IGST - Place of Supply in case of civil structure support services

The relevant section in this case is Section 12 of IGST Act 2017 which deals with the "Place of supply of services where location of supplier and recipient is in India".

To get better clarity, we need to read subsection 1, 2 and 3 of Section 12 of IGST Act 2017 which are reproduced below-

Section 12 of IGST Act 2017

12(1) The provisions of this section shall apply to determine the place of supply of services where the location of supplier of services and the location of the recipient of services is in India.

12(2) The place of supply of services, except the services specified in sub-sections (3) to (14),-

(a) made to a registered person shall be the location of such person;

(b) made to any person other than a registered person shall be,-

( i ) the location of the recipient where the address on record exists; and

(ii) the location of the supplier of services in other cases.

12(3) The place of supply of services,-

(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or

(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or

(c) by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or

(d) any services ancillary to the services referred to in clauses (a), (b) and (c),

shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located:

Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.

Explanation .-Where the immovable property or boat or vessel is located in more than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.

Now to discuss your case-

You are providing civil support for installation of Silos (plant and machinery), which is directly in relation to an immovable property which is situated in Bihar.

As per Section 12(2), the place of supply to a registered person, shall be the location of such person (e.g. Telangana). But Section 12(2) is not applied in certain conditions e.g. services specified in sub-sections 12(3) to 12(14). And your service is clearly specified under Section 12(3)(a) directly in relation to an immovable property. Hence Section 12(2) will not be applied instead Section 12(3) will prevail which says that the place of supply is the location of immovable property (e.g. Bihar).

So regardless of the location of your recipient, the place of supply will be treated as Bihar and since you are also registered in Bihar. You can only issue CGST, SGST invoices.

Your recipient cannot avail this as ITC and hence they might be telling you to issue IGST invoice. You can inform them if they want this ITC, they have to take a registration in Bihar, that is the only option.