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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.
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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 ;
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.
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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.
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