PLACE OF SUPPLY OF SERVICES UNDER GST REGIME – PART II

[Mr. M. GOVINDARAJAN]

In the previous part the place of supply of services where location of supplier and recipient is in India has been discussed. In this part the place of supply of services where location of supplier or location of recipient is outside India. Section 13 (1) of the Integrated Goods and Services Tax Act, 2017 provides that the provisions of Section 13 shall apply to determine the place of supply of services where location of supplier of location of recipient is outside India.

Place of supply of goods

Section 13(3) provides that the place of supply of the following services shall be the location where the services are actually performed-

• services supplied in respect of goods which are required to be made-

• physically available by the recipient of services to the supplier of services; or
• to a person acting on behalf of the supplier of services

in order to provide the services.

When such services are provided from a remote location by way of electronic means, the place of supply shall be the location where the goods are situated at the time of supply of services.

Nothing in this section shall apply in respect of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than which is required for such repairs;

• services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which required the physical present of the recipient or the person acting on his behalf, with the supplier for the supply of services.

For immovable property

Section 13(4) provide that the place of supply of services supplied directly in relation to an immovable property, including services supplied by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located.

Section 13(6) provides that where the above said services is supplied more than one location, including a location in the taxable territory, the place of supply shall be the location in the taxable territory.

For  admission or organization of an event

Section 13(5) provides that the place of supply of services supplied by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events and of services ancillary to such admission  or organization shall be the place where the event is actually held.

Section 13(6) provides where the above said service is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory.

Supply in more than one State or Union Territory

Section 13 (7) provides that where the above said services are supplied in more than one State or Union territory, the place of supply of such services shall be taken as being in each of the respective States or Union territories.  The value of such supplies specific to each State or Union territory shall be 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 agreement, on such other basis as may be prescribed.

For banking company

Section 13(8) (a) provides that the place of supply of the services supplied by a banking company or a financial institution or a non banking company, to account holders shall be the location of supplier of services.

The explanation (a)  to this section defines the term ‘account’ as an account bearing interest to the depositor and includes a non resident external account and a non resident ordinary account.

The explanation (b) to this section defines the expression ‘banking company’ as having the same meaning as assigned to it under section 45A(a) of the Reserve Bank of India Act, 1934. Section 45A(a) of the Reserve Bank of India Act, 1934 defines the expression ‘banking company’ as a banking company as defined in section 5 of the Banking Regulation Act, 1949  and includes the State Bank of India, any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959, any corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertak­ings) Act, 1970, and any other financial institution notified by the Central Government in this behalf.

The explanation (c) to this section defines the expression ‘non-banking financial company’ as-

• a financial institution which is a company;
• a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or
• such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette, specify.

For intermediary services

Section 13(8) (b) provides that the place of supply of the services supplied by intermediary shall be the location of the supplier of the services.

Section 2(13) of the Act defines the term ‘intermediary’ as 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.

For hiring of transport

Section 13(8) (c) provides that the place of supply of the services consisting of hiring of means of transport, including yachts but excluding aircraft and vessels, up to a period one month, shall be the location of the supplier of services.

For transportation of goods other than mail or courier

Section 13(9) provides that the place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods.

For the passenger transportation services

Section 13(10) provides that the place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey.

Section 2(3) of the Act defines the expression ‘continuous journey’ as 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.  The term’ stopover’ means a place where a passenger can disembark either to transfer to another conveyance or break this journey for a certain period in order to resume it at a later point of time.

For the services provided on board a conveyance

Section 13(11) provides that the place of supply of services provided on board during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance  for the journey.

For Online information and database access or retrieval services

Section 13(12) provides that the place of supply of online information and database access or retrieval services shall be the location of the recipient of services.

The person receiving such services shall be deemed to be located in the taxable territory, if any two of the following non contradictory conditions are satisfied-

• the location of address presented by the recipient of services through internet is in the taxable territory;
• the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;
• the billing address of the recipient of services is in the taxable territory;
• the internet protocol address of the device used by the recipient of services is in the taxable territory;
• the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;
• the country code of the subscriber identity module card used by the recipient of services is of taxable territory;
• the location of the fixed land line through which the service is received by the recipient is in the taxable territory.

Power of Government

Section 13(13) provides that in order to prevent double taxation or non taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.

Place of supply of service – location of the recipient

Section 13(2) provides that the place of supply of services except the services specified in section 13(3) to 13(13) shall be the location of the recipient of services.  Where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services.