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

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.

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-

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 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?

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 orco-                                                      

ordination of construction work shall be

the location at which the immovable                         

property is located. Therefore, the place

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

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 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.

3.1  It  is  clarified  that  the  Co-location

services are in the nature of “Hosting and

information     technology      (IT)

infrastructure   provisioning    services”

(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

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.