treated as intra-State or vice-versa and tax 
paid accordingly, the correct tax will be required to be paid and refund to be 
Place of supply
Place of supply of goods other than
supply of goods imported into, or
exported from INDIA [Section 10]
Place of supply of services where location
of supplier of service and the location of
the recipient of service is in INDIA
[Section 12]
CHAPTER OVERVIEW
© The Institute of Chartered Accountants of India
 
PLACE OF SUPPLY 
a
a
4.3 
claimed for tax wrongly paid.  Though no interest is levied in such a case, procedural 
requirements increase and working capital gets blocked where the amount involved 
is huge.  Hence, determining correct place of supply is of the paramount 
importance.  
Section 2(86) of the CGST Act, 2017 defines ‘place of supply’ to mean the place of 
supply as referred to in Chapter V of the Integrated Goods and Services Tax Act, 
2017.  Thus, in order to understand the provisions of the place of supply, we need 
to refer the provisions of the relevant Chapter of the Integrated Goods and Services 
Tax Act, 2017.  
In simple words, ‘place of supply’ is the place where the supply is consumed.  Thus, 
place of supply determines the jurisdiction where the tax revenue should reach.   
Now the question arises as how to determine the place of 
supply?  
Goods, usually being tangible do not pose any significant 
problems for determination of their place of consumption.  
Services, usually being intangible pose problems w.r.t 
determination of place of supply mainly due to following 
factors:  
? The manner of delivery of a service could be altered 
easily.   
 For example, telecom service could change from post-
paid to pre-paid or billing address of the customer could 
be changed, repair or maintenance of software could be 
changed from onsite to online; banking services earlier 
required customer to go to the bank, now the customer 
can avail service from anywhere. 
? Service provider, service receiver and the service provided may not be 
ascertainable or may easily be suppressed as nothing 
tangible moves and there would hardly be any trail. 
? For supplying a service, a fixed location of service 
provider is not mandatory and even the service 
recipient may receive service while on the move.  The 
© The Institute of Chartered Accountants of India
Page 4


LEARNING OUTCOMES 
a
CHAPTER 
4 
PLACE OF SUPPLY 
The section numbers referred to in the Chapter pertain to the IGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023.
After studying this chapter, you would be able to - 
? explain the provisions relating to determination of place of 
supply of goods, in case of domestic transactions and analyse 
the same to determine the place of supply in a given situation 
? explain the provisions relating to determination of place of 
supply of services, in case of domestic transactions and 
analyse the same to determine the place of supply in a given 
situation 
© The Institute of Chartered Accountants of India
a
 
4.2
GOODS AND SERVICES TAX 
1. INTRODUCTION
GST is a destination-based tax, i.e the tax is levied at the place where the goods or 
services are consumed, rather than the place 
where they are produced.  
The determination of ‘place of supply’ and 
the ‘location of the supplier’ is essential to 
ascertain the nature of supply, i.e. whether a 
supply is intra-State or inter- State. In other 
words, these two factors are required to 
determine whether a supply is subject to 
SGST/UTGST plus CGST in a given State/ 
Union territory or else would attract IGST if it 
is an inter-State supply.   
If an inter-State transaction is wrongly treated as intra-State or vice-versa and tax 
paid accordingly, the correct tax will be required to be paid and refund to be 
Place of supply
Place of supply of goods other than
supply of goods imported into, or
exported from INDIA [Section 10]
Place of supply of services where location
of supplier of service and the location of
the recipient of service is in INDIA
[Section 12]
CHAPTER OVERVIEW
© The Institute of Chartered Accountants of India
 
PLACE OF SUPPLY 
a
a
4.3 
claimed for tax wrongly paid.  Though no interest is levied in such a case, procedural 
requirements increase and working capital gets blocked where the amount involved 
is huge.  Hence, determining correct place of supply is of the paramount 
importance.  
Section 2(86) of the CGST Act, 2017 defines ‘place of supply’ to mean the place of 
supply as referred to in Chapter V of the Integrated Goods and Services Tax Act, 
2017.  Thus, in order to understand the provisions of the place of supply, we need 
to refer the provisions of the relevant Chapter of the Integrated Goods and Services 
Tax Act, 2017.  
In simple words, ‘place of supply’ is the place where the supply is consumed.  Thus, 
place of supply determines the jurisdiction where the tax revenue should reach.   
Now the question arises as how to determine the place of 
supply?  
Goods, usually being tangible do not pose any significant 
problems for determination of their place of consumption.  
Services, usually being intangible pose problems w.r.t 
determination of place of supply mainly due to following 
factors:  
? The manner of delivery of a service could be altered 
easily.   
 For example, telecom service could change from post-
paid to pre-paid or billing address of the customer could 
be changed, repair or maintenance of software could be 
changed from onsite to online; banking services earlier 
required customer to go to the bank, now the customer 
can avail service from anywhere. 
? Service provider, service receiver and the service provided may not be 
ascertainable or may easily be suppressed as nothing 
tangible moves and there would hardly be any trail. 
? For supplying a service, a fixed location of service 
provider is not mandatory and even the service 
recipient may receive service while on the move.  The 
© The Institute of Chartered Accountants of India
  
a
 
4.4 
GOODS AND SERVICES TAX 
location of billing could be changed overnight.  
? Sometime the same element may flow to more 
than one location, for example, 
construction or other services in 
respect of a railway line, a national 
highway or a bridge on a river 
which originate in one State and 
end in the other State.  
Similarly, a copyright for distribution and exhibition 
of film could be assigned for many States in a 
single transaction or an advertisement or a 
programme is broadcasted across the country at 
the same time.   
An airline may issue seasonal tickets, containing say 10 
vouchers which could be used for travel between any 
two locations in the country.   
The card issued by New Delhi metro could be used 
by a person located in Noida, or New Delhi or 
Faridabad, without the New Delhi metro being able 
to distinguish the location or journeys at the time 
of receipt of payment. 
? Services are continuously evolving and thus, 
continue to pose newer challenges.  For example, 
15-20 years back no one could have thought of 
DTH, online information, online banking, online 
booking of tickets, internet, mobile 
telecommunication etc. 
Considering the difficulties in determining the actual place of consumption of 
services, the various elements involved in a service transaction are used as proxies 
for determining the place of consumption or place of supply of such services.  A 
proxy which gives more appropriate result than others for determining the place of 
supply, could be used for determining the place of supply.   
© The Institute of Chartered Accountants of India
Page 5


LEARNING OUTCOMES 
a
CHAPTER 
4 
PLACE OF SUPPLY 
The section numbers referred to in the Chapter pertain to the IGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023.
After studying this chapter, you would be able to - 
? explain the provisions relating to determination of place of 
supply of goods, in case of domestic transactions and analyse 
the same to determine the place of supply in a given situation 
? explain the provisions relating to determination of place of 
supply of services, in case of domestic transactions and 
analyse the same to determine the place of supply in a given 
situation 
© The Institute of Chartered Accountants of India
a
 
4.2
GOODS AND SERVICES TAX 
1. INTRODUCTION
GST is a destination-based tax, i.e the tax is levied at the place where the goods or 
services are consumed, rather than the place 
where they are produced.  
The determination of ‘place of supply’ and 
the ‘location of the supplier’ is essential to 
ascertain the nature of supply, i.e. whether a 
supply is intra-State or inter- State. In other 
words, these two factors are required to 
determine whether a supply is subject to 
SGST/UTGST plus CGST in a given State/ 
Union territory or else would attract IGST if it 
is an inter-State supply.   
If an inter-State transaction is wrongly treated as intra-State or vice-versa and tax 
paid accordingly, the correct tax will be required to be paid and refund to be 
Place of supply
Place of supply of goods other than
supply of goods imported into, or
exported from INDIA [Section 10]
Place of supply of services where location
of supplier of service and the location of
the recipient of service is in INDIA
[Section 12]
CHAPTER OVERVIEW
© The Institute of Chartered Accountants of India
 
PLACE OF SUPPLY 
a
a
4.3 
claimed for tax wrongly paid.  Though no interest is levied in such a case, procedural 
requirements increase and working capital gets blocked where the amount involved 
is huge.  Hence, determining correct place of supply is of the paramount 
importance.  
Section 2(86) of the CGST Act, 2017 defines ‘place of supply’ to mean the place of 
supply as referred to in Chapter V of the Integrated Goods and Services Tax Act, 
2017.  Thus, in order to understand the provisions of the place of supply, we need 
to refer the provisions of the relevant Chapter of the Integrated Goods and Services 
Tax Act, 2017.  
In simple words, ‘place of supply’ is the place where the supply is consumed.  Thus, 
place of supply determines the jurisdiction where the tax revenue should reach.   
Now the question arises as how to determine the place of 
supply?  
Goods, usually being tangible do not pose any significant 
problems for determination of their place of consumption.  
Services, usually being intangible pose problems w.r.t 
determination of place of supply mainly due to following 
factors:  
? The manner of delivery of a service could be altered 
easily.   
 For example, telecom service could change from post-
paid to pre-paid or billing address of the customer could 
be changed, repair or maintenance of software could be 
changed from onsite to online; banking services earlier 
required customer to go to the bank, now the customer 
can avail service from anywhere. 
? Service provider, service receiver and the service provided may not be 
ascertainable or may easily be suppressed as nothing 
tangible moves and there would hardly be any trail. 
? For supplying a service, a fixed location of service 
provider is not mandatory and even the service 
recipient may receive service while on the move.  The 
© The Institute of Chartered Accountants of India
  
a
 
4.4 
GOODS AND SERVICES TAX 
location of billing could be changed overnight.  
? Sometime the same element may flow to more 
than one location, for example, 
construction or other services in 
respect of a railway line, a national 
highway or a bridge on a river 
which originate in one State and 
end in the other State.  
Similarly, a copyright for distribution and exhibition 
of film could be assigned for many States in a 
single transaction or an advertisement or a 
programme is broadcasted across the country at 
the same time.   
An airline may issue seasonal tickets, containing say 10 
vouchers which could be used for travel between any 
two locations in the country.   
The card issued by New Delhi metro could be used 
by a person located in Noida, or New Delhi or 
Faridabad, without the New Delhi metro being able 
to distinguish the location or journeys at the time 
of receipt of payment. 
? Services are continuously evolving and thus, 
continue to pose newer challenges.  For example, 
15-20 years back no one could have thought of 
DTH, online information, online banking, online 
booking of tickets, internet, mobile 
telecommunication etc. 
Considering the difficulties in determining the actual place of consumption of 
services, the various elements involved in a service transaction are used as proxies 
for determining the place of consumption or place of supply of such services.  A 
proxy which gives more appropriate result than others for determining the place of 
supply, could be used for determining the place of supply.   
© The Institute of Chartered Accountants of India
 
PLACE OF SUPPLY 
a
a
4.5 
The various elements used for determining the place of supply of a service are:  
(a) location of service provider 
(b) location of service receiver 
(c) place where the activity takes place/ 
place of performance 
(d) place where the service is consumed 
(e) place/person to which/whom actual benefit flows 
 
 
 
 
 
Proxies for 
determining 
place of supply 
of services 
Location of 
service 
provider 
Location of 
service 
receiver
Place of 
performance 
Place of 
consumption
Actual 
beneficiary 
place/person 
Proxy which gives more appropriate 
result than others is used for 
determining the place of supply 
© The Institute of Chartered Accountants of India