Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part I]
Place of Supply in case of transportation of goods: Section 12(8) of IGST Act
This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.
Vivek Laddha, Manish Gupta, Pooja Patwari
FAQ 1. Where FedEx India has collected the freight from the company located in Australia in respect of transportation of goods by way of courier. Goods are exported by M/s. Madhav Pvt. Ltd. located in India. Whether section 12(8) is having the role in determining the place of supply?
Law Brothers’ View: In such a case, the service recipient is located outside India and therefore the place of supply shall be determined in accordance with section 13 of IGST Act and not as per section 12(8) of IGST Act. In such as case, the place of supply shall be outside India (i.e. location of recipient). Needless to state that amendment in section 12(8) does not have relevance in such a situation.
FAQ 2. How the place of supply is proposed to be determined in case of supply of services by way of transportation of goods where such services are provided to exporter of goods and service provider both are located in India?
Law Brothers’ View: Now the place of supply for such services u/s 12(where location of supplier and location of recipient both are in India), will be determined regardless of the destination of goods.
If it is the case of B2B supply, place of supply shall be the location of recipient and in case of B2C supply, place of supply shall be the location at which such goods are handed over for their transportation (i.e. pick up point).
FAQ 3. Whether the above proposition is applicable for services by way of transportation of goods provided by courier service provider?
Law Brothers’ View: Yes, this is equally applicable totransportation of goods by a courier agency.
FAQ 4. Whether the above proposition is applicable transportation of goods by road or by air or by water inlands?
Law Brothers’ View: Yes, this is equally applicable to transportation of goods by road, vessel or aircraft.
FAQ 5. Whether the place of supply provision of transportation of goods is applicable in case of CIF transaction?
Law Brothers’ View: No. In case of CIF transaction , it holds the colour of composite supply and transportation services being ancillary supply will partake the colour of principal supply by virtue of section 8 and section 2(30) of CGST Act.