GST Updates

General Rule for determination of Place of Supply of Service

Section 6 of the Draft IGST Law provides how to determine Place of Supply of Service. Provisions of Section 6 of Draft IGST Law determining Place of Supply of Service can be divided in two parts, one where general rule is applicable and second where certain specific rules are applicable.

Section 6(2) and 6(3) of the Draft IGST Law contains provisions regarding applicability of general rule and provisions of Section 6(4) to 6(15) contains provisions regarding applicability of specific rule.

  1. Place of Supply of Service in case of Registered Person:

The situation is covered by Section 6(2) of the Draft IGST Law. The provision of the section 6(2) of the Draft IGST Law provides as follows:

 

(2) The place of supply of services, except the services specified in sub-sections (4),(5), (6), (7), (8), (9), (10), (11), (12), (13), (14) and (15), made to a registered person shall be the location of such person.

 

In case of registered person, place of supply of services except for services as specified in provisions 6(4) to 6(15) shall be location of such person.

As discussed in previous updates, a person would first be required to determine recipient of service as per section 2 (80) of the Draft GST Law. Once recipient has been identified, then location of the recipient of service would be identified as per provisions of section 2(64) of the Draft GST Law and the provision contains that

  • If the services have been received at the place where person is registered under the law, then place of supply of service would be the place where he is registered.
  • If the services have been received by a registered person at his fixed establishment, then place of supply of service would be the place of fixed establishment.
  • If services have been received at more than one place i.e. place of business and fixed establishment then place of business most directly connected with receipt of service would be the place of service.
  • In absence of any such place, usual place of residence of the registered person would be the place of supply of service.

Example 1: A Located in Chennai receives services at Chennai from B Located in Jaipur. A is a registered person under GST in Chennai. Therefore, as the services have been received by a registered person located in Chennai, therefore place of supply of service would be Chennai.

2) Place of Supply of Service in case of person other than registered person i.e. Unregistered Person:

The situation is covered by Section 6(3) of the Draft IGST Law. The provision of the section 6(3) of the Draft IGST Law provides as follows:

(3) The place of supply of services, except the services specified in sub-sections (4),(5), (6), (7), (8), (9), (10), (11), (12), (13), (14) and (15), made to any person other than a registered person shall be

(i) the location of the recipient where the address on record exists, and

(ii) the location of the supplier of services in other cases.

 

In case of person other than a registered person, place of supply of services except for services as specified in provisions 6(4) to 6(15) shall be

  • Location of the recipient wherein the address on record exists.
  • In case, the address does not exists on record, then in such case the location of the supplier would be the place of supply of service.

 

Let’s discuss the two situations contained in section 6(3) individually:

a) The provisions of section 6(3) of the Draft IGST Law cover the situation of person not registered under the law. If the person is registered under the law, then provisions of Section 6(2) of the Draft IGST Law would be applicable.

b) The next step would then be to determine recipient of service as per section 2 (80) of the Draft GST Law.

c) Once the recipient has been identified and address of recipient exists on record then place of supply of service would be the location of the recipient. Location of recipient of service would have to be identified as per provisions of Section 2(64) of the Draft GST Law and in such case’s, it would be the usual place of residence which would be the location of recipient. It would be inferred that address as provided by the recipient to the supplier is the usual place of residence of recipient defined under section 2(105) of the Draft GST Law.

d) However, in case the address of recipient does not exists on record, then place of supply of service would be the location of the supplier. It would be deemed that the supplies are Intra State Supplies even though the recipient may be located out of State. The location of supplier of service would have to be determined as per the provisions of section 2(65) of the Draft GST Law. The location of supplier provides that

  • If the supply of service has been made from a place of business for which registration has been obtained, the location of such place of business;
  • If the supply of service has been made from a place other than the place of business for which registration has been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed establishment;
  • If the supply of service has been 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
  • in absence of such places, the location of the usual place of residence of the supplier;

3. Conclusion: Applicability of General Rule for Identification of Place of Supply of Service

The first step to identify place of supply in case of service would be to identify recipient of service as per provisions of section 2(80) of the Draft GST Law.

Once recipient has been identified and in case wherein recipient is a registered person i.e. B2B Supply or in case wherein recipient is unregistered person i.e. B2C Supply but his address is available on record, location of such recipient would be the place of supply of service.

In case recipient is an unregistered person i.e. B2C Supply and his address is not available on record, then location of the supplier of service would be the place of supply of service.

1 Comment

1 Comment

  1. Avatar

    P C Shukla

    July 10, 2017 at 8:26 pm

    Suppose I have my registered office in UP. I am deputed for a survey loss assessment in UP by a Ins.co in Delhi on a policy issued by them. The deputing ins. co also has a registered office in UP. To whom I should raise the bill Delhi office or office in UP ?

    In second situation I have my registered office in UP. By Delhi office of insurance co I am deputed for survey in Uttarakhand.Insurance co also has a registered office in Uttarkhand. On whom I should raise the bill on Delhi office or Uttarkhand

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