Place of Supply of Services where location is in India – Sec.12, GST Act.

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General Provisions [Section 12(2) of IGST Act] – These are given below –

Different CasesPlace of Supply of Services
– Supply made to a registered personLocation of recipient
– Supply made to unregistered person (location of recipient available)Location of recipient

The above Rule is applicable in all cases ( except the cases given below) :

1. Services directly in relation to an Immovable Property [Section 12(3)(a) Of IGST Act] –

The place of supply of services which are directly in relation to an immovable property, shall be the location of such immovable property. A few examples of such services (which are directly in relation to an immovable property) are –

  • Services provided by an architect, interior decorators, surveyors, engineers and other related experts.
  • Services provided by estate agents.
  • Any service provided by way of grant of rights to use immovable property (i.e., giving property on rent/lease).
  • Any service for carrying out or co-ordination of construction work.
  • Services which are physically performed on any immovable property.
  • Services pertaining to valuation of property.
  • Property management services.

In these cases, location of immovable property is the place of supply of services.

Example :

Services of an architect contracted to design the landscaping of a particular resort hotel in Goa would be directly in relation to immovable property situated in Goa. Place of supply will be Goa. However, if an interior decorator is engaged by a retail chain to design a common décor for all its stores in India, this service would not be related to an immovable property.

2.  Services by way of Lodging Accommodation by Hotel [Section 12(3)(b) of IGST Act] –

This rule covers services by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called. It also includes lodging accommodation in a house boat or any other vessel.

In these cases, place of supply of services 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.

The following points should be noted –

  1. 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 of services.
  2. 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. If there is no such agreement, mode of computation will be prescribed by the Government.

Example :
X is marketing head of A Ltd. (a Delhi based leading software development company). On an official visit, X goes to Mumbai during December 2018 and stays in ITC Maratha (a 5-star hotel owned by ITC Ltd.). Invoice is prepared at the time of checkout in the name of A Ltd. Location of recipient of supply is in Delhi. Location of supplier is in Mumbai. Place of supply is Mumbai (i.e., the place where ITC Maratha is located). It is intra-State supply. 5-star hotel accommodation service is subject to GST @ 18 per cent. ITC Maratha will charge CGST @ 9% and SGST @ 9%.

3. Services by way of Accommodation for Organising Functions [Section 12(3)(c) of IGST Act] –

This rule covers services 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.

In these cases, place of supply of services shall be the location at which the immovable property is located.

Example :

X Ltd. is a publishing house and located in Gurugram (Haryana). For the purpose of organizing a book fair, it takes on rent auditorium situated in the campus of IIT Delhi. It also engages an event management company, an interior decorator and a caterer for this purpose. All these services will be covered by section 12(3)(c) of IGST Act. Place of supply of services will be the location of immovable property (i.e., Delhi).

4. Performance Based Services [Section 12(4) of IGST Act] –

This rule covers supply of restaurant and catering services, personal grooming, fitness, beauty treatment and health service (including cosmetic and plastic surgery). In these cases, place of supply of services shall be the location where the services are actually performed.

In these cases, nature of services is such which requires physical presence of the recipient of services. Though these services are generally rendered at the premises of supplier of services (i.e., at a cosmetic or plastic surgery clinic, or beauty parlour, or health and fitness centre, or internet café), they could also be provided at the customer’s premises. Such services may also be provided occasionally while the receiver is on the move (i.e., a personal security service; or a beauty treatment on-board an aircraft). Place of supply of services, shall be the location where services are actually performed.

Example :

X Ltd. is an event management service provider and located in Mumbai. It organises a fashion show in Dubai for Raymond. For this purpose, it engages a beauty parlour in Dubai for giving beauty treatment for its models in Dubai. In this case, place of supply of services will be Dubai (i.e., the place where the beauty treatment service is actually performed). Consequently, GST is not applicable on amount charged by beauty parlour from X Ltd.

5. Training and Performance Appraisal Services [Section 12(5) of IGST Act]

Services in relation to training and performance  appraisal to— 

(a) a registered person, ( Location of Recipient is the Place of Supply)

(b) a person other than a registered person, (Location where services are actually performed)

6. Service by way of Admission to any Event [Section 12(6) of IGST Act] –

This rule covers 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. In these cases, the place of supply of service will be the place where the event is actually held or where the park or such other place is located.

Example :

Consider the following Cases –

  1. X of Delhi visits Hyderabad. During his stay in Hyderabad, he visits Appu Ghar, Hyderabad (i.e., an amusement park). The place of supply of service in this case is Hyderabad.
  2. A leading business school of Delhi organises an exhibition in Chennai for prospective students. For visiting exhibition, a student has to pay an admission fee of Rs. 500. This is the case of service provided by way of admission to an educational event. The event takes place in Chennai. Consequently, the place of supply of service is Chennai.
  3. A fashion show is organised by PC Jewellers in Dubai. X of New Delhi purchases a ticket to attend the fashion show. In this case, place of supply is Dubai. Consequently, GST is not applicable.

7. Service Pertaining to Organisation of an Event [Section 12(7) of IGST Act] –

This rule covers the following –

Different SituationsPlace of Supply of Services
Supply of services provided by way of 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 eventsSupply to registered person –  Place of supply of services shall be the location of recipient.
 
Supply to unregistered person (event is held in India) – Place of supply of services shall be the place where event is actually held.

Supply to unregistered person (event is held outside India) – Place of supply of services shall be the location of recipient.

Where a consolidated amount is charged and the event is held 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. If there is no such agreement, mode of computation will be prescribed by the Government.

Example :

  1. X Ltd. is an Indian company based in Pune and engaged in fashion designing. It is not registered under GST. To organize a fashion show in Dubai, X Ltd. engages Y & Co., an event organizer based in Mumbai (having GST registration). To organize Dubai fashion show, it charges Rs. 4 lakh from X Ltd. In this case, service provider is Y & Co., a registered dealer. Supply is received by X Ltd., an unregistered dealer. Event is held outside India. Accordingly, the place of supply of service is the location of recipient (i.e., Pune). GST is applicable. It is intra-State supply. Y & Co. will charge CGST and SGST.
  2. Suppose in the above case, fashion show is held in Chennai (not in Dubai). Recipient of supply is unregistered and event is held in India. Place of supply will be Chennai (i.e., the location of event). It becomes inter-State supply. Y & Co. will charge IGST.
  3. Delhi University organises a seminar on pollution control in Gurugram (Haryana). It is sponsored by Saraswati Inc. (a leading American manufacturer of air purifiers, not having any GST registration in India but it wants to start marketing of its products in India). The entire cost of organizing seminar of Rs. 4,50,000 is borne by Saraswati Inc. (product advertisement facility is provided to Saraswati Inc. at the event). In this case, service provider is Delhi University. Recipient of service is Saraswati Inc., an unregistered person. The place of supply of service will be Gurugram (Haryana). It is inter-State supply. IGST will be applicable.

8. Service pertaining to Transportation Of Goods [Section 12(8) Of IGST Act] –

This rule covers supply of services by way of transportation of goods (including by mail or by courier). The place of supply of service will be as follows –

Recipient of ServicesPlace of Service
When the recipient of service is a registered personThe place of service will be the location of recipient of service
When the recipient of service is not a registered personThe place of service will be the location at which such goods are handed over for their transportation.

Example :

  1. X Ltd. is Indore based GST registered company. It engages a courier company located in Nagpur to send its samples by courier from Nagpur to different locations. In this case, place of supply of service will be Indore (as recipient is registered and located in Indore).
  2. Suppose in the above case, X Ltd. is not registered under GST. The place of supply of service will be Nagpur (i.e., the place where goods are handed over to the courier).
  3. Suppose in the above 2 cases, letters are sent through courier. “Letters” are not goods. The above rule given by section 12(8) of IGST is not applicable

9. Service Pertaining to Transportation of Passengers [Section 12(9) of IGST Act] –

This rule covers passenger transportation service. Place of supply of service is as follows –

Recipient of ServicesPlace of Service
When the recipient of service is a registered personThe place of service will be the location of recipient of service
When the recipient of service is not a registered personThe place of service will be the place where the passenger embarks on the conveyance for a continuous journey.

Example :

  1. X Ltd. is a GST registered company located at Chennai. On December 1, 2018, it books Delhi–Hong Kong air ticket for B (who is marketing head of the company). The booking is made on official website of Jet Airways. The place of supply will be Chennai.
  2. Suppose in the above case, ticket is booked by B himself (he does not give name of X Ltd. and GSTIN of X Ltd. to the airlines). B is not registered under GST. The place of supply of service will be Delhi (being the place where passenger embarks on the conveyance for a continuous journey.

10. Services Provided On-Board a Conveyance [Section 12(10) of IGST Act] –

This rule covers any service provided on-board for air passengers, railway

passengers or passengers of any other mode. Some examples are on-board service of movies, music, video, software games on demand, beauty treatment services. This rule is applicable only when these services are provided during a passenger transport operation against a specific charge, and not provided as a part of fare.

Under this rule, the place of supply of services shall be the location of the first scheduled point of departure of that conveyance for the journey.

Example :Air Asia provides a video game or a movie-on-demand on-board as entertainment against a charge during the Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi flight. The place of supply of this service will be Bangkok which is situated in a non-taxable territory and, consequently, not chargeable to GST. Conversely, if the above service is provided by Air Asia on-board in its Delhi-Kolkata-Bangkok-Jakarta flight during the Bangkok-Jakarta leg, then the place of supply of service will be Delhi and chargeable to GST.

11. Telecommunication Services [Section 12(11) of IGST Act] –

This rule covers telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person. The relevant provisions are given below –

Different situationsPlace of supply of service
Services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antennaLocation where such telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services
Mobile connection for telecommunication and internet services provided on post-paid basisLocation of billing address of the recipient of services on the record of the supplier of services
Mobile connection for telecommunication, internet service and direct to home television services provided on pre-payment basis through a voucher or any other means – through selling agents, distributors of recharge vouchers, etc.When service is provided through a selling agent/re-seller! distributor of subscriber identity module card or re-charge voucher- – Place of supply of service will be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply.
When service is provided by any person to the final subscriber – Place of supply of service will be the location where such pre-payment is received or such vouchers are sold.
In any other casePlace of supply of service will 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.

12. Banking and Financial Services [Section 12(12) of IGST Act] –

This rule covers place of supply of banking and other financial services (including stock broking services to any person). In such cases, the place of supply of services shall be the location of the recipient of services on the records of the supplier. If, however, 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.

Example :

  1. X Ltd. of Delhi has a current account in South Extension branch of SBI. The place of supply of service by South Extension branch of SBI to X Ltd. is Delhi (i.e., the location of the X Ltd., the recipient of services, on the records of SBI). If some services (through its current account in South Extension branch) are obtained by X Ltd. in Maharashtra, the place of supply of services will be Delhi (and, consequently, CGST and SGST will be chargeable). In such a transaction, the branch in Maharashtra will only be a facilitator for providing these services. If the branch in Maharashtra levies any charges on the South Extension branch in Delhi for providing this facility, that will be a separate supply between the two branches, it will be chargeable to IGST.
  2. Rose Consultants (P.) Ltd. provides stock broking services in Gujarat. X and Y are clients of Rose Consultants. As per records of the Bombay Stock Exchange (the details of the address of the client are required to be uploaded with the stock exchange as part of the “Unique Client Code” details), address of X is New Park Street, Mumbai and address of Y is Blacktown Road, Sydney.

Therefore, in the case of X, the place of supply shall be Mumbai [i.e., the “location of the recipient of services” in terms of section 12(12) of IGST Act]. However, in the case of Y, the location of the recipient is outside India. The place of supply shall be determined as per section 13(8) of IGST Act (i.e., as an intermediary).

13. Insurance Services [Section 12(13) of IGST Act] –

The place of supply of insurance services shall be as follows –

  • If recipient of service is registered under GST –

The place of supply of services will be the location of recipient.

  • If recipient is not registered under GST –

The place of supply of services will be the location of the recipient of services on the records of the supplier of services.In the case of group insurance policies, a master policy is issued. Beneficiaries of the master policy may be located in more than one State. If such policy is issued to a registered person and a single premium is charged (it is not segregated based on the beneficiaries of the insurance policies), the place of supply for such policy will be the location of the registered person paying the premium.

14. Advertisement Services Provided to Government [Section 12(14) of IGST Act] –

This rule covers supply of advertisement services to the Central Government, a State Government, a statutory body or a local authority. In such cases, the place of supply of services will be the concerned State/Union Territory. If more than one State/ Union Territory is involved, the value of such supplies specific to each State or Union territory shall be calculated. Calculation can be made 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/agreement entered into in this regard. If there is no such agreement/contract, value may be calculated on such other basis as may be prescribed.

Example :

X Ltd. is registered in Chennai. It provides advertisement services. It enters into an agreement with Kerala Government to provide advertisement services pertaining to Swachh Bharat Abhiyan in the entire State of Kerala. Place of supply of service in this case will be Kerala.

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