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Circular No. 203/15/2023-GST
F. No. 20/06/22/2023-GST-CBEC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs,
GST Policy Wing
*****
New Delhi, dated the 27th October, 2023
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification regarding determination of place of supply in various cases-reg.
Representations have been received from the trade and field formations seeking
clarification on certain issues with respect to determination of place of supply in case of –
i. supply of service of transportation of goods, including through mail and courier;
ii. supply of services in respect of advertising sector; and
iii. supply of the “co-location services”.
2.
In order to clarify the issue and to ensure uniformity in the implementation of the
provisions of law across the field formations, the Board, in exercise of its powers conferred by
section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to
as “CGST Act”), hereby clarifies the issues as under:
S.No.
Issue
Clarification
A. Place of supply in case of supply of service of transportation of goods, including
through mail and courier
1.
Sub-section (9) of section 13 of
Integrated Goods and Services Tax Act,
2017 (hereinafter referred to as “IGST
Act”) has been omitted vide section 162
1.1 Place of supply of services where
location of supplier or location of
recipient is outside India is determined as
per section 13 of the IGST Act. Sub-
of Finance Act, 2023 which will come
into effect from 01.10.2023. After the
said amendment, doubts have been
raised as to whether the place of supply
in case of service of transportation of
goods, including through mail and
courier, in cases where location of
supplier of services or location of
recipient of services is outside India,
will be determined as per sub-section
(2) of section 13 of IGST Act or will be
determined as per sub-section (3) of
section 13 of IGST Act.
section (9) of section 13 of IGST Act
provided that where one of the supplier of
the services or the recipient of services is
located outside India, the place of supply
of services of transportation of goods,
other than by way of mail or courier,
shall be the place of destination of such
goods. The said sub-section has been
omitted vide section 162 of Finance Act,
2023 which will come into effect from
01.10.2023. It is hereby clarified that
after the said amendment comes into
effect, the place of supply of services of
transportation of goods, other than
through mail and courier, in cases where
location of supplier of services or
location of recipient of services is outside
India, will be determined by the default
rule under section 13(2) of IGST Act and
not as performance based services under
sub-section (3) of section 13 of IGST
Act. Accordingly, in cases where
location of recipient of services is
available, the place of supply of such
services shall be the location of recipient
of services and in cases where location of
recipient of services is not available in
the ordinary course of business, the place
of supply shall be the location of supplier
of services.
1.2 Further, it is also mentioned that the
place of supply in case of service of
transportation of goods by mail or courier
was not covered under the provisions of
sub-section (9) of section 13 before the
said sub-section was amended/ omitted.
Therefore, on the same principles as
mentioned above, the place of supply in
case of service of transportation of goods
by mail or courier will continue to be
determined by the default rule under
section 13(2) of IGST Act i.e. in cases
where location of recipient of services is
available, the place of supply of such
services shall be the location of recipient
of services and in cases where location of
recipient of services is not available in
the ordinary course of business, the place
of supply shall be the location of supplier
of services.
B. Place of supply in case of supply of services in respect of advertising sector
2.
Advertising
companies
are
often
involved
in
procuring
space
on
hoardings/ bill boards erected and
mounted on buildings/land, in different
States,
from
various
suppliers
(“vendors”) for providing advertisement
services to its corporate clients. There
may
be
variety
of
arrangements
between the advertising company and
its vendors as below:
(i) There may be a case wherein there is
supply (sale) of space or supply (sale)
of rights to use the space on the
hoarding/
structure
(immovable
property) belonging to vendor to the
client/advertising company for display
of their advertisement on the said
hoarding/ structure. What will be the
place of supply of services provided by
the vendor to the advertising company
in such case?
(ii) There may be another case where
the advertising company wants to
display its advertisement on hoardings/
bill boards at a specific location availing
the
services
of
a
vendor.
The
2.1 It is clarified that the place of supply
in the case supply of services in respect
of advertising sector, in the cases referred
in (i) and (ii), shall be determined as
below:
2.2 Place of supply in Case (i): The
hoarding/structure erected on the land
should be considered as immovable
structure or fixture as it has been
embedded in earth. Further, place of
supply of any service provided by way of
supply (sale) of space on an immovable
property or grant of rights to use an
immovable property shall be governed by
the provisions of section 12(3)(a) of
IGST Act. As per section 12(3)(a) of
IGST Act, the place of supply of services
directly in relation to an immovable
property, including services provided by
architects, interior decorators, surveyors,
engineers and other related experts or
estate agents, any service provided by
way of grant of rights to use immovable
property or for carrying out or co-
ordination of construction work shall be
the location at which the immovable
property is located. Therefore, the place
responsibility
of
arranging
the
hoardings/ bill boards lies with the
vendor who may himself own such
structure or may be taking it on rent or
rights to use basis from another person.
The vendor is responsible for display of
the advertisement of the advertisement
company at the said location. During
this entire time of display of the
advertisement,
the
vendor
is
in
possession of the hoarding/structure at
the
said
location
on
which
advertisement is displayed and the
advertising company is not occupying
the space or the structure.
In this case, what will be the place of
supply of such services provided by the
vendor to the advertising company?
of supply of service provided by way of
supply of sale of space on hoarding/
structure for advertising or for grant of
rights to use the hoarding/ structure for
advertising in this case would be the
location where such hoarding/ structure is
located.
2.3 Place of supply in Case (ii): In this
case, as the service is being provided by
the vendor to the advertising company
and there is no supply (sale) of space/
supply (sale) of rights to use the space on
hoarding/structure (immovable property)
by the vendor to the advertising company
for display of their advertisement on the
said display board/structure, the said
service does not amount to sale of
advertising space or supply by way of
grant of rights to use immovable
property. Accordingly, the place of
supply of the same shall not be covered
under section 12(3)(a) of IGST Act.
Vendor is in fact providing advertisement
services by providing visibility to an
advertising company’s advertisement for
a specific period of time on his structure
possessed/taken on rent by him at the
specified
location.
Therefore,
such
services provided by the Vendor to
advertising company are purely in the
nature of advertisement services in
respect of which Place of Supply shall be
determined in terms of Section 12(2) of
IGST Act.
C. Place of supply in case of supply of the “co-location services”
3.
Co-location is a data center facility in
which a business/company can rent
space for its own servers and other
computing hardware along with various
3.1 It is clarified that the Co-location
services are in the nature of “Hosting and
information
technology
(IT)
infrastructure
provisioning
services”
other
bundled
services
related
to
Hosting and information technology
(IT) infrastructure.
A business/company who avails the co-
location services primarily seek security
and upkeep of its server/s, storage and
network hardware; operating systems,
system software and may require to
interact with the system through a web-
based interface for the hosting of its
websites or other applications and
operation of the servers.
In this respect, various doubts have
been raised as to
i. whether supply of co-location
services are renting of immovable
property service (as it involves
renting
of
space
for
keeping/storing
company’s
hardware/servers) and hence the
place of supply of such services is
to be determined in terms of
provision of clause (a) of sub-
section (3) of Section 12 of the
IGST Act which is the location
where the immovable property is
located; or
ii. whether the place of supply of
such services is to be determined
by the default place of supply
provision under sub-section (2) of
section 12 of the IGST Act as the
supply of service is Hosting and
Information
Technology
(IT)
Infrastructure
Provisioning
services
involving
providing
services of hosting the servers and
related hardware, security of the
said hardware, air conditioning,
uninterrupted power supply, fire
(S.No. 3 of Explanatory notes of SAC-
998315). Such services do not appear to
be limited to the passive activity of
making immovable property available to
a customer as the arrangement of the
supply of colocation services not only
involves providing of a physical space
for server/network hardware along with
air conditioning, security service, fire
protection system and power supply but it
also involves the supply of various
services by the supplier related to hosting
and information technology infrastructure
services
like
network
connectivity,
backup facility, firewall services, and
monitoring and surveillance service for
ensuring continuous operations of the
servers and related hardware, etc. which
are
essential
for
the
recipient
business/company to interact with the
system through a web based interface
relating to the hosting and operation of
the servers.
3.2 In such cases, supply of colocation
services cannot be considered as the
services
of
supply
of
renting
of
immovable property. Therefore, the place
of supply of the colocation services shall
not be determined by the provisions of
clause (a) of sub-section (3) of Section 12
of the IGST Act but the same shall be
determined by the default place of supply
provision under sub-section
(2) of
Section 12 of the IGST Act i.e. location
of recipient of co-location service.
3.3 However, in cases where the
agreement between the supplier and the
recipient
is
restricted
to
providing
protection
system,
network
connectivity,
backup
facility,
firewall
services,
24
hrs.
monitoring
and
surveillance
service for ensuring continuous
operations of the servers and
related hardware, etc.
physical space on rent along with basic
infrastructure, without components of
Hosting and Information Technology (IT)
Infrastructure Provisioning services and
the further responsibility of upkeep,
running, monitoring and surveillance, etc.
of the servers and related hardware is of
recipient of services only, then the said
supply of services shall be considered as
the supply of the service of renting of
immovable property. Accordingly, the
place of supply of these services shall be
determined by the provisions of clause
(a) of sub-section (3) of Section 12 of the
IGST Act which is the location where the
immovable property is located.
3.
Difficulty, if any, in implementation of the above instructions may please be brought to
the notice of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
