Place of Supply of Services under GST – Sec 12 – Complete Analysis

For any service provider, the sections governing the Place of Supply of services under GST are as crucial as it is to compute the taxes accurately and discharge the tax liabilities on time. It is of equal importance to ascertain whether the tax has to be paid as IGST or CGST and SGST/UTGST.

Separate Rules for Place of Supply in GST for – Goods and Services

Goods are usually tangible and thus there is no difficulty in ascertaining the place of supply in GST, on the other hand, services are intangibles and the place of supply of services under GST depends on the manner of delivery, billing address, etc. Considering the difficulties in determining the actual place of supply of services, the various elements involved in a service transaction can be used for determining the place of consumption or place of supply of such services. The following elements give more exact results than others for determining the place of supply of services under GST :-

• • Location of service supplier

• • Location of service recipient

• • Place where the activity takes place or Place of performance

• • Place where the service is consumed

• • Place/person to which/whom actual benefit flows

Thus, the place of supply of goods in GST is governed by Section 10 and 11 and the place of supply of services under GST are governed separately by Section 12 and 13.

Separate Rules for B2B and B2C transactions

Before we analyze the relevant sections of place of supply in GST, we must understand that there are separate rules for place of supply for B2B and B2C transactions.

In B2B transactions, the recipient being a registered person avails ITC for paying his taxes and no real revenue accrues to the Government. Therefore, in B2B transactions, the place of supply in GST is usually the location of the recipient.

However, in B2C transactions, the supply is made to an unregistered person who consumes the same and cannot avail ITC, therefore, the taxes paid actually reach the government.

Definitions – Location of Supplier of Service and Location of Recipient of Service

Section 2(15) of the IGST Act, 2017 defines the term location of supplier of service in different circumstances. The definition is explained as under:-

	Situation	Location of Supplier of Service
a	Where supply is made from a place of business for which registration has been obtained	Location of such place of business
b	Where supply is made from a fixed establishment located elsewhere	Location of the fixed    place
c	Where supply is made from more than one establishment, whether place of business or a fixed establishment	Location of the place most directly concerned with the provision of supply
d	Absence of any such place	Location of the usual place of residence of the supplier

Section 2(14) of the IGST Act, 2017 defines the term location of recipient of service in different circumstances. The definition is explained as under:-

	Situation	Location of Supplier of Service
a	Where supply is received at a place of business for which registration has been obtained	Location of such place of business
b	Where supply received at a fixed establishment located elsewhere	Location of such fixed place
c	Where supply is received at more than one establishment, whether place of business or a fixed establishment	Location of the place most directly concerned with the receipt of supply
d	Absence of any such place	Location of the usual place of residence of the recipient

Place of Supply of Services under GST – Section 12

As per Section 12 of the IGST Act, 2017 governs the place of supply of services under GST where the location of the supplier as well as the recipient in within India. The detailed analysis of the section with examples is as under:-

General Provision – Section 12(2)

	Recipient	Place of Supply of Services under GST
a	Registered Person	Location of the recipient
b	Unregistered person but the location of the recipient is available	Location of the recipient
c	Unregistered person and the location of the recipient is also not available	Location of the supplier

Illustrations

	Situation		Explanation
a	Ms. Hina from Bangalore provided some professional services to Hitech Engineers from Chandigarh which is registered under GST.		Chandigarh – Since the recipient is registered under GST, the Place of Supply of Services under GST will be the location of the recipient.
b	M/s Ravi Cleaners from Kanpur provided cleaning services to Mr. Rakesh at his office premises at Jhansi for which his Jhansi address was available on record with M/s Ravi Cleaners.		Jhansi – Even though the recipient is an unregistered person, since his location is available on record with the supplier, the Place of Supply of Services under GST will be the location of the recipient.
c	Mr. Ram from Ludhiana provides services to all the walk-in clients but does not maintain a record of their names and addresses.		Ludhiana – Since the recipient is an unregistered person and the address of the recipient is also not available on record, the Place of Supply of Services under GST will be the location of the supplier.

Services related to immovable property – Section 12(3)

	Services	Place of Supply of Services under GST
	Immovable Property – Located In India
a	Directly in relation to an immovable property including services of interior decoration, architects, surveyors, engineers	Location where the im-movable property or boat or vessel, is located or is intended to be located.
b	By way of lodging accommodation by a hotel, inn, club, guest house by whatever name called including a house boat or any other vessel
c	By way of accommodation in any immovable property for organizing any marriage function, social, cultural, religious or business function, including services provided in relation to such function at such property
d	Any ancillary services to (a), (b) and (c)
	Immovable Property – Located outside India
a	If the location of the recipient and supplier is in India but the immovable property is located outside India	Location of the recipient

Personalized Services – Section 12(4)

Transaction – This section pertains to restaurant and catering services, personal grooming, fitness, beauty treatment, health services including cosmetic and plastic surgery.

Place of Supply of Services under GST – Location where the services are actually performed.

Explanation – This section covers either individual related services like beauty treatment or other services like restaurant and catering services that are covered under the scope of blocked credit under GST. Thus, in these cases there is no concept of B2B transactions and the Place of Supply of Services under GST is the location where the services are actually performed.

Example – Mr. Paresh lives in New Delhi and is a member of a gym in Gurgaon. Here, the place of supply of services under GST is Gurgaon i.e. the location where the services are actually performed.

Training and Performance Appraisal Services – Section 12(5)

	Recipient	Place of Supply of Service under GST
a	Any Registered Person	Location of the recipient
b	Any Unregistered Person	Location where the services are actually performed

Example – M/s ABC Solutions is providing GST and Tally training classes to the employees of M/s Ind Taxcorp from New Delhi as per contract with M/s Ind Taxcorp and also to people who are joining their classes at their centre at Noida.

Place of Supply of Services under GST – In the first case, since the recipient is a registered person i.e. M/s Ind Taxcorp, the place of supply will be the location of the recipient i.e. New Delhi. In the second case, where the recipients are unregistered, the place of supply will be the location where the services are actually performed i.e. Noida.

Event Admission Services – Section 12(6)

Transaction – Services provided by way of admission to a cultural, artistic, sporting, entertainment event or amusement park or any other place or services.

Place of Supply of Services under GST – Place where the event is actually held or where the park or such other place is located.

Example – Mr. Rajiv from Ranchi has attended a cultural event in Udaipur for which he had paid the organizers. Here, the place of supply of services under GST will be Udaipur i.e. the place where the event is actually held.

Event Linked Services – Section 12(7)

Transaction – Services provided by way of organization of a cultural, artistic, sporting, entertainment event including conferences, fair, exhibition, celebration or similar services or services ancillary to the organization of the event or assigning of sponsorship to such events.

	Recipient	Place of Supply of Services under GST
a	Registered Person	Location of recipient
b	Unregistered Person and the event is held in India	Location where the event is actually held
c	Unregistered Person but the event is held outside India	Location of recipient

Rule 5 of the IGST Rules, 2017 has been inserted vide Notification No. 4/2018-IT w.e.f. 01.01.2019 to cover the scenario where the event linked services are supplied in different states or union territories. This rule is applicable when all the following conditions are fulfilled:-

• • The recipient is an unregistered person

• • The event is held in more than one State or Union Territory

• • A consolidated amount is charged for supply of the service

In the absence of any contract or agreement between the supplier of service and recipient of services for separately collecting or determining the value of the services in each such State or Union territory, as the case maybe, it shall be determined by application of the generally accepted accounting principles.

Example – An event management company E has to organize some promotional events in States S1 and S2 for a recipient R. 3 events are to be organized in S1 and 2 in S2. They charge a consolidated amount of Rs.10,00,000 from R. The place of supply of this service is in both the States S1 and S2. Say the proportion arrived at by the application of generally accepted accounting principles is 3:2. The service shall be deemed to have been provided in the ratio 3:2 in S1 and S2 respectively. The value of services provided will thus be apportioned as Rs. 6,00,000/- in S1 and Rs. 4,00,000/- in S2 .

Services provided by way of transportation of goods – Section 12(8)

Transaction – Services provided by way of transportation of goods including by way of mail or courier.

	Recipient	Place of Supply of Services under GST
a	Registered Person	Location of recipient
b	Unregistered Person and the location is in India	Location at which such goods are handed over for their transportation
c	Transportation of the goods is to a place outside India	Location of destination of such goods i.e. outside India

Passenger Transportation Services – Section 12(9)

Transaction – Services provided by way of transportation of passengers.

	Recipient	Place of Supply of Services under GST
a	Registered Person	Location of such person
b	Unregistered Person	Location where the passenger embarks on the conveyance for a continuous journey

Services on board a conveyance – Section 12(10)

Transaction – Services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle.

Place of supply of services under GST – Location of the first scheduled point of departure of that conveyance for the journey.

Example – Mr. A boarded a train from Mumbai to go to his hometown in Chhatisgarh. He paid in Mumbai for watching a movie on board. Here, the place of supply of services under GST will be Mumbai, i.e. the location of the first scheduled point of departure of that conveyance for the journey.

Telecommunication Services – Section 12(11)

As per Section 2(110) of the CGST Act, 2017, telecommunication service means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services), which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means.

Telecommunication service including data transfer, broadcasting, cable and direct to home television services to any person as under:-

Transaction 1 – In case of services by way of fixed telecommunication line, leased circuits, internet leased circuits, cable or dish antenna

Place of supply of services under GST – Location where the telecommunication line, leased circuits, internet leased circuits, cable or dish antenna is installed for receipt of services

Transaction 2 – In case of mobile connection for telecommunication and internet services provided on postpaid basis

Place of supply of services under GST – Location of billing address of the recipient of services on the record of the supplier of services.

Transaction 3 – In cases where mobile connection for telecommunication, internet service and direct to home television services provided on pre-payment basis through a voucher or any other means –

Situation	Place of supply of services under GST
Through a selling agent or a re-seller or  a distributor of subscriber identity module card or re-charge voucher	Address of the selling agent or a re-seller or  a distributor as per the record of the supplier at the time of supply
By any person to the final subscriber	Location where such prepayment is received or such vouchers are sold
The pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment	Location of recipient of services on record of the supplier of services

Transaction 4 – Any other case

	Recipient	Place of supply of service under GST
a	If the address of the recipient is available in records of the supplier	Address of the recipient is available in records of the supplier
b	If the address of the recipient is not available in records of the supplier	Location of the supplier of service

Banking and other financial services – Section 12(12)

Transaction – Banking and other financial services, including stock broking services to any person

	Recipient	Place of supply of services under GST
a	If the address of the recipient is available in records of the supplier	Address of the recipient is available in records of the supplier
b	If the address of the recipient is not available in records of the supplier	Location of the supplier of service

Example – Mr. Tarun travels from New Delhi to Dehradun and uses some banking service in Dehradun. If the service is not linked to the account of person, place of supply shall be Dehradun i.e. the location of the supplier of services. However, if the service is linked to the account of the person, the place of supply shall be New Delhi, the location of recipient on the records of the supplier.

Insurance Services – Section 12(13)

	Recipient	Place of Supply of Services under GST
a	Registered Person	Location of recipient
b	Unregistered Person	Location of recipient

In insurance services, the insurance companies will always have the details such as address of the insured on their records; therefore, the place of supply of services under GST will be the location of the recipient.

Example – Mr. Khan from Jaipur is travelling from New Delhi to Bangalore via Indigo and has availed the travel insurance on New Delhi. Here, the place of supply of services under GST will be Jaipur i.e. the location of the recipient.

Advertisement Services to Government/Govt. bodies – Section 12(14)

Transaction – Section 12(14) pertains to the determination of place of supply of advertising service to the Central Government/State Government/Statutory body/Local authority meant for the State or Union territory identified in contract or agreement.

Place of supply of services under GST – Each of such States/Union territories where the advertisement is broadcasted/run/played/dissemination.