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CMA Final · Indirect Tax Laws and Practice · Place of Supply

Sundaram Machines Ltd, Coimbatore (registered in Tamil Nadu), sells a machine to Rao Traders, Hyderabad (registered in Telangana). On Rao's written direction, the machine is delivered directly to Rao's customer Kiran Works in Pune, Maharashtra, before any movement of documents. Rao's principal place of business is Hyderabad. There is no import or export. What is the place of supply of the machine in Sundaram's supply to Rao?

The place of supply is Hyderabad. When the supplier delivers goods to another person on the direction of a third person, that third person is deemed to have received them, and the place of supply is the third person's principal place of business, which is Rao's Hyderabad.

  1. APune, as the location where movement of goods terminates
  2. BHyderabad, as the principal place of business of the directing personCorrect
  3. CCoimbatore, as the location of the supplier
  4. DTamil Nadu or Maharashtra, at the supplier's choice

Explanation

Under Section 10(1)(b), where goods are delivered by the supplier to a recipient or 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 person's principal place of business. Rao is the directing person, so the place of supply is Hyderabad. Pune would apply only under clause (a) if no third-person direction existed.

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