Indirect Tax Laws and Practice · Place of Supply

Residual Rule and Illustrations of Section 10 IGST

Updated 11 October 2026 · Fact-checked

Section 10 IGST Act fixes the place of supply of goods (other than imports and exports) by clauses (a) to (e), plus (ca) for unregistered recipients. If none fits, Section 10(2) says the place is determined as prescribed. Then compare the supplier's location with the place of supply: different States means inter-State; same State means intra-State.

Understand Residual Rule and Illustrations of Section 10

The place of supply decides whether you charge IGST or CGST plus SGST/UTGST. For goods, Section 10 gives the rules. It does not apply to goods imported into or exported from India, which have their own rules.

The rules work as a set of specific clauses. Clause (a): where goods move, the place of supply is the location of the goods when the movement ends for delivery to the recipient. Clause (b): where the supplier delivers to the recipient or another person on the direction of a third person, the third person is deemed to have received the goods, and the place of supply is that person's principal place of business. Clause (c): where goods do not move, the place is the location of the goods at the time of delivery. Clause (d): goods assembled or installed at site, the place of installation or assembly. Clause (e): goods supplied on board a conveyance, the place where the goods are taken on board.

Clause (ca) was inserted with effect from 1-10-2023. For a supply to a person who is not a registered person, the place of supply is the location as per the address recorded in the invoice, and if no address is recorded, the supplier's location. This applies despite clauses (a) and (c). Recording only the name of the State is treated as recording the address.

The residual rule is Section 10(2). Where the place of supply of goods cannot be determined under Section 10(1), it is determined in the manner prescribed. Do not invent a rule here. State that the place is as prescribed, and first check whether any clause in 10(1) applies.

Then apply Sections 7 and 8. Subject to Section 10, if the supplier's location and the place of supply are in two different States, two different Union territories, or a State and a Union territory, the supply is inter-State. If both are in the same State or same Union territory, it is intra-State. Supplies to or by an SEZ developer or unit are inter-State (Section 7(5)(b)) and are excluded from intra-State supply.

Key rules to remember

Movement of goods: Place of supply = location of goods when movement terminates for delivery to the recipient; Section 10(1)(a). Applies whoever arranges the movement.
Bill to Ship to: Place of supply = principal place of business of the third person who directed delivery; Section 10(1)(b). The third person is deemed to have received the goods.
No movement: Place of supply = location of goods at the time of delivery to the recipient; Section 10(1)(c).
Unregistered recipient: Place of supply = address in invoice; if none recorded, location of supplier; Section 10(1)(ca), overrides clauses (a) and (c). Naming the State counts as recording the address.
Installation or assembly: Place of supply = place of installation or assembly; Section 10(1)(d).
On board a conveyance: Place of supply = location where goods are taken on board; Section 10(1)(e): vessel, aircraft, train or motor vehicle.
Residual rule: If place cannot be determined, determine it as prescribed; Section 10(2). Use only after checking all of Section 10(1).
Inter-State test: Location of supplier ≠ place of supply (different State/UT) → inter-State → IGST; Section 7(1), subject to Section 10.
Intra-State test: Location of supplier = place of supply (same State/UT) → intra-State → CGST + SGST/UTGST; Section 8(1), subject to Section 10. SEZ supplies are not intra-State.

How to solve Residual Rule and Illustrations of Section 10 questions

Use this order for any place of supply problem on goods. Keep location of supplier and place of supply separate in your mind.

1Check that the goods are neither imported nor exported. If they are, Section 10 does not apply.
2Identify the supplier's location and the recipient: registered or unregistered.
3If the recipient is unregistered, apply clause (ca) first: the place is the address in the invoice, or the supplier's location if no address is recorded.
4Otherwise, decide which clause fits: goods moving (a), delivery on third person's direction (b), no movement (c), installation or assembly (d), or on board a conveyance (e).
5Write down the place of supply with the clause number and the reason.
6If no clause fits, state that Section 10(2) applies and the place is determined as prescribed.
7Compare the supplier's location with the place of supply. Different State/UT means inter-State; same means intra-State. Check for an SEZ party.
8State the tax: IGST for inter-State, CGST plus SGST/UTGST for intra-State.

Quickest way: Three-question shortcut

When to use it: For MCQs and short case scenarios where you have about two minutes.

Is the recipient unregistered? If yes, find the address on the invoice. That is the place of supply.
If registered, ask where the goods end up at delivery (moving), or where they sit (not moving). For Bill to Ship to, use the third person's principal place of business.
Compare that State with the supplier's State. Same means CGST + SGST; different means IGST. An SEZ party means IGST.

Common mistakes in Residual Rule and Illustrations of Section 10

Taking the place of supply as the recipient's registered address in a Bill to Ship to case.
Students assume the billed party always receives the goods.
Fix: Under clause (b), the place is the principal place of business of the third person who directed delivery, not the place where goods physically go.
Ignoring clause (ca) for unregistered buyers.
Older notes only list clauses (a) to (e).
Fix: For a non-registered recipient, use the address in the invoice. If no address is recorded, use the supplier's location.
Treating Section 10(2) as a general rule for all unclear cases.
The word residual suggests a catch-all.
Fix: Apply it only when no clause of Section 10(1) fits. It says the place is determined as prescribed.
Deciding inter-State or intra-State by where the goods were dispatched from.
Confusing the supplier's location with the point of dispatch.
Fix: Compare the supplier's location with the place of supply under Sections 7 and 8.
Charging CGST and SGST on a supply to an SEZ unit because both parties are in the same State.
Applying the same-State test mechanically.
Fix: Supplies to or by an SEZ developer or unit are inter-State under Section 7(5)(b) and are not intra-State.
Applying Section 10 to imports and exports.
The heading says place of supply of goods.
Fix: Section 10 covers goods other than imports and exports. Imported goods until they cross the customs frontier are inter-State under Section 7(2).

Worked examples

Example 1

Sharma Traders, registered in Gujarat, sells machine parts to Kaveri Engineering, registered in Tamil Nadu, on the instruction of Kaveri's buyer, Bharat Works, whose principal place of business is in Karnataka. Sharma delivers the goods directly to Bharat Works in Karnataka as directed by Kaveri. Determine the place of supply and the nature of the supply for the Sharma to Kaveri transaction.

Show the solution

The goods are not imported or exported, so Section 10 applies. The recipient is registered, so clause (ca) does not apply.
Sharma delivers goods to another person on the direction of a third person (Kaveri). This is clause (b).
Kaveri is deemed to have received the goods. The place of supply is the principal place of business of Kaveri, that is, Tamil Nadu.
The supplier's location is Gujarat. Gujarat and Tamil Nadu are different States.
Under Section 7(1), this is an inter-State supply.

Answer: The place of supply is Tamil Nadu (Kaveri's principal place of business) under Section 10(1)(b). It is an inter-State supply, so IGST applies.

Example 2

Ravi Hardware, registered in Maharashtra, sells a generator to Mr. Iyer, an unregistered individual. The invoice records Mr. Iyer's address in Pune, Maharashtra. Mr. Iyer asks that the generator be delivered to his farmhouse in Goa. Ravi Hardware ships it to Goa. Determine the place of supply and the nature of supply. Would your answer change if the invoice recorded no address for Mr. Iyer?

Show the solution

Goods are not imported or exported. The recipient is unregistered, so clause (ca) applies despite clause (a).
The invoice records an address in Pune, Maharashtra. The place of supply is that address, Maharashtra, even though the goods are delivered in Goa.
The supplier's location is Maharashtra. Both are in the same State, so under Section 8(1) the supply is intra-State. CGST and SGST apply.
If no address were recorded, the place of supply would be the supplier's location, which is Maharashtra. The supply would still be intra-State.
If only the State name Goa had been recorded, that would count as recording the address, the place of supply would be Goa, and the supply would be inter-State.

Answer: Place of supply is Maharashtra under Section 10(1)(ca). The supply is intra-State (CGST plus SGST). With no address recorded, the answer is the same.

Exam tips

Always name the clause. Marks in written answers go to the clause number and the reason, not just the final State.
In case scenarios, underline who is registered. Clause (ca) changes the answer for unregistered recipients.
For Bill to Ship to questions, draw three boxes: supplier, third person, and delivery point. The delivery point is usually a distractor.
Check for SEZ, import or export words in the facts before applying Section 10.
If a question hints at an unclear case, state that Section 10(2) applies and the place is determined as prescribed. Do not make up a rule.

Practice questions from Place of Supply

Residual Rule and Illustrations of Section 10: frequently asked questions

What does Section 10(2) of the IGST Act say?

It says that where the place of supply of goods cannot be determined, it shall be determined in the manner prescribed. It works as a fallback only after the clauses of Section 10(1) have been checked.

Does Section 10 apply to imports and exports of goods?

No. Section 10 deals with goods other than those imported into or exported from India. Imports and exports have separate place of supply rules.

How do I decide if a supply of goods is inter-State or intra-State?

Find the supplier's location and the place of supply under Section 10. If they are in different States or Union territories, the supply is inter-State. If they are in the same State or Union territory, it is intra-State. Supplies to or by an SEZ developer or unit are treated as inter-State.

Why does clause (ca) matter for unregistered buyers?

It overrides clauses (a) and (c) for supplies to non-registered persons. The place is the address on the invoice, or the supplier's location if no address is recorded. Recording just the State name counts as recording the address.