Supply and Jurisdiction

The ‘Central Goods and Services Tax’ (CGST or Central Tax) is levied on all ‘intra-State’ supply of goods and/or services under section 9 of the CGST Act (as recently passed by the Indian Parliament) and which also defines ‘intra-State supply of goods/services as having the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act (IGST Act), under which IGST (or Integrated Tax) is imposed on ‘inter-State’ supply.

The determination of the above stated nature of ‘supply’ (i.e.‘intra-State’ or ‘inter-State’) is therefore crucial, as the same consequentially also determines the following ––

  • GST rates and type of tax (CGST/SGST/UTGST and/or IGST) imposed
  • Administrative and legal jurisdiction on the relevant supply and/or Supplier/Assessee
  • Eligibility or denial of benefits (eg.Composition Levy scheme, input tax credit etc)
  • Compliance obligations for Supplier/Assessees etc.

> Read more on ‘Supply’

Section 2 of the Integrated Goods and Services Tax Act 2017 (IGST Act) lists the various definitions (subject to context) to various key words, terms and phrases, some of which for the purpose of ‘inter-State supply‘ have been provided below ––

Central tax” means the tax levied and collected under the Central Goods and Services Tax Act.

Continuous journey” means a journey for which a single or more than one ticket or invoice is issued at the same time, either by a single supplier of service or through an agent acting on behalf of more than one supplier of service, and which involves no stopover between any of the legs of the journey for which one or more separate tickets or invoices are issued.
Explanation.––For the purposes of this clause, the term “stopover” means a place where a passenger can disembark either to transfer to another conveyance or break his journey for a certain period in order to resume it at a later point of time.

Customs frontiers of India” means the limits of a customs area as defined in section 2 of the Customs Act, 1962.

Export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India.

Export of services” means the supply of any service when ––
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in
section 8.

Fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs.

Government” means the Central Government.

Import of goods” with its grammatical variations and cognate expressions, means bringing goods into India from a place outside India.

Import of services” means the supply of any service, where––
(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India.

Integrated tax” means the integrated goods and services tax levied under this Act.

Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.

Location of the recipient of services” means,––
(a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence of the recipient.

Location of the supplier of services” means,––
(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier.

Non-taxable online recipient” means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.
Explanation.––For the purposes of this clause, the expression “governmental authority” means an authority or a board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution.

Online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,––
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;

Output tax”, in relation to a taxable person, means the integrated tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis.

Special Economic Zone” shall have the same meaning as assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005.

Special Economic Zone developer” shall have the same meaning as assigned to it in clause (g) of section 2 of the Special Economic Zones Act, 2005 and includes an Authority as defined in clause (d) and a Co-Developer as defined in clause (f ) of section 2 of the said Act.

Supply” shall have the same meaning as assigned to it in section 7 of the Central Goods and Services Tax Act.

Taxable territory” means the territory to which the provisions of this Act apply.

Zero-rated supply” shall have the meaning assigned to it in section 16.


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Inter-State Supply

Section 7 of the IGST Act (subject to the provisions of section 10 for ‘goods’ and section 12 for ‘services’, of the said Act with respect to ‘place of supply‘) treats the supply of ‘goods’ and/or ‘services‘ as an ‘inter-State supply’ (or in the course of inter-State trade or commerce), where the location of the supplier and the place of supply are in ––

  • Two different States;
  • Two different Union Territories; or
  • A State and a Union Territory.

‘Inter-State Supply’ further includes the following supply of goods and/or services ––

  • When the supplier is located in India and the place of supply is outside India;
  • To or by a Special Economic Zone developer or a Special Economic Zone unit; or
  • In the taxable territory, not being an intra-State supply and not covered elsewhere in the above said section.

> Read more on ‘Place of Supply’


Import of Goods/Services

  • Under the above said provision, supply of goods imported into the territory of India, till they cross the customs frontiers of India, will be treated to be a supply of goods in the course of inter-State trade or commerce.
  • Supply of services imported into the territory of India will be treated to be a supply of services in the course of inter-State trade or commerce.

The ‘Integrated Goods and Services Tax‘ (IGST or Integrated Tax) is levied^ on all ‘inter-State supplies’ of goods and/or services (except on the supply of alcoholic liquor for human consumption) on its value (as determined under section 15 of the CGST Act) and at prescribed rates (not exceeding 40 percent) as may be notified by the Government on the recommendations of the GST Council.

  • The Government may (on GST Council’s recommendations) notify and specify categories of supply of ‘goods’ and/or services, Integrated Tax on which shall be paid on ‘reverse charge’ basis by the recipient of such supply.
  • Integrated Tax in respect of the supply of taxable goods and/or services by an unregistered supplier to a registered person is to be paid by the latter on ‘reverse charge’ basis as the recipient of supply.
  • The Government may (on GST Council’s recommendations) notify and specify categories of supply of ‘services’, Integrated Tax on ‘inter-State supplies’ of which shall be paid by the ‘electronic commerce operator’^^ (if such services are supplied through it).

^Integrated Tax on goods imported into India is to be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.

^^Where such ‘electronic commerce operator’ does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory will be liable to pay the applicable tax.

^^Where such ‘electronic commerce operator’ does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such said operator is required to appoint a person in the taxable territory for the purpose of paying the applicable tax and liable for the same.


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Intra-State Supply of ‘Goods’

Section 8 of the IGST Act (subject to the provisions of section 10 i.e.Place of supply of goods other than supply of goods imported into, or exported from India) treats the supply of ‘goods’ as ‘intra-State supply’, where the location of the supplier and the place of supply of goods are in the same State or Union territory (as the case may be).

The following supply of goods are not treated as ‘intra-State supply’ ––

  • Supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
  • Goods imported into the territory of India till they cross the customs frontiers of India; or
  • Supplies made to a tourist referred to in section 15 of said IGST Act.


Intra-State Supply of ‘Services’

Subject to the provisions of section 12 (Place of supply of services where location of supplier and recipient is in India), supply of ‘services’ where the location of the supplier and the place of supply of services are in the same State or Union Territory (as the case maybe) shall be treated as ‘intra-State supply’ (excludes supply of services to or by a ‘Special Economic Zone developer’ or a ‘Special Economic Zone unit’).


Establishment

  • Where a person has ––
    (i) an establishment in India and any other establishment outside India;
    (ii) an establishment in a State or Union territory and any other establishment outside that State; or
    (iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory,
    then such establishments shall be treated as establishments of distinct persons.
  • A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory.


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The place of supply of goods (other than supply of goods imported into, or exported from India) is as under ––

  • Where the supply involves movement of goods (by the supplier or the recipient or by any other person), the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient;
  • Where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person (acting as an agent or otherwise), before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it will be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;
  • Where the supply does not involve movement of goods (by the supplier or the recipient), the place of supply shall be the location of such goods at the time of the delivery to the recipient;
  • Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;
  • Where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board.

> Where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed.

 


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The said section applies to determine the place of supply of services where the location of supplier of services and the location of the recipient of services is in India.

Such place of supply of services (except ‘Specified Services’, see below) is determined in the following manner^––

  • Made to a registered person shall be the location of such person;
  • Made to any person other than a registered person shall be,––
    (a) the location of the recipient where the address on record exists; and
    (b) the location of the supplier of services in other cases.


Specified Services

  • The place of supply of services (with respect to immovable property) ––
    (a) Directly in relation to an immovable property, including services 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 immovable property or for carrying out or co-ordination of construction work; or
    (b) By way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or
    (c) By way of accommodation in any immovable property for organising 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; or
    (d) Any services ancillary to the services referred to above,
    shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located.

If the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.

Where the immovable property or boat or vessel is located in more than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

  • The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed.
  • The place of supply of services in relation to training and performance appraisal to ––
    (a) Registered person, shall be the location of such person;
    (b) Person other than a registered person, shall be the location where the services are actually performed.
  • The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located.
  • The place of supply of services provided by way of —
    (a) Organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or
    (b) Services ancillary to organisation of any of the events or services referred to above, or assigning of sponsorship to such events ––
    (i) To a registered person, shall be the location of such person;
    (ii) To a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient.

Where the event is held in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

  • The place of supply of services by way of transportation of goods, including by mail or courier to ––
    (a) Registered person, shall be the location of such person;
    (b) Person other than a registered person, shall be the location at which such
    goods are handed over for their transportation.
  • The place of supply of passenger transportation service to —
    (a) Registered person, shall be the location of such person;
    (b) Person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey.

For the above said purposes, the return journey shall be treated as a separate journey, even if the right to passage for onward and return journey is issued at the same time.

^These provisions apply where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage.

  • The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey.
  • The place of supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person shall —
    (a) In case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;
    (b) In case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services;
    (c) In cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means ––
    (i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or
    (ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold;
    (d) in other cases, be the address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services.

Where the address of the recipient as per the records of the supplier of services is not available, the place of supply shall be location of the supplier of services.

If such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall be the place of
supply of such services.

Where the leased circuit is installed in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such circuit, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

  • The place of supply of banking and other financial services, including stock broking services to any person shall be the location of the recipient of services on the records of the supplier of services.

If the location of recipient of services is not on the records of the supplier, the place of supply shall be the location of the supplier of services.

  • The place of supply of insurance services shall ––
    (a) To a registered person, be the location of such person;
    (b) To a person other than a registered person, be the location of the recipient of services on the records of the supplier of services.
  • The place of supply of advertisement services to the Central Government, a State Government, a statutory body or a local authority meant for the States or Union territories identified in the contract or agreement shall be taken as being in each of such States or Union territories and the value of such supplies specific to each State or Union territory shall be in proportion to the amount attributable to services provided by way of dissemination in the respective States or Union territories as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.


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Zero-Rated Supply

Section 16 of the IGST Act states that such supply means any of the following supplies of goods and/or services ––

  • Export of goods or services or both; or
  • Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

Subject to section 17(5) of the Central Goods and Services Tax Act (CGST Act) 2017, input tax credit may be availed for making zero-rated supplies, notwithstanding that such supply may be an ‘exempt supply’.

A registered person making ‘zero rated supply’ will be eligible to claim refund under either of the following options ––

  • Supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
  • Supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods and/or services supplied, in accordance with the provisions of section 54 of the CGST Act or the rules made thereunder.


Supplies in Territorial Waters

Under section 9 of the IGST Act, ‘place of supply’ is ––

  • The location of the supplier, where such location is in the territorial waters; or
  • The coastal State or Union Territory where the nearest point of the appropriate baseline is located, where the place of supply is in the territorial waters.


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