Subject: Place of Supply when Goods Delivered on Third Party Instruction
This case study explores the GST place of supply when goods are supplied by one party on the direction of a third person — a common scenario under the ‘Bill-to, Ship-to’ model.
Martial Motors Pvt. Ltd., registered in Karnataka, received an order from Mahindra & Mahindra Financial Services Ltd. (MMFSL), registered in Maharashtra, to deliver a car to a customer (lessee) located in Karnataka.
GST Law Analysis:
As per Section 10(1)(b) of the IGST Act, when goods are delivered to a third party on the instruction of a different person (MMFSL in this case), the supply is deemed to be made to that third person, and the place of supply is considered the principal place of business of the third person—i.e., Maharashtra.
Nature of Supply:
Since the supplier (Martial Motors) is in Karnataka and the place of supply is in Maharashtra (third party’s location), the supply is considered Inter-State, and IGST is applicable.
This is a classic ‘Bill-to, Ship-to’ GST transaction:
- Billing Party: MMFSL (Maharashtra)
- Shipping Party: Martial Motors (Karnataka)
- Delivery Location: Karnataka (end user)
Conclusion:
Under Section 10(1)(b), the place of supply is Maharashtra, and the transaction is inter-state, requiring the charging of IGST. Proper classification ensures GST compliance and prevents future tax disputes.
