Place of supply in job-work dispatches governs IGST treatment; Kerala HC quashes detention on mistaken intra-State assumption.

For goods sent to a job worker on the buyer's direction, the place of supply is determined by the statutory deeming rule under the IGST Act and is treated as the buyer's principal place of business. On that basis, the supply was held to be inter-State, not intra-State, because the buyer was located in Tamil Nadu. The court further held that detention proceedings under GST could not be sustained where the authorities proceeded on the mistaken assumption that the transaction was intra-State and ignored the applicable job-work framework. The impugned proceedings were quashed as being without jurisdiction.

---

---

Issues: (i) Whether the supply of goods sent to a job worker at Kannur on the direction of the buyer in Tamil Nadu was an inter-State supply or an intra-State supply; (ii) Whether the proceedings initiated under Section 129 of the GST law were without jurisdiction.

Issue (i): Whether the supply of goods sent to a job worker at Kannur on the direction of the buyer in Tamil Nadu was an inter-State supply or an intra-State supply.

Analysis: The determination of inter-State or intra-State supply turns on the place of supply and not merely on the place of delivery. Under Section 10(1)(b) of the Integrated Goods and Services Tax Act, 2017, where goods are delivered on the direction of a third person before or during movement, the third person is deemed to have received the goods and the place of supply is the principal place of business of that person. Sections 7 and 8 of the Integrated Goods and Services Tax Act, 2017 operate on the same principle, namely, the location of the supplier and the place of supply. Since the goods were consigned under the buyer's instructions and the buyer was located in Tamil Nadu, the place of supply was Tamil Nadu.

Conclusion: The supply was an inter-State supply and not an intra-State supply.

Issue (ii): Whether the proceedings initiated under Section 129 of the GST law were without jurisdiction.

Analysis: The movement of goods for job work is governed by Section 143 of the Central Goods and Services Tax Act, 2017, as made applicable to IGST transactions by Section 20 of the Integrated Goods and Services Tax Act, 2017, and the Board circular clarified that direct dispatch to the job worker with the buyer shown as principal and the job worker shown as consignee is permissible. The invoice format adopted by the petitioner was held to be in compliance with the job-work procedure. Rule 138(1) of the Kerala Goods and Services Tax Rules, 2017 was not treated as the basis of the detention, and the main premise of the respondents that the supply was intra-State was found to be erroneous. As the officers proceeded on a mistaken assumption of jurisdiction, the detention and consequential proceedings could not be sustained.

Conclusion: The proceedings were without jurisdiction.

Final Conclusion: The writ petition succeeded, and the impugned proceedings were quashed on the ground that the supply was governed by the IGST regime and the authorities lacked jurisdiction to proceed as they did.

Ratio Decidendi: For goods sent to a job worker on the direction of the buyer, the place of supply is fixed by the statutory deeming rule in favour of the buyer's principal place of business, and jurisdiction under the GST detention provisions cannot rest on treating such supply as intra-State contrary to that rule.

---