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The applicant supplies goods on an ex-factory basis, i.e., property in goods is transferred to the recipient at the factory gate itself. However, goods are taken by the recipient to another state on its own. • Accordingly, the applicant raised the question that whether such transactions should be considered as inter-state supply or intra-state supply and accordingly, should be subject to CGST & SGST or IGST. • Hon’ble AAR held that given case involves movement of goods therefore, “place of supply” shall be the place where movement of goods terminates. Accordingly, in the given case, such transactions shall be considered as inter-state supply and will be liable to IGST 1. IGST to be charged in case of ex factory sale
2.1 Brief Facts of the case • 2.2 What tax should be charged on interstate ex-factory supply? • 2.3 Legal Extracts of GST Law • 2.4 Applicatent Contention – Why CGST & SGST to be charged on ex factory sale • 2.5 Department Contention – Why IGST to be charged on ex factory sale: 2. IGST applicable on ex-factory sales : Detailed interpretation of case
For the purpose of determining the nature of transaction, it is pertinent to determine “Place of Supply” for transaction. • Given case involves movement of goods, therefore, for the purpose of determining “Place of Supply” provisions of section 10(1)(a) of IGST Act, 2017 shall apply. • As per section 10(1)(a), place of supply shall be the location of goods where movement of goods terminates for delivery to the recipient. Further, movement can be caused by the supplier or recipient or by any other person. • Therefore, section 10(1)(a) of IGST Act, 2017 clearly indicates that movement can be caused by the supplier or recipient. • Accordingly, in the given case, movement of goods doesn’t terminate at the factory gate itself rather it is terminated in another state at the billing address. Charge of movement of goods is taken by the recipient. 3. Finally IGST to be charged on Interstate ex-factory Supply