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CA Intermediate · Taxation · Place of Supply

Ramesh Gupta, a registered person in Jaipur (Rajasthan), buys a machine from Vishal Engineering of Pune (Maharashtra). Vishal Engineering delivers the machine to a warehouse in Surat (Gujarat) on Ramesh's written instruction, who is the 'bill-to' party, while Ramesh remains in Jaipur. What is the place of supply under the IGST Act, 2017?

The place of supply is Jaipur, Rajasthan. When goods are delivered to another person on the direction of a third person (the bill-to party), the goods are deemed received by that third person, so the place of supply is the third person's principal place of business, not the delivery location in Surat.

  1. ASurat, Gujarat, as the place of delivery
  2. BPune, Maharashtra, as the supplier's location
  3. CJaipur, Rajasthan, being the principal place of business of the person who gave the direction, treated as the recipientCorrect
  4. DPlace of the transporter chosen by Vishal Engineering

Explanation

Where goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as agent or otherwise, before or during movement, the goods are deemed received by the third person. Hence the place of supply is the principal place of business of the third person, Jaipur, Rajasthan. Surat is wrong as the delivery point applies only when there is no such direction. Supply is therefore inter-State.

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