PLACE OF SUPPLY OF SERVICES

GST UPDATE 29.08.2016

GST DAILY DOSE OF UPDATION:-
The place of Supply of Service
The provisions regarding the determination of place of supply of service have been largely imported from the earlier Place of Provision of service rules.
1.     Basically the location of service receiver has been marked as the place of supply in most cases where the recipient of service is a registered person. This has been done with a view that the credit can be passed on from provider to recipient.
2.     In cases where the service recipient is not registered, then the place of supply of service has been marked as that place where the activity of providing the service is performed.
3.     In case of some services, specific locations have been earmarked as place of supply. For eg. On board a conveyance, telecommunication services, advertisement services, restaurant services, services related to immovable property etc.
Looking at the new provisions, it is clear that as against the old rules, which were mostly relevant for cross border service provisions, the new provisions are more inclined towards determining the place of supply even within country as the new regime would comprise CGST and SGST on one hand and IGST on other hand. Whether CGST/SGST will be applicable or the IGST will be determined on basis of these rules only. It also becomes important because earlier only service tax was to be collected which was a central levy and now states will also have a say in this.
Complexities are bound to arise as the new law focuses on the location of service receiver mainly. Cases where provider and receiver are in the same state with supply of service in another state will cause revenue loss for the states where service was actually supplied. Protest from these states is bound to come as the infrastructure of these states are used but no revenue is coming to them.
Unlike previous provisions, where import of service was prone to litigation due to lack of clarity on position of service provider and receiver, best eg. being commission services of goods and services or the online information retrieval services, the new regime has done away with such scenarios by proposing the location of receiver (if he is registered) as the location of supply in residual cases.
Thus the GST may have been introduced with a motive of unifying the country a single market, but issues will arise seeing the geographical diversity of it.

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GST UPDATE 29.08.2016

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