The Central Board of Indirect Taxes and Customs (CBIC) has recently released Circular No. 203/15/2023-GST to provide clarity on determining place of supply for certain services under GST. Let’s look at what this circular has to say on some key issues:
CBIC GST Circular 203/15/2023 dated 27/10/2023: Clarifications on Place of Supply rules for transportation, advertising, co-location services
Transportation of Goods Services
Earlier, when either the supplier or recipient was outside India, the place of supply for transportation of goods (except mail/courier) was the destination of goods as per Section 13(9). But this section has been omitted from 01.10.2023.
Now, the circular clarifies that such services will follow the default rule under Section 13(2). This means, if the recipient location is available, that will be the place of supply. If not, the supplier’s location will be considered as the place of supply.
For transportation of goods by mail/courier, the position remains unchanged, and place of supply will be determined basis Section 13(2) itself.
Advertising Services
When there is an outright sale or rights given for advertising space on hoardings/billboards, the place of supply will be where the immovable property is located, under Section 12(3)(a).
However, for cases where an advertising company simply avails services from a vendor for displaying ads without taking space on rent/sale, the place of supply will be the advertising company’s location, as per the default rule under Section 12(2).
Co-location Services
For co-location services involving provision of space, hosting, IT infrastructure, the circular clarifies these will be treated as ‘Hosting and IT Infrastructure services’.
Thus, place of supply will be the recipient’s location basis the default rule under Section 12(2).
Only when the agreement is restricted to space and basic infrastructure rental without IT/hosting services, the service will be considered as renting of immovable property, with place of supply where property is located under 12(3)(a).
In summary, this circular aims to resolve several open issues and bring more clarity in determining place of supply for services under GST. Proper place of supply determination is crucial to ensure discharge of GST in the correct State/UT.