DETERMINATION OF NATURE OF SUPPLY

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DETERMINATION OF NATURE OF SUPPLY

 

Section 7

Inter-State supply

Nature of Supply and Place of supply are two most important concepts under GST. Determination of Nature of supply is very important to determine whether a supply is inter-state or intra-state. CGST and SGST will be levied on intra-state supply while inter-state supplies will be charged to IGST.

Supply of goods shall be treated as supply in the course of inter-State trade or commerce in the following cases:

Sub-Section (1)

Subject to provisions of Section 10, where location of supplier and place of supply are in –

  • Two different States

  • Two different Union Territories

  • A State and an Union Territory

Sub-Section (2)

Goods imported into the territory of India, till they cross the Customs frontiers of India.

Supply of services shall be treated as supply in the course of inter-State trade or commerce in the following cases:

Sub-Section (3)

Subject to provisions of Section 12, where location of supplier and place of supply are in –

  • Two different States

  • Two different Union Territories

  • A State and an Union Territory

Sub-Section (4)

Services imported into the territory of India.

Sub-Section (5)

Supply of goods or services or both shall be treated as supply in the course of inter-State trade or commerce in the following cases:

  1. When supplier is located in India and place of supply is outside India.

  2. Supply is to a SEZ Developer or SEZ Unit from Domestic Tariff Area (DTA) or by a SEZ Developer or SEZ Unit to DTA.

  3. Supply is in the taxable territory, not being an intra-State supply and not covered elsewhere in this section.

Section 8

Intra-State supply

Sub-Section (1)

Subject to the provisions of section 10, supply of goods shall be treated as intra-State supply where -

  • the location of the supplier and the place of supply of goods are in the same State or same Union territory

But in case of the following, supply of goods shall not be treated as intra-State supply, namely:—

  • supply of goods to or by a SEZ developer or a SEZ unit;

  • goods imported into the territory of India till they cross the customs frontiers of India; or

  • supplies made to a tourist referred to in section 15.

Sub-Section (2)

Subject to the provisions of section 12, supply of services shall be treated as intra-State supply where -

  • the location of the supplier and the place of supply of services are in the same State or same Union territory

But supply of services to or by a SEZ developer or a SEZ unit is not an intra-State supply.

Explanation 1.—

For the purposes of this Act, where a person has,—

  1. two establishments in two different countries i.e. one in India and other outside India;

  2. two establishments in two different States or Union Territories; or

  3. two establishments registered within the same State or Union territories, then such establishments shall be treated as establishments of distinct persons. Explanation 2.—

A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory.

Section 9

Supplies in territorial waters

Notwithstanding anything contained in this Act,—

  1. where the location of the supplier is in the territorial waters, the location of supplier shall be deemed to be in the coastal

    State or Union territory where the nearest point of the appropriate baseline is located; or

  2. where the place of supply is in the territorial waters, the place of supply shall be deemed to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.

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