Controversy: Place of supply when Billing Address Differs from Delivery Address in case of B2C Supply of Goods
IGST Amendment Act 2023 has amended the provisions for determining the place of supply for B2C supply of goods. According to the amendment, the place of supply of goods is determined solely based on whether the recipient’s address is recorded on the invoice.
If the recipient’s address is recorded, such an address will be considered the place of supply.
If the address is not recorded, the place of supply will be the location of the supplier.
The first question that arises here is whether mentioning the recipient’s address on the invoice is mandatory. The answer is that, per the provisions for tax invoices, mentioning the address is mandatory if the supply value exceeds Rs. 50,000. For values below Rs. 50,000, it is not mandatory unless the recipient explicitly requests it.
Now, if the delivery address is different from the billing address (i.e., the address of the recipient), what should be considered the place of supply?
Technically, since the recipient’s address is available on record and is also mentioned on the invoice, the place of supply should be the location of the billing address, not the delivery address. However, this creates an anomaly where the tax is attributed to the state of the billing address instead of the state where the goods are actually delivered.
To address this confusion, CBIC clarified [Circular No 209/3/2024-GST dated 26th June 2024] that the delivery address should be considered the place of supply. Furthermore, it clarified that the supplier must treat the delivery address as the recipient’s address for recording on the invoice and determining the place of supply.
One may appreciate that the provision was introduced to eliminate confusion in B2C transactions by making the recipient’s address (not the delivery address) the basis for determining the place of supply. However, this clarification appears to contradict the intent of the law. The explanation regarding recording the recipient’s state was meant for cases where the complete address is not available, allowing the state alone to suffice. Unfortunately, the clarification has interpreted this differently.
To a great extent, using delivery as the base will remain preferable by authorities. It will invite litigations. A further clarification by the GST council on the issue only can further resovle the issue.
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The Copy of the order is as under:
