The taxable event for levy of Goods and Services Tax (GST) is ‘supply’ and hence Section 3 of the Model GST Act, released by the Finance Ministry yesterday (14th June 2016), covers the meaning and scope of ‘supply’.

The specific inclusions under the term ‘supply’ are as under:

  • All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.
  • Supplies made or agreed to be made without a consideration, as specified in Schedule I which presently lists 5 items namely, permanent transfer/disposal of business assets; temporary application of business assets to a private or non-business use; services put to a private or non-business use; assets retained after deregistration; and supply of goods and / or services by a taxable person to another taxable or non-taxable person in the course or furtherance of business.
  • Importation of service with or without consideration.
  • Where a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a supply.
  • Supply of any branded service by an aggregator, as defined in section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator.
  • Other than above, Schedule II also covers list of certain transactions which are to be treated as supply of goods or services.

Further, it may be noted that the supply can be in the nature of intra-State or inter-State. The provisions for determination of whether a supply is inter-State or intra-State are provided in Sections 3 and 3A of the Model Integrated Goods and Services Tax (IGST) Act, 2016 respectively. Supply of goods/services shall be inter-State if location of supplier and place of supply are in different States. Otherwise the supply will be intra-State.

Central GST (CGST) and State GST (SGST) will be leviable on intra-State supplies and Integrated GST (IGST) will be leviable on inter-State supplies. Imports of both goods and services have been deemed as inter-State supplies leviable to IGST. Further, separate provisions have been made in Sections 5 and 6 of the Model GST Act for determination of place of supply of goods and services respectively.

Place of Supply for Services

Place of supply of services are different for B2B and B2C Supplies. Some of the important type of services, in case of B2C, are detailed below.

  • General services - Location of the recipient where the address on record exists, and the location of the supplier of services in other cases.
  • Supply of services in relation to immovable property - Location at which the immovable property
  • Supply of Services by way of organization of event - Place where the event is actually held
  • Supply of services by way of transportation of goods, including by mail or courier - Location at which such goods are handed over for their transportation.

Place of Supply for Goods

According to Chapter IV of the Model Integrated Goods and Services Tax Act, 2016, where the supply involves movement of goods, the place of supply of goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. It is also stated that where the goods are delivered by the supplier to a recipient or any other person, on the direction of a third person, before or during movement of goods, 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.

Additionally, where the supply does not involve movement of goods, the place of supply shall be the location of such goods at the time of the delivery to the recipient, and where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.