GST on Ex-Factory sale

As per sec 10(1)(a) of IGST Act, where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.

We can study the provision in three different parts:
1) Supply involves movement of goods
2) Movement of goods may be by suppliers, recipients or any other person
3) Point of supply is the location where movement of goods terminates for delivery to recipient.

Provision clearly says that point of supply is the point/location where movement of goods terminates for delivery to recipients. Provision also say that movement of goods may be by suppliers or recipients or any other person but the Point of Supply shall be decided by the place where movement of goods terminates.

When the movement of goods is undertaken by suppliers, it will be the case of FOR delivery and the place of supply shall be the place of recipient. In this case, if the place of recipient is in other state then IGST will be applicable.

When the movement of goods is undertaken by recipient means delivery is taken ex factory of suppliers, then movement is undertaken by recipient and it terminates when the goods are received by recipient at his place and not at the time when the goods are handed over to the recipient at the place of supplier. Sec 10 clearly specify that location shall be decided with the termination of movement of goods not with the delivery /hand over of goods to the recipient at the place of suppliers. So if the location of the recipient is in the different state IGST shall be applicable and not SGST.

This is my view.

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Navneet Munot