The place of supply provisions determines whether the supply transaction is Inter-State or Intra-State. Depending upon the type of transaction, the tax to be levied is either IGST or CGST and SGST/UTGST. Hence, every transaction involving supply of goods will have to go through the test of provisions relating to place of supply of goods in order to determine which tax is to be levied. Thus, under GST Regime, the place of supply is not only relevant for services but also for the supply of goods. In this article, we shall be discussing on provisions relating to place of supply for goods. 

In GST, the manner in which a supply is to be determined as Inter-State Supply or Intra-State supply has been provided in the Integrated Goods and Service Tax Act, 2017.To determine whether a transaction is an Intra-State or Inter-State, we have to identify two aspects i.e., location of Supplier and the place of supply. Where the location of supplier and the place of supply is within the State/Union territory then the transactions is said to be an Intra-State transactions and where the location of supplier is in one State/Union territory and the place of supply is in another State/Union territory, then the transactions is said to be an Inter-State transaction. The Imports and Export transactions are always considered as Inter-State Supplies. Similarly, the supply to SEZ units or developer is always treated as Inter-State transaction even the location of supplier and place of supply are in same State.

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1. Introduction

• As per Rule 22 of the Special Economic Zone Rules, 2006 (“Rules”), the SEZ unit has to prepare a report showing SEZ unit post commencement of production and submit the same to the Development Commissioner who shall place the same before the Approval Committee for consideration. The preparation of Annual Performance Report (APR) has to be done independently by each SEZ unit located in SEZ area. An APR, which has to be duly certified by an independent Chartered Accountant [[i]], has to be filed with the Development Commissioner of the subject unit, who shall place the same before the Approval Committee for consideration [[ii]]. The Approval Committee does annual review of the performance of every unit and the compliance with the conditions of approval on the basis of the APR.

  Read more: APR of a Manufacturing SEZ

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Introduction: 

Under the erstwhile service tax regime, the services by way of transportation of goods by vessel or aircraft from a place outside India up to the Customs Station of Clearance in India were originally covered under the Negative list as given under section 66D. With effect from 01.06.2016, these services are taken away from section 66D. While the transportation services by air remains exempted, services of vessel are made taxable. Doubts have been expressed by the industry and tax experts about the vires of taxing such services as the said services are subject to customs duty as part of the value of goods imported. These doubts continued even under GST regime also. 

Governments have subjected these services to tax even under GST regime, without appreciating the reasons for levy under erstwhile Service tax regime and examining whether levy of GST on such services is really warranted in view of those reasons. 

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1. Background 

In keeping with India’s commitment to implement the recommendations of Action Plan 13 of Base Erosion and Profit Shifting (BEPS), the Finance Act, 2016 introduced Section 286 of Income-tax Act, 1961 (the Act) providing for furnishing of Country-by-Country Report (CbCR) in respect of an International Group. 

Section 92D of the Act which contained provisions for preparing TP documentation was also amended to provide for keeping and maintaining of Master File. 

In continuation with the amendment, the Central Board of Direct Taxes (CBDT) on 6 October 2017, released the draft rules and forms in relation to manner of preparation and furnishing of Master File and CbCR. It is commendable, on part of CBDT, to consistently follow an inclusive approach and seeking public comments when introducing a new and important regulation. 

Read more: MF Complications and Transfer Pricing Updates