GST IMPLICATIONS YOU MUST KNOW IN CASE OF SUPPLY OF SPECIFICIED SERVICES
Whether you should charge IGST or CGST & SGST in case of Supply of Services where both the parties are situated in India?
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 (in case of inter-state transaction) is to be levied.
How to Determine Place of Supply in case of supply of service where both the parties are situated in India?
|Situations||Place of Supply|
Any service in relation to immovable property including service provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use (Renting, Leasing) immovable property. Service provided by hotel, inn, guest house, home stay, club or campsite by whatever name called, including house boat or any other vessel service.
Service by accommodation in any immovable property for organizing any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property.
|In all the cases place of supply will be place where immovable property is situated. If immovable property is situated outside India then place of supply will be location of recipient.|
In case if any of the parties is situated outside India as per section 13 of IGST Act, 2017 place of supply will be place where immovable property is situated (Whether in India or Outside India).
Example : Mr. Harsh is situated in Delhi he has provided service of interior decoration to one of his clients situated in Mumbai in relation to flat of his client situated in Mumbai. Mr. Harsh is confused about place of supply and whether to treat such transaction as inter-state or intra-state. Place of supply in relation to any service relating to immovable property where both the parties are situated in India will be place where such immovable property is located provided if immovable property is situated outside India then in that case place of supply will be location of recipient. Therefore, here place of supply will be Mumbai and transaction will be treated as Inter-state supply and IGST will be applicable on such transaction. What if in the above transaction flat of client is situated in Australia?
What if Client of Mr. Harsh is also situated outside India?
In such section 13 of IGST Act, 2017 will be applicable and in that case place of supply will be place were immovable property is situated i.e. Australia. It shall be noted that here the clause that if immovable property is situated outside India, then place of supply will be location of recipient will not be applicable it is will be applied only and only when both the parties are situated in India. Mr. Henry who is registered as normal taxpayer under the state of Gujarat has visited hotel near Jammu and Kashmir; while billing hotel staff charged him CGST and SGST; Mr. Henry argument and denied the payment of CGST and SGST he was of the opinion that he shall be billed as inter-state customer and IGST shall be levied.
Determine whether the opinion of Mr. Henry is valid?
As per section 12 where both the parties are situated in India then place of supply of immovable property will be place where immovable property is situated provided if place of immovable property is situated outside India then place of supply will be location of recipient. Here it is not relevant whether person is registered or not, but place of supply will be determined as per above rule. In this case place of supply will be Jammu and Kashmir and dealer will charge SGST and CGST.