Model GST Law – inter-State

transactions
Presented by Samir Kapadia

BOMBAY CHARTERED ACCOUNTANTS SOCIETY

© Samir Kapadia
Synopsis
» Current law
» Model GST Law
» Important concepts
» Place of supply
» Illustrations

© Samir Kapadia
Present scheme for taxation of inter-State sale of goods and
provision of services
Goods:
» Centre levies CST on inter-State sale
» Tax is levied when sale is occasions inter-State movement of goods or where the sale of goods is effected by transfer of
documents of title during the inter-State movement of goods
» Central Levy but collected & retained by originating State
» States levy tax on entry of goods into a local area for consumption, use or sale therein
» Some %age of retention is mandated where goods are transferred outside the State otherwise than by way of
sale
» Declaration forms are issued of inter-state movement of goods and concessional rate of tax
» Verifications at Border Check posts
» VAT, ED and ST credit not fungible
» ITC of CST / Entry Tax not allowed to buying dealer

Services:
» Centre levies Service tax on provision of services across India

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Model GST Law
» An Integrated Goods and Services Tax (‘IGST’) shall be levied in respect of supply of goods and/or services in
the course of inter-State trade or commerce (i.e. from one State to another)
» Inter-State supply of goods and/or services means any supply where the location of the supplier and the place of
supply are in different States
» Intra-State supply of goods and/or services means any supply where the location of the supplier and the place of
supply are in the same States
» A supply of goods and/or services in the course of import into the territory of India shall be deemed to be a
supply of goods and/or services in the course of inter-State trade or commerce
» An export of goods and/or services shall be deemed to be a supply of goods and/or services in the course of
inter-State trade or commerce

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Important definitions under the Model GST Law
» India means -
(a) the territory of the Union as referred to in clauses (2) and (3) of Article 1 of the Constitution;
(b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the
Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of
1976);
(c) the seabed and the subsoil underlying the territorial waters;
(d) the air space above its territory and territorial waters; and
(e) the installations, structures and vessels located in the continental shelf of India and the exclusive economic
zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and
supply thereof;

» Appropriate State in relation to a taxable person, means that State where he is registered or liable to be
registered under section 19 of the Central Goods and Services Tax Act, 2016

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Important definitions under the Model GST Law
» Export of goods with its grammatical variations and cognate expressions, means taking out of India to a place
outside India;
» Deemed exports as notified by the Central Government/State Government on the recommendation of the
Council, refer to those transactions in which the goods supplied do not leave India, and payment for such
supplies is received either in Indian Rupees or in convertible foreign exchange
» Import of goods with its grammatical variations and cognate expressions, means bringing into India from a
place outside India
» Export of Service: the supply of any service shall be treated as “export of service” when:
(a) the supplier of service is located in India,
(b) the recipient of service is located outside India,
(c) the place of supply of service is outside India,
(d) the payment for such service has been received by the supplier of service in convertible foreign exchange,
and
(e) the supplier of service and recipient of service are not merely establishments of a distinct person;
Explanation: For the purposes of clause (e), an establishment of a person in India and any of his other
establishment outside India shall be treated as establishments of distinct persons.

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Important definitions under the Model GST Law
» Import of Service: the supply of any service shall be treated as an “import of service” if,
(a) the supplier of service is located outside India,
(b) the recipient of service is located in India,
(c) the place of supply of service is in India, and
(d) the supplier of service and the recipient of service are not merely establishments of a distinct person;
Explanation 1: An establishment of a person in India and any of his other establishment outside India shall be
treated as establishments of distinct persons.
Explanation 2: A person carrying on a business through a branch or agency or representational office in any
territory shall be treated as having an establishment in that territory.
» Location of supplier of service means:
(i) where a supply is made from a place of business for which registration has been obtained, the location of
such place of business;
(ii) where a supply is 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;
(iii) 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;
and
(iv) in absence of such places, the location of the usual place of residence of the supplier;

© Samir Kapadia
Important definitions under the Model GST Law
» Location of recipient of service means:
(i) where a supply is received at a place of business for which registration has been obtained, the location of
such place of business;
(ii) where a supply is received at 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;
(iii) 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; and
(iv) in absence of such places, the location of the usual place of residence of the recipient;
» Fixed establishment means a place (other than the place of business) which is characterised by a sufficient
degree of permanence and suitable structure in terms of human and technical resources to supply services, or
to receive and use services for its own needs;
» Place of business includes
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other
place where a taxable person stores his goods, provides or receives goods and/or services; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called
» Principal place of business means the place of business specified as the principal place of business in the
certificate of registration where the taxable person keeps and maintains the accounts and records as specified
under section 42

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Place of supply of goods and services
» IGST is payable in case of inter-state trade or commerce and CGST and SGST is payable in case of intra-state
supply of goods and services
» Whether the goods and/or services are supplied inter-State or intra-State has to be determined as per the place
of supply as specified under section 5 (in case of goods) and section 6 (in case of services) of the Model IGST
Law
» The basic principle behind provisions relating to place of supply is that GST is destination based tax. Thus, tax is
finally payable where goods and services are consumed
» Determination of the destination is relatively easy in case of goods, but not so easy in case of services.
Typically the place of supply of services is determined on the basis of the location where:
• Service receiver is registered; or
• Service receivers billing address; or
• Immovable property is located; or
• Services are performed; or
• Other similar indexes

© Samir Kapadia
Inter-State supply of goods – important concepts
» Location of supplier – refers to the site or premises (geographical point) where the supplier is situated, with the
goods in his control, ready to be supplied;
» Place of supply of goods – refers to the place where the delivery takes place
» Delivery would be the place where the supplier passes control over the goods supplied. Thus, whether
movement of goods is involved or not, the important aspect to be understood is that the place of supply will be
determined based on the site or premises (geographic location) where the ‘delivery’ is complete for each supply
» The place where the control passes from the supplier to the recipient is vital for determining the place of supply
» If goods have to be transported to properly complete the supply, then the place where ‘movement terminates’ is said to be
its place of supply
» If goods do not have to be transported, then the place where they are ‘delivered’ or ‘made available’ to the recipient is
provided to be its place of supply

» If the place from where the supply originates and the place of supply (as determined under this
Section) are not in the same State, then it is a supply covered by IGST Act

© Samir Kapadia

General rule
Movement of goods
involved
Movement of goods at the
instance of a third party
Location where the
movement of goods
terminates
Principal POB of the third
party

Movement of goods not Location of the goods at the

involved time of the delivery
Place of supply

Goods
Installation or assembly at Place of installation or
site assembly

Supplied on board a Location where the goods

conveyance are taken on board

As per law made by the

Cannot be determined Parliament in accordance
the GSTC recommendation

© Samir Kapadia
 If vessel is located at more
In relation to immovable
Location of the immovable than one location either
property, accommodation
property or vessel proportionate or
and ancillary services
reasonable basis

Place where the services

Personal services
are actually performed

B2B: Location of the

Place of supply

registered person
Training and performance
appraisal
Services
B2C: Location where the
services are performed

Location where the event

Admission to event or
is held or where the park is
amusement park
located

B2B: Location of the

registered person
Organizing an event and
ancillary services Where event is held in
B2C: Location where the more than one State either
event is held proportionate or
reasonable basis
© Samir Kapadia
 B2B: Location of the
Transportation of registered person
goods, including by B2C: Location where
mail or courier the goods are handed
over for
transportation
B2B: Location of the
registered person
Transportation of B2B: location of
passengers registered person
Place of supply

B2C: Location of
Right of passage for
passenger when he
future use B2C: Billing address
embarks
Services or location of the
Location of the first service provider
Services on board a
scheduled point of
conveyance
departure

Location where the

Fixed line:
line is installed

Post paid Billing address

Telecommunication
services Location where the
Pre paid prepaid voucher is
sold

Pre paid sold through

Billing address
internet
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 Location of recipient
Banking and other Linked to account on records of
financial services supplier
including stock
broking Location of service
Not linked to account
provider

B2B: Location of the

registered person
Place of supply

Insurance
B2C: Address of the
Services
recipient on record

Government, Local Location in each Proportionate or

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authority State reasonable basis

B2B: Location of the

registered person
Address of the
Residuary rule
recipient on record
B2C
Location of the
service provider

© Samir Kapadia
Illustrations
» Inter-State Sales
» High Seas Sale
» Bill to Ship to
» Inter-State Works Contract
» Chartered Accountants Service

© Samir Kapadia
Thank you
Email: Samir.kapadia@voxlaw.in

© Samir Kapadia