Goods and Service Tax is a combined tax levied by both Center and state governments wherein the center and state get their share of tax depending upon the quantum of goods and services consumed in their jurisdiction. However, a transaction may involve more than one state such as the supplier is located in one state and the recipient is located in another state. In that case, how can it be determined where goods and services are consumed and to which government tax should be given.
To resolve this issue, place of supply provisions comes into the picture. Place of supply plays a very pivotal role under Goods and Service Tax (GST) because this helps in determining where the goods and services are actually consumed. Place of supply determines whether the supply is inter-state supply or intra-state supply and accordingly, whether it will attract IGST or CGST & SGST.
Chapter V of the Integrated Goods and Service Tax Act, 2017 (IGST Act) contains detailed provisions related to the place of supply for different categories of services and different types of transactions.
Transportation service is a usual service and is availed by most businesses. GST Component on transportation service is a significant amount. Detailed place of supply provisions is given for different natures of transportation services and different scenarios. In this article, the place of supply provisions is analyzed in detail with respect to transportation services.
Transportation services are classified under the following categories for place-of-supply provisions:
- Transportation of Goods
- Transportation of Passengers
1. Transportation of Goods
- Under IGST Act, the place of supply of services is defined based on the location of the supplier and recipient.
- Section 12 specifies the place of supply of service when both the service provider and service recipient are located in India.
- Further, Section 13 specifies the place of supply of service when any of them are located outside India.
a. Place of supply where both service provider and service recipient are located in India
- As per Section 12(8) of the IGST Act, the Place of supply of transportation of goods service (including mail and courier) in cases where both service provider and service recipient are located in India is:
| Nature of Service Recipient | Destination of Goods | Place of supply |
| Registered | In India | Location of Recipient |
| Registered | Outside India | Destination of goods |
| Unregistered | In India | location at which such goods are handed over for their transportation |
| Unregistered | Outside India | Destination of goods |
- Accordingly, the place of supply shall vary depending upon whether the recipient is registered or not and whether the designation of goods is in India or Outside India.
- E.g.
| Service Provider | Service Recipient | Destination of goods | Location at which goods are handed over for transportation | Place of Supply | Nature of Transaction |
| X (Delhi) | Y, Delhi- Registered | Maharashtra | Delhi | Delhi(Location of Recipient) | Intra-State Supply |
| X (Delhi) | Y, Uttar Pradesh – Registered | Maharashtra | Delhi | Uttar Pradesh(Location of Recipient) | Inter-State Supply |
| X (Delhi) | Y, Delhi- Registered | China | Delhi | Outside India(Destination of goods) | Inter-State Supply |
| X (Delhi) | Y, Mumbai- Unregistered | West Bengal | Delhi | Delhi(The location at which goods are handed over for transportation) | Intra-State Supply |
| X (Delhi) | Y, Mumbai- Unregistered | China | Delhi | Outside India(Destination of goods) | Inter-State Supply |
b. Place of supply where both service provider and service recipient are located in India
- As per Section 13(9) of the IGST Act, in the case where either the service provider or service recipient are located outside India, the Place of supply for transportation service, other than mail or courier, shall be the destination of goods.
- Section 13(3) to Section 3(13) are specific places of supply provisions for different services.
- Whereas, Section 13(2) of the IGST Act is a general provision for place of supply when service doesn’t fall in Section 13(3) to (13).
- Since transportation by mail or courier is not covered in clause 9 of Section 13 of the IGST Act, accordingly, as per Section 13(2), the place of supply of courier or mail service shall be the location of the recipient.
| Service Provider | Service Recipient | Destination of goods | Place of Supply | Nature of Supply |
| X (Delhi) | Y, USA | Maharashtra | Maharashtra(Destination of goods) | Inter-State Supply |
| X (Delhi) | Y, USA | USA | Other Territory(Destination of goods) | Inter-State Supply (May also qualify as export of service) |
| X, USA | Y, Delhi- Registered | Delhi | Delhi(Destination of goods) | Inter-state supply(May qualify as Import of service) |
Note: Amended by 49th GST Council meeting
- In the 49th GST Council meeting, GST Council recommended deleting section 13(9) of the IGST Act, i.e., accordingly, place of supply of transportation service, when either supplier or recipient is located outside India.
- In absence of a specific provision, the general provision given under section 13(2) of the IGST Act shall apply and accordingly, place of supply shall be the location of the recipient.
- Therefore in all the above-mentioned examples, the place of supply shall be the location of the recipient.
2. Transportation of Passengers
a. Place of supply where both supplier and recipient are located in India
- As per section 13(9) of the IGST Act, in case of transportation of passenger following shall be the place of supply:
| Nature of Service Recipient | Place of supply |
| Registered | Location of Recipient |
| Unregistered | A place where passengers embark on the conveyance for a continuous journey. However, if the point of embarkation is not known at the time of issuance of the invoice, the place of supply shall be the location of the recipient where the address on record exists; and the location of the supplier of services in other cases. |
- The return journey shall be considered as a separate journey, even if the right to passage for onward and the return journey is issued at the same time.
b. Place of supply where any of the suppliers or recipients is located outside India
- In such a case, the place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey.
E.g.
| Service Provider | Service Recipient | A place where the passenger embarks on the conveyance | Place of supply | Nature of transaction |
| X Limited (Delhi) | Y Limited (Delhi)- Registered | Mumbai | Delhi(Location of recipient) | Intra-State Supply |
| X Limited (Delhi) | Mr. Y (Delhi)- Unregistered | Mumbai to USA | Mumbai (Place where the passenger embarks on the conveyance) | Inter-State Supply |
| Mr. Y (Delhi)- Unregistered | USA to Mumbai (Return ticket) | Other Territory (Place where the passenger embarks on the conveyance) | Inter-State Supply | |
| X Limited (Delhi) | X Limited- USA | Delhi | Delhi(Place where the passenger embarks on the conveyance) | Intra-State Supply |
The supplier has to be very
