Business setup in India

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IGST applicable on Interstate ex-factory
sales
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(No Transcript)
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1. IGST to be charged in case of ex factory
sale 

• 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. 
• Honble 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

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2. IGST applicable on ex-factory sales Detailed
interpretation of case

• 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

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3. Finally IGST to be charged on Interstate
ex-factory Supply

• 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
  doesnt 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.