Determining Place of Supply for Intra-State Goods Movement

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Published Date:  13-02-2024   Author:   eva-mukherjee
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Introduction

Whenever goods or services are transported from a particular location to another one, the involved parties must pay a destination-based tax. This tax refers to GST applicable whenever the goods are consumed in any place other than their origin. Accordingly, the destination state may legally collect the mandatory GST associated with the moved goods. 

However, the question is how any Indian state may determine the type of GST provision applicable. For this, the taxation authority of India considers the place of supply for intra-state goods and the respective location factors. According to the GST rules, the place of supply determines whether the transaction of the goods will be categorized as interstate or intrastate transactions. Thus, the person pays a levy of CGST and SGST under intrastate transactions.  

Table to Determine the Place of Supply for the Movement of Goods 

Movement of Goods  Place of Supply
By a buyer/supplier Location of the recipient 
By a seller as per the third party’s direction Business place of the third-party
By a Vessel/Conveyance Board Location, where goods collected on-board

Also Read: What are the different rules that apply to the place of supply of goods?

Detailed Explanation on the Determination of Supply Place for Movement of Goods 

Movement of Goods by a Supplier/Buyer

Whenever a buyer, supplier, or any other individual/party moves certain goods from one place to another within the state, the location or the supply place becomes the location of the goods’ recipient. In other words, the movement of goods in intra-state transactions commences from the supplier’s location and ends at the recipient’s location. However, anyone from the supplier, buyer, or recipient may move the goods.

Alternatively, if the recipient or the supplier highlights the destination of the goods to an external person, the respective person may even undertake the movement. Accordingly, the following individuals/parties may undertake the transportation of the goods-

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  • The supplier 
  • The buyer or the recipient 
  • The external person or the transporter knows the destination of the transported goods.

Also Read: Determining Place Of Supply In Intra-State Transactions General Principles

Movement of Goods to the Buyer Based on Third-party Directions 

In some cases, a seller of the goods delivers them to a buyer according to the directions given by a third party. Here, a third party may be a person or an agent. He may instruct either during or before the movement of goods.   

Simultaneously, the deal also involves the transfer of title in the transported goods or their corresponding documents. In these transactions, the officer in charge of the state and the taxation authority assumes that the third party has received the moved goods. Hence, based on the latest state-specific goods supply guidelines, the supply place for the goods will be the third-party business location There are three different parties/individuals involved-

  • The supplier 
  • The buyer/the recipient
  • The third person or third-party, who gives instructions 

The technical aspect associated with this type of intra-state goods supply location factor highlights two supplies. The first supply starts from the supplier’s location and ends at the place of the third party/person. The second supply commences from the third party or person and ends at the recipient’s location. However, the intra-state GST rule considers only the first supply. Hence, the supply place will be the third party/person’s business place.

Also Read: How Is The Place Of Supply Determined For Goods?

Movement of Goods on a Vessel/Conveyance Board

When the movement of goods takes place on a conveyance board, like an aircraft, a vessel, a motor vehicle, or a train, the place of supply will be the same location, where individuals take such goods on board. The supplier himself will transfer the goods to the passengers. For instance, the salesperson of a specific company sells any packed eatables that they carry to sell the goods.  

Alternatively, one can sell the goods to the conveyance’s operator, and the operator can sell to any traveling passenger. The second condition involves two supplies, where the first is between the supplier to the conveyance operator and the second is between the conveyance operator to the on-board passengers during their journey. Hence, the place of supply of goods when moved on a conveyance board is the same location where goods are collected on board. Later, these goods will be sold at the time of journey on a board of conveyance.  

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Conclusion

The place of supply for the movement of goods in intra-state transportation varies according to the start and end location of the goods. The GST law also states that when goods are moved on a vessel, the supply place or location will be the location of the collected onboard goods.

Frequently Asked Questions

  • What refers to the place of supply according to the GST rules?

The place of supply will be the location of a person, who receives the goods and services.

  • What are the places of supply under different scenarios when goods move?

The scenarios associated with the place of supply while moving the goods are-

  • When goods moved between two different places
  • When a seller supplies goods to a third party 
  • When goods move in a conveyance board or a vessel
  • What does the suppliers’ location indicate?

The location of the supplier refers to the registered business location of the seller or the place of dispatching the goods and services.  

  • What are the aspects included in the supply or movement of goods?

Supply of goods possess the following aspects-

    • Agreement to transfer the ownership of moved or transported goods
  • The sale of movable goods as per the commission of an agent or an auctioneer.
  • What happens in intra-state movement of goods?

The intra-state movement of goods take place whenever goods are moved between two cities of a state. 

  • What type of GST is applicable for intra-state movement of goods?

According to the latest GST act, government authorized officers will collect both SGST and CGST to supply or move goods within an Indian state. 

  • Which section of GST indicates the place of supply?

Place of supply related rules are in Section 12 of GST. Accordingly, the supply place is the location of the seller. However, both the recipient’s and supplier’s location must be in India. 

  • What refers to movement of goods as per the latest GST rule?

When sellers supply the goods in a delivery van and following a specific route to sell them to retailers, movement of goods take place. Here, you must get an e-way bill to cover the movement of goods. Otherwise, you will end up paying a big fine. 

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Eva Mukherjee

Eva has expertise in writing content in diverse niches, including the latest rules and norms related to CGST Act, Stock Market and Shares.

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