Generating response Copilot said: GST Advance Received - Rule 50(ii) Inter-State Supply but Place of Supply Unknown for GSTR-1 Reporting

[Abhijeet Mane]

Under Rule 50, if at the time of receipt of advance the nature of supply is not determinable, the supply is deemed to be an inter-State supply and IGST is payable.

However, while reporting such advance in GSTR-1, the system requires selection of the PoS (State) for interstate transactions.

If the nature of supply and consequently the actual place of supply is not determinable at the time of receipt of advance, which State should be reported in GSTR-1 for such advance liability?

[Raam Srinivasan Swaminathan Kalpathi]

IMHO, suggestion to report in the respective GST state code of the recipient.

[Sanjeev Agarwal]

Under Rule 50 of the CGST Rules, where the nature of supply cannot be determined at the time of receipt of advance, the supply is deemed to be an inter-State supply and IGST is payable.

However, Rule 50 does not prescribe any deemed State as the Place of Supply (PoS) in such circumstances. This creates a practical difficulty because GSTR-1 requires a State to be selected while reporting the advance.

The important distinction is:

• Nature of supply: Rule 50 deems it to be inter-State.
• Place of supply: Rule 50 does not deem it to be any particular State.

Therefore, the supplier's State cannot automatically be reported as the PoS merely because the portal requires a State code.

Where the recipient is identifiable and the eventual supply can reasonably be connected with the recipient's State, reporting the recipient's State as the PoS is the more defensible practical approach, subject to the applicable PoS provisions and facts.

However, where neither the actual PoS nor any reasonable State can be identified, there appears to be no specific statutory provision prescribing a default State for GSTR-1 reporting. Selecting a State solely to satisfy the portal requirement would not have an express basis in Rule 50.

Thus, the appropriate position is:

IGST should be paid because Rule 50 deems the supply to be inter-State, but Rule 50 does not itself prescribe which State should be reported as the PoS.

The issue is essentially a reporting-system gap: GSTR-1 requires a State code even though the law may not yet permit determination of the actual PoS.

Once the underlying supply becomes identifiable, the advance should be appropriately adjusted/reconciled with the subsequent tax invoice and actual PoS.

In conclusion: If the recipient's State is known, reporting that State is the more practical and defensible approach. If even the recipient/PoS State cannot reasonably be identified, there is no clear statutory "default State" under Rule 50, and obtaining a written clarification from the jurisdictional authority/CBIC would provide the strongest compliance support.

[Shilpi Jain]

Why is the nature of supply not determinable in the presetn case? Additional facts will help give relevant reply.

AI Summary

Inter-State advance supply classification requires IGST, but unresolved place of supply creates a GSTR-1 reporting gap.
Advances received where the nature of supply is indeterminable are treated as inter-State supplies and liable to IGST, but no deemed State is prescribed for the place of supply. GSTR-1 nevertheless requires a State selection. Where identifiable, the recipient's State may be reported if the prospective supply can reasonably be linked to it, subject to applicable PoS provisions and facts. If no actual or reasonably connected State can be identified, no express default State exists; the advance should later be reconciled with the actual PoS.