Classification of Place of Supply under GST

Ashish M. Shaji

20 Nov, 2020

We have already discussed the place of supply of goods under GST, now in this article we will review the determination of the place of supply in case of Services. There are certain general rules associated with the determination of the place of supply of services. We will discuss them in detail here.

Determination of place of supply of services is a bit tricky as compared to the supply of goods. In the case of goods, the general rule says that the place of consumption of goods is the place of supply. However, in the case of services, it’s not that easy to track the place of consumption, because many a time service recipients are not registered. For example, in the case of online consultancy, it’s hard to keep track of the address of every person to whom such services are provided. We have already covered the topic of time/point of taxation earlier.

Place of supply under GST

Let’s categorize the supply of services into two main categories:

• Domestic Supply of Services, i.e. those transactions where both the supplier of services as well as the recipient of services are located inside India. These transactions can happen either in one state or more than one state, as well as they don’t cross the international boundaries.
• International supply of Services, i.e. those transactions when either one of the recipient or supplier of services is located outside India.

1. Domestic Supply of Services-

Provisions relating to the supply of services within India are covered under section 12 of the Integrated Goods and Service Tax Act, 2017^[1]. When we say domestic supply, it simply implies that both supplier and recipient are located in India. These domestic transactions include both inter-state as well as the intra-state supply of goods.

There are two subheads in this section:

1. Registered Recipient
2. Unregistered Recipient

When service recipient is registered under GST

When the service recipient is registered under GST, the place of supply will be the location of such a service recipient. Now the question is what will be considered as the location of the recipient.

The following place will be deemed to be the location of the service provider:

• When such registered recipient has a registered place of business specified in the registration certificate, then such place of business will be considered as the place of supply of services.
• In case the recipient does not have a registered place of business, then any fixed establishment where such supply is received will be considered as the place of supply for such services.
• Where the supplier neither has a registered place of business nor does he has a fixed establishment, in such a case the place of supply will be deemed to be the recipient’s usual place of business.

When service recipient is not registered under GST

In case the registered person is not registered under the provisions of GST, in such cases following place will be deemed to be the place of supply of services:

• If the address of such unregistered recipient is available on record, then such location of service recipient will be considered as the place of supply for services.
• However, if no address of the services received is available on record, in that case, the location of a supplier of services will be considered as the place of supply for such supplies.

2. International supply of Services-

Provisions relating to the supply of services outside India or receiving any services from outside India are covered under section 13 of Integrated Goods and Service Tax Act, 2017. When either the supplier or services or recipient of services is located outside India, then such supply will be deemed to be an international supply of services.

General Rule to be followed

In a case of the global supply of services, the place of supply will be:

• If the location of such a service recipient is available, then such location will be considered as the place of supply.
• However, if the location of the service recipient is not available, then the location of the supplier of services will be deemed to be the place of supply for such services.

With this, we have covered the general rules associated with the determinations of a place of supply of services. Other than these general rules there are certain exceptions related to the place of supply of services.

Conclusion

It is critical to identify place of supply under GST (services) in order to impose appropriate type of GST. If you wish to know more on GST and related laws, feel free to contact Enterslice.

Read our article: GST and Input Tax Credit on Promotional Products