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Place of Supply of Goods under GST

As we already know that the GST is a destination-based tax, the place of supply plays a major role under GST.

What is the Place of Supply?

Under GST, the place of supply is the place of delivery of goods or the place where service is rendered by the taxpayer. In simple words, the place of supply is nothing but the registered place of the recipient of goods or/and services. This is the reason why the place of supply under GST is divided into two different categories:

  1. The place of supply of goods
  2. The place of supply of Services

However, in this article, we will discuss the place of supply of goods under GST

Place of Supply of Goods

Section 10 of the IGST Act deals with the place of supply of goods in domestic transactions.

So, here are the rules that will help you to determine the place of supply of goods:

Movement of Goods

This is the situation where the goods are moved from one place to another. For such a movement of goods, the place of supply will be the location of the recipient where the goods are delivered. Let us understand this with an example.

Mr. X from Delhi sells Air Conditioners to Mr. Y from Uttar Pradesh. As the goods are moved from Delhi to Uttar Pradesh, then, in this case, the place of supply will be Uttar Pradesh. Moreover, on such a supply of goods IGST will be applicable as it is an inter-state transaction.

No Movement of Goods

There are instances where there is no movement of goods in such cases, the place of supply of the goods is the location where the good is delivered to the recipient. Let us understand this with an example:

Mr. X from Delhi goes to Gurugram to buy a mobile from the Mall. He purchased a cell-phone on a discount from the Digi-store. Since the goods have not been moved from one place to another then it is such a case the place of supply of goods will be Gurugram, Haryana. Moreover in such type of transaction, both CGST and SGST will apply as it is an intra-state supply.

Goods sent on the request made by the third party

There are instances where the third party makes a request to the supplier to deliver the goods on his/her behalf to the recipient. In such a transaction the supplier either supplies the goods by transferring the title or the ownership of the goods. So, in such type of transaction, the place of supply of goods will be deemed as the location of the third party. To get a better understanding of the same, let us see an example:

Mr. X has a registered office in Delhi. He makes a request to Mr. Y in Uttar Pradesh to deliver a parcel to Mr. Z who lives in Mumbai. As we can see the goods are delivered by Mr. Y to Mr. Z on behalf of the third Party i.e., Mr. Y. So, in this case, the place of supply of such good will be Delhi that is the registered office of Mr. X. Moreover, IGST will apply to such supply of goods as it is an inter-state transaction.

Installation of Goods at a Site

There are certain cases where the goods are installed or assembled at the site, the place of supply will be the place where such goods are installed or assembled. Let us understand this with an example:

Mr. X from Noida orders a machine from Mr. Y from New Delhi. Mr. Y installs the machine at Mr. X’s office premises at Noida. In such a case, the place of supply of goods will be Noida. Moreover, IGST will apply to such supply of goods as it is an inter-state transaction.

Goods Supplied on a conveyance

This is the most common supply of goods, where the goods are supplied using a conveyance such as a vessel, train, aircraft or motor vehicle. In such types of movements of goods, the place of supply will the place where the goods are taken on board. Let us understand this with an example:

Delhi – Allahbad Duranto Express provides meals during the Journey from Delhi to Allahabad. During the journey, the train receives the food at Aligarh in Uttar Pradesh. In this case, the place of supply of goods will be Aligarh UP.

Imports and Exports of goods

The place of supply of goods in case of import will be the location of the importer whereas in the case of exports of goods the location will be outside India.

Let us understand this with two examples:

  1. X imports Dates from the United Arab Emirates for his shop located and registered in New Delhi. In this case, the place of supply of goods will be New Delhi. Moreover, in such a case IGST will be applicable.
  2. Y exports spices to the United States from his registered office in Noida (Uttar Pradesh). In this case, the place of supply of goods will be Noida (Uttar Pradesh) as the reverse charge will be applicable. In addition to this, in such type of transaction GST will be exempted.

However, there are certain scenarios where the place of supply of goods cannot be ascertained. In such cases, the place of supply shall be ascertained in such a way as may be prescribed.