Clarification on place of supply of goods to unregistered persons.

27Jun 2024 by admin

Circular No.: 209/3/2024-GST
Date: 26th June, 2024
Subject: Clarification on the provisions of clause (ca) of Section 10(1) of the Integrated Goods and Service Tax Act, 2017 relating to place of supply of goods to unregistered persons

Key Points and Clarifications:

Background:

The Circular No. 209/3/2024-GST was issued to clarify the provisions of clause (ca) of Section 10(1) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), which came into effect from 1st October 2023. This clause deals with determining the place of supply of goods when supplied to unregistered persons.

Clause (ca) Details:

Clause (ca) was inserted in Section 10(1) of the IGST Act, providing that:

  • When goods are supplied to an unregistered person, the place of supply is the location as per the address recorded in the invoice issued.
  • If the address of the unregistered person is not recorded in the invoice, the place of supply will be the supplier’s location.
  • The clause includes an explanation that recording the name of the State of the unregistered person in the invoice is considered as recording the address of the said person.

Issues and Clarifications:

Issue 1: Place of Supply of Goods to Unregistered Persons with Different Billing and Delivery Addresses

  • Scenario: An unregistered person (Mr. A) from State X orders a mobile phone on an e-commerce platform to be delivered to State Y. Mr. A provides the billing address in State X.
  • Clarification: In such cases, the place of supply will be the delivery address (State Y) recorded in the invoice, not the billing address. This ensures that the tax revenue goes to the state where the goods are actually delivered and consumed.

Summary of Clarifications:

  1. Place of Supply:
    • If the supply of goods is made to an unregistered person, the place of supply is determined based on the address of delivery recorded in the invoice.
    • If the address of the unregistered person is not recorded in the invoice, the supplier’s location is considered the place of supply.
    • Recording just the State name of the unregistered person on the invoice is sufficient to meet the requirement of recording the address.
  2. E-commerce Transactions:
    • For goods ordered through e-commerce platforms, where the billing address differs from the delivery address, the delivery address is the place of supply.
  3. Supplier’s Responsibility:
    • Suppliers may record the delivery address as the recipient’s address on the invoice to determine the place of supply.