CHAPTER-4 DETERMINATION OF NATURE OF SUPPLY

SECTION 7 INTER STATE SUPPLY

SECTION AND RELEVANT RULE

(1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in–

• • two different States;
  • two different Union territories; or
  • a State and a Union territory,

shall be treated as a supply of goods in the course of inter-State trade or commerce.

(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in–

• • two different States;
  • two different Union territories; or
  • a State and a Union territory,

shall be treated as a supply of services in the course of inter-State trade or commerce.

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

(5) Supply of goods or services or both, –

• • when the supplier is located in India and the place of supply is outside India;
  • to or by a Special Economic Zone developer or a Special Economic Zone unit; or
  • in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

ANALYTICAL REVIEW

Inter-State supply

Supply of Goods/Services shall be treated as inter-state supply, where the location of the supplier and the place of supply are in:

• Two different states
• Two different Union Territories or
• A State and a Union Territory

Integrated Goods & Service Tax i.e. IGST shall be charged on an Inter State Transfer.

Example 1:

Place of Supply = Maharashtra

Place of Supplier = Gujarat

Such transfer is an Inter State Supply and IGST shall be levied.

Example 2:

Place of Supply = Punjab

Place of Supplier = Chandigarh

IGST shall be levied. Although Chandigarh is located within the state of Punjab, such supply will not be considered as Intra State supply because Punjab is a state and Chandigarh is a Union Territory. Therefore, such transfer is an Inter State supply as per section 7 of IGST Act, 2017.

Sec 7(2): Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

Sec 7(4): Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce. Sec

Sec 7(5): Supply of goods or services or both,

1. when the supplier is located in India and the place of supply is outside India;
2. to or by a Special Economic Zone developer or a Special Economic Zone unit; or
3. in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

INTER-STATE SUPPLY

RELEVANT NOTIFICATION

Relevant Circular

SECTION-8 INTRA STATE SUPPLY

 SECTION AND RELEVANT RULE

(1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply:

Provided that the following supply of goods shall not be treated as intra-State supply, namely:–

• • supply of goods to or by a Special Economic Zone developer or a Special Economic Zone 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.

(2) Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply:

Provided that the intra-State supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit.

Explanation 1.– For the purposes of this Act, where a person has,–

• • an establishment in India and any other establishment outside India;
  • an establishment in a State or Union territory and any other establishment outside that State or Union territory; or
  • an establishment in a State or Union territory and any other establishment [***]^[1] registered within that State or Union territory, 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.

Reference for Amendments:-

[1] Omitted “being a business vertical” by The Integrated Goods and Services Tax (Amendment) Act, 2018 (No. 32 of 2018) – Brought into force w.e.f. 01.02.2019.

ANALYTICAL REVIEW

Intra-State Supply

Supply of Goods/Services shall be treated as intra-state supply, where the location of the supplier and the place of supply are in –

• Same State
• Same Union Territory

Central Goods & Service Tax i.e. CGST and State Goods & Service Tax i.e. SGST / Union Territory Goods & Service Tax i.e. UTGST shall be charged on an Intra State Transfer

Example 1:

Place of Supply = Gujarat

Place of Supplier = Gujarat

The said transfer is an Intra-State Supply and CGST + SGST of Maharashtra State would be levied.

Example 2:

Place of Supply = Chandigarh

Place of Supplier = Chandigarh

The said transfer is an Intra-State Supply and CGST + UGST would be levied.

Example 2:

Place of Supply = Delhi

Place of Supplier = Delhi

The said transfer is an Intra-State Supply and CGST + SGST* of Delhi would be levied.

*State includes a Union Territory with Individual Legislature. Delhi & Puducherry have their own individual legislature and hence covered under State GST Law.

Sec 8(1): The following supply of goods shall not be treated as intra-State supply, namely:

1. supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
2. goods imported into the territory of India till they cross the customs frontiers of India; or
3. supplies made to a tourist referred to in section 15.

RELEVANT NOTIFICATION

SECTION-9 SUPPLIES IN TERRITORIAL WATERS

 SECTION AND RELEVANT RULE

Notwithstanding anything contained in this Act, –

(a) where the location of the supplier is in the territorial waters, the location of such supplier; or

(b) where the place of supply is in the territorial waters, the place of supply,

shall, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.

ANALYTICAL REVIEW

Supplies in territorial waters

Where the location of the supplier is in the territorial waters, it shall be deemed that location of such supplier is in the coastal State or Union Territory where the nearest point of the appropriate baseline is located. Similarly, in case where the place of supply is in 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.

RELEVANT NOTIFICATION