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CA Final · Indirect Tax Laws · Place of Supply

Himalaya Exports Ltd, registered in Dehradun (Uttarakhand), sells 500 units to Gujarat Retail Pvt Ltd, registered in Ahmedabad (Gujarat). At the direction of Gujarat Retail, Himalaya delivers the goods directly to Rajkot Wholesalers, a registered buyer in Rajkot (Gujarat) which is Gujarat Retail's customer. Gujarat Retail's principal place of business is Ahmedabad. The goods are delivered by Himalaya before Gujarat Retail issues a delivery order, by transfer of documents of title. What is the place of supply of Himalaya's supply to Gujarat Retail?

The place of supply is Gujarat, at the principal place of business of Gujarat Retail in Ahmedabad. When goods are delivered on the direction of a third person, that person is deemed to have received them, so the place of supply is that person's principal place of business.

  1. AUttarakhand, the supplier's location
  2. BGujarat, the location of Rajkot where goods finally reach
  3. CGujarat, being the principal place of business of Gujarat Retail, deemed to have received the goodsCorrect
  4. DCannot be determined and must be prescribed by rules

Explanation

Under section 10(1)(b), where goods are delivered to a recipient or other person on the direction of a third person, either by transfer of documents of title or otherwise, the third person is deemed to have received the goods. The place of supply is that third person's principal place of business, here Ahmedabad, Gujarat. The Rajkot delivery is not used, though the state is the same; the supplier's location is irrelevant.

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