Place
of Supply Clarification
[Circular
No. 184/16/2022-GST dated 27 December, 2022]
Subject: Clarification on the entitlement of input tax credit where the place of supply is determined in terms of the proviso to
sub-section (8) of section 12 of the Integrated Goods and Services Tax
Act, 2017.
Attention is invited to sub-section (8) of section 12 of Integrated Goods and Services
Tax
Act, 2017 (hereinafter
referred to as “IGST Act”) which provides for the
place of supply of services by way of transportation of goods, including by mail or courier, where
location of the supplier as well as the recipient of services is in India. As per clause (a) of the aforesaid sub-
section, 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 registered person. However, the
proviso to the aforesaid sub-section which was inserted vide the Integrated Goods
and
Services Tax (Amendment)
Act, 2018 w.e.f. 01.02.2019 provides that where the transportation of goods
is to a place outside India, the place of supply of the said service shall be the place of destination of
such goods. In such cases, as the place
of supply of services, as per the proviso to sub-section
(8)
of section 12 of IGST Act, is the concerned foreign
destination and not the State
where the recipient is registered under GST, doubts are being raised regarding the availability
of input tax credit of the said services to
the recipient located in
India.
2.
In order to clarify this issue and to ensure
uniformity in the implementation of the
provisions of law across the field formations,
the Board, in exercise of its powers conferred by section 168 (1)
of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as
“CGST Act”), hereby clarifies the
issues as under:
|
Sl.
No. |
Issue |
Clarification |
|
1. |
In
case of supply
of services by way
of transportation
of goods, including by mail or courier, where the transportation of goods
is to a place outside India, and where the supplier and recipient of the
said supply of services are
located in India, what
would be the place of supply of the said services? |
The place of
supply of services by way of transportation
of goods, including by mail or courier, where both the supplier and the recipient
are located in India,
is determined in terms of sub-
section (8) of section 12 of the IGST Act which
reads
as follows: “(8)
The place of supply
of services by way of transportation of goods, including by mail or courier to,—
(a)
a registered person, shall
be the location of such person;
(b)
a person other than
a registered person, shall be the location at which such goods
are handed over for
their transportation:
Provided that where the
transportation of
goods is to a place
outside India,
the place of supply shall be the
place of destination of
such goods”
Hence, in case
of supply of services by way of transportation
of goods, including by mail or courier, where the
transportation of
goods is to a place outside India,
and where
the supplier and recipient of the said supply of services are located in India,
the place of supply is the concerned
foreign destination where
the goods are being
transported, in accordance
with the proviso to the
sub-section (8) of
section 12 of IGST Act, which was
inserted vide the Integrated Goods and Services Tax
(Amendment) Act, 2018 w.e.f. 01.02.2019. Illustration:
X is a person registered under GST in the state
of West Bengal who intends to export goods to a person Y located in Singapore. X
avails the services for transportation of goods by air to Singapore from an air cargo operator Z, who is also registered under GST
in the state of West
Bengal. In
this case, the place of supply of the services provided by Z to X is the place of destination of goods i.e., Singapore,
in terms of the proviso to sub-section
(8) of section 12 of IGST Act. |
|
2. |
In
the case given in Sl. No. 1,
whether the supply of services will
be treated as inter-State supply or intra-State supply? |
The aforesaid
supply of services would be considered as inter-State
supply in terms of sub- section (5) of section 7 of the IGST
Act since the
location of the supplier is in India
and the place of
supply is outside India.
Therefore, integrated tax (IGST) would be chargeable on the said supply of services. In respect of the
illustration given
in Sl. No. 1. above, Z would charge IGST from X in terms
of sub-section (5) of section 7 of the
IGST Act, for supply of services by way of transportation
of goods. |
|
3. |
In
the case given in Sl. No. 1,
whether the recipient of
service of transportation of goods would be eligible to avail input tax credit in
respect of the said input service of transportation of goods? |
Section 16 of the CGST Act lays down the eligibility and conditions for taking input tax credit
whereas, section 17 of
the CGST Act provides for apportionment of
credit and blocked credits under
circumstances specified
therein. The said provisions of law do not restrict
availment of input tax credit by the recipient located
in India if the place
of supply of the said input service is
outside India. Thus, the recipient
of service of transportation of goods shall be eligible to avail input tax credit in respect of the IGST so charged
by the supplier, subject to the
fulfilment of other conditions laid down in
section 16 and 17 of the CGST Act. In
the illustration given in Sl. No. 1 above,
X would be eligible to take input tax credit of IGST
in respect of supply of services received by him from Z,
subject to the
fulfilment of other conditions laid down in section 16 and 17
of the CGST Act. |
|
4. |
In the case mentioned at Sl. No. 1,
what state code has to be mentioned by the supplier of the said service of
transportation of
goods, where the transportation of
goods is to a place outside India, while reporting the said supply
in FORM GSTR-1? |
The supplier of service shall report place of supply
of such service by selecting State code as ‘96-
Foreign Country’ from the list of codes in the drop- down menu available on the portal in FORM
GSTR-1. |
3. It is requested that suitable trade notices may be issued to publicize the contents
of this Circular.
4. Difficulty,
if any, in implementation of the above instructions may please be brought to the
notice of the
Board.
F.
No. CBIC-20001/2/2022 - GST