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CA Final · Indirect Tax Laws · Place of Supply

Kaveri Exports Pvt Ltd (Chennai, Tamil Nadu) is a registered person. It sells 50 machines to Delta Works (registered, Bengaluru, Karnataka). On Delta's direction, Kaveri delivers the goods straight to Omega Fabricators in Hyderabad (Telangana), who is Delta's customer. Delta has its principal place of business in Bengaluru. Under Section 10(1)(b), what is the place of supply of the goods sold by Kaveri to Delta?

The place of supply is Bengaluru. Under Section 10(1)(b), when goods are delivered to another person on the direction of a third person, that third person (Delta) is deemed to have received them, so its principal place of business fixes the place of supply, not the delivery point in Hyderabad.

  1. AChennai, where movement began
  2. BHyderabad, where the goods are delivered
  3. CBengaluru, the principal place of business of DeltaCorrect
  4. DTelangana or Karnataka, whichever has the higher tax rate

Explanation

Where goods are delivered to another person on the direction of a third person, the third person is deemed to have received the goods. The place of supply is that third person's principal place of business. Delta directed the delivery, so the place of supply is Bengaluru. Hyderabad would apply only under the plain movement rule in clause (a), which clause (b) overrides.

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