Determination of nature of supply - Inter State supply [ Section 7 of IGST Act ] - GST Ready Reckoner - GST

Determination of nature of supply Nature of Supply - It is very important to determine the nature of supply whether it is inter-State or intra-State, as the kind of tax to be paid (IGST or CGST+SGST) depends on that. Thus, the nature of the supply depends on the location of the supplier and the place of supply. Both these terms have been defined in the IGST Act. Inter- State Supply [ Section 7 of IGST Act, 2017 ] (a) Inter state supply of Goods or services (With in India) [ Section 7(1) 7(3) ] Subject to the place of supply provisions (Section 10 or 12 of IGST Act, 2017) , where the location of the supplier and the place of supply are in: Two different States; or Two different Union territories; or A State and a Union Territory. (b) Inter state of supply of Goods or service (Import of Goods or Services) [ Section 7(2) 7(4) ] Supply of goods imported ( Import of goods ) into the territory of India, till they cross the customs frontiers of India , shall be treated to be a supply of goods in the course of inter-State trade or commerce. Supply of services imported ( Import of services ) into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce . As per section 7(1)(b) of CGST Act, import of services for a consideration whether or not in the course or furtherance of business. As per Schedule -I Entry No. 4 Import of services by a person from a related person outside India or from any of his other establishments outside India, in the course or furtherance of business. Reverse charge [ Notification No. 10/2017- Integrated Tax (Rate) ] Sl. No. Category of Supply of Services Supplier of service Recipient of Service 1 Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient. Any person located in a non-taxable territory Any person located in the taxable territory other than non-taxable online recipient. (c) Inter state supply - supply of goods or services outside India [ Export of Goods or Export of services ] [ Section 7(5) of IGST Act ] Supply of goods or services or both, when the supplier is located in India and the place of supply is outside India; to or by a Special Economic Zone developer or a Special Economic Zone unit; or in the taxable territory , not being an intra-State supply and not covered elsewhere in this section As per First proviso of section 8 of IGST Act, supplies made to a tourist referred to in section 15 . goods or services imported into the territory of India till they cross the customs frontiers of India; shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Important Notification clarification issued by CBIC Compliance of rule 46(n) of the CGST Rules, 2017 while issuing invoices in case of inter- State supply [ Circular No. 90/09/2019 -GST Dated 18 th February, 2019 ] After introduction of GST, which is a destination-based consumption tax, it is essential to ensure that the tax paid by a registered person accrues to the State in which the consumption of goods or services or both takes place. In case of inter-State supply of goods or services or both, this is ensured by capturing the details of the place of supply along with the name of the State in the tax invoice. It is therefore, instructed that all registered persons making supply of goods or services or both in the course of inter-State trade or commerce shall specify the place of supply along with the name of the State in the tax invoice. The provisions of sections 10 and 12 of the IGST Act, 2017 may be referred to in order to determine the place of supply in case of supply of goods and services respectively. Contravention of any of the provisions of the Act or the rules made there under attracts penal action under the provisions of sections 122 or 125 of the CGST Act . Clarifications 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 14th June, 2018 ]