Circular No. 203/15/2023-GST [C10-6XE]

Representations have been received from the trade and field formations seeking clarification on certain issues with respect to determination of place of supply in case of –

i. supply of service of transportation of goods, including through mail and courier;

ii. supply of services in respect of advertising sector; and

iii. supply of the “co-location services”.

2. In order to clarify the 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:

S.No. Issue Clarification A. Place of supply in case of supply of service of transportation of goods, including through mail and courier

1. Sub-section (9) of section 13 of 1.1 Place of supply of services where Integrated Goods and Services Tax Act, location of supplier or location of 2017 (hereinafter referred to as “IGST recipient is outside India is determined as Act”) has been omitted vide section 162 per section 13 of the IGST Act. Sub-

of Finance Act, 2023 which will come section (9) of section 13 of IGST Act into effect from 01.10.2023. After the provided that where one of the supplier of said amendment, doubts have been the services or the recipient of services is raised as to whether the place of supply located outside India, the place of supply in case of service of transportation of of services of transportation of goods, goods, including through mail and other than by way of mail or courier, courier, in cases where location of shall be the place of destination of such supplier of services or location of goods. The said sub-section has been recipient of services is outside India, omitted vide section 162 of Finance Act, will be determined as per sub-section 2023 which will come into effect from (2) of section 13 of IGST Act or will be 01.10.2023. It is hereby clarified that determined as per sub-section (3) of after the said amendment comes into section 13 of IGST Act. effect, the place of supply of services of transportation of goods, other than through mail and courier, in cases where location of supplier of services or location of recipient of services is outside India, will be determined by the default rule under section 13(2) of IGST Act and not as performance based services under sub-section (3) of section 13 of IGST Act. Accordingly, in cases where location of recipient of services is available, the place of supply of such services shall be the location of recipient of services and in cases where location of recipient of services is not available in the ordinary course of business, the place of supply shall be the location of supplier of services.

1.2 Further, it is also mentioned that the place of supply in case of service of transportation of goods by mail or courier was not covered under the provisions of sub-section (9) of section 13 before the said sub-section was amended/ omitted. Therefore, on the same principles as mentioned above, the place of supply in case of service of transportation of goods

by mail or courier will continue to be determined by the default rule under section 13(2) of IGST Act i.e. in cases where location of recipient of services is available, the place of supply of such services shall be the location of recipient of services and in cases where location of recipient of services is not available in the ordinary course of business, the place of supply shall be the location of supplier of services. B. Place of supply in case of supply of services in respect of advertising sector

2. Advertising companies are often 2.1 It is clarified that the place of supply involved in procuring space on in the case supply of services in respect hoardings/ bill boards erected and of advertising sector, in the cases referred mounted on buildings/land, in different in (i) and (ii), shall be determined as States, from various suppliers below: (“vendors”) for providing advertisement services to its corporate clients. There 2.2 Place of supply in Case (i): The may be variety of arrangements hoarding/structure erected on the land between the advertising company and should be considered as immovable its vendors as below: structure or fixture as it has been embedded in earth. Further, place of

(i) There may be a case wherein there is supply of any service provided by way of supply (sale) of space or supply (sale) supply (sale) of space on an immovable of rights to use the space on the property or grant of rights to use an hoarding/ structure (immovable immovable property shall be governed by the provisions of section 12(3)(a) of property) belonging to vendor to the client/advertising company for display IGST Act. As per section 12(3)(a) of of their advertisement on the said IGST Act, the place of supply of services hoarding/ structure. What will be the directly in relation to an immovable place of supply of services provided by property, including services provided by the vendor to the advertising company architects, interior decorators, surveyors, engineers and other related experts or in such case? estate agents, any service provided by

(ii) There may be another case where way of grant of rights to use immovable the advertising company wants to property or for carrying out or co- display its advertisement on hoardings/ ordination of construction work shall be bill boards at a specific location availing the location at which the immovable the services of a vendor. The property is located. Therefore, the place

responsibility of arranging the of supply of service provided by way of hoardings/ bill boards lies with the supply of sale of space on hoarding/ vendor who may himself own such structure for advertising or for grant of structure or may be taking it on rent or rights to use the hoarding/ structure for rights to use basis from another person. advertising in this case would be the The vendor is responsible for display of location where such hoarding/ structure is the advertisement of the advertisement located. company at the said location. During this entire time of display of the 2.3 Place of supply in Case (ii): In this advertisement, the vendor is in case, as the service is being provided by possession of the hoarding/structure at the vendor to the advertising company the said location on which and there is no supply (sale) of space/ advertisement is displayed and the supply (sale) of rights to use the space on advertising company is not occupying hoarding/structure (immovable property) the space or the structure. by the vendor to the advertising company In this case, what will be the place of for display of their advertisement on the supply of such services provided by the said display board/structure, the said vendor to the advertising company? 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. C. Place of supply in case of supply of the “co-location services”

3. Co-location is a data center facility in 3.1 It is clarified that the Co-location which a business/company can rent services are in the nature of “Hosting and space for its own servers and other information technology (IT) computing hardware along with various infrastructure provisioning services”

other bundled services related to (S.No. 3 of Explanatory notes of SAC- Hosting and information technology 998315). Such services do not appear to (IT) infrastructure. be limited to the passive activity of A business/company who avails the co- making immovable property available to location services primarily seek security a customer as the arrangement of the and upkeep of its server/s, storage and supply of colocation services not only network hardware; operating systems, involves providing of a physical space system software and may require to for server/network hardware along with interact with the system through a web- air conditioning, security service, fire based interface for the hosting of its protection system and power supply but it websites or other applications and also involves the supply of various operation of the servers. services by the supplier related to hosting In this respect, various doubts have and information technology infrastructure been raised as to services like network connectivity, i. whether supply of co-location backup facility, firewall services, and services are renting of immovable monitoring and surveillance service for property service (as it involves ensuring continuous operations of the renting of space for servers and related hardware, etc. which keeping/storing company’s are essential for the recipient hardware/servers) and hence the business/company to interact with the place of supply of such services is system through a web based interface to be determined in terms of relating to the hosting and operation of provision of clause (a) of sub- the servers. section (3) of Section 12 of the IGST Act which is the location 3.2 In such cases, supply of colocation where the immovable property is services cannot be considered as the located; or services of supply of renting of ii. whether the place of supply of immovable property. Therefore, the place such services is to be determined of supply of the colocation services shall by the default place of supply not be determined by the provisions of provision under sub-section (2) of clause (a) of sub-section (3) of Section 12 section 12 of the IGST Act as the of the IGST Act but the same shall be supply of service is Hosting and determined by the default place of supply Information Technology (IT) provision under sub-section (2) of Infrastructure Provisioning Section 12 of the IGST Act i.e. location services involving providing of recipient of co-location service. services of hosting the servers and related hardware, security of the 3.3 However, in cases where the said hardware, air conditioning, agreement between the supplier and the uninterrupted power supply, fire recipient is restricted to providing

protection system, network physical space on rent along with basic connectivity, backup facility, infrastructure, without components of firewall services, 24 hrs. Hosting and Information Technology (IT) monitoring and surveillance Infrastructure Provisioning services and service for ensuring continuous the further responsibility of upkeep, operations of the servers and running, monitoring and surveillance, etc. related hardware, 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 clause

(a) of sub-section (3) of Section 12 of the IGST Act which is the location where the immovable property is located.

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