POS - Services in relation to an immovable property (within India) [ Section 12(3) of IGST Act ] - GST Ready Reckoner - GST

Determination of place of supply of services in relation to an immovable property Services in relation to an immovable property /boat/vessel [ Section 12(3) of IGST Act 2017 ] S. No. Nature of Supply of services Place of Supply 1. Directly, in relation to Immovable Property including services provided by architects, interior decorators, surveyors, engineers other related experts or estate agents. Any services provided by way of grant of right to use immovable property or for carrying out or co-ordination of construction work or Services provided by way of lodging accommodation by a hotel, inn, guest house, homestay, club, campsite, house, boat, vessel or; Services provided by way of accommodation in an immovable property for organizing, any marriage/reception or matters related thereto, official, social, cultural, religious or business functions, including services provided in relation to such function at such property or; Any services ancillary to the above-mentioned services. Location at which immovable property or boat or vessel is located or intended to be located. If the location of the immovable property or boat or vessel is located or intended to be located outside India , then place of supply shall be the location of the recipient. 2 If the location of the immovable property or boat or vessel is located or intended to be located outside India The place of supply shall be the location of the recipient. 3 Where the immovable property or boat or vessel is located in more than one state /UT. the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, In the absence of agreement or contract , on such other reasonable basis as may be prescribed in Rule 4 of IGST Rule 2017. Examples:- Example 1:- Mr. X provided architectural services to Y of Delhi. X and Y are registered under GST. X has place of business in Nagpur. The building is situated in Delhi. The place of supply of services will be Delhi. Example 2 :- Suresh, a registered person has place of business in Ahmedabad. He visits Mumbai for business purpose and stays in a hotel there. The place of supply of services will be Mumbai where the Hotel is located. Example 3 :- A is a rich businessman of Delhi. He hosts the marriage of his daughter in the Udaipur fort in Udaipur Rajasthan. The place of supply of service will be Udaipur. In fact, all other services provided at the Udaipur Fort for the conduct of marriage will also have place of supply as Udaipur. Example 4:- Mr. X an architect (kolkata ), provides interior decorator services to Mr. Y of New York (USA) in relation to his immovable property located in New Delhi. In this case, where location of the supplier or location of recipient of services is outside India, the place of supply directly to an immovable property including that the of interior decorators is the place where the immovable property is located Place of supply of services will be Delhi Services where immovable property is located in more than one State/UT, in the absence of contract/ agreement Computation of value of services where immovable property is located in more than one State and where the location of supplier and recipient is in India [Rule 4 of the IGST Rules 2017 (effective from 1-1-2019)] As per Rule 4 of IGST Rule 2017 , in the absence of any contract or agreement between the supplier of services and recipient of services for separately collecting or determining the value of services in each such state or UT, as case may shall be determined in the prescribed manner. 1. Nature of services - In case of services provided by way of lodging accommodation by a hotel, inn, guest house, club or campsite, by whatever name called (except cases where such property is a single property located in two or more contiguous States or Union territories or both) and services ancillary to such services. Manner of allocation- The supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the number of nights stayed in such property. Example - A hotel chain X charges a consolidated sum of Rs. 30, 000/- for stay in its two establishments in Delhi and Agra, where the stay in Delhi is for 2 nights and the stay in Agra is for 1 night. The place of supply in this case is both in the Union territory of Delhi and in the State of Uttar Pradesh and the service shall be deemed to have been provided in the Union territory of Delhi and in the State of Uttar Pradesh in the ratio 2:1 respectively. The value of services provided will thus be apportioned as Rs. 20, 000/- in the Union territory of Delhi and Rs. 10, 000/- in the State of Uttar Pradesh. 2. Nature of Services: - In case of all other services in relation to immovable property including services by way of accommodation in any immovable property for organising any marriage or reception etc., and in cases of supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called where such property is a single property located in two or more contiguous States or Union territories or both, and services ancillary to such services. Manner of allocation : - The supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the area of the immovable property lying in each State or Union territory. Example - There is a piece of land of area 20, 000 square feet which is partly in State S1 say 12, 000 square feet and partly in State S2, say 8000 square feet. Site preparation work has been entrusted to T. The ratio of land in the two states works out to 12:8 or 3:2 (simplified). The place of supply is in both S1 and S2. The service shall be deemed to have been provided in the ratio of 12:8 or 3:2 (simplified) in the States S1 and S2 respectively. The value of the service shall be accordingly apportioned between the States. 3. Nature of Services: in case of services provided by way of lodging accommodation by a house boat or any other vessel and services ancillary to such services. Manner of allocations: - The supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the time spent by the boat or vessel in each such State or Union territory, which shall be determined on the basis of a declaration made to the effect by the service provider. Example: - A company C provides the service of 24 hours accommodation in a houseboat, which is situated both in Kerala and Karnataka inasmuch as the guests board the house boat in Kerala and stay there for 22 hours but it also moves into Karnataka for 2 hours (as declared by the service provider). The place of supply of this service is in the States of Kerala and Karnataka. The service shall be deemed to have been provided in the ratio of 22:2 or 11:1 (simplified) in the states of Kerala and Karnataka, respectively. The value of the service shall be accordingly apportioned between the States. Important Notification Clarification issued by CBIC Clarification regarding determination of place of supply in case of supply of services in respect of advertising sector and In case of supply of the co-location services . [ Circular No. 203/15/2023-GST Dated 27.10.2023 ] 1.1. There may be a case wherein there is supply (sale) of space or supply (sale) of rights to use the space on the hoarding/ structure (immovable property) belonging to vendor to the client/advertising company for display of their advertisement on the said hoarding/ structure. What will be the place of supply of services provided by the vendor to the advertising company in such case? [ The hoarding/structure erected on the land should be considered as immovable structure or fixture as it has been embedded in earth. Further, place of supply of any service provided by way of supply (sale) of space on an immovable property or grant of rights to use an immovable property shall be governed by the provisions of section 12(3)(a) of IGST Act . Therefore, the place of supply of service provided by way of supply of sale of space on hoarding/ structure for advertising or for grant of rights to use the hoarding/ structure for advertising in this case would be the location where such hoarding/ structure is located. 1.2. There may be another case where the advertising company wants to display its advertisement on hoardings/ bill boards at a specific location availing the services of a vendor. The responsibility of arranging the hoardings/ bill boards lies with the vendor who may himself own such structure or may be taking it on rent or rights to use basis from another person. The vendor is responsible for display of the advertisement of the advertisement company at the said location. During this entire time of display of the advertisement, the vendor is in possession of the hoarding/structure at the said location on which advertisement is displayed and the advertising company is not occupying the space or the structure. In this case, as the service is being provided by the vendor to the advertising company and there is no supply (sale) of space/ supply (sale) of rights to use the space on hoarding/structure (immovable property) by the vendor to the advertising company for display of their advertisement on the said display board/structure, the said service does not amount to sale of advertising space or supply by way of grant of rights to use immovable property. Accordingly, the place of supply of the same shall not be covered under section 12(3)(a) of IGST Act. Vendor is in fact providing advertisement services by providing visibility to an advertising company s advertisement for a specific period of time on his structure possessed/taken on rent by him at the specified location. Therefore, such services provided by the Vendor to advertising company are purely in the nature of advertisement services in respect of which Place of Supply shall be determined in terms of Section 12(2) of IGST Act . Clarification regarding determination of place of supply in case of supply of the co-location services [ Circular No. 203/15/2023-GST Dated 27.10.2023 ] 2.1. whether supply of co-location services are renting of immovable property service (as it involves renting of space for keeping/storing company s hardware/servers) and hence the place of supply of such services is to be determined in terms of provision of clause (a) of section 12(3) of the IGST Act which is the location where the immovable property is located. Co-location is a data center facility in which a business/company can rent space for its own servers and other computing hardware along with various other bundled services related to Hosting and information technology (IT) infrastructure. Co-location services are in the nature of Hosting and information technology (IT) infrastructure provisioning services (S.No. 3 of Explanatory notes of SAC-998315 ). In such cases, supply of Co-location services cannot be considered as the services of supply of renting of immovable property. Therefore, the place of supply of the Co-location services shall not be determined by the provisions of clause (a) of section 12(3) of the IGST Act but the same shall be determined by the default place of supply provision under section 12(2) of the IGST Act i.e. location of recipient of co-location service. 2.2. whether the place of supply of Co-location services is to be determined by the default place of supply provision under section 12(2) of the IGST Act as the supply of service is Hosting and Information Technology (IT) Infrastructure Provisioning services involving providing services of hosting the servers and related hardware, security of the said hardware, air conditioning, uninterrupted power supply, fire protection system, network connectivity, backup facility, firewall services, 24 hrs. monitoring and surveillance service for ensuring continuous operations of the servers and related hardware, etc. Co-location is a data center facility in which a business/company can rent space for its own servers and other computing hardware along with various other bundled services related to Hosting and information technology (IT) infrastructure. Co-location services are in the nature of Hosting and information technology (IT) infrastructure provisioning services (S.No. 3 of Explanatory notes of SAC-998315 ). In cases where the agreement between the supplier and the recipient is restricted to providing physical space on rent along with basic infrastructure, without components of Hosting and Information Technology (IT) Infrastructure Provisioning services and the further responsibility of upkeep, running, monitoring and surveillance, etc. of the servers and related hardware is of recipient of services only, then the said supply of services shall be considered as the supply of the service of renting of immovable property. Accordingly, the place of supply of these services shall be determined by the provisions of section 12(3)(a) of the IGST Act which is the location where the immovable property is located. Clarification on Whether services of short-term accommodation, conferencing, banqueting etc. provided to a Special Economic Zone (SEZ) developer or a SEZ unit should be treated as an inter-State supply (under section 7(5)(b) of the IGST Act, 2017) or an intra-State supply (under section 12(3)(c) of the IGST Act, 2017) ? [ Circular No. 48/22/2018-GST dated 14.06.2018 ]