Charge of Tax

[DURGADUTT DUBEY]

X of West Bengal gets order from a German company to deliver goods to Y of UP. As in this case goods are not going outside India it is not an export. But what tax 'X' is required to charge in his bill i.e whether he will apply CGST + SGST or IGST as the movements of goods is terminating in UP. Please advice.

[KASTURI SETHI]

IGST is applicable.

[DURGADUTT DUBEY]

Thanks for answering but sir please explain this a little bit.

[KASTURI SETHI]

Is there any doubt this transaction being Inter-State supply ?

[DURGADUTT DUBEY]

In this transaction though goods has moved from one state to another but I'm making a bill on a foreign party. In this case how will I determine POS ?

Whether I have to look provision of section 10(1)(a) and 10(1)(b) of IGST Act to determine POS in this situation? I have read that section 10 will be applicable only when supplier and recipient both are located within India. In my case recipient of goods is a foreign party as he is making the payment of goods. Further, this is not export also as goods does not goes to outside India. Hence, section 11 of IGST Act is also not applicable.

[RUDRADUTT SAXENA]

Dear Sir

As per my Opinion , You have to read Section 7(1) of IGST Act, 2017 and Section 10(1)(a) of the IGST Act, 2017 simultaneously, under which Section 10(1)(a) will apply in your case where supply involves movement of goods, the place of supply will be the location of the goods at the time at which the movement of goods terminates for the delivery of recipient i.e U.P.

[DR.MARIAPPAN GOVINDARAJAN]

I endorsed the views of Sethi.

[KASTURI SETHI]

Section 10(1)(b) of IGST Act is more relevant. Though the goods have not physically left India but as per Section 10(1)(b) it is deemed that Germany Company has received the said goods. Goods have been delivered to Y of UP on the directions of Germany Co. So de fecto, Germany Co. is recipient. Hence IGST is applicable. The question of applicability of CGST/SGST does not arise at all.

 

[KASTURI SETHI]

In my above reply, read the phrase, "de facto" instead of "de fecto".

[Bhavika Chothani]

In this case even if goods are transporting within the country but the transportation of goods is happening within two different states of the country. Hence IGST will be charged in this case

AI Summary

IGST applicability for supplies to foreign buyers where goods are delivered across state lines within the country, treated as inter state supply. A supplier in one state selling to a foreign company but delivering goods to a consignee in another state on the foreign buyer's directions must treat the supply as inter state and charge IGST. The place of supply for movement of goods is the location where movement terminates for delivery, and where a foreign principal directs delivery to a domestic recipient the transaction is deemed an inter state supply for IGST purposes.