CBIC Circular Decodes the Mystery: Delivery Address is the Place of Supply for supplies to Unregistered Persons

Circular Number - 209/3/2024-GST

Key Takeaways:

1. The place of supply for goods sold to unregistered persons is the delivery address, not the billing address.

2. This clarification primarily impacts e-commerce transactions where addresses may differ.

3. Suppliers should record the delivery address on invoices for accurate place of supply determination.

4. The amendment aims to simplify GST compliance and reduce disputes in inter-state transactions.

5. Right Click here and open Official Circular in new tab

Detailed Narrative:

You can easily recall IGST Amendment Act 2023 inserted clause (ca) to Section 10(1) wef Oct 1 2023.

This section 10(1)(ca) describes,

How you should determine the place of supply for goods sold to unregistered persons?

However, trade and industry sought clarification in this amendment. They sought clarification primarily in cases where the billing address of an unregistered person differs from the address of delivery of goods.

The Central Board of Indirect Taxes and Customs (CBIC) has recently clarified their query and expressed an example too.

The CBIC Circular No.209/3/2024-GST states that -

It is clarified that in such cases involving supply of goods to an unregistered person, where the address of delivery of goods recorded on the invoice is different from the billing address of the said unregistered person on the invoice, the place of supply of goods in accordance with the provisions of clause (ca) of sub-section (1) of section 10 of IGST Act, shall be the address of delivery of goods recorded on the invoice.

For example, if an unregistered person in State X orders a product to be delivered in State Y, the place of supply would be State Y (the delivery address), not State X (the billing address)

In simple words, You should consider the delivery address as Place of supply in cases where billing address differs from the delivery address.

FAQs:

Q1: What is the main change introduced by this amendment?

A1: The amendment clarifies that for goods supplied to unregistered persons, the place of supply is the delivery address recorded on the invoice, not the billing address.

Q2: How does this affect e-commerce transactions?

A2: It provides clarity for e-commerce platforms where customers often have different billing and delivery addresses, ensuring the correct state's GST is applied.

Q3: What should suppliers do if the recipient's address isn't recorded on the invoice?

A3: In such cases, the place of supply would be the location of the supplier.

Q4: Is it necessary to record the full address of the recipient on the invoice?

A4:No, recording just the name of the recipient's state on the invoice is deemed sufficient for determining the place of supply.

Q5: When did this amendment come into effect?

A5: The amendment became effective from October 1, 2023.

Key Precedents:

1. Integrated Goods and Services Tax (Amendment) Act, 2023 (31 of 2023): This act introduced the amendment to Section 10(1) of the IGST Act, adding clause (ca) to address the place of supply for goods sold to unregistered persons.

2. Notification 02/2023-Integrated Tax, dated September 29, 2023: This notification brought the provisions of the IGST (Amendment) Act, 2023 into force from October 1, 2023.

3. Section 10(1)(a) and 10(1)(c) of the IGST Act: These existing provisions are overridden by the new clause (ca) in cases of supply to unregistered persons.

4. Section 168(1) of the Central Goods and Services Tax Act, 2017: This section empowers the Central Board of Indirect Taxes and Customs to issue clarifications for uniform implementation of the Act.

5. Circular No. 209/3/2024-GST: This circular, issued by the GST Policy Wing of the Central Board of Indirect Taxes and Customs, provides the detailed clarification on the application of the new clause (ca) of Section 10(1) of the IGST Act.

Circular No.209/3/2024-GST

F.No. CBIC-20001/4/2024-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

GST Policy Wing

North Block, New Delhi

Dated the 26th June, 2024

To,

The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on the provisions of clause (ca) of Section 10(1) of the Integrated Goods and Service Tax Act, 2017 relating to place of supply of goods to unregistered persons– Reg.

Vide Notification 02/2023-Integrated Tax, dated 29th September, 2023, the provisions of the Integrated Goods and Services Tax (Amendment) Act, 2023 (31 of 2023) came into force with effect from 01.10.2023.

2. Clause (ca) has been inserted in Section 10(1) of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the “IGST Act”) with effect from 01.10.2023. The same is reproduced as under:

"(ca) where the supply of goods is made to a person other than a registered person, the place of supply shall, notwithstanding anything contrary contained in clause (a) or clause (c), be the location as per the address of the said person recorded in the invoice issued in respect of the said supply and the location of the supplier where the address of the said person is not recorded in the invoice.

Explanation.—For the purposes of this clause, recording of the name of the State of the said person in the invoice shall be deemed to be the recording of the address of the said person;"

2.1 The said provision has been inserted as a non-obstante provision overriding the provisions under Section 10(1)(a) or 10(1)(c) of IGST Act. The clause (ca) provides that where the supply of goods is made to an unregistered person, the place of supply would be the location as per the address of the said person recorded in the invoice and the location of the supplier where the address of the said person is not recorded in the invoice. An explanation has also been added to the said clause to clarify that recording the name of the State of the said person shall be deemed to be the recording of the address of the said person.

3. Reference has been received from trade and industry seeking clarification regarding the place of supply in terms of newly added clause (ca) of section 10(1) of the IGST Act, in case of supply of goods made to an unregistered person where billing address is different from the address of delivery of goods, especially in the context of supply being made through e-commerce platforms.

4. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 hereby clarifies the issues as under:

S.No. Issue Clarification

Place of supply of goods (particularly being supplied through e-commerce platform) to unregistered persons where billing address is different from the address of delivery of goods.

1. Mr. A (unregistered person) located in X State places an order on an ecommerce platform for supply of a mobile phone, which is to be delivered at an address located in Y State. Mr. A, while placing the order on the e-commerce platform, provides the billing address located in X state. In such a scenario, what would be the place of supply of said supply of mobile phone, whether the State pertaining to the billing address i.e. State X or the State pertaining to the delivery address i.e. State Y?

As per the provisions of clause (ca) of subsection (1) of section 10 of IGST Act, where the supply of goods is made to an unregistered person, the place of supply would be the location as per the address of the said person recorded in the invoice and the location of the supplier where the address of the said person is not recorded in the invoice. Further, as per Explanation to the said clause, recording the name of the State of the said unregistered person on the invoice shall be deemed to be the recording of the address of the said person.

Accordingly, it is clarified that in such cases involving supply of goods to an unregistered person, where the address of delivery of goods recorded on the invoice is different from the billing address of the said unregistered person on the invoice, the place of supply of goods in accordance with the provisions of clause (ca) of sub-section (1) of section 10 of IGST Act, shall be the address of delivery of goods recorded on the invoice i.e. State Y in the present case where the delivery address is located.

Also, in such cases involving supply of goods to an unregistered person, where the billing address and delivery address are different, the supplier may record the delivery address as the address of the recipient on the invoice for the purpose of determination of place of supply of the said supply of goods.

5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. Difficulty, if any, in the implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.

(Sanjay Mangal)

Principal Commissioner (GST)