Ch 16 - Place of Supply of Goods and Services within India | GST Saral by CA Dhruv Aggarwal PDF Download

 Page 1


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 16 - Pl ace of suppl y of goods and servi ces wi thi n Indi a 
 
 
 
 
 
CHAPTER 16 
 
Place of supply of goods and services within India 
 
EXECUTIVE SUMMARY 
 
?   The basic principle behind 'place of supply' provisions is that GST is consumption based tax. The tax 
is payable in the State in which goods or services or both are consumed. 
?   If location of supplier of service and place of supply are in same State or Union Territory, CGST 
and SGST/UTGST payable. 
?   If location of supplier of service and place of supply are in di fferent States or Union Territories, 
IGST is payable. 
?   Supply of services in the course of inter-State trade or commerce means any supply where the 
location of the  supplier  and  the  place  of supply are  in di fferent  States  or two  di fferent  Union 
Territories or a State and Union Territory. 
?   Supply of services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of 
services in the course of inter-State trade or commerce. 
?   Supply of services where the location of the supplier and the place of supply are in the same State or 
same Union Territory shall be treated as intra-state supply. However, this is subject to the provisions 
of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. 
?   Specific  provisions  have been made  for place  of supply in case of services  directly relating to 
immovable property, restaurant, training and appraisal, admission to events, transportation of goods 
and  passengers,  services  on board  a  conveyance,  telecom services,  banking  and  FI  services, 
insurance services and advertisement services to Government within India. 
?   In case of services other than those specified above, the place of supply of services - (a) made to a 
registered person shall be location of service recipient - section 12(2)(a) of IGST Act (b) made to 
any person other  than  a registered  person  shall be (i) the location of the recipient where the 
address on record exists, and ( i) the location of the supplier of services in other cases. 
16.1 Importance of place of supply 
 
CGST and SGST is payable in case of intra-state trade or commerce i.e. intra-state supply of goods and 
services. 
IGST is payable in case of inter-state trade or commerce i.e. intra-state supply of goods and services. 
Provisions to determine whether the transaction is intra-state or inter-state are contained in IGST Model Law. 
Export and import of goods and services are also covered under IGST provisions. 
 
Principle  behind the provisions - The basic principle behind provisions relating to place of supply is that 
GST is destination based tax. Thus, tax is finally payable where goods and services are consumed. This issue 
Page 2


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 16 - Pl ace of suppl y of goods and servi ces wi thi n Indi a 
 
 
 
 
 
CHAPTER 16 
 
Place of supply of goods and services within India 
 
EXECUTIVE SUMMARY 
 
?   The basic principle behind 'place of supply' provisions is that GST is consumption based tax. The tax 
is payable in the State in which goods or services or both are consumed. 
?   If location of supplier of service and place of supply are in same State or Union Territory, CGST 
and SGST/UTGST payable. 
?   If location of supplier of service and place of supply are in di fferent States or Union Territories, 
IGST is payable. 
?   Supply of services in the course of inter-State trade or commerce means any supply where the 
location of the  supplier  and  the  place  of supply are  in di fferent  States  or two  di fferent  Union 
Territories or a State and Union Territory. 
?   Supply of services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of 
services in the course of inter-State trade or commerce. 
?   Supply of services where the location of the supplier and the place of supply are in the same State or 
same Union Territory shall be treated as intra-state supply. However, this is subject to the provisions 
of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. 
?   Specific  provisions  have been made  for place  of supply in case of services  directly relating to 
immovable property, restaurant, training and appraisal, admission to events, transportation of goods 
and  passengers,  services  on board  a  conveyance,  telecom services,  banking  and  FI  services, 
insurance services and advertisement services to Government within India. 
?   In case of services other than those specified above, the place of supply of services - (a) made to a 
registered person shall be location of service recipient - section 12(2)(a) of IGST Act (b) made to 
any person other  than  a registered  person  shall be (i) the location of the recipient where the 
address on record exists, and ( i) the location of the supplier of services in other cases. 
16.1 Importance of place of supply 
 
CGST and SGST is payable in case of intra-state trade or commerce i.e. intra-state supply of goods and 
services. 
IGST is payable in case of inter-state trade or commerce i.e. intra-state supply of goods and services. 
Provisions to determine whether the transaction is intra-state or inter-state are contained in IGST Model Law. 
Export and import of goods and services are also covered under IGST provisions. 
 
Principle  behind the provisions - The basic principle behind provisions relating to place of supply is that 
GST is destination based tax. Thus, tax is finally payable where goods and services are consumed. This issue 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
is relatively easy in case of goods, but not so easy in case of services. Hence, in many cases, location of 
person receiving the service is relevant. If he is registered under GST, that is taken as criteria. Even if he is not 
registered, address on record of recipient is taken as criteria to determine place of supply in some cases. 
16.1-1 Parliament to formulate principles for determining place of supply of goods 
 
Parliament may, by law, formulate principles for determining (a) place of supply of goods or services (b) when 
supply of goods or services or both are in the course of inter-State trade or commerce -Article 269A(2) of 
Constitution of India inserted w.e.f. 16-9-2016. 
The provisions  relating to Place of Supply are made under these powers.  That is the reason why these 
provisions are contained in IGST Act and not CGST Act. 
16.1-2  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  inter-State trade  or 
commerce 
Section 7 of IGST Act make provisions in respect of Supply of goods or services or both in the course of 
inter-State trade or commerce (i.e. from one State to another). 
Inter-state supply of goods - As per section 7(1) of IGST Act, supply of goods in the course of inter-State 
trade or commerce (i.e. from one State to another) means any supply where the location of the supplier and 
the place  of supply are in two di fferent  States  or two di fferent  Union Territories  or a State  and Union 
Territory. However, this is subject to the provisions of section 10 Act [i.e. provisions of section 10 override 
provisions of section 7]. 
Import of goods shall be deemed to be inter-state  suppl y - Supply of goods imported into the territory of 
India. Ti l they cross the customs frontiers of India shall be treated to be a supply of goods in the course of 
inter-State trade or commerce - section 7(2) of IGST Act. 
Thus, IGST will be payable, at the time of import of goods from customs. 
 
IGST will be payable on value determined under section 3 of Customs Tariff Act on value determined under 
said Act at the point where duties of customs are levied on the said goods under section 12 of Customs Act, 
1962 - proviso to section 5(1) of IGST Act. 
 
Inter-state supply of services - Supply of services in the course of inter-State trade or commerce means any 
supply where the location of the supplier and the place of supply are in di fferent States or two di fferent Union 
Territories or a State and Union Territory. However, this is subject to the provisions of section 12 of IGST 
Act - section 7(3) of IGST Act. 
Import of services shall be treated to be inter-state  supply -Supply of services imported into the territory 
of India shall be deemed to be a supply of services in the course of inter-State trade or commerce - section 
7(4) of IGST Act. 
 
Thus, IGST will be payable, mostly under reverse charge. 
 
Export  of goods or services shall  be treated  to be inter-state  supply - Supply of goods or services or 
both, when the supplier is located in India and the place of supply is outside India, shall be treated to be a 
supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(a) of IGST 
Act. 
Supply to and  by SEZ developer or SEZ unit  shall  be treated  to be inter-state  supply - Supply of 
goods and/or services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of goods or 
services or both in the course of inter-State trade or commerce - section 7(5)(b) of IGST Act. 
Supply which is not intra-state supply is inter-state  supply - Any supply of goods or services or both in 
Page 3


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 16 - Pl ace of suppl y of goods and servi ces wi thi n Indi a 
 
 
 
 
 
CHAPTER 16 
 
Place of supply of goods and services within India 
 
EXECUTIVE SUMMARY 
 
?   The basic principle behind 'place of supply' provisions is that GST is consumption based tax. The tax 
is payable in the State in which goods or services or both are consumed. 
?   If location of supplier of service and place of supply are in same State or Union Territory, CGST 
and SGST/UTGST payable. 
?   If location of supplier of service and place of supply are in di fferent States or Union Territories, 
IGST is payable. 
?   Supply of services in the course of inter-State trade or commerce means any supply where the 
location of the  supplier  and  the  place  of supply are  in di fferent  States  or two  di fferent  Union 
Territories or a State and Union Territory. 
?   Supply of services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of 
services in the course of inter-State trade or commerce. 
?   Supply of services where the location of the supplier and the place of supply are in the same State or 
same Union Territory shall be treated as intra-state supply. However, this is subject to the provisions 
of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. 
?   Specific  provisions  have been made  for place  of supply in case of services  directly relating to 
immovable property, restaurant, training and appraisal, admission to events, transportation of goods 
and  passengers,  services  on board  a  conveyance,  telecom services,  banking  and  FI  services, 
insurance services and advertisement services to Government within India. 
?   In case of services other than those specified above, the place of supply of services - (a) made to a 
registered person shall be location of service recipient - section 12(2)(a) of IGST Act (b) made to 
any person other  than  a registered  person  shall be (i) the location of the recipient where the 
address on record exists, and ( i) the location of the supplier of services in other cases. 
16.1 Importance of place of supply 
 
CGST and SGST is payable in case of intra-state trade or commerce i.e. intra-state supply of goods and 
services. 
IGST is payable in case of inter-state trade or commerce i.e. intra-state supply of goods and services. 
Provisions to determine whether the transaction is intra-state or inter-state are contained in IGST Model Law. 
Export and import of goods and services are also covered under IGST provisions. 
 
Principle  behind the provisions - The basic principle behind provisions relating to place of supply is that 
GST is destination based tax. Thus, tax is finally payable where goods and services are consumed. This issue 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
is relatively easy in case of goods, but not so easy in case of services. Hence, in many cases, location of 
person receiving the service is relevant. If he is registered under GST, that is taken as criteria. Even if he is not 
registered, address on record of recipient is taken as criteria to determine place of supply in some cases. 
16.1-1 Parliament to formulate principles for determining place of supply of goods 
 
Parliament may, by law, formulate principles for determining (a) place of supply of goods or services (b) when 
supply of goods or services or both are in the course of inter-State trade or commerce -Article 269A(2) of 
Constitution of India inserted w.e.f. 16-9-2016. 
The provisions  relating to Place of Supply are made under these powers.  That is the reason why these 
provisions are contained in IGST Act and not CGST Act. 
16.1-2  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  inter-State trade  or 
commerce 
Section 7 of IGST Act make provisions in respect of Supply of goods or services or both in the course of 
inter-State trade or commerce (i.e. from one State to another). 
Inter-state supply of goods - As per section 7(1) of IGST Act, supply of goods in the course of inter-State 
trade or commerce (i.e. from one State to another) means any supply where the location of the supplier and 
the place  of supply are in two di fferent  States  or two di fferent  Union Territories  or a State  and Union 
Territory. However, this is subject to the provisions of section 10 Act [i.e. provisions of section 10 override 
provisions of section 7]. 
Import of goods shall be deemed to be inter-state  suppl y - Supply of goods imported into the territory of 
India. Ti l they cross the customs frontiers of India shall be treated to be a supply of goods in the course of 
inter-State trade or commerce - section 7(2) of IGST Act. 
Thus, IGST will be payable, at the time of import of goods from customs. 
 
IGST will be payable on value determined under section 3 of Customs Tariff Act on value determined under 
said Act at the point where duties of customs are levied on the said goods under section 12 of Customs Act, 
1962 - proviso to section 5(1) of IGST Act. 
 
Inter-state supply of services - Supply of services in the course of inter-State trade or commerce means any 
supply where the location of the supplier and the place of supply are in di fferent States or two di fferent Union 
Territories or a State and Union Territory. However, this is subject to the provisions of section 12 of IGST 
Act - section 7(3) of IGST Act. 
Import of services shall be treated to be inter-state  supply -Supply of services imported into the territory 
of India shall be deemed to be a supply of services in the course of inter-State trade or commerce - section 
7(4) of IGST Act. 
 
Thus, IGST will be payable, mostly under reverse charge. 
 
Export  of goods or services shall  be treated  to be inter-state  supply - Supply of goods or services or 
both, when the supplier is located in India and the place of supply is outside India, shall be treated to be a 
supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(a) of IGST 
Act. 
Supply to and  by SEZ developer or SEZ unit  shall  be treated  to be inter-state  supply - Supply of 
goods and/or services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of goods or 
services or both in the course of inter-State trade or commerce - section 7(5)(b) of IGST Act. 
Supply which is not intra-state supply is inter-state  supply - Any supply of goods or services or both in 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be deemed 
to be a supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(c) of 
IGST Act, 2017. 
Thus, any supply which is not intra-state supply is 'inter-state' supply and will be subject to IGST. 
 
16.1-3  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  intra-State trade  or 
commerce 
Section 8 of IGST Act make provisions in respect of supply of goods or services or both in the course of 
intra-State trade or commerce, i.e. trade or commerce within the State. 
Intra-state supply of goods - As per section 8(1) of IGST Act, supply of goods where the location of the 
supplier and the place of supply of goods are in same State or same Union Territory shall be treated as intra- 
state supply. However, this is subject to the provisions of section 10 of IGST Act. 
Further, the intra-State supply of goods shall not include - (i) supply of goods to or by a SEZ developer or to 
or by an SEZ unit ( i) supply of goods brought into India in the course of import ti l they cross the customs 
frontiers of India ( i) supplies made to a tourist under section 15 of IGST Act. 
Intra-state supply of services - Supply of services where the location of the supplier and the place of supply 
are in the same State or same Union Territory shall be treated as intra-state supply. However, this is subject to 
the provisions of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. - section 8(2) of IGST Act. 
16.1-4 Meaning of IGST 
 
"Integrated Tax" means the integrated goods and services tax (IGST) levied under IGST Act- section 2(12) of 
IGST Act. 
 
16.1-5 Meaning of India 
 
"India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed 
and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as 
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones 
Act, 1976, and the air space above its territory and territorial waters - section 2(56) of CGST Act. 
Definition of 'India' is wide. It covers a l landmass of India plus 200 nautical miles inside the sea, sea bed and 
air space above land and territorial waters. 
Territorial waters - Section 3 of the 'Territorial Waters, Continental Shelf, Exclusive Economic Zone and 
other Maritime Zone Act, 1976' specifies that territorial water extend upto 12 nautical miles from the base line 
on the coast of India and include any bay, gulf, harbour, creek or tidal river. (1 nautical mile = 1.1515 miles = 
1.853 Kms). Sovereignty of India extends to the territorial waters and to the seabed and subsoil underlying 
and the air space over the waters. 
In British India Steam Navigation Co Ltd. v. Shanmughavilas Cashew Industries (1990) 3 SCC 481, it 
was held that a statute extends to territory, unless the contrary is stated, throughout the country and will extend 
to the territorial waters and such places as intention to that effect is shown. - . - Indian Parliament has no 
authority to legislate for foreign vessels or foreigners in them on the high seas. - quoted with approval in World 
Tanker Carrier  Corpn v. SNP Shipping Services P Ltd. 1998(3) SCALE 165 (SC 3 member bench). 
Exclusive Economic Zone - 'Exclusive economic zone' extends to 200 nautical miles from the base-line. In 
this zone, the coastal State has exclusive rights to exploit it for economic purposes like constructing artificial 
islands (for oil exploration, power generation etc.), fishing, mineral resources and scientific research. However, 
other countries have right of navigation and over-f li ght rights. Other countries can lay submarine cables and 
Page 4


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 16 - Pl ace of suppl y of goods and servi ces wi thi n Indi a 
 
 
 
 
 
CHAPTER 16 
 
Place of supply of goods and services within India 
 
EXECUTIVE SUMMARY 
 
?   The basic principle behind 'place of supply' provisions is that GST is consumption based tax. The tax 
is payable in the State in which goods or services or both are consumed. 
?   If location of supplier of service and place of supply are in same State or Union Territory, CGST 
and SGST/UTGST payable. 
?   If location of supplier of service and place of supply are in di fferent States or Union Territories, 
IGST is payable. 
?   Supply of services in the course of inter-State trade or commerce means any supply where the 
location of the  supplier  and  the  place  of supply are  in di fferent  States  or two  di fferent  Union 
Territories or a State and Union Territory. 
?   Supply of services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of 
services in the course of inter-State trade or commerce. 
?   Supply of services where the location of the supplier and the place of supply are in the same State or 
same Union Territory shall be treated as intra-state supply. However, this is subject to the provisions 
of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. 
?   Specific  provisions  have been made  for place  of supply in case of services  directly relating to 
immovable property, restaurant, training and appraisal, admission to events, transportation of goods 
and  passengers,  services  on board  a  conveyance,  telecom services,  banking  and  FI  services, 
insurance services and advertisement services to Government within India. 
?   In case of services other than those specified above, the place of supply of services - (a) made to a 
registered person shall be location of service recipient - section 12(2)(a) of IGST Act (b) made to 
any person other  than  a registered  person  shall be (i) the location of the recipient where the 
address on record exists, and ( i) the location of the supplier of services in other cases. 
16.1 Importance of place of supply 
 
CGST and SGST is payable in case of intra-state trade or commerce i.e. intra-state supply of goods and 
services. 
IGST is payable in case of inter-state trade or commerce i.e. intra-state supply of goods and services. 
Provisions to determine whether the transaction is intra-state or inter-state are contained in IGST Model Law. 
Export and import of goods and services are also covered under IGST provisions. 
 
Principle  behind the provisions - The basic principle behind provisions relating to place of supply is that 
GST is destination based tax. Thus, tax is finally payable where goods and services are consumed. This issue 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
is relatively easy in case of goods, but not so easy in case of services. Hence, in many cases, location of 
person receiving the service is relevant. If he is registered under GST, that is taken as criteria. Even if he is not 
registered, address on record of recipient is taken as criteria to determine place of supply in some cases. 
16.1-1 Parliament to formulate principles for determining place of supply of goods 
 
Parliament may, by law, formulate principles for determining (a) place of supply of goods or services (b) when 
supply of goods or services or both are in the course of inter-State trade or commerce -Article 269A(2) of 
Constitution of India inserted w.e.f. 16-9-2016. 
The provisions  relating to Place of Supply are made under these powers.  That is the reason why these 
provisions are contained in IGST Act and not CGST Act. 
16.1-2  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  inter-State trade  or 
commerce 
Section 7 of IGST Act make provisions in respect of Supply of goods or services or both in the course of 
inter-State trade or commerce (i.e. from one State to another). 
Inter-state supply of goods - As per section 7(1) of IGST Act, supply of goods in the course of inter-State 
trade or commerce (i.e. from one State to another) means any supply where the location of the supplier and 
the place  of supply are in two di fferent  States  or two di fferent  Union Territories  or a State  and Union 
Territory. However, this is subject to the provisions of section 10 Act [i.e. provisions of section 10 override 
provisions of section 7]. 
Import of goods shall be deemed to be inter-state  suppl y - Supply of goods imported into the territory of 
India. Ti l they cross the customs frontiers of India shall be treated to be a supply of goods in the course of 
inter-State trade or commerce - section 7(2) of IGST Act. 
Thus, IGST will be payable, at the time of import of goods from customs. 
 
IGST will be payable on value determined under section 3 of Customs Tariff Act on value determined under 
said Act at the point where duties of customs are levied on the said goods under section 12 of Customs Act, 
1962 - proviso to section 5(1) of IGST Act. 
 
Inter-state supply of services - Supply of services in the course of inter-State trade or commerce means any 
supply where the location of the supplier and the place of supply are in di fferent States or two di fferent Union 
Territories or a State and Union Territory. However, this is subject to the provisions of section 12 of IGST 
Act - section 7(3) of IGST Act. 
Import of services shall be treated to be inter-state  supply -Supply of services imported into the territory 
of India shall be deemed to be a supply of services in the course of inter-State trade or commerce - section 
7(4) of IGST Act. 
 
Thus, IGST will be payable, mostly under reverse charge. 
 
Export  of goods or services shall  be treated  to be inter-state  supply - Supply of goods or services or 
both, when the supplier is located in India and the place of supply is outside India, shall be treated to be a 
supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(a) of IGST 
Act. 
Supply to and  by SEZ developer or SEZ unit  shall  be treated  to be inter-state  supply - Supply of 
goods and/or services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of goods or 
services or both in the course of inter-State trade or commerce - section 7(5)(b) of IGST Act. 
Supply which is not intra-state supply is inter-state  supply - Any supply of goods or services or both in 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be deemed 
to be a supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(c) of 
IGST Act, 2017. 
Thus, any supply which is not intra-state supply is 'inter-state' supply and will be subject to IGST. 
 
16.1-3  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  intra-State trade  or 
commerce 
Section 8 of IGST Act make provisions in respect of supply of goods or services or both in the course of 
intra-State trade or commerce, i.e. trade or commerce within the State. 
Intra-state supply of goods - As per section 8(1) of IGST Act, supply of goods where the location of the 
supplier and the place of supply of goods are in same State or same Union Territory shall be treated as intra- 
state supply. However, this is subject to the provisions of section 10 of IGST Act. 
Further, the intra-State supply of goods shall not include - (i) supply of goods to or by a SEZ developer or to 
or by an SEZ unit ( i) supply of goods brought into India in the course of import ti l they cross the customs 
frontiers of India ( i) supplies made to a tourist under section 15 of IGST Act. 
Intra-state supply of services - Supply of services where the location of the supplier and the place of supply 
are in the same State or same Union Territory shall be treated as intra-state supply. However, this is subject to 
the provisions of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. - section 8(2) of IGST Act. 
16.1-4 Meaning of IGST 
 
"Integrated Tax" means the integrated goods and services tax (IGST) levied under IGST Act- section 2(12) of 
IGST Act. 
 
16.1-5 Meaning of India 
 
"India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed 
and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as 
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones 
Act, 1976, and the air space above its territory and territorial waters - section 2(56) of CGST Act. 
Definition of 'India' is wide. It covers a l landmass of India plus 200 nautical miles inside the sea, sea bed and 
air space above land and territorial waters. 
Territorial waters - Section 3 of the 'Territorial Waters, Continental Shelf, Exclusive Economic Zone and 
other Maritime Zone Act, 1976' specifies that territorial water extend upto 12 nautical miles from the base line 
on the coast of India and include any bay, gulf, harbour, creek or tidal river. (1 nautical mile = 1.1515 miles = 
1.853 Kms). Sovereignty of India extends to the territorial waters and to the seabed and subsoil underlying 
and the air space over the waters. 
In British India Steam Navigation Co Ltd. v. Shanmughavilas Cashew Industries (1990) 3 SCC 481, it 
was held that a statute extends to territory, unless the contrary is stated, throughout the country and will extend 
to the territorial waters and such places as intention to that effect is shown. - . - Indian Parliament has no 
authority to legislate for foreign vessels or foreigners in them on the high seas. - quoted with approval in World 
Tanker Carrier  Corpn v. SNP Shipping Services P Ltd. 1998(3) SCALE 165 (SC 3 member bench). 
Exclusive Economic Zone - 'Exclusive economic zone' extends to 200 nautical miles from the base-line. In 
this zone, the coastal State has exclusive rights to exploit it for economic purposes like constructing artificial 
islands (for oil exploration, power generation etc.), fishing, mineral resources and scientific research. However, 
other countries have right of navigation and over-f li ght rights. Other countries can lay submarine cables and 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
pipelines with consent of Indian Government. Such consent may be declined for protecting interest of India. 
Section 7 of Territorial Waters - . - . - . - Act, 1976 has made similar provisions and thus, these provisions 
have been adopted in India too. 
Beyond 200 nautical miles, the area is 'High Seas', where a l countries have equal ri ghts. These high seas are 
reserved for peaceful purposes. Any Country can use it for navigation, over-f light, laying submarine cables and 
pipes, fishing, construction of artificial islands permitted under international law and for scientific research. 
Continental Shelf - 'Continental  shelf' is an area of relatively sha low seabed between the shore of a 
continent and the deeper ocean. [Concise Oxford Dictionary, 1990 edition]. 
16.1-6 Area upto 12 nautical miles belongs to State 
Area upto 12 nautical miles belong to State/Union Territory at least as far as GST is concerned. 
Notwithstanding anything contained in IGST Act, (a) where the location of the supplier is in the territorial 
waters, the location of such supplier; or (b) where the place of supply is in the territorial waters, the place of 
supply, sha l, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the 
nearest point of the appropriate baseline is located - section 9 of IGST Act. 
This view has been held by High Courts also. 
 
Sovereignty of State extends to 12 nautical miles. Hence, any sale which is within 12 nautical miles is taxable 
by the State concerned (i.e. it is local sale i.e. Sale within the State) - Great  Eastern Shipping v. State of 
Karnataka  (2000) 117 STC 437 (Karn HC) - view confirmed  in Great  Eastern  Shipping v. State of 
Karnataka  (2004) 136 STC  519 (Karn HC  DB) -  same view in A.M.S.S.V.M  Company v. State  of 
Madras AIR 1954 Mad HC DB 291. 
Person  supplying goods or services from territorial waters should register in coastal  state or Union 
Territory  - Every person who makes a supply from the territorial waters of India shall obtain registration in 
the  coastal State  or  Union  territory  where  the  nearest  point  of the  appropriate  base  line  is  located  - 
Explanation to section 25(1) of CGST Act. 
16.2 Place of supply of goods if supply is within India 
 
As per section 10(1) of IGST Act, place of supply of goods will be determined on fo lowing basis, if it is 
within India (i.e. other than imports and exports of goods) 
Place of supply is where movement of goods terminates - Where the supply i nvolves movement of goods, 
whether by the supplier or the recipient or by any other person, the place of supply of goods shall be the 
location of the goods at the time at which the movement of goods terminates for delivery to the recipient- 
section 10(1)(a) of IGST Act. 
Goods delivered  on  direction  of third  person  - Where the goods are delivered  by the supplier to a 
recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, 
before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, 
it shall be deemed that the said third person has received the goods and the place of supply of such goods shall 
be the principal place of business of such person- section 10(1)(b) of IGST Act. 
This would cover sale in transit by transfer of documents of title. 
 
This clause would also cover situation when goods are sent to job worker on the instructions of 'principal'. 
 
Place  of supply is delivery to recipient  when  no  movement  of goods - Where the supply does not 
i nvolve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location 
of such goods at the time of the delivery to the recipient - section 10(1)(c) of IGST Act. 
Page 5


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 16 - Pl ace of suppl y of goods and servi ces wi thi n Indi a 
 
 
 
 
 
CHAPTER 16 
 
Place of supply of goods and services within India 
 
EXECUTIVE SUMMARY 
 
?   The basic principle behind 'place of supply' provisions is that GST is consumption based tax. The tax 
is payable in the State in which goods or services or both are consumed. 
?   If location of supplier of service and place of supply are in same State or Union Territory, CGST 
and SGST/UTGST payable. 
?   If location of supplier of service and place of supply are in di fferent States or Union Territories, 
IGST is payable. 
?   Supply of services in the course of inter-State trade or commerce means any supply where the 
location of the  supplier  and  the  place  of supply are  in di fferent  States  or two  di fferent  Union 
Territories or a State and Union Territory. 
?   Supply of services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of 
services in the course of inter-State trade or commerce. 
?   Supply of services where the location of the supplier and the place of supply are in the same State or 
same Union Territory shall be treated as intra-state supply. However, this is subject to the provisions 
of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. 
?   Specific  provisions  have been made  for place  of supply in case of services  directly relating to 
immovable property, restaurant, training and appraisal, admission to events, transportation of goods 
and  passengers,  services  on board  a  conveyance,  telecom services,  banking  and  FI  services, 
insurance services and advertisement services to Government within India. 
?   In case of services other than those specified above, the place of supply of services - (a) made to a 
registered person shall be location of service recipient - section 12(2)(a) of IGST Act (b) made to 
any person other  than  a registered  person  shall be (i) the location of the recipient where the 
address on record exists, and ( i) the location of the supplier of services in other cases. 
16.1 Importance of place of supply 
 
CGST and SGST is payable in case of intra-state trade or commerce i.e. intra-state supply of goods and 
services. 
IGST is payable in case of inter-state trade or commerce i.e. intra-state supply of goods and services. 
Provisions to determine whether the transaction is intra-state or inter-state are contained in IGST Model Law. 
Export and import of goods and services are also covered under IGST provisions. 
 
Principle  behind the provisions - The basic principle behind provisions relating to place of supply is that 
GST is destination based tax. Thus, tax is finally payable where goods and services are consumed. This issue 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
is relatively easy in case of goods, but not so easy in case of services. Hence, in many cases, location of 
person receiving the service is relevant. If he is registered under GST, that is taken as criteria. Even if he is not 
registered, address on record of recipient is taken as criteria to determine place of supply in some cases. 
16.1-1 Parliament to formulate principles for determining place of supply of goods 
 
Parliament may, by law, formulate principles for determining (a) place of supply of goods or services (b) when 
supply of goods or services or both are in the course of inter-State trade or commerce -Article 269A(2) of 
Constitution of India inserted w.e.f. 16-9-2016. 
The provisions  relating to Place of Supply are made under these powers.  That is the reason why these 
provisions are contained in IGST Act and not CGST Act. 
16.1-2  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  inter-State trade  or 
commerce 
Section 7 of IGST Act make provisions in respect of Supply of goods or services or both in the course of 
inter-State trade or commerce (i.e. from one State to another). 
Inter-state supply of goods - As per section 7(1) of IGST Act, supply of goods in the course of inter-State 
trade or commerce (i.e. from one State to another) means any supply where the location of the supplier and 
the place  of supply are in two di fferent  States  or two di fferent  Union Territories  or a State  and Union 
Territory. However, this is subject to the provisions of section 10 Act [i.e. provisions of section 10 override 
provisions of section 7]. 
Import of goods shall be deemed to be inter-state  suppl y - Supply of goods imported into the territory of 
India. Ti l they cross the customs frontiers of India shall be treated to be a supply of goods in the course of 
inter-State trade or commerce - section 7(2) of IGST Act. 
Thus, IGST will be payable, at the time of import of goods from customs. 
 
IGST will be payable on value determined under section 3 of Customs Tariff Act on value determined under 
said Act at the point where duties of customs are levied on the said goods under section 12 of Customs Act, 
1962 - proviso to section 5(1) of IGST Act. 
 
Inter-state supply of services - Supply of services in the course of inter-State trade or commerce means any 
supply where the location of the supplier and the place of supply are in di fferent States or two di fferent Union 
Territories or a State and Union Territory. However, this is subject to the provisions of section 12 of IGST 
Act - section 7(3) of IGST Act. 
Import of services shall be treated to be inter-state  supply -Supply of services imported into the territory 
of India shall be deemed to be a supply of services in the course of inter-State trade or commerce - section 
7(4) of IGST Act. 
 
Thus, IGST will be payable, mostly under reverse charge. 
 
Export  of goods or services shall  be treated  to be inter-state  supply - Supply of goods or services or 
both, when the supplier is located in India and the place of supply is outside India, shall be treated to be a 
supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(a) of IGST 
Act. 
Supply to and  by SEZ developer or SEZ unit  shall  be treated  to be inter-state  supply - Supply of 
goods and/or services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of goods or 
services or both in the course of inter-State trade or commerce - section 7(5)(b) of IGST Act. 
Supply which is not intra-state supply is inter-state  supply - Any supply of goods or services or both in 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be deemed 
to be a supply of goods or services or both in the course of inter-State trade or commerce - section 7(5)(c) of 
IGST Act, 2017. 
Thus, any supply which is not intra-state supply is 'inter-state' supply and will be subject to IGST. 
 
16.1-3  Meaning  of  Supply   of  goods  or services  or both  in  the  course  of  intra-State trade  or 
commerce 
Section 8 of IGST Act make provisions in respect of supply of goods or services or both in the course of 
intra-State trade or commerce, i.e. trade or commerce within the State. 
Intra-state supply of goods - As per section 8(1) of IGST Act, supply of goods where the location of the 
supplier and the place of supply of goods are in same State or same Union Territory shall be treated as intra- 
state supply. However, this is subject to the provisions of section 10 of IGST Act. 
Further, the intra-State supply of goods shall not include - (i) supply of goods to or by a SEZ developer or to 
or by an SEZ unit ( i) supply of goods brought into India in the course of import ti l they cross the customs 
frontiers of India ( i) supplies made to a tourist under section 15 of IGST Act. 
Intra-state supply of services - Supply of services where the location of the supplier and the place of supply 
are in the same State or same Union Territory shall be treated as intra-state supply. However, this is subject to 
the provisions of section 12 of IGST Act. Further, the intra-state supply of services shall not include supply of 
services to or by a SEZ developer or to or by an SEZ unit. - section 8(2) of IGST Act. 
16.1-4 Meaning of IGST 
 
"Integrated Tax" means the integrated goods and services tax (IGST) levied under IGST Act- section 2(12) of 
IGST Act. 
 
16.1-5 Meaning of India 
 
"India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed 
and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as 
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones 
Act, 1976, and the air space above its territory and territorial waters - section 2(56) of CGST Act. 
Definition of 'India' is wide. It covers a l landmass of India plus 200 nautical miles inside the sea, sea bed and 
air space above land and territorial waters. 
Territorial waters - Section 3 of the 'Territorial Waters, Continental Shelf, Exclusive Economic Zone and 
other Maritime Zone Act, 1976' specifies that territorial water extend upto 12 nautical miles from the base line 
on the coast of India and include any bay, gulf, harbour, creek or tidal river. (1 nautical mile = 1.1515 miles = 
1.853 Kms). Sovereignty of India extends to the territorial waters and to the seabed and subsoil underlying 
and the air space over the waters. 
In British India Steam Navigation Co Ltd. v. Shanmughavilas Cashew Industries (1990) 3 SCC 481, it 
was held that a statute extends to territory, unless the contrary is stated, throughout the country and will extend 
to the territorial waters and such places as intention to that effect is shown. - . - Indian Parliament has no 
authority to legislate for foreign vessels or foreigners in them on the high seas. - quoted with approval in World 
Tanker Carrier  Corpn v. SNP Shipping Services P Ltd. 1998(3) SCALE 165 (SC 3 member bench). 
Exclusive Economic Zone - 'Exclusive economic zone' extends to 200 nautical miles from the base-line. In 
this zone, the coastal State has exclusive rights to exploit it for economic purposes like constructing artificial 
islands (for oil exploration, power generation etc.), fishing, mineral resources and scientific research. However, 
other countries have right of navigation and over-f li ght rights. Other countries can lay submarine cables and 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
pipelines with consent of Indian Government. Such consent may be declined for protecting interest of India. 
Section 7 of Territorial Waters - . - . - . - Act, 1976 has made similar provisions and thus, these provisions 
have been adopted in India too. 
Beyond 200 nautical miles, the area is 'High Seas', where a l countries have equal ri ghts. These high seas are 
reserved for peaceful purposes. Any Country can use it for navigation, over-f light, laying submarine cables and 
pipes, fishing, construction of artificial islands permitted under international law and for scientific research. 
Continental Shelf - 'Continental  shelf' is an area of relatively sha low seabed between the shore of a 
continent and the deeper ocean. [Concise Oxford Dictionary, 1990 edition]. 
16.1-6 Area upto 12 nautical miles belongs to State 
Area upto 12 nautical miles belong to State/Union Territory at least as far as GST is concerned. 
Notwithstanding anything contained in IGST Act, (a) where the location of the supplier is in the territorial 
waters, the location of such supplier; or (b) where the place of supply is in the territorial waters, the place of 
supply, sha l, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the 
nearest point of the appropriate baseline is located - section 9 of IGST Act. 
This view has been held by High Courts also. 
 
Sovereignty of State extends to 12 nautical miles. Hence, any sale which is within 12 nautical miles is taxable 
by the State concerned (i.e. it is local sale i.e. Sale within the State) - Great  Eastern Shipping v. State of 
Karnataka  (2000) 117 STC 437 (Karn HC) - view confirmed  in Great  Eastern  Shipping v. State of 
Karnataka  (2004) 136 STC  519 (Karn HC  DB) -  same view in A.M.S.S.V.M  Company v. State  of 
Madras AIR 1954 Mad HC DB 291. 
Person  supplying goods or services from territorial waters should register in coastal  state or Union 
Territory  - Every person who makes a supply from the territorial waters of India shall obtain registration in 
the  coastal State  or  Union  territory  where  the  nearest  point  of the  appropriate  base  line  is  located  - 
Explanation to section 25(1) of CGST Act. 
16.2 Place of supply of goods if supply is within India 
 
As per section 10(1) of IGST Act, place of supply of goods will be determined on fo lowing basis, if it is 
within India (i.e. other than imports and exports of goods) 
Place of supply is where movement of goods terminates - Where the supply i nvolves movement of goods, 
whether by the supplier or the recipient or by any other person, the place of supply of goods shall be the 
location of the goods at the time at which the movement of goods terminates for delivery to the recipient- 
section 10(1)(a) of IGST Act. 
Goods delivered  on  direction  of third  person  - Where the goods are delivered  by the supplier to a 
recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, 
before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, 
it shall be deemed that the said third person has received the goods and the place of supply of such goods shall 
be the principal place of business of such person- section 10(1)(b) of IGST Act. 
This would cover sale in transit by transfer of documents of title. 
 
This clause would also cover situation when goods are sent to job worker on the instructions of 'principal'. 
 
Place  of supply is delivery to recipient  when  no  movement  of goods - Where the supply does not 
i nvolve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location 
of such goods at the time of the delivery to the recipient - section 10(1)(c) of IGST Act. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
Place of supply in case of installation or assembly - Where the goods are assembled or insta led at site, 
the place of supply shall be the place of such insta lation or assembly - section 10(1)(d) of IGST Act. 
Place  of supply when goods are supplied on board  a conveyance - Where the goods are supplied on 
board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the 
location at which such goods are taken on board - section 10(1)(e) of IGST Act. 
Residual provision - Where the place of supply of goods cannot be determined in aforesaid terms, the same 
shall be determined in such manner as may be prescribed - section 10(2) of IGST Act. 
16.3 Supply of goods by transfer of documents during movement of goods 
 
Section 10(1)(b) of IGST Act covers supply during movement of goods by transfer of documents. In case of 
such sale, it shall be presumed that the final recipient's place is place of supply of goods. Thus, if supplier and 
final recipient are in di fferent States, the supply will be inter-state even if goods are delivered in the same State 
on direction of final customer (third party). 
16.4 Place of supply of services if location of supplier and recipient of service is in India 
 
Issue relating to place of supply of services is tricky as there is no physical movement like in case of goods. 
For this purpose, definition of location of supplier and location of recipient of service are important. 
Place  of supply in case of export  or import  of services - IGST Act has made separate provisions in 
respect of place of supply in case of import and export of services i.e. where the location of the supplier of 
service or the location of the recipient of service is outside India. 
These are discussed in another chapter as there are di fferences in provisions. 
 
16.4-1 Location of recipient of service and supplier of services 
 
Section 2(14) of IGST Act defines 'location of recipient of services' as fo lows 
 
"Location of recipient of services" means: 
 
(a)   where a supply is received at a place of business for which registration has been obtained,  the 
location of such place of business. 
(b)   where a supply is received at a place other than the place of business for which registration has been 
obtained (i.e. fixed establishment elsewhere), the location of such fixed establishment. 
(c)   where a supply is received at more than one establishment, whether the place of business or fixed 
establishment,  the location of the establishment  most directly concerned  with the receipt of the 
supply; and 
(d)   in absence of such places, the location of the usual place of residence of the recipient. 
Section 2(15) of IGST Act defines 'location of supplier of service' as follows - 
"Location of supplier of service" means: 
 
(a)   where a supply is made from a place of business for which registration has been obtained,  the 
location of such place of business. 
(b)   where a supply is made from a place other than the place of business for which registration has been 
obtained (i.e. fixed establishment elsewhere), the location of such fixed establishment. 
(c)   where a supply is made from more than one establishment, whether the place of business or fixed 
establishment,  the location of the establishment most directly concerned with the provision of the 
supply and 
(d)   in absence of such places, the location of the usual place of residence of the supplier.