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IV

IGST Act · Chapter IV

Determination of Nature of Supply

3 sections authoredIGST Act, 2017

BHARAT TAX

Treatise on the Integrated Goods and Services Tax Act, 2017

CGST · IGST · UTGST · DGST · Rules thereunder

INTEGRATED GOODS AND SERVICES TAX ACT, 2017

Chapter IV — DETERMINATION OF NATURE OF SUPPLY (Sections 7-9)

Chapter Index — fourteen-section practitioner architecture

Effective from 1 July 2017 (IGST Act, 2017) | First Edition | May 2026

[Inter-State / Intra-State / Territorial Waters classification framework — the gateway to whether IGST or CGST+SGST attaches]

1. Scope at a Glance

Chapter IV of the IGST Act (ss. 7, 8 and 9) creates the classification gateway that determines whether a supply attracts IGST (inter-State) or CGST+SGST (intra-State). Section 7 defines inter-State supply for goods and services, treats imports as inter-State, and includes a catch-all for SEZ supplies, exports, and residual non-intra-State supplies. Section 8 defines intra-State supply with provisos carving out SEZ supplies, imports until customs frontiers, and tourist supplies, plus Explanation 1 distinct-person fiction and Explanation 2 branch-deemed-establishment rule. Section 9 deems territorial-waters supplies to be in the adjoining coastal State / UT.

2. Section-by-Section Synopsis

SECTION

OPERATIVE SYNOPSIS

Section 7 — Inter-State supply

Five sub-sections. (1) Inter-State goods — location-of-supplier and POS in different States/UTs. (2) Imports until customs frontiers = inter-State. (3) Inter-State services — same location-vs-POS test. (4) Imports of services = inter-State. (5) Catch-all — (a) supplier in India + POS outside India; (b) SEZ supplies; (c) residual non-intra-State.

Section 8 — Intra-State supply

Two sub-sections + 2 Explanations. (1) Intra-State goods — location-of-supplier and POS in same State/UT; provisos exclude SEZ / imports till customs frontiers / tourist supplies. (2) Intra-State services — same-State test; SEZ proviso excludes. Explanation 1 distinct-person fiction (Indian + foreign establishment / cross-State / cross-PoB within same State post FA 2018). Explanation 2 branch-deemed-establishment.

Section 9 — Territorial waters

Single non-obstante provision. Supplier or POS in territorial waters (12 nm from baseline) deemed in adjoining coastal State / UT (nearest baseline point). Channels offshore supplies into standard inter-State / intra-State framework.

3. Key Doctrines

DOCTRINE

SOURCE / APPLICATION

Location-vs-POS classification rule

s. 7(1)/(3) + s. 8(1)/(2) — single mechanical test for inter-State vs intra-State.

Imports-as-inter-State

s. 7(2) goods + s. 7(4) services. Constitutional foundation Article 269A(1) deeming.

SEZ-always-inter-State

s. 7(5)(b) + s. 8(1) proviso (i) + s. 8(2) proviso. Channels SEZ into zero-rated framework via s. 16.

Export-of-services inter-State

s. 7(5)(a) read with s. 2(6) five-limb test.

Residual catch-all

s. 7(5)(c) — non-intra-State residual = inter-State. Important for novel transactions.

Distinct-person fiction (Explanation 1)

Indian + foreign establishment / cross-State / cross-PoB same State (post FA 2018) = distinct persons. Cascading effect on s. 2(6)(v) export defeat and s. 25(4)/(5) registration.

Branch-deemed-establishment (Explanation 2)

Branches / agencies / representational offices = deemed establishments.

Coastal-State deeming (s. 9)

Territorial-waters supplies deemed in adjoining coastal State per nearest-baseline-point test.

Customs-frontiers boundary

s. 7(2) + s. 8(1) proviso (ii) — imports inter-State only till customs frontiers; post-clearance domestic supply is standard s. 7/8 analysis.

Section 19 wrongly-paid refund

Honest mis-classification (inter-State as intra-State or vice versa) corrected via s. 19 refund + re-payment route without time-limit penalty.

4. Amendment Timeline

DATE / INSTRUMENT

CHANGE

01.07.2017 — Notification 3/2017-IT

Chapter IV brought into force on appointed-day along with substantive IGST provisions.

29.08.2018 — IGST (Amendment) Act 2018 (Act 32 of 2018)

Section 4 of the Amendment Act omitted "being a business vertical" from Explanation 1(iii) to s. 8 w.e.f. 01.02.2019 — consequent to omission of business-vertical concept under CGST. Permits cross-PoB-within-same-State distinct-person treatment without business-vertical restriction.

Periodic CBIC circulars

Circular 184/2022, 199/2023, 209/2024 — clarifications on POS application within Chapter IV/V framework.

Mohit Minerals — 19.05.2022

SC ruling on IGST charge scope — affects inter-State / intra-State classification of composite supplies.

Circular 161/2021-GST

Subsidiary-parent distinct-person clarification — interface with Explanation 1 to s. 8.

Circular 199/2023-GST

HO-BO cross-charge clarification for services — distinct-person service-vs-allocation framework.

5. Forms — Direct or Indirect Use in Chapter IV

FORM

PURPOSE / TRIGGER

Tax invoice (Rule 46)

Invoice must show POS for inter-State (with IGST) or State for intra-State (with CGST+SGST).

GSTR-1 Tables 4A/B (intra-State), 5A (inter-State B2B), 7A/B (B2C)

POS-wise / State-wise reporting based on s. 7/8 classification.

GSTR-3B Table 3.1(a), 3.1(b), 3.1(c), 3.2

Outward taxable / zero-rated / exempt / inter-State-to-unregistered.

E-way bill (Form GST EWB-01)

Required for inter-State movement above Rs. 50,000; State-specific thresholds for intra-State.

Bill of Entry (Customs)

Imports until customs frontiers — s. 7(2) IGST + s. 5(1) proviso.

Form INV-01 (e-invoice)

E-invoicing for B2B / exports — POS captured in IRN data.

LUT (RFD-11)

For exports under s. 7(5)(a) without payment of IGST.

RFD-01

Refund for zero-rated supplies including SEZ under s. 7(5)(b).

ASMT-10 / ASMT-11

Scrutiny notices for mis-classification.

6. Due-Date / Compliance-Calendar Footprint

TRIGGER

TIMELINE

Tax invoice issuance

For goods — before or at removal (s. 31(1) CGST); for services — within 30 days of supply (s. 31(2) CGST).

GSTR-1 monthly

11th of following month (regular); QRMP IFF 13th.

GSTR-3B monthly

20th / 22nd / 24th of following month.

E-way bill validity

Per distance (1 day per 200 km); inter-State and intra-State same framework.

Bill of Entry filing

At time of customs clearance.

LUT renewal

Annually before 1 April.

Refund applications

Within 2 years of relevant date.

7. Filing Frequency / Reporting Triggers

  • Monthly GSTR-1 — POS-wise inter-State reporting.
  • Monthly GSTR-3B — tax classification by inter-State / intra-State.
  • Quarterly QRMP option for small taxpayers.
  • Annual GSTR-9 — reconciliation with audited financials including POS-wise breakdown.
  • E-way bill — generated at time of movement.
  • Bill of Entry — at customs clearance.
  • GSTR-5A — monthly for OIDAR (s. 14 IGST + Chapter IV inter-State context).

8. CBIC Circulars / Notifications Summary

INSTRUMENT

SUBJECT

Notification 3/2017-Integrated Tax

Commencement of Chapter IV on 01.07.2017.

Notification 18/2017-Integrated Tax (Rate)

SEZ supplies exemption — operationalises s. 7(5)(b).

IGST (Amendment) Act 2018

Omission of "business vertical" from Explanation 1(iii) to s. 8.

Circular 33/2018-Customs

High-seas sales — s. 7(2) treatment.

Circular 184/16/2022-GST

Bill-to-ship-to + POS for transportation.

Circular 161/17/2021-GST

Subsidiary-parent distinct-person for export-of-services.

Circular 199/11/2023-GST

HO-BO cross-charge for services (distinct-person framework).

Circular 209/3/2024-GST

Comprehensive POS clarifications.

Circular 27/01/2018-GST

Government / PSU supplies including offshore.

Circular 80/54/2018-GST

Petroleum operations comprehensive clarification.

Notification 17/2017-Central Tax

Common e-way bill — inter-State and intra-State framework.

9. Sectoral Pointers — Chapter IV Application

SECTOR

POINTERS

Multi-State manufacturers / traders

Inter-State branch transfers + distinct-person + Rule 28 valuation. POS-wise GSTR-1 reporting critical.

SEZ developers / units

s. 7(5)(b) + s. 8(1) proviso (i) — always inter-State. LUT / IGST-paid / Notif 18 exemption choice.

Importers

s. 7(2) imports inter-State till customs frontiers. Post-clearance domestic supply standard s. 7/8 analysis.

IT / ITES exporters

s. 7(5)(a) + s. 2(6) five-limb. Circular 161/2021 for subsidiary-parent.

Multi-PoB enterprises

Post FA 2018 — any cross-PoB within same State is distinct person.

HO-BO cross-charges

Circular 199/2023 — actual service vs cost allocation distinction.

Offshore oil/gas (ONGC, Reliance)

s. 9 + coastal-State allocation + petroleum-rate concessions.

Maritime / shipping

s. 9 deeming + s. 12(8)/(9) transportation rules.

Foreign companies with Indian branches

Explanation 2 deems Indian branch = establishment; cross-border supplies analysed via distinct-person + s. 7(5)(a) export framework.

Tourist retail (s. 15 framework)

s. 8(1) proviso (iii) excludes from intra-State; channels to tourist refund route.

Bill-to-ship-to (third-party delivery)

Circular 184/2022 + s. 10(1)(b); POS = principal place of business of bill-to party.

10. Practitioner Quick-Reference

SITUATION

QUICK ANSWER / SECTION

Inter-State or intra-State?

Same State location-of-supplier and POS = intra-State (s. 8); different = inter-State (s. 7).

Import classification?

s. 7(2) goods + s. 7(4) services = inter-State.

SEZ supply within same State?

Still inter-State per s. 7(5)(b) + s. 8(1) proviso (i).

HO-BO cross-charge taxable?

Yes if actual service supply per Circular 199/2023; not for mere cost allocation.

Foreign-branch supply of services?

Explanation 2 + Circular 161/2021 — supply between subsidiary-parent is export if other s. 2(6) conditions met.

Offshore drilling-rig supply?

s. 9 deems to adjoining coastal State; standard s. 7/8 analysis thereafter.

Pre vs post FA 2018 same-State multi-PoB?

Pre — business-vertical needed; post 01.02.2019 — any cross-PoB is distinct.

Tourist supplies?

s. 8(1) proviso (iii) excludes from intra-State; channels to s. 15 tourist refund.

Mis-classification correction?

s. 19 IGST refund + re-payment without time-limit penalty.

Catch-all for novel supplies?

s. 7(5)(c) residual inter-State characterisation.

11. Cross-Chapter Coordination

  • Chapter I (ss. 1-2) — definitional foundation; location concepts in s. 2(14)/(15) feed Chapter IV classification.
  • Chapter II (ss. 3-4) — officer authority for Chapter IV administration; cross-empowerment.
  • Chapter III (ss. 5-6) — Chapter IV classification triggers s. 5 IGST or CGST+SGST; s. 6 exemptions.
  • Chapter V (ss. 10-14) — POS rules feed Chapter IV classification; s. 9 deeming + POS for territorial-waters supplies.
  • Chapter VI (s. 15) — tourist refund route activated by s. 8(1) proviso (iii) exclusion.
  • Chapter VII (s. 16) — zero-rated supply for exports + SEZ classified inter-State under s. 7(5)(a)/(b).
  • Chapter VIII (ss. 17-19) — apportionment of IGST collected on Chapter IV inter-State supplies; s. 19 wrongly-paid refund.
  • Chapter IX (ss. 20-25) — application of CGST including registration s. 24(i) for inter-State suppliers.
  • CGST Chapter III (ss. 7-11A) — s. 7 supply, s. 8 composite/mixed (principal-supply rate), s. 9 intra-State charge, s. 25(4)/(5) distinct-person registration.
  • CGST Chapter IV (ss. 12-15) — time of supply (anchors rate); value (s. 15 for base).
  • CGST Chapter V (ss. 16-21) — ITC including cross-utilisation under s. 49.
  • CGST Chapter VII (s. 31) — tax invoice with POS.
  • CGST Chapter IX (ss. 37-48) — returns including POS-wise GSTR-1.
  • CGST Chapter XI (ss. 54-58) — refund for zero-rated Chapter IV(5)(a)/(b) supplies.
  • CGST Chapter XV (ss. 73-84) — SCN for mis-classification.

12. File-Link Navigation — Chapter IV Files

FILE

COVERAGE

00 - Chapter IV Index.docx (this file)

Chapter-level practitioner index.

Section 7 - Inter-State supply.docx

Five sub-sections; inter-State goods + services + imports + exports + SEZ + catch-all.

Section 8 - Intra-State supply.docx

Two sub-sections + Explanations 1 & 2; intra-State framework + distinct-person fiction + branch-deemed-establishment.

Section 9 - Supplies in territorial waters.docx

Coastal-State deeming rule for offshore supplies.

13. External Constitutional and Statutory Anchors

  • Article 246A — concurrent GST competence.
  • Article 269A — apportionment of inter-State GST.
  • Article 286 — restrictions on State taxation outside State.
  • Article 297 — vesting of territorial waters in Union.
  • Article 1(3)(c) — territorial waters part of India.
  • IGST (Amendment) Act 2018 — Explanation 1(iii) amendment.
  • CGST Act ss. 7, 8, 9, 25(4)/(5), 11 — parallel framework.
  • SEZ Act 2005 — SEZ definitions.
  • TWCSEEZ Act 1976 — territorial waters / baselines / EEZ.
  • Customs Act 1962, s. 2(11)/(28) — customs frontiers / India.
  • Customs Tariff Act 1975 — for IGST on imports.
  • GST Council recommendations — apportionment + cross-empowerment.

14. Key Takeaways

  • Chapter IV is the classification gateway — every IGST liability and every CGST+SGST liability flows from a Chapter IV decision.
  • Single mechanical test — location-of-supplier vs POS — determines inter-State (s. 7) or intra-State (s. 8).
  • s. 7(5) catch-all preserves inter-State characterisation for exports, SEZ, and residual non-intra-State supplies.
  • s. 8(1) provisos channel SEZ / imports / tourist supplies out of intra-State into special routes.
  • Explanation 1 distinct-person fiction has cascading effects — defeats export of services for inter-branch same-legal-person supplies; permits cross-PoB-same-State separate-person treatment post FA 2018.
  • Explanation 2 branch-deemed-establishment brings foreign branches into the distinct-person framework.
  • s. 9 coastal-State deeming simplifies offshore-supply classification.
  • For composite supplies, apply principal-supply test (s. 8 CGST) before Chapter IV characterisation.
  • For honest mis-classification, s. 19 IGST refund + re-payment is the corrective route — no time-limit penalty.
  • Circular 161/2021 + Circular 199/2023 + Circular 184/2022 + Circular 209/2024 are operative practitioner references.
  • For multi-State enterprises, design distinct-person framework with Rule 28 valuation + clear documentation.
  • For SEZ planning, model LUT / IGST-paid / Notif 18 exemption cash-flows before deciding.
  • For exports of services, document each of the five s. 2(6) limbs before invoking s. 7(5)(a).
  • For offshore operations, maintain GPS + baseline documentation for s. 9 coastal-State proof.
  • Mohit Minerals + AIFTP + Bharti Airtel + Vatika Township + Mafatlal + GVK Industries form the doctrinal backbone of Chapter IV jurisprudence.

Sections in this chapter