Whether you should charge IGST or CGST & SGST in case of Supply of Goods?
It is important to determine place of supply as this will decided whether transaction is inter-state or intra-state which will further allow tax payers to determine whether CGST and SGST is to be levied (in case of intra-state transaction) or whether IGST is to be levied.
How to Determine Place of Supply in case of supply of Goods where in movement of Goods are involved and buyer and sellers are located in India?
Situations – (Buyer and Seller located in India) | Place of Supply |
Movement of Goods either by seller of buyer or by any other person | The movements of goods terminate for delivery to recipient. |
Example: – Mr. R of Delhi has sold 10 washing machines to Mr. F of Gujarat (Registered in Gujarat); Mr. F said he will take the machine on ex-factory basis and therefore he insists that Mr. R shall charge CGST and SGST treating such supply as intra-state supply. Determine what will be the place of supply.
Place of supply will be Gujarat i.e. where Mr. F is registered even if the goods are purchased on ex-factory basis. Because irrespective of who is undertaking movements of goods (i.e. either supplier or the recipient) the place of supply is the location of goods where movement of goods terminates for delivery to the recipient which is at Gujarat (as is actually movement undertaken terminates at Gujarat). There Mr. R should charge IGST as it is inter-state transaction. What is Mr. R of Delhi first Charge CGST and SGST and then realized that IGST should have been charged? Is there any remedy available to Mr. R? |
Situations – (Buyer and Seller located in India) | Place of Supply |
Goods are delivered by supplier to any recipient on direction of any 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 | Principal place of business of such recipient. |
Example: – Mr. R of Delhi has sold 10 washing machines to Mr. F of Gujarat (Registered in Gujarat); Mr. F suggest to deliver goods to one of his buyers situated in Mumbai?
It is a typical case of Bill to and Ship to Transaction – Here there are two transactions which has been undertaken (i) Sale of Goods by Mr. R to Mr. F (ii) Further sale by Mr. F. In first case i.e. sale by Mr. R place of supply will be where movement of goods terminated i.e. Mumbai. In second case i.e. sale of goods by Mr. F, as it has already been specified that irrespective of whether movement is undertaken by buyer or supplier (Mr. F) or any third person (Mr. R) place of supply will be where the movements of goods is terminated. Therefore, again place of supply will be Mumbai. Therefore Mr. R and Mr. F both are required to Charged IGST on the above mentioned transaction. What if Mr. R of Delhi sold washing Machine to Mr. F of Gujarat (Registered in Gujarat) and Mr. F suggest to deliver goods to one of his buyers situated in Delhi itself? What if Mr. R of Delhi sold washing Machine to Mr. F of Gujarat (Registered in Gujarat) and movement of goods where undertaken and during the transit Mr. F suggest Mr. R to deliver goods to Mr. A located in warehouse of Mathura (Uttar Pradesh) and having Principal Place of Business in Delhi? |
How to Determine Place of Supply in case of supply of Goods where in movement of Goods are involved and the buyer is not registered under GST?
Let us take one example – Mr. R of Delhi sold washing Machine to Mr. F who is not registered under GST.
In that case it will be practically difficult for the seller to identify the termination of movement of goods sold by him. As buyer may say or may not say about movement that will be undertaken by him; in that case unless otherwise provided it will be treated as intra-state supply.
Jigar the question here is Mr. F would ask the delivery of Goods at Gujarat or at some other place i.e. directly to ultimate customer – in such scenario the movement of Goods are Traced and if it is delivered at Gujarat then it’s a IGST Transaction. Practically when any Goods are sold movement of Goods are generally traced. Please elaborate this example clearly.
How to Determine Place of Supply in case of supply of Goods wherein movement of Goods are involved and the transportation is undertaken by Goods Transport Agency?
It doesn’t make any difference if transportation is undertaken by Goods Transportation agency – the rule of place of supply is to be determined as per the conditions of the Law and in case of sale/purchase of goods, place of supply will be the place were movements of goods terminate for delivery to recipient.
How to Determine Place of Supply in case of supply of Goods wherein movement of Goods are involved and any of the parties are situated outside India?
Such Transactions will be either Import or Export Transactions.
- In case of import, place of supply will be place where such goods are being imported i.e. location of importer and therefore, in such case IGST will be applicable.
- In case of export, place of supply will be place where goods are being exported.
How to Determine Place of Supply in case of supply of Goods wherein movement of Goods are NOT involved and buyer and sellers are located in India?
Situations | Place of Supply |
Where the supply does not involve movement of goods by any of the person | Place of supply will be place where such goods are located at the time of delivery of goods to the recipient. |
Mr. Desai wants to sale his workout instruments which are currently lying in his storage near to his home. He contacts Mr. Shiva and sells such instrument as such along with this he will also provide his storage to him for using such instruments. What will be place of supply in this case?
In this case there are two transactions: – 1. Sale of workout instrument and 2. Renting of storage. Tax Implication of the above transaction is as under: – 1.Sale of working instrument it is sale of goods and in case where supply does not involve movement of goods by any of the person, place of supply will be place where goods are located at time of delivery of goods. 2. In case of renting of storage place of supply will be determined as per section 12 and 13 of IGST Act, 2017; i.e. where the immovable property is situated in case one of the party is outside India; Jigar we have not addressed what would be the place of supply if both the parties and immovable property is within India? Also please mention IGST or CGST/SGST to be charged on each such transaction What if in above case both the parties are outside India? In case both the parties are in India then place of supply will be location of immovable property What if in above immovable Property is situation outside India? If immovable property is situated out if India then location of recipient will be the place of supply. |
How to Determine Place of Supply in case of supply of Goods supplied through vessels/Conveyance?
Situations | Place of Supply |
Where the supply is through vessels/Conveyance | Place of supply in such case will be location at which such goods are taken on board. |
Mr. Harry has purchased goods while travelling to Mumbai through Kolkata Express Train; such goods were loaded on train from Kolkata boarding station. What will be place of supply in such case? In such case place of supply will be place from which goods have been taken on board; i.e. Kolkata. In above case CGST and SGST will be charged as such supply will be treated as intra-state supply. |