place of supply

[mahima arora]

ONE PARTY IS PROVIDING CRANE SERVICE SUPPLIER IS REGISTRED IN HARYANA AND RECIPENT IS REGISTERED IN MAHARASTRA AND THE SERVICE PROVIDIDE AT HARYANA THEN WHAT WILL APPLICABLE IGST OR CGST AND SGST

SEC 12 OF IGST WHICH CLAUSE IS APPLICABLE IN THIS SITUATION

[KASTURI SETHI]

IGST is applicable.

[Shilpi Jain]

What is the reason that the service recipient of Haryana is taking a crane from Maharashtra?

Is the work undertaken in MH by a person having registration in Haryana?

Further facts needed, what is the nature of service to check if it is a service relating to immovable property and thereby tax type may change.

[Amit Agrawal]

More facts & clarity needed. Sub-section (3) of Section 12 of the IGST Act, 2017 might come into play.

It is also possible the service-recipient (in given situation) is liable to get itself registered in Haryana but avoiding the same.

So, before deciding to charge IGST or CGST & SGST, one needs to take into account many factual situation & applicable legal provisions.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[mahima arora]

recipient has a civil work contract in haryana ( party is not registerd in haryana) , recipent asked bill with maharastra gstn and palce of supply in maharstra so as they can claim itc. but the confusion is about place of supply

[Amit Agrawal]

Assuming that you are referring to 'construction of immovable property' and services of crane services being ancillary to those activities, Section 12 (3) of the IGST Act, 2017 is applicable.

And Place of supply is the location of the immovable property (i.e. Haryana). Hence, supplier of crane-services needs to charge CGST & SGST (& NOT IGST) against given supply.

This legal position can not change just because recipient has not taken registration in Haryana (though, he is most likely, liable to take that registration).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[mahima arora]

THANKS FOR YOUR OPINION

[Alkesh Jani]

Shri/Ku.

In this regards, I agree with the views of Shri Kasturiji Sir, that IGST is applicable.

Thanks

[Amit Agrawal]

Dear Shri Alkesh Ji,

Request you to kindly elaborate your views please

[Alkesh Jani]

Shri Amitji & Querist,

At the very outset, supply of crane is supply of service of tangible goods. Supplier of Service is in Haryana and Services will be supplied to person registered in Maharashtra, although services are consumed in Haryana, the supply of service is neither event based or performance based.

Section 12 (2) (a) of IGST Act, 2017 will be applicable.

If doubt persist, one can opt for Advance Ruling.

Thanks

[Amit Agrawal]

Thanks Shri Alkesh Ji for your elaboration!

In view of my understanding of factual position read with Section 12 (3) of the IGST Act, 2017, as spelt in my post at serial no. 5 above, I most respectfully cannot agree with your views.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. I respect contrary views.

[Padmanathan KV]

Dear Alkesh Ji,

Pls note that AAR is not competent to decide Place of Supply for the want of jurisdiction.

[Padmanathan KV]

Dear Querist,

In my opinion the said service of providing crane is ancilliary for construction of immovable property and POS will be Haryana as per Sec 12(3)(d) of IGST Act, 2017. hence, it will be subject to CGST & SGST.

[Alkesh Jani]

Shri Padmanathan Kollengode Ji,

With regard to your reply No.11, Please refer judgement of High Court of Kerala in case of SUTHERLAND MORTGAGE SERVICES INC Vs. THE PRINCIPAL COMMISSIONER 2020 (3) TMI 186 - KERALA HIGH COURT based on this Rulings are available.

Thanks

[Padmanathan KV]

Alkesh Sir,

With respect to Sutherlands decision of Kerala High Court in 2020 (3) TMI 186 - KERALA HIGH COURT, the court has held that the question sought by the petitioner had bearing on larger question of "determination of liability to pay tax on goods or services or both" and for that purpose, remitted the matter back to AAR for fresh consideration. In my considerate opinion, it does not mean AAR has jurisdiction to rule on POS.

In the present issue, the question does not have any bearing on determination of liability to pay tax.

[Alkesh Jani]

Shri Padmanathan Kollengode Ji,

Our expert Shri M. GOVINDARAJAN Ji has written an article on this, link is given below. To be proud of he is also an Expert in our forum. Let us seek guidance from him and request him to comment in the matter for larger public interest.

https://www.taxtmi.com/article/detailed?id=8986

[Amit Agrawal]

Dear Shri Alkesh Ji, Shri Kasturi Ji, Shri Padmanatham Ji & all my fellow professional colleagues,

PLEASE TREAT THIS AS PURE ACADEMIC DISCUSSION:

In my post at serial No. 5 above, I had also stated as follows: 'This legal position can not change just because recipient has not taken registration in Haryana (though, he is most likely, liable to take that registration).'

Lets analyse ongoing dispute taking base-case from Shri Alkesh Ji's point of view (in his post at serial No. 9 above) where he felt that Section 12 (2) (a) of IGST Act, 2017 will be applicable, even if services are consumed in Haryana, as supply of crane is supply of service of tangible good/s.

As per said Section 12 (2) (a) of the IGST Act, 2017, The place of supply of services, except the services specified in sub-sections (3) to (14), made to a registered person shall be the location of such person;

Now, issue to my mind is, what is 'location of such registered person (i.e. location of registered recipient of subject services under discussion here)'?

As per Section 2 (70) (b) of the CGST Act, 2017, “location of the recipient of services” means, where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;

As per Section 2 (50) of the CGST Act, 2017, “fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;

Querist, in her post at serial no. 4 above, has already clarified that recipient (who is registered in Maharashtra) has a civil work contract in Haryana.

Logically follows therefrom that this recipient must have a place (which can be even the 'construction-site' where he is executing said civil-work contract)) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply its civil-work services (otherwise, how he is providing those output civil-work services in Haryana?)as well as to receive and use services for its own needs (such as crane-services so provided by supplier registered in Haryana in this subject matter).

In any case in such contract such as crane-service, PO / Agreement / Understanding between parties clearly states (or known between parties) that these services are required for particular project / place where civil-work is carried by the recipient (which is Haryana, in this case).

Summarising above, I would argue that even if Section 12 (2) (a) of the IGST Act, 2017 is applicable for given crane-services, STILL, location of registered recipient is Haryana. Hence, supplier of crane-service (registered & located in Haryana) needs to charge CGST & SGST & not IGST and 'place of supply' is Haryana.

Your views, including counter arguments, please

P.S.As the cost of repetition, PLEASE TREAT THIS AS PURE ACADEMIC DISCUSSION. I am well aware of implication of above arguments - as put by me - if upheld by court/s in future.

[Amit Agrawal]

* Please also Read 'Ms. Shilpi Jain Mam' in start of my earlier post.

[Alkesh Jani]

Shri Amitji,

The observation of Advance Ruling in case of In re GEW (India) Pvt. Ltd. (GST AAR Karnataka) 2021 (11) TMI 394 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA is as below

It is observed that, as per Section 12(3) of the Integrated Goods and Services Act, 2017 (“IGST Act”), service provided by the Applicant in relation to immovable property by way of grant of right to use immovable property or for carrying out or coordination of construction work or any ancillary services, the place of supply of services shall be location of immovable property i.e. Karnataka.

Held that, as the location of the supplier, Noida, Uttar Pradesh and place of supply of service, Karnataka are at two different states so as per Section 7(3) of the IGST Act the supply of service will be considered as inter-state supply and accordingly IGST will be charged.

Held that, the Applicant is not required to take separate registration in Karnataka for the supply of services and can raise the invoice by charging IGST from their registered office at Noida, Uttar Pradesh, with the place of supply as Karnataka.

From above, it is clear that AAR can give ruling with regards to place of supply and ratio is also applicable.

Thanks

[Amit Agrawal]

Dear Shri Alkesh Ji,

Thanks for sharing wonderful AAR (Citation: 2021 (11) TMI 394 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA), though, as you are aware, same (as in where case of advance ruling) is binding only between parties thereto and for the facts stated therein.

And said ruling gives followings as finding of facts in Para 13: In the instant case, the applicant has obtained registration for the premises located at Noida, UP and hence the location of the supplier of services is the place of business of the applicant. It is also pertinent to note that the applicant has no fixed establishment in the State of Karnataka as on date.

Furthermore, said AAR also ruled that 'Since the applicant are neither having nor intending to have any establishment at the site at Karwar, Karnataka, they cannot obtain ISD registration for the site at which they are delivering service.'.

One more thing, I missed mentioning (& my apologies for the same) - as I was more focused on Section 12 (2) (a) & location of registered recipient - is as follows:

A. As per Section 2 (20) of the CGST Act, 2017, “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.

A1. And 'casual taxable persons making taxable supply' needs to take compulsory registration u/s 24 (ii) read with Section 25 (1).

A2. I feel that effects of these provisions are not yet dealt with in proper perspectives (specially when thought for 'person registered in Maharashtra' providing civil work services in Haryana).

Having said that, your post & referred AAR is definitely thought-provoking and I am very much thankful to you for that.

Other views please.

P.S.As the cost of repetition, PLEASE TREAT ALL THIS AS PURE ACADEMIC DISCUSSION. I am well aware of implication of above arguments - as put by me - if upheld by court/s in future.

[Alkesh Jani]

Shri Amitji,

the above referred AAR, it is also observed that :-

"..the Applicant is not required to take separate registration in Karnataka for the supply of services and can raise the invoice by charging IGST from their registered office at Noida, Uttar Pradesh, with the place of supply as Karnataka."

With regard to 'Casual Taxable person' the registration is valid for limited period and can be extended to limited period. Moreover, person has to deposit the tax in advance. while in the works contract, it may not be completed within that time period.

Further, I agree that the ruling given by AAR is for applicant and jurisdiction office only, but it is pertinent to note that AAR is an Authority recognised under Law, and interpretation made vide such ruling are also effective ground unless contrary decision is given by higher legal forum.

This is the best of all I have.

Thanks

AI Summary

Place of supply: crane services consumed at immovable property attract intrastate tax, not inter-state tax.
Where crane services are ancillary to construction of immovable property and consumed at the construction site, the place of supply is the location of the immovable property, supporting intrastate taxation (CGST and SGST). An alternative view based on the rule for services to a registered person depends on whether the recipient has a fixed establishment at the site; definitions of fixed establishment and location of recipient, and advance ruling practice, influence whether local registration or IGST invoicing is appropriate.