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F. No. CBIC-20001/2/2022 - GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
*****
New Delhi, Dated the 27th December, 2022
Circular No. 184/16/2022 - GST: Clarification on the entitlement of input tax credit where the place of supply is determined in terms of the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act, 2017
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)/
The Principal Directors General/ Directors General (All) Madam/Sir,
Subject: Clarification on the entitlement of input tax credit where the place of supply is determined in terms of the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act, 2017 – reg.
Attention is invited to sub-section (8) of section 12 of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as “IGST Act”) which provides for the place of supply of services by way of transportation of goods, including by mail or courier, where location of the supplier as well as the recipient of services is in India. As per clause (a) of the aforesaid sub- section, the place of supply of services by way of transportation of goods, including by mail or courier, to a registered person shall be the location of such registered person.
However, the proviso to the aforesaid sub-section which was inserted vide the Integrated Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01.02.2019 provides that where the transportation of goods is to a place outside India, the place of supply of the said service shall be the place of destination of such goods. In such cases, as the place of supply of services, as per the proviso to sub-section (8) of section 12 of IGST Act, is the concerned foreign destination and not the State where the recipient is registered under GST, doubts are being raised regarding the availability of input tax credit of the said services to the recipient located in India.
2. In order to clarify this issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues as under:
| Sl. No. | Issue | Clarification |
| 1. | In case of supply of services by way of transportation of goods, including by mail or courier, where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, what would be the place of supply of the said services? | The place of supply of services by way of transportation of goods, including by mail or courier, where both the supplier and the recipient are located in India, is determined in terms of sub- section (8) of section 12 of the IGST Act which reads as follows: “(8) The place of supply of services by way of transportation of goods, including by mail or courier to,— (a) a registered person, shall be the location of such person; (b) a person other than registered person, shall be the location at which such goods are handed over for their transportation: Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods” Hence, in case of supply of services by way of transportation of goods, including by mail or courier, where the transportation of goods is to a place outside India, and where the supplier and recipient of the said supply of services are located in India, the place of supply is the concerned foreign destination where the goods are being transported, in accordance with the proviso to the sub-section (8) of section 12 of IGST Act, which was inserted vide the Integrated Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01.02.2019. Illustration: X is a person registered under GST in the state of West Bengal who intends to export goods to a person Y located in Singapore. X avails the services for transportation of goods by air to Singapore from an air cargo operator Z, who is also registered under GST in the state of West Bengal. In this case, the place of supply of the services provided by Z to X is the place of destination of goods i.e., Singapore, in terms of the proviso to sub-section (8) of section 12 of IGST Act. |
| 2. | In the case given in Sl. No. 1, whether the supply of services will be treated as inter-State supply or intra-State supply? | The aforesaid supply of services would be considered as inter-State supply in terms of sub- section (5) of section 7 of the IGST Act since the location of the supplier is in India and the place of supply is outside India. Therefore, integrated tax (IGST) would be chargeable on the said supply of services. In respect of the illustration given in Sl. No. 1. above, Z would charge IGST from X in terms of sub-section (5) of section 7 of the IGST Act, for supply of services by way of transportation of goods. |
| 3. | In the case given in Sl. No. 1, whether the recipient of service of transportation of goods would be eligible to avail input tax credit in respect of the said input service of transportation of goods? | Section 16 of the CGST Act lays down the eligibility and conditions for taking input tax credit whereas, section 17 of the CGST Act provides for apportionment of credit and blocked credits under circumstances specified therein. The said provisions of law do not restrict availment of input tax credit by the recipient located in India if the place of supply of the said input service is outside India. Thus, the recipient of service of transportation of goods shall be eligible to avail input tax credit in respect of the IGST so charged by the supplier, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act. In the illustration given in Sl. No. 1 above, X would be eligible to take input tax credit of IGST in respect of supply of services received by him from Z, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act. |
| 4. | In the case mentioned at Sl. No. 1, what state code has to be mentioned by the supplier of the said service of transportation of goods, where the transportation of goods is to a place outside India, while reporting the said supply in FORM GSTR-1? | The supplier of service shall report place of supply of such service by selecting State code as ‘96- Foreign Country’ from the list of codes in the drop- down menu available on the portal in FORM GSTR-1. |
3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
4. Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
📚 Frequently Asked Questions (FAQs): Circular No. 184/16/2022 - GST
Q1. What is Circular No. 184/16/2022-GST about?
Answer: Circular No. 184/16/2022 clarifies the GST treatment of transportation services where goods are transported outside India. It explains the place of supply, whether IGST applies, the eligibility of Input Tax Credit, and the correct method of reporting such transactions in GSTR-1.
Q2. What is the place of supply when goods are transported outside India?
Answer: The place of supply is the destination of the goods outside India. This is specifically provided in the proviso to Section 12(8) of the IGST Act and applies where both the supplier and recipient of transportation services are located in India.
Q3. Is the transportation service treated as an inter-State supply?
Answer: Yes. Since the supplier is located in India and the place of supply is outside India, the transaction qualifies as an inter-State supply under Section 7(5) of the IGST Act. Therefore, IGST is chargeable on the service.
Q4. Can the exporter claim Input Tax Credit on the IGST charged?
Answer: Yes. The circular clearly states that the recipient is eligible to claim ITC on the IGST charged for transportation services, provided the general conditions under Sections 16 and 17 of the CGST Act are satisfied.
Q5. Why is ITC allowed even though the place of supply is outside India?
Answer: Because the provisions governing Input Tax Credit do not prohibit credit merely on the ground that the place of supply is outside India. If the service is received for business purposes and all statutory conditions are fulfilled, ITC remains available.
Q6. Does this clarification apply only to courier services?
Answer: No. It applies to transportation of goods generally, including transportation by mail or courier, where both the supplier and recipient are located in India and the goods are transported to a place outside India.
Q7. Which GST should the transporter charge?
Answer: The transporter should charge IGST because the transaction is treated as an inter-State supply under Section 7(5) of the IGST Act, even if both supplier and recipient are located in the same State.
Q8. What State code should be used while filing GSTR-1?
Answer: The supplier should report the place of supply by selecting State Code 96 – Foreign Country in FORM GSTR-1. This ensures proper reporting of export transportation services under GST.
Q9. Does this circular amend the GST law?
Answer: No. The circular does not amend the law. It clarifies how the existing provisions of the IGST Act and the CGST Act should be interpreted and applied in relation to export transportation services.
Q10. Who benefits from this clarification?
Answer: Exporters, logistics companies, courier operators, freight forwarders, customs consultants, chartered accountants, and GST practitioners all benefit from the certainty provided by this clarification.
Q11. Is ITC available automatically?
Answer: No. ITC is available only if the recipient satisfies the normal conditions prescribed under Sections 16 and 17 of the CGST Act, such as possession of a valid tax invoice, receipt of the service, and other applicable requirements.
Q12. Why is this circular important for exporters?
Answer: The circular removes uncertainty regarding ITC on export freight services and provides a clear compliance framework. This helps exporters claim legitimate credits confidently while ensuring proper GST reporting and reducing the risk of future disputes.
Conclusion
In simple terms, Circular No. 184/16/2022 confirms that an Indian exporter does not lose the benefit of Input Tax Credit merely because the place of supply of transportation services is outside India. While the destination of the goods determines the place of supply under the proviso to Section 12(8) of the IGST Act, the exporter can still claim ITC on the IGST charged, provided the general eligibility conditions are fulfilled.
Download PDF: Circular No. 184/16/2022 - GST
More Information: https://taxinformation.cbic.gov.in/
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