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CA Final · Indirect Tax Laws · Place of Supply

Sharma Agro Ltd (Ludhiana) sells grain to Mehta Exports (Mumbai). On the written direction of Mehta Exports, Sharma Agro delivers the goods directly to Gupta Mills in Indore, while Mehta Exports' principal place of business is in Mumbai. Gupta Mills is not an agent of anyone in the transaction. What is the place of supply for the supply by Sharma Agro to Mehta Exports?

The place of supply is Mumbai. When goods are delivered to another person on the direction of a third person, the third person is deemed to have received them, and the place of supply is that third person's principal place of business, here Mehta Exports in Mumbai.

  1. AIndore, where the goods are physically delivered
  2. BLudhiana, where the goods originate
  3. CMumbai, being the principal place of business of the third person who directed deliveryCorrect
  4. DPlace decided by the transporter

Explanation

Section 10(1)(b) applies when goods are delivered to 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. Mehta Exports directed delivery, so Mumbai is the place. Indore is wrong because physical delivery location is overridden.

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