CBIC Circular No. 203/15/2023 Dt. 27 October 2023
The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular 203/15/2023 to provide clarity on determining the place of supply for specific services, namely transportation of goods, advertising services, and co-location services. This circular aim to ensure uniform interpretation and implementation of the relevant provisions.
1. Place of Supply for Transportation of Goods
Issue: With the amendment to the IGST Act, there were doubts regarding the place of supply for transportation of goods when either the service provider or the recipient is located outside India.
Clarification
After the recent amendment takes effect, the place of supply for transportation of goods (excluding mail and courier services) in cases involving international service providers or recipients will be determined according to the default rule specified in section 13(2) of the IGST Act. When the recipient’s location is known, the place of supply will be at the recipient’s location. If the recipient’s location is not readily available, the place of supply will be at the supplier’s location.
Furthermore, it’s important to note that the place of supply for transportation of goods by mail or courier remains determined by section 13(2) of the IGST Act. The same rules apply – the location of the recipient if known, and the supplier’s location if the recipient’s location is unavailable.
2. Place of Supply for Advertising Services
Issue: Advertising companies often procure space on hoardings or billboards for their clients in various states. There are different arrangements for such services, and the place of supply needs clarification.
Clarification
(i) In cases where there is a sale of space or rights to use space on an immovable property (hoarding/structure) for displaying advertisements, the place of supply will be the location of that hoarding or structure. This aligns with section 12(3)(a) of the IGST Act.
(ii) In cases where the advertising company merely avails services for displaying advertisements on hoardings or billboards without a sale of space, the place of supply will not be covered by section 12(3)(a). Instead, it falls under advertisement services, and the place of supply will be determined according to Section 12(2) of the IGST Act.
3. Place of Supply for Co-Location Services
Issue: Co-location services involve renting space for servers and IT infrastructure, and there was uncertainty about whether it constitutes renting immovable property or IT infrastructure services.
Clarification
Co-location services are considered “Hosting and IT infrastructure provisioning services.” These services encompass not only the physical space but also various IT-related services such as network connectivity, security, backup, and monitoring. Therefore, they are not solely rental of immovable property.
The place of supply for co-location services is determined by section 12(2) of the IGST Act, which is the location of the recipient of the service. However, if the agreement restricts services to basic space and infrastructure without IT-related components, it falls under the rental of immovable property, and the place of supply is the location of the immovable property.
To Read & Download the CBIC Circular No.203/15/2023 CLICK HERE
To Read & Download the CBIC Circular No.202/14/2023 CLICK HERE
To Read & Download the CBIC Circular No.204/16/2023 CLICK HERE
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