Place of Supply Under GST: Why It Decides CGST/SGST vs IGST

Two invoices can carry the exact same GST rate and still be wrong in a way that matters: one charges CGST and SGST, the other should have charged IGST, and the mix-up isn't cosmetic. Which tax head applies depends on a specific legal question called place of supply, and it doesn't simply mean 'wherever my customer happens to be' or 'wherever I'm registered.' It's a defined outcome that the rules for goods and the rules for services work out differently, sometimes landing somewhere neither party expected. Getting comfortable with how it's actually determined, for both goods and services, is what keeps invoices correct the first time instead of needing a correction later.

Location of Supplier and Place of Supply Are Two Different Questions

GST compares two things to decide whether a transaction is intra-state or inter-state: the location of the supplier, which is simply where you're registered from, and the place of supply, which is a separately defined outcome that depends on the nature of the transaction. When both fall within the same state or union territory, the supply is intra-state and attracts CGST plus SGST (or UTGST). When they fall in different states, or one of them is outside India, the supply is inter-state and attracts IGST instead. The common mistake is treating this as a straight comparison between the supplier's state and the buyer's registered address, as if it were purely a matter of two GSTINs. It often works out that way, but place of supply is a rule in its own right, not just a stand-in for the recipient's billing address. For a meaningful set of transactions, goods delivered to a third party, services tied to a location, event-based services, it produces an answer that has nothing to do with where either party's GSTIN happens to be registered. A Mumbai-based agency billing a client whose head office sits in Mumbai but whose GST registration for a particular project is in Pune, for example, still has to work out place of supply for that project separately, rather than assuming the invoice is automatically intra-state just because both teams happen to be sitting in the same city that week.

For Goods: Follow Where the Movement Actually Ends

Where a supply of goods involves movement, whether by the supplier, the recipient, or someone else on their behalf, the place of supply is the location of the goods at the point that movement terminates for delivery to the recipient. In plain terms, it's usually where the goods physically end up, not the address printed on the invoice. This produces a genuinely counter-intuitive result in a bill-to-ship-to arrangement: say a buyer registered in Delhi orders goods from a supplier in Mumbai but asks for delivery directly to the buyer's own customer in Bangalore. The law treats the Delhi buyer as having received the goods at their own registered location for place-of-supply purposes, so the Mumbai-to-Delhi leg is taxed as if delivery happened in Delhi, even though the goods never physically went there, and a second, separate supply from the Delhi buyer to the Bangalore customer follows on from that point. Where goods are supplied without any movement at all, sold from a fixed location, or assembled or installed at a site, the place of supply is simply that location, wherever the goods sit or get installed at the time of supply. Imports and exports follow the same movement logic taken to its natural conclusion: the place of supply for imported goods is the location of the importer, and for exported goods it's treated as outside India, which is exactly why an export invoice is inter-state and carries IGST rather than CGST and SGST, before you even get into how that IGST is paid or avoided.

For Services: Registered or Not Is the First Fork in the Road

For a domestic supply of services, meaning both supplier and recipient are in India, the default rule starts with a simple question: is the recipient GST-registered? If yes, the place of supply is the recipient's location, regardless of where the service is actually delivered or performed. If the recipient isn't registered, the place of supply is their address on record, if the supplier actually has one, such as a billing or delivery address captured at the time of the transaction; if there's no such address on file, the place of supply defaults to the supplier's own location. That last fallback matters more than it sounds like it should for consultants, freelancers, and agencies serving individual clients across states: skip capturing the client's address, and an inter-state service to an unregistered person quietly becomes, for tax purposes, a same-state supply billed from wherever you sit. That's not necessarily wrong, but it's worth doing deliberately rather than by accident.

A Handful of Services That Skip the General Rule Entirely

A short list of services are anchored to something concrete instead of following the registered-or-not test at all, because the nature of the service makes location obvious and hard to dispute regardless of who is billing whom.

None of this is really about memorising every category; it's about building the habit of asking the right question before an invoice goes out. For goods, that question is where the movement actually ends. For services, it's whether the recipient is registered, and whether the specific service falls into one of the handful of location-anchored exceptions. Charging the wrong tax head is fixable: you pay the tax under the correct head and separately claim a refund of what went out under the wrong one, generally without interest, provided you're within the prescribed time limit. But it's an avoidable detour, and it can leave your buyer looking at an input tax credit that doesn't reconcile the way they expected, which tends to generate a phone call you'd rather not get. Running through the place-of-supply question deliberately at the time of invoicing costs a minute; unwinding it after the fact costs considerably more.