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CA Final · Indirect Tax Laws · Place of Supply

Vardhan Machines Ltd, Pune (registered), supplies a turbine to Eastern Power Ltd, registered in Kolkata. Eastern Power directs Vardhan to deliver the turbine directly to a project site in Odisha, where it is received by Eastern Power's contractor, Orissa Works. Eastern Power's principal place of business is in West Bengal. Orissa Works has no role as agent. Is clause (b) of Section 10(1) applicable and what is the place of supply?

The place of supply is West Bengal. Because Vardhan delivers the goods to another person on Eastern Power's direction, Eastern Power is deemed to have received them, and the place of supply is that directing third person's principal place of business, not the delivery site in Odisha.

  1. AClause (b) does not apply as the recipient is registered; Odisha is the place of supply
  2. BClause (b) applies; the place of supply is Odisha, where movement terminates
  3. CClause (b) applies only if documents of title are transferred; otherwise Maharashtra
  4. DClause (b) applies; the place of supply is West BengalCorrect

Explanation

Under clause (b), where goods are delivered by the supplier to a recipient or any other person on the direction of a third person, before or during movement, the third person is deemed to have received the goods. Its principal place of business is the place of supply. Eastern Power is the directing person, so the place is West Bengal. The option linking to documents of title is wrong because 'or otherwise' covers other cases too.

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