GOODS & SERVICES TAX MAY 11, 2017 GST Seminar GOODS & SERVICES TAX MAY 11, 2017

Coverage Understanding the relevance of Place of Supply (“POS”) Place of Supply framework under the GST regime Supply of goods within India Service provider (“SP”) and Service Receiver (“SR”) located in India

Relevance of Place of Supply Need for Place of Supply provisions in a legislation?? Determining Jurisdiction of levy of tax ‘Origin’ based levy vis-à-vis ‘Destination’ based levy Current laws vis-à-vis place of supply principles Taxes Levy Place of supply Principle Value Added Tax Sale of goods Place of Movement Origin based tax Central Sales Tax Central Excise duty Manufacture of goods Place of Removal Service tax Provision of service Place of Recipient Destination based tax

Taxes to be levied on Supply of Goods / Services Whom to Pay Taxes to be levied on Supply of Goods / Services Intra State CGST + SGST Inter State IGST Import Export including supplies to SEZ Developer and SEZ Unit Zero Rated

Interstate Vs. Intrastate... Intra State supplies Where the location of the supplier and the place of supply are in the same state or same union territory Inter State supplies Where the location of the supplier and the place of supply are in different states or union territories

...Interstate Vs. Intrastate Deciding Parameters Location of the Supplier Place of Supply

...Interstate Vs. Intrastate Following shall always be considered as Inter state supplies: Supply of goods imported into the territory of India till they cross the custom frontiers of India Supply of services imported into the territory of India Supplier is located in India and the place of supply is outside India i.e. export Supply to or by a Special Economic Zone unit / developer

Either SP or SR outside India Place of Supply Goods Imports and Exports DTA Transactions Services Either SP or SR outside India SP and SR in India

Place of supply of goods other than imports or exports

POS framework for goods under GST Sr. No. Scenario Section under the IGST Act 1 Supply involving movement of goods 10(1)(a) 2 Goods delivered on the direction of a third person 10(1)(b) 3 Supply does not involve movement of goods 10(1)(c) 4 Goods are assembled or installed at site 10(1)(d) 5 Goods supplied on board a conveyance 10(1)(e) 6 Residuary Rule 10(2)

Supply involves movement of goods Where Supply involves movement of goods whether by: the supplier; or the recipient; or any other person Place of Supply Location where movement of goods terminates for delivery to the recipient How do we interpret the term ‘Terminates for delivery’ ????

Supply involves movement of goods - Illustration Sells goods to the customer (Ex-works) 1 Gujarat Pune Sells goods to the customer (FOR) 2 Gujarat Transaction 1: Movement of goods terminates at Pune. Customer takes delivery ex-works – POS – Maharashtra (CGST+SGST) Transaction 2: Movement of goods terminates at Gujarat. Delivery is on the factory owner – POS – Gujarat (IGST)

Issues Credit of CGST / SGST in case of ex works delivery terms Inter State Supplies Place of supply and location of supplier in different states Ex works Movement of goods terminates at the location of supplier CGST / SGST Credit of CGST / SGST not available unless buyer is registered in that state Who will generate E way bill in case of ex works delivery terms?? Every registered person who causes movement of delivery shall generate E way bill. In case of ex works contracts transportation is arranged by the buyer.

Delivery by supplier on direction of a third person Where the goods are delivered by the supplier to a recipient (before or during the movement); On direction of third person (agent or otherwise) By way of transfer of documents or otherwise Place of Supply Principal place of business of the third person Person issuing the direction to be considered for the Place of supply; ‘Bill to Ship to’ Model, Place of supply shall be the person to whom the bill is raised; No concept of in-transit sales;

Place of Supply –Bill to Ship to Manufacturer Trader 1 Maharashtra 2 Ship to Madhya Pradesh customer Transaction 1: On the direction of the trader, manufacturer delivers the goods – POS – Maharashtra (CGST+SGST) Transaction 2: Normal Sale transaction. POS would be decided in terms of general rule – Delivery terms Ex- works POS – Maharashtra (CGST + SGST) Delivery terms FOR POS – Madhya Pradesh (IGST)

Place of Supply –Bill to Ship to Manufacturer 1 Maharashtra Ship to Bill to Madhya Pradesh Customer Trader 2 Transaction 1: On the direction of the trader, manufacturer delivers the goods – POS – Madhya Pradesh (IGST) Transaction 2: Normal Sale transaction. POS would be decided in terms of general rule –POS – Madhya Pradesh (CGST + SGST)

Place of Supply –Bill to Ship to Manufacturer Ship to Customer 1 Maharashtra Bill to 2 Madhya Pradesh Trader Transaction 1: On the direction of the trader, manufacturer delivers the goods – POS – Madhya Pradesh (IGST) Transaction 2: Normal Sale transaction. POS would be decided in terms of general rule –Delivery terms Ex- works POS – Madhya Pradesh (CGST + SGST) Delivery terms FOR POS – Maharashtra (IGST)

Supply does not involve movement of goods Supply does not involve movement of goods by the supplier or the recipient Place of Supply Location of good at the time of delivery Sells property including the furniture Scrap generated at job worker’s premises and sold to job worker by the principal Mumbai Gujarat POS – Mumbai (being the location of goods at time of supply) - CGST+SGST

Goods are assembled or installed at site... Where goods are assembled or installed at site Place of Supply Location of installation or assembly Raises Invoice for supply and installation of Air Conditioner Mumbai Mumbai Installs Air Conditioner Rajasthan POS – Rajasthan (location of installation) - IGST

.... Goods are assembled or installed at site Supply involves movement of goods Goods are assembled or installed at site and involves movement from one state to another Which clause would be applicable?? Installation resulting into immovable property If Installation of goods resulting in immovable property – it is works contract Works contract is defined as ‘service’ In such cases, place of supply with respect to services shall apply

Goods supplied on board a conveyance Where Goods supplied onboard a conveyance, including vessel, aircraft or train or motor vehicle Place of Supply Location of goods taken on board Sells a watch onboard USA Frankfurt Mumbai POS – Mumbai Location of supplier?? – HO of the Airline company??

Place of supply of services where service provider and service receiver is located in India

Section under the IGST Act POS framework for services under GST where location of SS and SR is in India Sr. No. Concept Section under the IGST Act 1 General Rule 12(2) 2 Services directly in relation to an immovable property 12(3) 3 Restaurant and catering services, personal grooming, fitness, beauty treatment, health services including cosmetic and plastic surgery 12(4) 4 Services in relation to training and performance appraisal 12(5) 5 Services provided by way of admission to various events, amusement park or any other place and ancillary services 12(6) 6 Services provided by way of organising various events and ancillary services 12(7) 7 Services by way of transportation of goods, including courier or mail 12(8) 8 Passenger Transport Service 12(9) 9 Services supplied on board a conveyance 12(10) 10 Supply of telecommunication services including data transfer, broadcasting, cable and D2h service 12(11) 11 Banking and other financial services, including stock brokering services 12(12) 12 Insurance Service 12(13) 13 Advertisement services provided to the CG, SG, statutory authority or local authority 12(14)

General Rule Location of the recipient of service Location of the supplier of service Available Not available in the ordinary course of business POS

Location of Service Recipient [Section 2(15) of IGST] Supply is received at a place of business for which registration is obtained Location of registered place of business Supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere) Location of fixed establishment Supply is received at more than one establishment, whether the place of business or fixed establishment Location of establishment which is directly concerned with the receipt of supply In absence of such places Location of usual place of residence

Immovable Property Related Service... Coverage Directly in relation to immovable Property and includes services provided by: Architects, Interior decorators, Surveyors, Engineers and other experts Estate agents Grant of right to use immovable property Carrying out co-ordination of construction work By way of lodging and accommodation by: Hotels, Inns, Guesthouse, Home stay, Club or campsite Including: House boat or any other vessel By way of accommodation for organizing: Marriage or reception Official, Social, Cultural, Religious or business functions And includes: Services provided in relation to such functions Services ancillary to these

…Immovable Property Related Service... Place of Supply: Property located in India Location of property Place of Supply Architect services Hotel located Delhi Mumbai Bangalore Bangalore Property located outside India Location of recipient Place of Supply Architect services Hotel located Delhi Mumbai New York Mumbai

…Immovable Property Related Service If immovable property is located in more than one State, or Union Territory Place of supply shall be each respective States or Union Territory in proportion to value of services provided as mentioned in the contract as entered Single Road Construction Contract for construction 1000 k.m. road between Maharashtra and Gujarat Mumbai (Service Provider) Delhi (Service Receiver) 600 k.m. of road to be constructed in Maharashtra and balance in Gujarat POS – 40% value in Gujarat POS – 60% value in Maharashtra

Performance Based Service... Coverage Place of Supply: The section specifically lists these five services and applies to only these services There is no use of ‘includes’ or ‘means and includes’ or ‘in relation to’ which expands the scope of the section No use of word ‘physical presence’ as under current Rule 4(b) of Place of Provision Nature of Service Restaurant and catering Personal grooming Fitness Beauty treatment Health service (including cosmetic and plastic surgery) Location where services are actually performed

...Performance Based Service - Illustration Delhi Mumbai Teaching Yoga to Employees Head Office Yoga Instructor Delhi Chennai Pune Branch Branch Branch Place of Supply of Service for Yoga Instructor shall be location of various branches What if consolidated invoice is raised in favour of HO?? Will HO require to cross charge it to branch?? Valuation and apportionment of yoga services between branches??

Training & Performance Appraisal Service Coverage : Place of Supply: Deviation from current provision where POS is where the services are actually performed Services in relation to: - Training; and - Performance appraisal Services provided Registered Person Unregistered Person Location of registered person Location where service is actually performed

Any Services ancillary thereto Admission to An Event Coverage Place of Supply: Service by way of admission Cultural event Artistic event Sporting event Scientific event Educational event Entertainment event Amusement park Any other place Any Services ancillary thereto Current Rule 6 of POPOS deals with admission as well as organizing of an event Location where the event is actually held; Or such park or place is located

Admission to An Event - Illustration Pune Office Music event in USA Organises event in USA USA Pune Chennai Sales tickets to various persons POS – USA No Tax POS – USA No Tax POS – USA No Tax

Organising An Event Coverage: Place of supply: Ancillary Services, or Sponsorship to such Events Services provided by way of organizing: Cultural Event Artistic event Sporting Event Scientific event Educational event Entertainment event Including: Services in relation to conference, fair, exhibition, celebration or similar events Services provided Registered Person Other than registered person Location of registered person Event held in India Location of event Event held outside India Location of recipient

Transportation of Goods... Coverage Place of Supply Supply of Services by way of: - Transportation of goods (Including by way of mail or a courier) Transportation Services Registered Person Other than registered person Location of registered person Location at which goods are handed over for transportation

...Transportation of Goods- Illustration Unregistered Trader Registered Trader Factory - Pune Registered Trader Chennai Mumbai Delhi POS -Chennai Tax - IGST POS - Mumbai Tax – CGST+SGST POS -Pune Tax – CGST+SGST

Passenger Transportation Service... Coverage Place of Supply: Passenger Transportation Service Services provided Registered Person Other than registered person Location of registered person Point of embarkation known Location of embarkation Point of embarkation not known for future journey Apply General Rule

...Passenger Transportation Service -Illustration Pune Bangalore Registered in Delhi Unregistered POS = Delhi POS = Pune Note: Return Journey shall be treated as a separate journey, even if right to passage for onward and return journey are issued at the same time

Location of first scheduled point of departure On-board Service... Coverage : Supply of service on board a conveyance, including: Vessel; An aircraft; A train; or Motor vehicle Place of supply Location of first scheduled point of departure

...On-board Service - Illustration Pune Delhi Beijing POS = Pune Unregistered Registered in Delhi

Telecommunication Service Telecom Services Fixed Line Mobile Connection Place of Installation Post Paid Pre Paid Address on Record of Customer Online Voucher Physical Voucher Address on Record of Customer Place of Sale of Voucher/ Receipt

Banking and Financial Service... Coverage Place of Supply: Banking and other financial services; (Including stock broking services) Currently, in terms of Rule 9,place of supply is Service provider as place of provision of service Under GST the place of supply for banking and financial has been shifted to location of receiver (if address on record) Address of recipient of service On records of supplier Not on records of supplier Location of recipient Location of supplier

...Banking and Financial Service - Illustration Maharashtra Demand Draft Service Loan procured for Tamil Nadu Plant Registered in Gujarat Registered in Tamil Nadu non-account holder of the Bank POS – Maharashtra Tax – CGST+SGST POS – Tamil Nadu Tax – IGST

Insurance Service... Coverage Place of Supply: Insurance Services Service provided Registered person Other than registered person Location of recipient on records of insurance company Location of registered person

Insurance Service - Illustration Maharashtra Insurance Service Insurance Service Customer registered in Gujarat Unregistered person located in Karnataka POS – Gujarat Tax – IGST POS – Maharashtra Tax – CGST+SGST

Advertisement services to Government Coverage Place of Supply: Advertisement services provided to Central Government State Government Union Territory Statutory body or local authorities for States or Union Territories Meant for the States or Union Territories Each respective States or Union Territories in proportion to amount attributable to services provided as determined in the contract as entered

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Disclaimer: The information provided in this presentation is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This presentation is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned herein.