IGST — Inter-State Supply; Nature & Place of Supply; Imports/Exports — Law of Taxation Notes

IGST — Inter-State Supply; Nature & Place of Supply; Imports/Exports

Ramakrishnan of Chennai visits Mumbai and buys a washing machine there for his house in Chennai. Is it a Maharashtra sale or a Tamil Nadu sale — and which tax, CGST+SGST or IGST, applies? The answer is decided not by where he stood but by the place of supply rules, which are the whole subject of this topic.

IGST and the place-of-supply logic

IGST (Integrated Goods and Services Tax Act, 2017) is the tax the Centre levies on inter-State supplies (and imports). Its rate is roughly the sum of CGST and SGST, so a buyer pays the same total whether he buys within or across States. The Centre collects IGST and apportions it — keeping the CGST share and passing the SGST share to the destination (consuming) State, under Article 269A.

Article 269A(1): “Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.”

What is an inter-State supply (s.7 IGST)? A supply is inter-State when the location of the supplier and the place of supply are in different States/UTs. It is intra-State (s.8 IGST) when both are in the same State. Imports and exports are deemed inter-State — imports attract IGST (in addition to customs), and exports are zero-rated.

Place of supply — the deciding rule. Because GST is destination-based, the tax must go to the State where consumption happens, so the law fixes the “place of supply”:

Goods (s.10 IGST) — generally the location where the movement of goods terminates for delivery to the recipient. Where there is no movement, it is the place of the goods at delivery.
Services (s.12 IGST, domestic) — generally the location of the recipient if registered; otherwise the address on record, or the location of the supplier. Special rules apply for immovable property (where the property is), events, transport, etc.

The location of the supplier is his registered place of business. Compare it with the place of supply: same State → intra-State (CGST+SGST); different State → inter-State (IGST).

🧩 WORKED EXAMPLE — Washing machine bought in Mumbai for a Chennai home

Facts. Ramakrishnan, resident of Chennai, buys a washing machine at a Mumbai showroom and takes delivery there / has it delivered.

Rule. The place of supply of goods is where the movement terminates for delivery (s.10 IGST). If the goods are delivered and taken in Mumbai (over the counter), the supply terminates in Maharashtra; if the showroom ships them to Chennai, the movement terminates in Tamil Nadu.

Apply. (a) Over-the-counter delivery in Mumbai: supplier (Maharashtra) and place of supply (Maharashtra) are the same State → intra-State, CGST + Maharashtra SGST. (b) Shipped to Chennai: place of supply is Tamil Nadu, different from the supplier’s Maharashtra → inter-State, IGST.

Conclusion. The tax depends on where delivery terminates, not where the buyer lives. Counter sale = CGST+SGST (Maharashtra); shipment to Chennai = IGST apportioned to Tamil Nadu.

In Simple Terms: IGST is the Centre’s single tax on supplies that cross State borders (and on imports). Whether a sale is inter-State is decided by comparing the supplier’s location with the place of supply (usually where the goods are delivered / the service is received). Same State = CGST+SGST; different States = IGST, which the Centre shares with the destination State.

flowchart TD
    ROOT["Compare supplier location vs PLACE OF SUPPLY"]:::root
    ROOT --> Q{"Same State?"}:::leaf
    Q -->|"Yes"| INTRA["Intra-State: CGST + SGST"]:::sub
    Q -->|"No"| INTER["Inter-State: IGST (Centre)"]:::sub
    INTER --> AP["Apportioned to destination State (Art. 269A)"]:::sub
    ROOT --> IE["Imports = inter-State (IGST + customs)<br/>Exports = zero-rated"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef sub fill:#F2F2F2,stroke:#555,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Union of India v Mohit Minerals (P) Ltd. (2022) — IGST on ocean freight in imports; the reach of the IGST levy and place-of-supply scheme.

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