GST - Place of Supply of Goods

Chapter V of IGST Act, 2017 provides provision for “Place of Supply of goods or services of both”.  In this article I will explain by examples rather than repeating clauses in the section

Section 10(1)(a) of IGST Act, 2017

Example 1

• A Customer in Delhi orders goods on a vendor in Tamilnadu on ex-works terms. 
• The vendor in Tamilnadu delivers the product at his factory gate and raises invoice on customer with address of Delhi. 
• The Delhi customer sends his truck to pick up the material from the vendor in Tamilnadu.
• Since the delivery ends at the factory gate of Tamilnadu vendor “Place of Supply” is Tamilnadu though invoice is addressed to Delhi customer
• Tamilnadu vendor raises an invoice and charges SGST & CGST treating this is as a supply within Tamilnadu (intrastate)

In this scenario Delhi customer has to get himself registered with Tamilnadu GST and avail credit of SGST & CGST.  Delhi customer then will stock transfer this goods to Delhi and pay IGST on this stock transfer


Example 2

• A Customer in Delhi orders goods on a vendor in Tamilnadu on CIF terms. 
• The vendor in Tamilnadu delivers the product upto the factory gate of Delhi customer and raises invoice on customer with address of Delhi. 
• The Tamilnadu vendor arranges truck to supply the goods to the customer in Delhi.
• Since the delivery ends at the factory gate of Delhi customer “Place of Supply” is Delhi
• Tamilnadu vendor raises an invoice and charges IGST treating this is as a supply outside Tamilnadu (interstate)

Section 10(1)(b) of IGST Act, 2017

Example 1

• A Customer in Delhi orders goods on a vendor in Chennai, Tamilnadu for delivery to a third person in  Coimbatore,  Tamilnadu
• The vendor in Chennai, Tamilnadu delivers the product to the third person in Coimbatore, Tamilnadu and raises invoice on customer with address of Delhi and consignee as third party
• Even though delivery is within Tamilnadu as the Principal supplier is in Delhi this is treated as Interstate Sales
• Tamilnadu vendor raises an invoice on customer in Delhi and charges IGST treating this is as a supply outside Tamilnadu (interstate)

Delhi customer on receipt of invoice with IGST charged on it will raise an invoice on the third person in Coimbatore, Tamilnadu and charge IGST

Example 2

• A Customer in Noida, UP  orders goods on a vendor in Chennai, Tamilnadu for delivery to a third person in Kanpur, UP
• The vendor in Chennai, Tamilnadu delivers the product to the third person in Kanpur, UP and raises invoice on customer in Noida, UP
• As the Principal supplier is in Noida, UP this is treated is Interstate Sales
• Tamilnadu vendor raises an invoice on customer in Noida, UP and charges IGST treating this is as a supply outside Tamilnadu (interstate)

Noida, UP customer on receipt of invoice with IGST charged on it will raise an invoice on the third person in Kanpur, UP and charge SGST & CGST treating it as intrastate sales

Section 10(1)(c) of IGST Act, 2017

Place of supply when goods are not moved either by supplier or recipient

Example 1

• Vendor registered in Tamilnadu sells his pre-installed windmill in Tamilnadu to a customer in Maharashtra
• There is no movement of goods
• Invoice will be raised by Tamilnadu registered vendor on customer in Maharashtra
• As goods have not moved and the vendor is registered in Tamilnadu, the Tamilnadu vendor will charge CGST & SGST treating this as an intrastate sales – within state sales

Example 2

• Vendor registered in Kerala sells his pre-installed windmill in Tamilnadu to a customer in Maharashtra
• There is no movement of goods
• Invoice will be raised by Kerala registered vendor for windmill pre-installed in Tamilnadu, on customer in Maharashtra
• As goods have not moved and the vendor is registered in Kerala, but goods pre-installed in Tamilnadu, the Kerala vendor will charge IGST treating this as an interstate sales - outside state sales

Section 10(1)(d) of IGST Act, 2017

Example 1

• Vendor registered in Tamilnadu installs Air conditioners in the office of customer in Delhi
• Tamilnadu vendor will raise invoice on Delhi customer and charge IGST, this is interstate sales

Example 2

• Customer in Chennai, Tamilnadu opens a branch in Kerala and orders Air conditioners from vendor registered in Madurai, Tamilnadu
• Vendor registered in Madurai, Tamilnadu installs Air conditioners in the office of Tamilnadu customer in Kerala
• Tamilnadu Madurai, vendor will raise invoice on Chennai, Tamilnadu customer for installation of Air conditioners in Kerala and charge IGST, as this is interstate sales