Ch 17 - Place of Supply in case of Export or Import | 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 17 - Pl ace of suppl y i n case of export or i mport of goods and 
servi ces 
 
 
 
 
 
CHAPTER 17 
 
Place of supply in case of export or import of goods and services 
 
EXECUTIVE SUMMARY 
 
?   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.  Thus, IGST will be payable, mostly under reverse 
charge. 
?   Import of service means supplier out of India, recipient in India and place of supply of service is in 
India. 
?   Supply of services, when the supplier is located in India and the place of supply is outside India, shall 
be treated to be a supply of services in the course of inter-State trade or commerce. 
?   Export of service means supplier in India, recipient out of India and place of supply of service is 
outside India and payment received in foreign exchange. 
?   Specific provisions have been made for place of supply in case of performance  based services, 
services  where  physical  presence  of service  recipient  is  required,  services  directly  relating  to 
immovable property, services relating to admission or organisation of events, banking, NBFC and FI 
services, services of commission agent, hiring means of transport, service of transportation of goods 
and passengers, services on board a conveyance and Online Information and database access or 
Retrieval Services (OIDAR). 
?   Except is case of specified services discussed above, the place of supply of services shall be the 
location of the recipient of service. However, in case the location of the recipient of service is not 
available in the ordinary course of business, the place of supply shall be the location of the supplier of 
service. 
17.1 Place of supply when supplier or recipient is outside  India 
 
IGST Act has made separate provisions in respect of place of supply in case of import and export of goods 
and services i.e. where the location of the supplier of goods or services or the location of the recipient of 
goods or services is outside India. 
17.1-1 Taxable territory 
 
"Taxable territory" means the territory to which the provisions of IGST Act apply - section 2(22) of IGST Act. 
As per section 1(2) of IGST Act, the IGST Act extends to whole of India, except J&K. 
17.2 Place of supply in case of imports and exports of goods 
 
"Export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to 
a place outside India - section 2(5) of IGST Act. 
Page 2


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 17 - Pl ace of suppl y i n case of export or i mport of goods and 
servi ces 
 
 
 
 
 
CHAPTER 17 
 
Place of supply in case of export or import of goods and services 
 
EXECUTIVE SUMMARY 
 
?   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.  Thus, IGST will be payable, mostly under reverse 
charge. 
?   Import of service means supplier out of India, recipient in India and place of supply of service is in 
India. 
?   Supply of services, when the supplier is located in India and the place of supply is outside India, shall 
be treated to be a supply of services in the course of inter-State trade or commerce. 
?   Export of service means supplier in India, recipient out of India and place of supply of service is 
outside India and payment received in foreign exchange. 
?   Specific provisions have been made for place of supply in case of performance  based services, 
services  where  physical  presence  of service  recipient  is  required,  services  directly  relating  to 
immovable property, services relating to admission or organisation of events, banking, NBFC and FI 
services, services of commission agent, hiring means of transport, service of transportation of goods 
and passengers, services on board a conveyance and Online Information and database access or 
Retrieval Services (OIDAR). 
?   Except is case of specified services discussed above, the place of supply of services shall be the 
location of the recipient of service. However, in case the location of the recipient of service is not 
available in the ordinary course of business, the place of supply shall be the location of the supplier of 
service. 
17.1 Place of supply when supplier or recipient is outside  India 
 
IGST Act has made separate provisions in respect of place of supply in case of import and export of goods 
and services i.e. where the location of the supplier of goods or services or the location of the recipient of 
goods or services is outside India. 
17.1-1 Taxable territory 
 
"Taxable territory" means the territory to which the provisions of IGST Act apply - section 2(22) of IGST Act. 
As per section 1(2) of IGST Act, the IGST Act extends to whole of India, except J&K. 
17.2 Place of supply in case of imports and exports of goods 
 
"Export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to 
a place outside India - section 2(5) of IGST Act. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
"Import of goods" with its grammatical variations and cognate expressions, means bringing goods into India 
from a place outside India - section 2(10) of IGST Act. 
The place of supply of goods imported into India shall be the location of the importer - section 11(a) of IGST 
Act. 
The place of supply of goods exported from India shall be the location outside India- section 11(b) of IGST 
Act. 
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. 
"Customs frontiers of India" means the limits of a customs area as defined in section 2 of the Customs Act, 
1962 - section 2(4) of IGST Act. 
 
Thus, in case of import of goods, only IGST can apply. SGST and CGST will never apply. 
 
17.2-1  Export or supply  to  SEZ  unit  or developer  of goods  or services  is  inter-state trade  or 
commerce 
Supply of goods or services or both - (a) when the supplier is located in India and the place of supply is 
outside India (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the 
taxable territory, not being an intra-State supply and not covered elsewhere in this section - - 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) of 
IGST Act. 
Thus, in case of export of goods or services, SGST cannot apply. 
 
17.3 Export and import of services 
 
Place of supply of service is relevant to determine issue of export and import of services. 
 
Export of services - Section 2(6) of IFIGST Act states as follows - 
"Export of services" means the supply of any service when- 
(a)   the supplier of service is located in India 
(b)   the recipient of service is located outside India 
(c)   the place of supply of service is outside India 
(d)   the payment for such service has been received by the supplier of service in convertible  foreign 
exchange, and 
(e)   the supplier of service and recipient of service are not merely establishments of a distinct person in 
accordance with explanation 1 of section 8 of IGST Act [what is meant is that branch and HO of 
same taxable person shall not be treated as two distinct persons for this provision.  Thus, there 
cannot be export of service to own branch office outside India]. 
Import of services - Section 2(11) of IGST Act reads as follows - 
"Import of service" means the supply of any service, where— 
(a)   the supplier of service is located outside India, 
(b)   the recipient of service is located in India, and 
(c)   the place of supply of service is in India. 
17.3-1 Meaning of establishment of distinct  persons 
 
Explanation1 to section 8(1) of IGST Act reads as follows - 
Page 3


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 17 - Pl ace of suppl y i n case of export or i mport of goods and 
servi ces 
 
 
 
 
 
CHAPTER 17 
 
Place of supply in case of export or import of goods and services 
 
EXECUTIVE SUMMARY 
 
?   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.  Thus, IGST will be payable, mostly under reverse 
charge. 
?   Import of service means supplier out of India, recipient in India and place of supply of service is in 
India. 
?   Supply of services, when the supplier is located in India and the place of supply is outside India, shall 
be treated to be a supply of services in the course of inter-State trade or commerce. 
?   Export of service means supplier in India, recipient out of India and place of supply of service is 
outside India and payment received in foreign exchange. 
?   Specific provisions have been made for place of supply in case of performance  based services, 
services  where  physical  presence  of service  recipient  is  required,  services  directly  relating  to 
immovable property, services relating to admission or organisation of events, banking, NBFC and FI 
services, services of commission agent, hiring means of transport, service of transportation of goods 
and passengers, services on board a conveyance and Online Information and database access or 
Retrieval Services (OIDAR). 
?   Except is case of specified services discussed above, the place of supply of services shall be the 
location of the recipient of service. However, in case the location of the recipient of service is not 
available in the ordinary course of business, the place of supply shall be the location of the supplier of 
service. 
17.1 Place of supply when supplier or recipient is outside  India 
 
IGST Act has made separate provisions in respect of place of supply in case of import and export of goods 
and services i.e. where the location of the supplier of goods or services or the location of the recipient of 
goods or services is outside India. 
17.1-1 Taxable territory 
 
"Taxable territory" means the territory to which the provisions of IGST Act apply - section 2(22) of IGST Act. 
As per section 1(2) of IGST Act, the IGST Act extends to whole of India, except J&K. 
17.2 Place of supply in case of imports and exports of goods 
 
"Export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to 
a place outside India - section 2(5) of IGST Act. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
"Import of goods" with its grammatical variations and cognate expressions, means bringing goods into India 
from a place outside India - section 2(10) of IGST Act. 
The place of supply of goods imported into India shall be the location of the importer - section 11(a) of IGST 
Act. 
The place of supply of goods exported from India shall be the location outside India- section 11(b) of IGST 
Act. 
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. 
"Customs frontiers of India" means the limits of a customs area as defined in section 2 of the Customs Act, 
1962 - section 2(4) of IGST Act. 
 
Thus, in case of import of goods, only IGST can apply. SGST and CGST will never apply. 
 
17.2-1  Export or supply  to  SEZ  unit  or developer  of goods  or services  is  inter-state trade  or 
commerce 
Supply of goods or services or both - (a) when the supplier is located in India and the place of supply is 
outside India (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the 
taxable territory, not being an intra-State supply and not covered elsewhere in this section - - 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) of 
IGST Act. 
Thus, in case of export of goods or services, SGST cannot apply. 
 
17.3 Export and import of services 
 
Place of supply of service is relevant to determine issue of export and import of services. 
 
Export of services - Section 2(6) of IFIGST Act states as follows - 
"Export of services" means the supply of any service when- 
(a)   the supplier of service is located in India 
(b)   the recipient of service is located outside India 
(c)   the place of supply of service is outside India 
(d)   the payment for such service has been received by the supplier of service in convertible  foreign 
exchange, and 
(e)   the supplier of service and recipient of service are not merely establishments of a distinct person in 
accordance with explanation 1 of section 8 of IGST Act [what is meant is that branch and HO of 
same taxable person shall not be treated as two distinct persons for this provision.  Thus, there 
cannot be export of service to own branch office outside India]. 
Import of services - Section 2(11) of IGST Act reads as follows - 
"Import of service" means the supply of any service, where— 
(a)   the supplier of service is located outside India, 
(b)   the recipient of service is located in India, and 
(c)   the place of supply of service is in India. 
17.3-1 Meaning of establishment of distinct  persons 
 
Explanation1 to section 8(1) of IGST Act reads as follows - 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
For the purposes of this Act (i.e. IGST Act)- (i) an establishment in India and any other establishment outside 
India, or ( i) an establishment in a State and any other establishment outside that State or ( i) an establishment 
in a State  and  any other  establishment  being a business  vertical within the  State  -  -shall be treated  as 
establishments of distinct persons. 
17.3-2 Receipt or payment in foreign exchange  not relevant to decide place of supply 
 
The Place of Supply of Services provisions do not make any mention about receipt or payment in foreign 
exchange or in Rupees. In fact, the provisions do not make any mention of payment at a l. 
Thus, payment or receipt in foreign exchange or rupees is not at a l relevant to determine Place of Supply of 
Services. That is relevant to determine whether the service is 'export of service'. Often, provisions of place of 
supply of service and Export of Service provisions are mixed up, which causes confusion. 
17.3-3 Principles in Place of Supply of Service provisions based on European Directives 
 
Principles in Place of Supply of Service rules are broadly based on European Union (EU) Directives. 
 
In Aktiebolaget NN v. Skatteverket (2012) 36 STT 264 = 22 Latest Case175 (ECJ), it was observed 
that the purpose of the EU directives is to avoid conf licts of jurisdiction which may result in double taxation or 
non-taxation. 
Thus, principle is to avoid doubt taxation or non-taxation.  This has to be remembered  while applying the 
provisions. 
17.3-4 Global Agreement and Global Framework Agreement 
 
In case of Global Agreement, or Global Framework Agreement for provision and receipt of services, various 
permutations and combinations are possible. CBE&C has clarified as follows in respect of service tax where 
orders are placed at HQ or payment for services are made by HQ outside India. This clarification equa ly 
applies in case of IGST also. 
Third person or HQ may place orders or make payment on behalf of recipient  service - Para 5.3.4 of 
CBE&C's 'Taxation of Services : An Education Guide' published on 20-6-2012 states as follows - 
 
Occasiona ly, a person may be the person liable to make payment for the service provided on his behalf to 
another person. For instance, the provision of a service may be negotiated at the headquarters of an entity by 
way of centralized sourcing of services whereas the actual provision is made at various locations in di fferent 
taxing jurisdictions (in the case of what is commonly referred to as a multi-locational entity or MLE). Here, the 
central office  may act  only as  a  facilitator  to  negotiate  the  contract  on behalf of various  geographical 
establishments.  Each of the geographical establishments  receives the service and is obligated to make the 
payment either through headquarters or sometimes directly. When the payment is made directly, there is no 
confusion. In other situations, where the payment is settled either by cash or through debit and credit note 
between the business and fixed establishments, it is clear that the payment is being made by a geographical 
location. Wherever a fixed establishment bears the cost of acquiring, or using or consuming a service through 
any internal arrangement (norma ly referred to as a "recharge",  "rea location", or a "settlement"),  these are 
genera ly  made  in  accordance  with  corporate  tax  or  other  statutory  requirements.  These  accounting 
arrangements also invariably aid the MLE's management in budgeting and financial performance measurement. 
Various  accounting  and  business  management  systems  are  genera ly employed  to  manage,  monitor  and 
document the entire purchasing cycle of goods and services (such as the ERP-Enterprise Resource Planning 
System). These systems support and document the company processes, including the financial and accounting 
process, and purchasing process. Norma ly, these systems will provide the required information and audit trail 
to identify the establishment that uses or consumes a service. 
Page 4


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 17 - Pl ace of suppl y i n case of export or i mport of goods and 
servi ces 
 
 
 
 
 
CHAPTER 17 
 
Place of supply in case of export or import of goods and services 
 
EXECUTIVE SUMMARY 
 
?   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.  Thus, IGST will be payable, mostly under reverse 
charge. 
?   Import of service means supplier out of India, recipient in India and place of supply of service is in 
India. 
?   Supply of services, when the supplier is located in India and the place of supply is outside India, shall 
be treated to be a supply of services in the course of inter-State trade or commerce. 
?   Export of service means supplier in India, recipient out of India and place of supply of service is 
outside India and payment received in foreign exchange. 
?   Specific provisions have been made for place of supply in case of performance  based services, 
services  where  physical  presence  of service  recipient  is  required,  services  directly  relating  to 
immovable property, services relating to admission or organisation of events, banking, NBFC and FI 
services, services of commission agent, hiring means of transport, service of transportation of goods 
and passengers, services on board a conveyance and Online Information and database access or 
Retrieval Services (OIDAR). 
?   Except is case of specified services discussed above, the place of supply of services shall be the 
location of the recipient of service. However, in case the location of the recipient of service is not 
available in the ordinary course of business, the place of supply shall be the location of the supplier of 
service. 
17.1 Place of supply when supplier or recipient is outside  India 
 
IGST Act has made separate provisions in respect of place of supply in case of import and export of goods 
and services i.e. where the location of the supplier of goods or services or the location of the recipient of 
goods or services is outside India. 
17.1-1 Taxable territory 
 
"Taxable territory" means the territory to which the provisions of IGST Act apply - section 2(22) of IGST Act. 
As per section 1(2) of IGST Act, the IGST Act extends to whole of India, except J&K. 
17.2 Place of supply in case of imports and exports of goods 
 
"Export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to 
a place outside India - section 2(5) of IGST Act. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
"Import of goods" with its grammatical variations and cognate expressions, means bringing goods into India 
from a place outside India - section 2(10) of IGST Act. 
The place of supply of goods imported into India shall be the location of the importer - section 11(a) of IGST 
Act. 
The place of supply of goods exported from India shall be the location outside India- section 11(b) of IGST 
Act. 
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. 
"Customs frontiers of India" means the limits of a customs area as defined in section 2 of the Customs Act, 
1962 - section 2(4) of IGST Act. 
 
Thus, in case of import of goods, only IGST can apply. SGST and CGST will never apply. 
 
17.2-1  Export or supply  to  SEZ  unit  or developer  of goods  or services  is  inter-state trade  or 
commerce 
Supply of goods or services or both - (a) when the supplier is located in India and the place of supply is 
outside India (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the 
taxable territory, not being an intra-State supply and not covered elsewhere in this section - - 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) of 
IGST Act. 
Thus, in case of export of goods or services, SGST cannot apply. 
 
17.3 Export and import of services 
 
Place of supply of service is relevant to determine issue of export and import of services. 
 
Export of services - Section 2(6) of IFIGST Act states as follows - 
"Export of services" means the supply of any service when- 
(a)   the supplier of service is located in India 
(b)   the recipient of service is located outside India 
(c)   the place of supply of service is outside India 
(d)   the payment for such service has been received by the supplier of service in convertible  foreign 
exchange, and 
(e)   the supplier of service and recipient of service are not merely establishments of a distinct person in 
accordance with explanation 1 of section 8 of IGST Act [what is meant is that branch and HO of 
same taxable person shall not be treated as two distinct persons for this provision.  Thus, there 
cannot be export of service to own branch office outside India]. 
Import of services - Section 2(11) of IGST Act reads as follows - 
"Import of service" means the supply of any service, where— 
(a)   the supplier of service is located outside India, 
(b)   the recipient of service is located in India, and 
(c)   the place of supply of service is in India. 
17.3-1 Meaning of establishment of distinct  persons 
 
Explanation1 to section 8(1) of IGST Act reads as follows - 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
For the purposes of this Act (i.e. IGST Act)- (i) an establishment in India and any other establishment outside 
India, or ( i) an establishment in a State and any other establishment outside that State or ( i) an establishment 
in a State  and  any other  establishment  being a business  vertical within the  State  -  -shall be treated  as 
establishments of distinct persons. 
17.3-2 Receipt or payment in foreign exchange  not relevant to decide place of supply 
 
The Place of Supply of Services provisions do not make any mention about receipt or payment in foreign 
exchange or in Rupees. In fact, the provisions do not make any mention of payment at a l. 
Thus, payment or receipt in foreign exchange or rupees is not at a l relevant to determine Place of Supply of 
Services. That is relevant to determine whether the service is 'export of service'. Often, provisions of place of 
supply of service and Export of Service provisions are mixed up, which causes confusion. 
17.3-3 Principles in Place of Supply of Service provisions based on European Directives 
 
Principles in Place of Supply of Service rules are broadly based on European Union (EU) Directives. 
 
In Aktiebolaget NN v. Skatteverket (2012) 36 STT 264 = 22 Latest Case175 (ECJ), it was observed 
that the purpose of the EU directives is to avoid conf licts of jurisdiction which may result in double taxation or 
non-taxation. 
Thus, principle is to avoid doubt taxation or non-taxation.  This has to be remembered  while applying the 
provisions. 
17.3-4 Global Agreement and Global Framework Agreement 
 
In case of Global Agreement, or Global Framework Agreement for provision and receipt of services, various 
permutations and combinations are possible. CBE&C has clarified as follows in respect of service tax where 
orders are placed at HQ or payment for services are made by HQ outside India. This clarification equa ly 
applies in case of IGST also. 
Third person or HQ may place orders or make payment on behalf of recipient  service - Para 5.3.4 of 
CBE&C's 'Taxation of Services : An Education Guide' published on 20-6-2012 states as follows - 
 
Occasiona ly, a person may be the person liable to make payment for the service provided on his behalf to 
another person. For instance, the provision of a service may be negotiated at the headquarters of an entity by 
way of centralized sourcing of services whereas the actual provision is made at various locations in di fferent 
taxing jurisdictions (in the case of what is commonly referred to as a multi-locational entity or MLE). Here, the 
central office  may act  only as  a  facilitator  to  negotiate  the  contract  on behalf of various  geographical 
establishments.  Each of the geographical establishments  receives the service and is obligated to make the 
payment either through headquarters or sometimes directly. When the payment is made directly, there is no 
confusion. In other situations, where the payment is settled either by cash or through debit and credit note 
between the business and fixed establishments, it is clear that the payment is being made by a geographical 
location. Wherever a fixed establishment bears the cost of acquiring, or using or consuming a service through 
any internal arrangement (norma ly referred to as a "recharge",  "rea location", or a "settlement"),  these are 
genera ly  made  in  accordance  with  corporate  tax  or  other  statutory  requirements.  These  accounting 
arrangements also invariably aid the MLE's management in budgeting and financial performance measurement. 
Various  accounting  and  business  management  systems  are  genera ly employed  to  manage,  monitor  and 
document the entire purchasing cycle of goods and services (such as the ERP-Enterprise Resource Planning 
System). These systems support and document the company processes, including the financial and accounting 
process, and purchasing process. Norma ly, these systems will provide the required information and audit trail 
to identify the establishment that uses or consumes a service. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
It should be noted that in terms of proviso to section 66B, the establishments in a taxable and non-taxable 
territory are to be treated as distinct persons. Moreover, the definition of "location of the receiver" clearly 
states that "where the services are "used" at more than one establishment,  whether business or fixed, the 
establishment  most directly concerned  with the use of the service" will be the location.  Thus,  the taxing 
jurisdiction of service, which is provided under a 'global framework agreement'  between two multinational 
companies with the business establishment located outside the taxable territory, but which is used or consumed 
by a fixed establishment located in the taxable territory, will be the taxable territory. 
17.4 Place of supply in case of export or import of service 
 
The provisions of section 13 of IGST Act shall apply to determine the place of supply of services where the 
location of the supplier of service or the location of the recipient of service is outside India - section 13(1) of 
IGST Act. 
17.4-1 Services supplied partly in India  and partly outside  India 
 
Where any service referred to in section 13(3), 13(4) or 13(5) of IGST Act is supplied at more than one 
location, including a location in the taxable territory (i.e. India), its place of supply shall be the location in the 
taxable territory (i.e. India)- section 13(6) of IGST Act. 
17.4-2 Services supplied in more than one States  in India 
 
Where the services referred to in section 13(3), 13(4) or 13(5) of IGST Act are supplied in more than one 
State or Union Territory, the place of supply of such services shall be taken as being in each of the respective 
States or Union territories  and the value  for services  separately co lected  or determined  in terms of the 
contract or agreement entered into in this regard or, in absence of such contract or agreement, on such other 
basis as may be prescribed- section 13(7) of IGST Act. 
17.5 Place of supply in case of performance on goods made  available by service recipient 
 
In case of services supplied in respect of goods which are required to be made physica ly 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: the place of supply shall be the location where the services are actua ly performed - 
section 13(3)(a) of IGST Act. 
Services provided electronically  from remote location - When such services are provided from a remote 
location by way of electronic means, the place of supply shall be the location where goods are situated at the 
time of supply of service - first proviso to section 13(3)(a) of IGST Act. 
Place of supply if goods supplied by recipient  are repaired  and re-exported  - In the case of a service 
supplied in respect of goods that are temporarily imported into India for repairs and are exported after repairs 
without being put to any other use in India (i.e. other than that which is required for such repairs), the place of 
supply of service will be location of recipient of service as per residuary provision contained in section 13(2) of 
IGST Act- second proviso to section 13(3)(a) of IGST Act. 
17.5-1 Services covered under performance related services 
 
Maintenance  and  repair  service  provided  within  territorial  waters  to  marine  vessels  owned  by  foreign 
companies is not export of service even if payment is received in foreign exchange. This would so even if the 
service provider is located  within SEZ - V V Kay Marine  P  Ltd. v. CCE  (2014)  43 GST 348 = 41 
Latest Case343 (CESTAT). 
Maintenance or repair service provided in India in respect of products of a foreign company is not export of 
service as service is provided in India and delivered in India - prima facie view in FANUC India v. CCE 
(2011) 30 STT 168 = 8 Latest Case270 (CESTAT). 
Page 5


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 17 - Pl ace of suppl y i n case of export or i mport of goods and 
servi ces 
 
 
 
 
 
CHAPTER 17 
 
Place of supply in case of export or import of goods and services 
 
EXECUTIVE SUMMARY 
 
?   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.  Thus, IGST will be payable, mostly under reverse 
charge. 
?   Import of service means supplier out of India, recipient in India and place of supply of service is in 
India. 
?   Supply of services, when the supplier is located in India and the place of supply is outside India, shall 
be treated to be a supply of services in the course of inter-State trade or commerce. 
?   Export of service means supplier in India, recipient out of India and place of supply of service is 
outside India and payment received in foreign exchange. 
?   Specific provisions have been made for place of supply in case of performance  based services, 
services  where  physical  presence  of service  recipient  is  required,  services  directly  relating  to 
immovable property, services relating to admission or organisation of events, banking, NBFC and FI 
services, services of commission agent, hiring means of transport, service of transportation of goods 
and passengers, services on board a conveyance and Online Information and database access or 
Retrieval Services (OIDAR). 
?   Except is case of specified services discussed above, the place of supply of services shall be the 
location of the recipient of service. However, in case the location of the recipient of service is not 
available in the ordinary course of business, the place of supply shall be the location of the supplier of 
service. 
17.1 Place of supply when supplier or recipient is outside  India 
 
IGST Act has made separate provisions in respect of place of supply in case of import and export of goods 
and services i.e. where the location of the supplier of goods or services or the location of the recipient of 
goods or services is outside India. 
17.1-1 Taxable territory 
 
"Taxable territory" means the territory to which the provisions of IGST Act apply - section 2(22) of IGST Act. 
As per section 1(2) of IGST Act, the IGST Act extends to whole of India, except J&K. 
17.2 Place of supply in case of imports and exports of goods 
 
"Export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to 
a place outside India - section 2(5) of IGST Act. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
"Import of goods" with its grammatical variations and cognate expressions, means bringing goods into India 
from a place outside India - section 2(10) of IGST Act. 
The place of supply of goods imported into India shall be the location of the importer - section 11(a) of IGST 
Act. 
The place of supply of goods exported from India shall be the location outside India- section 11(b) of IGST 
Act. 
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. 
"Customs frontiers of India" means the limits of a customs area as defined in section 2 of the Customs Act, 
1962 - section 2(4) of IGST Act. 
 
Thus, in case of import of goods, only IGST can apply. SGST and CGST will never apply. 
 
17.2-1  Export or supply  to  SEZ  unit  or developer  of goods  or services  is  inter-state trade  or 
commerce 
Supply of goods or services or both - (a) when the supplier is located in India and the place of supply is 
outside India (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the 
taxable territory, not being an intra-State supply and not covered elsewhere in this section - - 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) of 
IGST Act. 
Thus, in case of export of goods or services, SGST cannot apply. 
 
17.3 Export and import of services 
 
Place of supply of service is relevant to determine issue of export and import of services. 
 
Export of services - Section 2(6) of IFIGST Act states as follows - 
"Export of services" means the supply of any service when- 
(a)   the supplier of service is located in India 
(b)   the recipient of service is located outside India 
(c)   the place of supply of service is outside India 
(d)   the payment for such service has been received by the supplier of service in convertible  foreign 
exchange, and 
(e)   the supplier of service and recipient of service are not merely establishments of a distinct person in 
accordance with explanation 1 of section 8 of IGST Act [what is meant is that branch and HO of 
same taxable person shall not be treated as two distinct persons for this provision.  Thus, there 
cannot be export of service to own branch office outside India]. 
Import of services - Section 2(11) of IGST Act reads as follows - 
"Import of service" means the supply of any service, where— 
(a)   the supplier of service is located outside India, 
(b)   the recipient of service is located in India, and 
(c)   the place of supply of service is in India. 
17.3-1 Meaning of establishment of distinct  persons 
 
Explanation1 to section 8(1) of IGST Act reads as follows - 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
For the purposes of this Act (i.e. IGST Act)- (i) an establishment in India and any other establishment outside 
India, or ( i) an establishment in a State and any other establishment outside that State or ( i) an establishment 
in a State  and  any other  establishment  being a business  vertical within the  State  -  -shall be treated  as 
establishments of distinct persons. 
17.3-2 Receipt or payment in foreign exchange  not relevant to decide place of supply 
 
The Place of Supply of Services provisions do not make any mention about receipt or payment in foreign 
exchange or in Rupees. In fact, the provisions do not make any mention of payment at a l. 
Thus, payment or receipt in foreign exchange or rupees is not at a l relevant to determine Place of Supply of 
Services. That is relevant to determine whether the service is 'export of service'. Often, provisions of place of 
supply of service and Export of Service provisions are mixed up, which causes confusion. 
17.3-3 Principles in Place of Supply of Service provisions based on European Directives 
 
Principles in Place of Supply of Service rules are broadly based on European Union (EU) Directives. 
 
In Aktiebolaget NN v. Skatteverket (2012) 36 STT 264 = 22 Latest Case175 (ECJ), it was observed 
that the purpose of the EU directives is to avoid conf licts of jurisdiction which may result in double taxation or 
non-taxation. 
Thus, principle is to avoid doubt taxation or non-taxation.  This has to be remembered  while applying the 
provisions. 
17.3-4 Global Agreement and Global Framework Agreement 
 
In case of Global Agreement, or Global Framework Agreement for provision and receipt of services, various 
permutations and combinations are possible. CBE&C has clarified as follows in respect of service tax where 
orders are placed at HQ or payment for services are made by HQ outside India. This clarification equa ly 
applies in case of IGST also. 
Third person or HQ may place orders or make payment on behalf of recipient  service - Para 5.3.4 of 
CBE&C's 'Taxation of Services : An Education Guide' published on 20-6-2012 states as follows - 
 
Occasiona ly, a person may be the person liable to make payment for the service provided on his behalf to 
another person. For instance, the provision of a service may be negotiated at the headquarters of an entity by 
way of centralized sourcing of services whereas the actual provision is made at various locations in di fferent 
taxing jurisdictions (in the case of what is commonly referred to as a multi-locational entity or MLE). Here, the 
central office  may act  only as  a  facilitator  to  negotiate  the  contract  on behalf of various  geographical 
establishments.  Each of the geographical establishments  receives the service and is obligated to make the 
payment either through headquarters or sometimes directly. When the payment is made directly, there is no 
confusion. In other situations, where the payment is settled either by cash or through debit and credit note 
between the business and fixed establishments, it is clear that the payment is being made by a geographical 
location. Wherever a fixed establishment bears the cost of acquiring, or using or consuming a service through 
any internal arrangement (norma ly referred to as a "recharge",  "rea location", or a "settlement"),  these are 
genera ly  made  in  accordance  with  corporate  tax  or  other  statutory  requirements.  These  accounting 
arrangements also invariably aid the MLE's management in budgeting and financial performance measurement. 
Various  accounting  and  business  management  systems  are  genera ly employed  to  manage,  monitor  and 
document the entire purchasing cycle of goods and services (such as the ERP-Enterprise Resource Planning 
System). These systems support and document the company processes, including the financial and accounting 
process, and purchasing process. Norma ly, these systems will provide the required information and audit trail 
to identify the establishment that uses or consumes a service. 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
It should be noted that in terms of proviso to section 66B, the establishments in a taxable and non-taxable 
territory are to be treated as distinct persons. Moreover, the definition of "location of the receiver" clearly 
states that "where the services are "used" at more than one establishment,  whether business or fixed, the 
establishment  most directly concerned  with the use of the service" will be the location.  Thus,  the taxing 
jurisdiction of service, which is provided under a 'global framework agreement'  between two multinational 
companies with the business establishment located outside the taxable territory, but which is used or consumed 
by a fixed establishment located in the taxable territory, will be the taxable territory. 
17.4 Place of supply in case of export or import of service 
 
The provisions of section 13 of IGST Act shall apply to determine the place of supply of services where the 
location of the supplier of service or the location of the recipient of service is outside India - section 13(1) of 
IGST Act. 
17.4-1 Services supplied partly in India  and partly outside  India 
 
Where any service referred to in section 13(3), 13(4) or 13(5) of IGST Act is supplied at more than one 
location, including a location in the taxable territory (i.e. India), its place of supply shall be the location in the 
taxable territory (i.e. India)- section 13(6) of IGST Act. 
17.4-2 Services supplied in more than one States  in India 
 
Where the services referred to in section 13(3), 13(4) or 13(5) of IGST Act are supplied in more than one 
State or Union Territory, the place of supply of such services shall be taken as being in each of the respective 
States or Union territories  and the value  for services  separately co lected  or determined  in terms of the 
contract or agreement entered into in this regard or, in absence of such contract or agreement, on such other 
basis as may be prescribed- section 13(7) of IGST Act. 
17.5 Place of supply in case of performance on goods made  available by service recipient 
 
In case of services supplied in respect of goods which are required to be made physica ly 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: the place of supply shall be the location where the services are actua ly performed - 
section 13(3)(a) of IGST Act. 
Services provided electronically  from remote location - When such services are provided from a remote 
location by way of electronic means, the place of supply shall be the location where goods are situated at the 
time of supply of service - first proviso to section 13(3)(a) of IGST Act. 
Place of supply if goods supplied by recipient  are repaired  and re-exported  - In the case of a service 
supplied in respect of goods that are temporarily imported into India for repairs and are exported after repairs 
without being put to any other use in India (i.e. other than that which is required for such repairs), the place of 
supply of service will be location of recipient of service as per residuary provision contained in section 13(2) of 
IGST Act- second proviso to section 13(3)(a) of IGST Act. 
17.5-1 Services covered under performance related services 
 
Maintenance  and  repair  service  provided  within  territorial  waters  to  marine  vessels  owned  by  foreign 
companies is not export of service even if payment is received in foreign exchange. This would so even if the 
service provider is located  within SEZ - V V Kay Marine  P  Ltd. v. CCE  (2014)  43 GST 348 = 41 
Latest Case343 (CESTAT). 
Maintenance or repair service provided in India in respect of products of a foreign company is not export of 
service as service is provided in India and delivered in India - prima facie view in FANUC India v. CCE 
(2011) 30 STT 168 = 8 Latest Case270 (CESTAT). 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
Departmental clarification - CBE&C's 'Taxation of Services : An Education Guide' published on 20-6- 
2012 clarifies as follows - 
 
Para 5.4-1 What are the services that are provided " in respect of goods that are made physically 
available, by the receiver to the service provider, in order to provide the service" ? Services that are 
related to goods, and which require such goods to be made available to the service provider so that the 
service can be rendered, are covered here. Examples of such services are repair, reconditioning, or any 
other work on goods (not amounting to manufacture), storage and warehousing, courier service, cargo 
handling service (loading, unloadi ng, packing or unpacking of cargo), technical 
testing/inspection/certification/analysis of goods,  dry cleaning etc. It will not cover services  where  the 
supply of goods by the receiver is not material to the rendering of the service e.g. where a consultancy 
report commissioned by a person is given on a pen drive belonging to the customer. Similarly, provision of 
a market research service to a manufacturing firm for a consumer product (say, a new detergent) will not 
fa l in this category, even if the market research firm is given say, 1000 nos. of 1 kilogram packets of the 
product by the manufacturer, to carry for door-to-door surveys. 
 
Para 5.4-2 What is the implication of the proviso? 
 
The proviso to states as follows :- 
 
"Provided  further that where such services are provided from a remote location by way of electronic 
means, the place of provision shall be the location where goods are situated at the time of provision of 
service." 
 
In the field of Information Technology, it is not uncommon to provide services in relation to tangible goods 
located distantly from a remote location. Thus the actual place of performance of the service could be quite 
di fferent from the actual location of the tangible goods. This proviso requires that the place of provision shall 
be the actual location of the goods and not the place of performance, which in normal situations is one and the 
same. 
17.6 Services where physical presence of person is required 
 
In case of services supplied to an individual, represented either as the recipient of service or a person acting on 
behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, 
with the supplier for the supply of the service, the place of supply shall be the location where the services are 
actua ly performed- section 13(3)(b) of IGST Act. 
17.6-1 Services covered in respect of physical presence of person 
 
CBE&C's 'Taxation of Services : An Education Guide' published on 20-6-2012 clarifies as follows - 
 
Para 5.4.3 What are the services that are provided " to an individual,..., which require the physical 
presence of the receiver,..., with the provider for provision of the service" ?- - Certain services like 
cosmetic  or  plastic  surgery,  beauty  treatment  services,  personal  security  service,  health  and  fitness 
services, photography service (to individuals), internet cafe service, classroom teaching, are examples of 
services that require the presence of the individual receiver for their provision. As would be evident from 
these examples, the nature of services covered here is such as are rendered in person and in the receiver's 
physical presence. Though these are genera ly rendered at the service provider's premises (at a cosmetic 
or plastic surgery clinic, or beauty parlour, or health and fitness centre, or internet cafe), they could also be 
provided at the customer's premises, or occasiona ly while the receiver is on the move (say, a personal 
security service; or a beauty treatment on board an aircraft).