Section 10 Practical Problems and Inter-State vs Intra-State Supply

Understand Section 10 Practical Problems and Inter-State vs Intra-State Supply

Key rules to remember

Inter-State supply test

Location of supplier ≠ Place of supply (different State/UT) → IGST

Imports, exports and supplies to or from an SEZ are also inter-State under the IGST Act.

Intra-State supply test

Location of supplier = Place of supply (same State/UT) → CGST + SGST (UTGST in a Union territory)

CGST and SGST are normally levied at equal rates, each being half of the GST rate.

Movement of goods (default rule, section 10(1)(a))

Place of supply = location of goods when movement terminates for delivery to the recipient

Applies whether the supplier, the recipient or any other person moves the goods.

Delivery on third person's direction (bill-to-ship-to, section 10(1)(b))

Place of supply of the first supply = principal place of business of the third person

The third person is deemed to have received the goods. This holds whether the direction is given before or during delivery, and whether or not documents of title are transferred. The second supply, from the third person onward, follows the movement rule in section 10(1)(a).

Goods not involving movement (section 10(1)(c))

Place of supply = location of the goods at the time of delivery to the recipient

Example: goods that stay in a warehouse and ownership changes.

Assembly or installation at site (section 10(1)(d))

Place of supply = place of installation or assembly

The recipient's registered address is irrelevant here.

Goods supplied on board a conveyance (section 10(1)(e))

Place of supply = location at which the goods are taken on board

The section names a vessel, an aircraft, a train or a motor vehicle as the conveyance.

Tax computation

IGST = taxable value × GST rate; or CGST = SGST = taxable value × (GST rate ÷ 2)

Check first whether the question's rate is the total GST rate or the CGST rate alone.

How to solve Section 10 Practical Problems and Inter-State vs Intra-State Supply questions

1. 1List each separate supply in the facts. A bill-to-ship-to case has two supplies, so answer each one separately.
2. 2For each supply, note the location of the supplier. This is usually the State of the registered place from which the supply is made.
3. 3Decide whether the goods move. If they move, identify where the movement terminates. If not, note where the goods are when delivered.
4. 4Pick the right limb of Section 10(1): movement (a), third-person direction (b), no movement (c), installation or assembly (d), or on board a conveyance (e).
5. 5State the place of supply for that supply, with the reason from the facts.
6. 6Compare the supplier's location with the place of supply. Different State or UT means IGST. Same State or UT means CGST and SGST.
7. 7Compute the tax on the taxable value at the given rate and state the tax heads and amounts.
8. 8Write a one-line conclusion, and mention the provision you applied.

Quickest way: Two-address shortcut

Common mistakes in Section 10 Practical Problems and Inter-State vs Intra-State Supply

• Deciding the tax by the State in the recipient's billing address.

  Students link the invoice address to the place of supply and forget that the movement of goods decides it.

  Fix: Under the default rule, look at where the movement terminates. Only in a bill-to-ship-to case does the buyer's principal place of business become the place of supply.

• Treating a bill-to-ship-to transaction as one supply.

  The goods move once, so students assume one supply and one tax.

  Fix: Split it into two supplies. Supplier to buyer (place of supply is the buyer's principal place of business) and buyer to customer (place of supply is where the goods are delivered). Compute tax separately for each.

• Using the ship-to address as the place of supply for the first supply in a bill-to-ship-to case.

  Students apply the movement rule to both supplies.

  Fix: For the first supply, the third person is deemed to have received the goods. Use that person's principal place of business.

• Ignoring the installation rule when goods move and are also installed.

  The movement rule is memorised first and used for everything.

  Fix: If the facts mention assembly or installation at a site, the place of supply is the site. Check for it before applying the movement rule.

• Charging CGST and SGST because the supplier and the recipient are in the same State.

  Students compare the supplier with the recipient instead of the supplier with the place of supply.

  Fix: Always compare the supplier's location with the place of supply. The recipient's own State matters only when it is the place of supply.

• Applying the full GST rate to each of CGST and SGST.

  Students rush the computation and double the tax.

  Fix: Split the total GST rate in half. For an 18% rate, CGST is 9% and SGST is 9%.

Worked examples