TaxTMI 
TaxTMI 
'Bill to - Ship to' Model - IGST Act - Version 2 dated 25 November 2016
X X X X Extracts X X X X
X X X X Extracts X X X X
....Bill to - Ship to' Model - IGST Act - Version 2 dated 25 November 2016<br>By: - Ramnarayan Balakrishnan<br>Goods and Services Tax - GST<br>Dated:- 20-1-2017<br><br>Chapter IV, Section 7(3) of the draft IGST Act reads as below (verbatim): "Where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person, whether acting as an agent or otherwi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person." While the First Leg of the Transaction is reasonably clear, the second leg does seem to have ambiguity, as discuss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed below: A. The First Leg of the Transaction It could be inferred from the above section that, the supply can be intra-state, but the tax trigger/ place of supply would be the location of the third person who gives instructions for delivery of the goods. In other words, a person could supply goods intra-state (which ideally should trigger CGST + SGST), but, if the "third person" who gives inst....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ructions for such supply is located outside the particular state, then, regardless of the actual movement of goods, the location of such person would be deemed to be the place of supply and result in triggering of IGST. As a corollary, if the 'third person' discussed under Section 7(3) of the IGST Act, is located in the same state as the supplier but issues instructions for delivery of the goods ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on inter-state basis (which ideally should trigger IGST), then, regardless of the actual movement of goods, his location would be deemed to be the place of supply and result in triggering of CGST + SGST. The aspects discussed above are only in relation to the first leg of the transaction, i.e. between the Supplier of goods and the 'third person', whether located within or outside the state. B. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Second Leg of the Transaction The next point to reckon with would be the nature of the second leg of the transaction, i.e. between the 'third person' and the ultimate customer who receives the goods. Whether a transaction triggers IGST or CGST+SGST is based on whether the supply is inter-state or intra-state. In so far as the 'bill to - ship to' model is concerned, there is just one transacti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of movement of goods from the Supplier to the Ultimate Customer. The transactions between the 'third person' and the Ultimate Customer are just paper transactions. With respect to the above, it is pertinent to analyze Section 7(4), which states that, "Where the supply does not involve movement of goods, (in this case, between the 'third person' and 'ultimate customer'), whether by the supplie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient." There are two interpretations possible for the second leg of the transaction. At the time of effecting the second leg of the sale transaction, * The goods might have reached the ultimate customer. In which case, the place of supply would be the destination of the ultimate c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustomer. * Going back to Section 7(3), in this transaction of 'bill to - ship to', it is deemed that the 'third person' is the recipient of the goods, even though the actual recipient is the ultimate customer. This concept could further complicate the process of determining the actual place of supply. Correspondingly, there would be implications from the input credit perspective also. Thoughts....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on the above are most welcome. Reply By Somil Bhansali as = Sir as per my interpretation the Second leg of Transaction will be as per Section 7(4) of IGST Act where supply does not involve movement of goods and place of supply will be location of goods at the time of delivery to recipient irrespective of the place of third person and ultimate consumer. Dated: 20-1-2017<br> Scholarly article....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s for knowledge sharing by authors, experts, professionals ....