Principles for Determining Supply of Goods/Services in the Course of Interstate Trade or Commerce

The purpose of this article is to spread awareness about the soon to be implemented Goods and Service Tax in India. This article highlights the key principles which help in determining whether a particular supply would be considered an intra state supply or inter- state supply. This differentiation is very important due various reasons including non-availability of composition scheme in case of interstate supply, mandatory registration for interstate supply etc. Place of supply will be dealt in a different article.

Supplies of goods and/or services in the course of inter-State trade or commerce

1. Supply of goods in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in different States.
2. Supply of services in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in different States.
3. Supply of goods in the course of import into the territory of India till they cross the customs frontiers of India shall be deemed to be a supply of goods in the course of inter-State trade or commerce. (High Sea sales/Import of goods)
4. Supply of services in the course of import into the territory of India shall be deemed to be a supply of services in the course of inter-State trade or commerce. (Import of services)
5. Supply of goods and/or services, when the supplier is located in India and the place of supply is outside India, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. (Export of Goods/Services).
6. Supply of goods and/ or services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. (SEZ Supply).
7. Any supply of goods and/or services in the taxable territory, not being an intra-State supply shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce.

Supplies of goods and/or services in the course of intra-State trade or commerce

1. Intra-State supply of goods means any supply of goods where the location of the supplier and the place of supply are in the same State.
2. Intra-State supply of services means any supply of services where the location of the supplier and the place of supply are in the same State.
3. SEZ Supply always inter-State supply.

The author is a fellow member of the Institute of Chartered Accountants of India and also a qualified Company Secretary. The author has also done DISA(ICAI), certificate on IFRS (ICAI),  Certificate on Forex and Treasury Management (ICAI), Certificate on Forensic Accounting and Fraud Prevention (ICAI). The author practices as a Chartered Accountant under the name and style of Rishabh Kumar Barmecha and Associates and is an expert in auditing, financial investigation, direct and indirect taxation. The author can be reached at rishabhkumarbarmecha@gmail.com or +91 9007909221 or Twitter @CARKBarmecha.

CA Rishabh Kumar Barmecha