by In a GST invoice, the location of supplier and location of recipient play an important role in the determination of the applicability of IGST or CGST and SGST. If the supply is inter-state, IGST would be applicable. If the supply is intra-state, CGST and SGST would be applicable. In this article, we look at how to determine the location of the supplier and location of the recipient as per rules provided in the GST Act.
Location of supplier is usually where a supply is made from, a place mentioned as a principal place of business on the GST registration certificate. In case the supplier distributes the supplier apart from the places as mentioned on the GST registration certificate, the supplier can use the location of a place mentioned on the GST registration certificate.
If the supplier makes the supply from more than one location, the supplier can treat the location of the supplier which directly reflects the concerned supply. If the supplier is unable to determine the place of supply, the concerned individual shall use the usual place of residence of the supplier as the location of the supplier on the GST invoice.
Recipient
Recipient of the supply of goods or services is someone who is liable for payment of consideration for the supply of goods or services. If no consideration is payable, the person to whom the goods are delivered or made available, or uses the goods or services shall apply as the recipient. The word recipient shall also apply to the reference to an agent acting on behalf of a recipient.
Importance of Place of Supply
Wrong classification of supply between interstate or intra-state and vice-versa may lead to hardship to the taxpayer as per section 19 of IGST Act and section 70 of CGST Act
Where wrong taxes have been paid on the basis of the wrong classification, a refund will have to be claimed by the taxpayer
The taxpayer will have to pay the correct tax along with interest for the delay on the basis of revised/correct classification.
Also, correct determination of place of supply will help us in knowing the incidence of tax. As if the place of supply is determined as a place outside India, then tax will not have to be paid on that transaction.
| Supply Type | Place of Supply |
| Involves movement of goods, whether by supplier, or buyer or by any other person | Location of the goods when the movement of goods terminates for delivery to the recipient. |
| Goods are delivered by the seller to the buyer on the directions of a third party (whether or not an agent), before or during the movement of goods, by the way of transfer of title in goods or the documents or some other way | It is assumed that the third person has received the goods and therefore, the place of supply of the goods will be the principal place of business of the third party. |
Determining The Place Of Supply Of Services
GST is destination-based tax i.e consumption tax, which means tax will be levied where goods and services are consumed and will accrue to that state. Under GST, there are three levels of Tax, IGST, CGST & SGST and based on the ‘’place of supply’’ so determined and the location of the supplier, the respective tax will be levied.
IGST is levied where the transaction is inter-state, and CGST & SGST are levied where the transaction is intra-state. For understanding the place of supply for services, the following two concepts are very important namely:
- Location of the recipient of services
- Location of the supplier of services
Location of the Recipient of Services
| Case | Location of Recipient of Service |
| where a supply is received at a place of business for which the registration has been obtained | such place of business |
| where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere) | such fixed establishment |
| 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 |
| in absence of such places | the location of the usual place of residence of the recipient; |
Location of the provider/Supplier of services
| Case | Location of Supplier of Services |
| where a supply is made from a place of business for which the registration has been obtained | the location of such place of business |
| 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; |
| 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 |
| in absence of such places, | the location of the usual place of residence of the supplier; |
Domestic Transactions
These are the transactions where both the parties i.e the supplier as well as the recipient of service are in India. Domestic transactions can be further categorised as below:
- Inter-State (i.e between two different states)
- Intra-State (i.e within the same state)
International Transactions
These are the transactions where either the service recipient or the provider is outside India. Transactions in which both the recipient as well as a provider are outside India are not covered here.
General Rule: The Place of supply for services treated as international transactions shall be:
- The location of the service recipient
- In the case where the location of the service recipient is not available, the place of supply shall be the location of the supplier.
