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]

Sh.Alkesh Jani Ji,

An AAR decision has persuasive value. You have worked hard on this issue. All-out efforts made by you will not end in smoke. Your efforts will help the visitors of TMI. I am really thankful to you.

[Amit Agrawal]

Dear Alkesh Ji,

Thank you very much for taking these academic discussions in right spirit. Taking the same forward, I want to state the followings:

You are right when stated that 'With regard to 'Casual Taxable person' the registration is valid for limited period and can be extended to limited period.'.

W.r.t. definition of 'fixed establishment', 'a sufficient degree of permanence' is one of important criteria (and non-having 'a sufficient degree of permanence' - as per facts put by the applicant - has greatly impacted outcome of referred AAR ruling in case of M/S. GEW (INDIA) PVT. LTD. - 2021 (11) TMI 394 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA, in my view).

Issue is whether any registered person which is undertaking supply of civil-work (i.e. construction of immovable property) in another state and which require time more than allowed for casual taxable person' can be said to have 'a sufficient degree of permanence' so as to qualify as 'Fixed Establishment'.

And if yes, taking registration in other state becomes compulsory ..... one way or other, applying principals of harmonious interpretation.

Let's also remember that place of business - as per Section 2 (85) (a) - includes a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both;.

In the subject supply under discussion here, you agree that said crane-services are consumed in Haryana. And your reliance upon Section 12 (2) (a) - to determine place of supply - is from point of view of nature of services provided (i.e. supply of crane is supply of service of tangible goods).

As per Section 2 (61), “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office;

And taking registration as ISD is compulsory u/s 24 (viii) read with Section 25 (1).

Said AAR - in its Para 19 - denies the applicant to get registration as ISD on the ground that 'It is an admitted fact that the applicant neither have nor intend to have any establishment at the site at Karwar, Karnataka and hence cannot obtain the ISD registration'.

Again, having 'an establishment' (i.e. 'office' in context of ISD) is different from having 'a fixed establishment' in my view (& same need not necessarily be (though, can be) at actual site) and AAR failed to recognize the same.

Further Section 2 (70) (c) of the CGST Act states that “location of the recipient of services” means, where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply;

Even though this discussion is strictly limited to determination of place of supply under Section 12 (2) (a) of the IGST Act, 2017 for given facts (& not ignoring Section 12 (3) to determine place of supply for purpose of this discussion), fact remains that 'place of supply' can be different from registered place of the recipient in situations covered in sub-sections (3) to (14) therein. And location of recipient - under Section 2 (70) - covers 'a fixed establishment elsewhere' as well as 'more than one establishment, whether the place of business or fixed establishment'.

Looking these relevant provisions in their entirety, I am not too convinced about accuracy of said ARR ruling, specially in the context of factual position under discussion here, referred provisions and on our points of difference/s.

Having said that, I am really grateful for your insights, Shri Alkesh Ji! Thank you once again! I am aware that issue/s are far more complex and it may take years (may be decade & more) to have proper legal jurisprudence to evolve on multiple inter-linked issues.

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.

[Amit Agrawal]

In my last post, please read relevant Para as follows: "Even though this discussion is strictly limited to determination of place of supply under Section 12 (2) (a) of the IGST Act, 2017 for given facts (& ignoring Section 12 (3) to determine place of supply for purpose of this discussion), ......."

[Amit Agrawal]

Dear Shri Kasturi Sethi Ji,

I agree with you that Shri Alkesh Ji has put all out efforts to make this discussion meaningful and my earlier posts specifically recognise them in no uncertain terms.

[Amit Agrawal]

W.r.t. referred AAR ruling in case of M/S. GEW (INDIA) PVT. LTD. (Citation: 2021 (11) TMI 394 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA) & question about authority of AAR to look into 'place of supply', following points are worth noting:

A. As a outcome summary, said AAR simple protected interest of state of Karnataka by asking supplier to raise invoices showing place of supply as Karnataka while denying him to use facility of ISD to transfer ITC (from state of Karnataka) against input services to supplier's registered state.

B. Whether AAR (Haryana) will have same approach when 'supplier registered in Haryana' giving crane-services which is admittedly consumed in state of Haryana .... I doubt this very much, after going through experience till date from so many rulings from these authorities on varied subject/s.

C. Earlier discussion shows how determination of place of supply have so many angles - both from supplier and recipient's end and ultimately, it make two states / UT fighting with each other using complex legal provisions (many of which are referred to, in earliest posts).

D. As understood from media reports, only principal bench of tribunal at Delhi is expected to take up cases involving determination of place of supply. This is because it is expected that different state / UT will take contrary positions on same set of facts by looking into these facts / issues / legal provisions from their own prism.

All this proves that how taking calls on 'place of supply' can be very very difficult .... even for expert professionals. Ultimately, objective of any good professional, in my humble view, will be to give his opinion .. no doubt .... only on given facts & applicable law, but simultaneously protecting interest of his client (i.e. who is asking questions & paying fees) by taking least-risky way.

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

[Amit Agrawal]

To add to my last post:

To understand complexities involved even better,take a hypothetical scenario where civil-services provided by registered suppler of Maharashtra (but undertaken in state of Haryana) is exempted from GST for any reason while crane-services - supplied (& consumed in Haryana) by the supplier registered in Haryana to recipient registered person of Maharashtra - is not exempted.

[Alkesh Jani]

Shri Kasturiji Sir, Shri Amitji and all participants,

My heartly thanks to all of you, Shri Kasturiji Sir, taught me that we lay foundation and it is the querist to choose the path.

Thanks to all once again.

With regards,

[GST MADURAI]

In this case ultimate revenue should go to Haryana state as the place of ultimate supply is Haryan. As the Supplier from Maharashtra will avail the credit for the input service provided by the crane operator. Now there are two methods:-

(i) the supplier from Maharashtra may take registration in Haryana.

(ii) He may ask the crane operator to issue to invoice in his principle place of business with IGST, and he will avail the credit, further he can issue the invoice in the name of actual recipients with levying the IGST and here he can set off the liability.

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.