Circular No. 184/16/2022-GST [C10-693]

Attention is invited to sub-section (8) of section 12 of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as “IGST Act”) which provides for the place of supply of services by way of transportation of goods, including by mail or courier, where location of the supplier as well as the recipient of services is in India. As per clause (a) of the aforesaid sub- section, the place of supply of services by way of transportation of goods, including by mail or courier, to a registered person shall be the location of such registered person. However, the proviso to the aforesaid sub-section which was inserted vide the Integrated Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01.02.2019 provides that where the transportation of goods is to a place outside India, the place of supply of the said service shall be the place of destination of such goods. In such cases, as the place of supply of services, as per the proviso to sub-section (8) of section 12 of IGST Act, is the concerned foreign destination and not the State where the recipient is registered under GST, doubts are being raised regarding the availability of input tax credit of the said services to the recipient located in India.

2. In order to clarify this issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues as under:

Sl. Issue Clarification No.

1. In case of supply of services by The place of supply of services by way of way of transportation of goods, transportation of goods, including by mail or including by mail or courier, courier, where both the supplier and the recipient where the transportation of goods are located in India, is determined in terms of sub- is to a place outside India, and section (8) of section 12 of the IGST Act which where the supplier and recipient of reads as follows: the said supply of services are located in India, what would be “(8) The place of supply of services by way of the place of supply of the said transportation of goods, including by mail or services? courier to,—

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation:

Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods”

Hence, in case of supply of services by way of transportation of goods, including by mail or courier, where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, the place of supply is the concerned foreign destination where the goods are being transported, in accordance with the proviso to the sub-section (8) of section 12 of IGST Act, which was inserted vide the Integrated Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01.02.2019.

Illustration:

X is a person registered under GST in the state of West Bengal who intends to export goods to a person Y located in Singapore. X avails the services for transportation of goods by air to Singapore from an air cargo

operator Z, who is also registered under GST in the state of West Bengal.

In this case, the place of supply of the services provided by Z to X is the place of destination of goods i.e., Singapore, in terms of the proviso to sub-section (8) of section 12 of IGST Act.

2. In the case given in Sl. No. 1, The aforesaid supply of services would be whether the supply of services will considered as inter-State supply in terms of sub- be treated as inter-State supply or section (5) of section 7 of the IGST Act since the intra-State supply? location of the supplier is in India and the place of supply is outside India. Therefore, integrated tax (IGST) would be chargeable on the said supply of services.

In respect of the illustration given in Sl. No. 1. above, Z would charge IGST from X in terms of sub-section (5) of section 7 of the IGST Act, for supply of services by way of transportation of goods.

3. In the case given in Sl. No. 1, Section 16 of the CGST Act lays down the whether the recipient of service of eligibility and conditions for taking input tax credit transportation of goods would be whereas, section 17 of the CGST Act provides for eligible to avail input tax credit in apportionment of credit and blocked credits under respect of the said input service of circumstances specified therein. The said transportation of goods? provisions of law do not restrict availment of input tax credit by the recipient located in India if the place of supply of the said input service is outside India. Thus, the recipient of service of transportation of goods shall be eligible to avail input tax credit in respect of the IGST so charged by the supplier, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act.

In the illustration given in Sl. No. 1 above, X would be eligible to take input tax credit of IGST in respect of supply of services received by him from Z, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act.

4. In the case mentioned at Sl. No. 1, The supplier of service shall report place of supply

what state code has to be of such service by selecting State code as ‘96- mentioned by the supplier of the Foreign Country’ from the list of codes in the drop- said service of transportation of down menu available on the portal in FORM goods, where the transportation of GSTR-1. goods is to a place outside India, while reporting the said supply in FORM GSTR-1?

3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

4. Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.