Place of Supply in case of Bill to Ship to

https://www.taxclub.online/

Bill to Ship to Transaction:

As per Section 10(1)(b) of CGST Act.

"where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person" 

When goods are delivered to a party on the direction of a third person the place of supply will be the location of such third person and not where the delivery terminates.

It Can be more cleared with

Example:

JMS Traders, a dealer in Electronics Products, located in Delhi, receives an order from Muskan Traders, also located in Rajasthan. The order is for the supply of 20 Laptops, with an instruction to ship the Laptops to Jitu Electronics, located in Bihar. Jitu Electronic is a customer of Muskan Traders.

There are two parts to this transaction:

● First part of the transaction – between JMS Traders and Muskan Traders:

JMS Traders is the supplier of Laptops, and Muskan Traders is the buyer. Accordingly, JMS Traders bills the transaction to Muskan Traders, and as per the instruction, ships the goods to Jitu Electronics in Bihar.

● The second part of the transaction – between JMS Traders and Jitu Electronic :

Muskan Traders is the supplier, and Jitu Electronics is the buyer. Muskan Traders bills the transaction to Jitu Electronics, and endorses the lorry receipt (goods shipped in a lorry by JMS Traders) in favour of Jitu Electronics. This lorry receipt (LR) will enable Jitu Electronics to take the delivery of the goods. 

Over here, on the instruction from Muskan Traders, JMS Traders ships the Laptops to Jitu Electronics located in Bihar. 

FIRST PART GST IMPLICATION

Muskan Traders is deemed as the third person. Therefore, the place of supply will be the principal place of business of the third person, i.e., Rajasthan. Accordingly, JMS Traders charges IGST on billing to Muskan Traders. 

SECOND PART GST IMPLICATION

On  the other hand transaction between Muskan Traders and Jitu Electronics will also be interstate, and IGST will be charged.