Interstate supply of services
This query is : Resolved
18 September 2017
A registered dealer in Maharashtra carrying out Operation & Maintenance work for registered customer at Hubli (Karnataka). All the work is carried out at site in Hubli with the help of local labour. Can he raise Invoice in Maharashtra for Labour Charges service and charge IGST ?
18 September 2017
Yes, he will have to charge IGST
18 September 2017
Sir Thanks. But my query is that keeping in view (default rule for Place Of Provision Of Service) Fixed establishment concept , would the location of the Supplier in Maharashtra would get shifted to Karnataka and the supply of service would attract CGST & SGST ?
01 August 2024
In the context of GST, the place of supply and the applicable tax treatment for services can indeed be influenced by the nature of the service and where it is provided. Let’s address your query in detail:
### **Interstate Supply of Services and GST**
1. **Place of Supply of Services:**
- **Default Rule:** The default rule for determining the place of supply of services is that the place of supply is the location where the service is provided or where the service is received.
- **Fixed Establishment Concept:** For certain types of services, the place of supply is determined based on the location of the fixed establishment of the supplier or recipient. However, for most services, especially operational and maintenance services, the place of supply would be where the service is physically provided or where the recipient is located.
2. **Operational and Maintenance Services:**
- **Location of Service:** In your case, the operational and maintenance work is carried out at a site in Hubli (Karnataka), even though the supplier is located in Maharashtra.
- **Tax Treatment:** Since the work is physically performed in Karnataka, the place of supply for these services is Karnataka. Therefore, the supply of services is considered an intrastate supply in Karnataka.
3. **Invoice and Taxation:**
- **IGST vs. CGST/SGST:** For services where the place of supply is within the same state as the recipient (in this case, Karnataka), you should charge CGST and SGST.
- **Interstate Supply:** If the place of supply was Maharashtra, then IGST would be applicable. However, since the service is performed in Karnataka, you should not raise the invoice from Maharashtra and charge IGST. Instead, you should issue the invoice from Karnataka and charge CGST and SGST.
### **Fixed Establishment Concept and Its Relevance:**
- **Fixed Establishment:** The fixed establishment concept mainly applies to cases where a business has a stable place of business with sufficient human and technical resources to provide services. In your case, the service is provided at the location of the work (Hubli), and the fixed establishment of the supplier in Maharashtra does not change the place of supply.
- **Practical Application:** Therefore, irrespective of the location of the supplier’s fixed establishment, the location where the service is provided (Hubli, Karnataka) determines the tax treatment. Hence, CGST and SGST are applicable in Karnataka.
### **Summary:**
For the operational and maintenance work carried out in Hubli (Karnataka):
- **Invoice should be issued as per Karnataka GST regulations.**
- **You need to charge CGST and SGST, not IGST.**
- **The fixed establishment of the supplier in Maharashtra does not alter the place of supply, which is determined by where the service is physically provided.**
Make sure to comply with local GST regulations and consult with a tax advisor for specific guidance based on your business operations.
### **Interstate Supply of Services and GST**
1. **Place of Supply of Services:**
- **Default Rule:** The default rule for determining the place of supply of services is that the place of supply is the location where the service is provided or where the service is received.
- **Fixed Establishment Concept:** For certain types of services, the place of supply is determined based on the location of the fixed establishment of the supplier or recipient. However, for most services, especially operational and maintenance services, the place of supply would be where the service is physically provided or where the recipient is located.
2. **Operational and Maintenance Services:**
- **Location of Service:** In your case, the operational and maintenance work is carried out at a site in Hubli (Karnataka), even though the supplier is located in Maharashtra.
- **Tax Treatment:** Since the work is physically performed in Karnataka, the place of supply for these services is Karnataka. Therefore, the supply of services is considered an intrastate supply in Karnataka.
3. **Invoice and Taxation:**
- **IGST vs. CGST/SGST:** For services where the place of supply is within the same state as the recipient (in this case, Karnataka), you should charge CGST and SGST.
- **Interstate Supply:** If the place of supply was Maharashtra, then IGST would be applicable. However, since the service is performed in Karnataka, you should not raise the invoice from Maharashtra and charge IGST. Instead, you should issue the invoice from Karnataka and charge CGST and SGST.
### **Fixed Establishment Concept and Its Relevance:**
- **Fixed Establishment:** The fixed establishment concept mainly applies to cases where a business has a stable place of business with sufficient human and technical resources to provide services. In your case, the service is provided at the location of the work (Hubli), and the fixed establishment of the supplier in Maharashtra does not change the place of supply.
- **Practical Application:** Therefore, irrespective of the location of the supplier’s fixed establishment, the location where the service is provided (Hubli, Karnataka) determines the tax treatment. Hence, CGST and SGST are applicable in Karnataka.
### **Summary:**
For the operational and maintenance work carried out in Hubli (Karnataka):
- **Invoice should be issued as per Karnataka GST regulations.**
- **You need to charge CGST and SGST, not IGST.**
- **The fixed establishment of the supplier in Maharashtra does not alter the place of supply, which is determined by where the service is physically provided.**
Make sure to comply with local GST regulations and consult with a tax advisor for specific guidance based on your business operations.
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