How to Determine the Place of Supply of Transportation Services

Under Goods and Service Tax, ‘supply’ will be the single taxable event and the major transformation that will occur is ‘Destination based consumption tax’, where tax will accrue to the state in which the supply is consumed. The place of supply will determine the type of tax to be levied on the supply.
Determination of place of supply of goods is quite simple, as they are tangible. You can refer our earlier blogs on the same- Determining place of supply when there is movement of goods and Determining place of supply when there is no movement of goods.
Determination of place of supply of services is more complex, due to its intangibility. While general rules for determining place of supply of services are formulated, specific rules have been laid down for determining the place of supply of many services. In this blog, we’ll understand how to determine the place of supply of transportation services.
Transportation services are of 3 types:

• Transportation of goods
• Transportation of passengers
• Services supplied on board a conveyance

Let us understand how to determine the place of supply in case of each of these services.

Type of service

Type of recipient

Place of supply

Example

Transportation of goods

Registered Person

Location of the recipient

Rolf Transports, a goods transportation company based in Tamil Nadu, provides transportation services to Super Cars Ltd, an automobile manufacturer, registered in Tamil Nadu
 
Location of supplier: Tamil Nadu
Place of supply: Tamil Nadu
This is an intrastate supply and the taxes applicable are CGST + SGST

Unregistered person

Location at which the goods are handed over for transportation

Rohan Couriers, a courier agency registered in Maharashtra, provides courier services to an unregistered customer, Mr. Ram, in Karnataka, to deliver documents from Maharashtra to Karnataka.
 
Location of supplier: Maharashtra
Place of supply: The location at which the documents are handed over for transport is Maharashtra
This is an intrastate supply and the taxes applicable are CGST + SGST

Transportation of passengers

Registered Person

Location of the recipient

Aravind Apparels, registered in Gujarat, purchase flight tickets from TranAir Ltd., registered in Delhi, for travel from Delhi to Gujarat.
 
Location of supplier: Delhi
Place of supply: Gujarat
This is an interstate supply and the tax applicable is IGST

Unregistered person

Place where the passenger embarks on the conveyance for a continuous journey

For passenger transportation service provided to unregistered persons, there can be 3 cases:
 
1.       Onward journey
Example: Mr. Ram, an unregistered customer in West Bengal, purchases flight tickets from Tran Air Ltd, registered in West Bengal, for travel from West Bengal to Delhi
Location of supplier: West Bengal
Place of supply: Mr. Ram will embark on the journey in West Bengal. Hence, the place of supply is West Bengal.
This is an intrastate supply and the taxes applicable are CGST + SGST
2.       Return journey
Return journey will be treated as a separate journey, even if the tickets for onward and return journey are issued at the same time
Example: Mr. Ram, in the above example, purchases flight tickets for the return journey from Delhi to West Bengal from Tran Air Ltd. The ticket is issued by Tran Air’s Delhi registration.
Location of supplier: Delhi
Place of supply: The point of embarkation for the return journey is Delhi. Hence, the place of supply is Delhi
This is an intrastate supply and the taxes applicable are CGST + SGST.
3.       When the point of embarkation is not known at the time of issue of ticket
In this case, place of supply will be the location of the supplier
Example: Tran Air Ltd, registered in West Bengal, issues a pass for one-way anywhere travel in India to Mr. Ram.
Location of supplier: West Bengal
Place of supply: Place of supply will be the location of supplier, i.e. West Bengal
Hence, it is an intrastate supply and the taxes applicable will be CGST + SGST

Services supplied on board a conveyance

Not applicable

Location of the first scheduled point of departure of the conveyance for the journey

Tran Air Ltd, registered in Delhi, supplies food on board its flight from Delhi to Kerala via Mumbai.
 
For the catering service provided by Tran Air Ltd,
Location of supplier: Delhi
Place of supply: As the first point of departure of the flight is Delhi, the place of supply is Delhi.
This is an intrastate supply and the taxes applicable are CGST + SGST

Also read: Place of supply of telecommunication and financial services