NOTIFICATION NO- 04/2018-Integrated Tax,dt. 31-12-2018 Seeks to amend the IGST Rules, 2017 so as to notify the rules for determination of place of supply in case of inter-State supply under sections 10(2), 12(3), 12(7), 12(11) and 13(7) of the IGST Act, 2017.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,
SECTION 3, SUB-SECTION (i)]

Government of India
Ministry of Finance
(Department of Revenue)
[Central Board of Indirect Taxes and Customs]

Notification No.04 /2018 – Integrated Tax

New Delhi, the 31st December, 2018

10 Pausha,1940 Saka

G.S.R.- (E). – In exercise of the powers conferred by sub-sections (3),(7) and (11) of section 12and sub section (7) of section 13 read with section 22 of the Integrated Goods and Services TaxAct , 2017 (13 of 2017), the CentralGovernment hereby makes the following rules to furtheramend the Integrated Goods and Services Tax Rules, 2017, namely:-

1. Short title and commencement.- (1) These rules may be called the Integrated Goods andServices Tax (Amendment) Rules, 2018.

2) They shall be deemed to have come into force on the 1st day of January, 2019.

2. In the Integrated Goods and Services Tax Rules, 2017 (hereinafter referred to as the saidrules), in rule 3 in clause (h), after the words “in the case of advertisements over internet” thewords “the service shall be deemed to have been provided all over India and” shall be inserted.

3.In the said rules, after rule 3, the following rules shall be inserted, namely: –

“ 4. The supply of services attributable to different States or Union territories, undersub section (3) of section 12 of the Integrated Goods and Services Tax Act, 2017 (hereinafter inthese rules referred to as the said Act), in the case of-

(a) services directly in relation to immovable property, including services provided byarchitects, interior decorators, surveyors, engineers and other related experts or estateagents, any service provided by way of grant of rights to use immovable property or forcarrying out or co-ordination of construction work; or

(b) lodging accommodation by a hotel, inn, guest house, homestay, club or campsite, bywhatever name called, and including a houseboat or any other vessel ; or

(c) accommodation in any immovable property for organising any marriage or reception ormatters related thereto, official, social, cultural, religious or business function includingservices provided in relation to such function at such property; or

(d) any services ancillary to the services referred to in clauses (a), (b) and (c),
where such immovable property or boat or vessel is located in more than one State orUnion territory, shall be taken as being in each of the respective States or Unionterritories, and in the absence of any contract or agreement between the supplier ofservice and recipient of services for separately collecting ordetermining the value of theservices in each such State or Union territory, as the case maybe, shall be determined inthe following manner namely:-

(i) in case of services provided by way of lodging accommodation by a hotel, inn, guesthouse, club or campsite, by whatever name called (except caseswhere such property is asingle property located in two or more contiguous States or Union territories or both) and services ancillary to such services, the supply of services shall be treated as made in each
of the respective States or Union territories, in proportion to the number of nights stayedin such property;

(ii) in case of all other services in relation to immovable property including services by wayof accommodation in any immovable property for organising any marriage or receptionetc., and in cases of supply of accommodation by a hotel, inn, guest house, club orcampsite, by whatever name called where such property is a single property located intwo or more contiguous States or Union territories or both, and services ancillary to suchservices, the supply of services shall be treated as made in each of the respective States or
Union territories, in proportion to the area of the immovable property lying in each Stateor Union territory;

(iii) in case of services provided by way of lodging accommodation by a house boat or anyother vessel and services ancillary to such services, the supply of services shall be treated
as made in each of the respective States or Union territories, in proportion to the timespent by the boat or vessel in each such State or Union territory, which shall bedetermined on the basis of a declaration made to the effect by the service provider.

Illustration 1: A hotel chain X charges a consolidated sum of Rs.30,000/- for stay in itstwo establishments in Delhi and Agra, where the stay in Delhi is for 2 nights and the stay
in Agra is for 1 night. The place of supply in this case is both in the Union territory ofDelhi and in the State of Uttar Pradesh and the service shall be deemed to have beenprovided in the Union territory of Delhi and in the State of Uttar Pradesh in the ratio 2:1

respectively. The value of services provided will thus be apportioned as Rs.20,000/- in theUnion territory of Delhi and Rs.10,000/- in the State of Uttar Pradesh .

Illustration 2: There is a piece of land of area 20,000 square feet which is partly in StateS1 say 12,000 square feet and partly in State S2, say 8000 square feet. Site preparationwork has been entrusted to T. The ratio of land in the two states works out to 12:8 or 3:2(simplified). The place of supply is in both S1 and S2. The service shall be deemed to havebeen provided in the ratio of 12:8 or 3:2 (simplified) in the States S1 and S2 respectively.The value of the service shall be accordingly apportioned between the States.

Illustration 3: A company C provides the service of 24 hours accommodation in ahouseboat, which is situated both in Kerala and Karnataka inasmuch as the guests boardthe house boat in Kerala and stay there for 22 hours but it also moves into Karnataka for2 hours (as declared by the service provider). The place of supply of this service is in theStates of Kerala and Karnataka. The service shall be deemed to have been provided in theratio of 22:2 or 11:1 (simplified) in the states of Kerala and Karnataka, respectively. The
value of the service shall be accordingly apportioned between the States.

5. The supply of services attributable to different States or Union territories, under subsection (7) of section 12 of the said Act, in the case of-

(a) services provided by way of organisation of a cultural, artistic, sporting, scientific,educational or entertainment event , including supply of services in relation to a conference, fairexhibition, celebration or similar events; or

(b) services ancillary to the organisation of any such events or assigning of sponsorship tosuch events ,where the services are supplied to a person other than a registered person, the event is held inIndia in more than one State or Union territory and a consolidated amount is charged for supply
of such services, shall be taken as being in each of the respective States or Union territories, andin the absence of any contract or agreement between the supplier of service and recipient ofservices for separately collecting or determining the value of the services in each such State orUnion territory, as the case maybe, shall be determined by application of the generally accepted
accounting principles.

Illustration: An event management company E has to organise some promotional eventsin States S1 and S2 for a recipient R. 3 events are to be organised in S1 and 2 in S2. Theycharge a consolidated amount of Rs.10,00,000 from R. The place of supply of this service
is in both the States S1 and S2. Say the proportion arrived at by the application ofgenerally accepted accounting principles is 3:2. The service shall be deemed to have beenprovided in the ratio 3:2 in S1 and S2 respectively. The value of services provided willthus be apportioned as Rs. 6,00,000/- in S1 and Rs. 4,00,000/- in S2 .

6. The supply of services attributable to different States or Union territories, under subsection (11) of section 12 of the said Act, in the case of supply of services relating to a leasedcircuit where the leased circuit is installed in more than one State or Union territory and aconsolidated amount is charged for supply of such services, shall be taken as being in each of therespective States or Union territories, and in the absence of any contract or agreement betweenthe supplier of service and recipient of services for separately collecting or determining the valueof the services in each such State or Union territory, as the case maybe, shall be determined in
the following manner, namely:-

(a) The number of points in a circuit shall be determined in the following manner:

(i) in the case of a circuit between two points or places, the starting point or place of thecircuit and the end point or place of the circuit will invariably constitute two points;

(ii) any intermediate point or place in the circuit will also constitute a point provided thatthe benefit of the leased circuit is also available at that intermediate point;

(b) the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the number of points lying in the State or Union territory.

Illustration 1: A company T installs a leased circuit between the Delhi and Mumbaioffices of a company C. The starting point of this circuit is in Delhi and the end point ofthe circuit is in Mumbai. Hence one point of this circuit is in Delhi and another inMaharashtra. The place of supply of this service is in the Union territory of Delhi and theState of Maharashtra. The service shall be deemed to have been provided in the ratio of

1:1 in the Union territory of Delhi and the State of Maharashtra, respectively.
Illustration 2: A company T installs a leased circuit between the Chennai, Bengaluruand Mysuru offices of a company C. The starting point of this circuit is in Chennai andthe end point of the circuit is in Mysuru. The circuit alsoconnects Bengaluru. Hence onepoint of this circuit is in Tamil Nadu and two points in Karnataka. The place of supply of this service is in the States of Tamil Nadu and Karnataka. The service shall be deemed tohave been provided in the ratio of 1:2 in the States of Tamil Nadu and Karnataka,
respectively.

Illustration 3: A company T installs a leased circuit between the Kolkata, Patna andGuwahati offices of a company C. There are 3 points in this circuit in Kolkata, Patna andGuwahati. One point each of this circuit is, therefore, in West Bengal, Bihar and Assam.The place of supply of this service is in the States of West Bengal, Bihar and Assam. Theservice shall be deemed to have been provided in the ratio of 1:1:1 in the States of WestBengal, Bihar and Assam, respectively.

7. The supply of services attributable to different States or Union territories, under subsection (7) of section 13 of the said Act, in the case of services supplied in respect of goodswhich are required to be made physically available by the recipient of services to the supplier ofservices, or to a person acting on behalf of the supplier of services, or in the case of servicessupplied to an individual, represented either as the recipient of services or a person acting on
behalf of the recipient, which require the physical presence of the recipient or the person actingon his behalf, where the location of the supplier of services or the location of the recipient of service’s is outside India, and where such services are supplied in more than one State or Unionterritory, shall be taken as being in each of the respective States or Union territories, and the
proportion of value attributable to each such State and Union territory in the absence of anycontract or agreement between the supplier of service and recipient of services for separatelycollecting or determining the value of the services in each such State or Union territory, as thecase maybe, shall be determined in the following manner, namely:-

(i) in the case of services supplied on the same goods, by equally dividing the value of theservice in each of the States and Union territories where the service is performed;

(ii) in the case of services supplied on different goods, by taking the ratio of the invoice valueof goods in each of the States and Union territories, on which service is performed, as theratio of the value of the service performed in each State or Union territory;

(iii)in the case of services supplied to individuals, by applying the generally acceptedaccounting principles.

MORE……https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-4-2018-igst-english.pdf

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