The concept of ‘Place of Supply’ plays a significant role in GST. It helps to determine whether the supply should be classified as an intra-State supply or an inter-State supply. In this article, we will understand the concept of import and the place of supply for imports (in the case of goods and services):
The IGST Act has defined import of goods as ‘bringing goods into India from a place outside India’. Further, there have been landmark judgements by the Supreme Court in support of the view that the import of goods is complete only when it crosses the customs barrier and becomes a part of the mass of goods within the country.
The import of services has been defined in the IGST Act, 2017 to mean the supply of any service where:
- The supplier of service is located outside India,
- The recipient of service is located in India, and
- The place of supply of service is in India.
The place of supply of goods in case of imports will be the location of the importer as per section 11 of the IGST Act, 2017. The location of the importer is usually his place of business.
Section 13 of the IGST Act determines the place of supply when either the supplier or the recipient is located outside India. However, as mentioned earlier, to qualify as an import of service, the supplier of service needs to be located outside India, and the recipient should be located in India. Thus, the provisions of section 13 need to be applied in a more restricted manner to determine the place of supply of imports, especially when it comes to services.
Assuming that the supplier of services is located outside India and the recipient is located in India, the place of supply will be determined in the following manner:
- The place of supply of services rendered in respect of goods which are required to be made physically available to the supplier will be the location where the services are actually performed.
- The place of supply of services rendered in respect of goods from a remote location through electronic means will be the location of the goods at the time of supply of such service.
- The place of supply of services that require the recipient’s physical presence will be the location where the services are actually performed.
- The place of supply of services provided directly in relation to an immovable property will be the place where the immovable property is located or intended to be located.
- Such services include accommodation services provided by hotels, boats, vessels, etc.
- Further, such services also include professional services of surveyors, architects, etc. in relation to such immovable property.
- The place of supply of services provided by way of admission or organisation of an event will be the place where the event is actually held.
- Such services would include selling of tickets for a concert, event management services, etc.
- The place of supply of services supplied by a banking company, or a financial institution, or an NBFC to account holders or intermediary services (such as stockbroking) will be the location of the supplier of service.
- The place of supply for services related to the hiring of means of transport (up to a period of one month), including yachts but excluding aircrafts and vessels will be the location of the supplier of the service.
- The place of supply in case of passenger transport services will be the place where the passenger first embarked (started) on the conveyance for a continuous journey.
- Whenever there are services provided onboard (in the conveyance), the place of supply will be the first scheduled point of departure of that conveyance.
- OIDAR stands for Online Information Database Access and Retrieval (OIDAR). Such services cannot be performed without the use of technology. The place of supply in case of such services will be the location of the recipient.
- An example of such a service is: showing advertisements online via social media platforms.
- When the place of supply cannot be determined based on the situations mentioned above, the recipient’s location (when determinable) will be the place of supply. In other cases, the location of the supplier will be the place of supply.