Inserted by Notification 04/2018-IT effective 01.01.2019. The proportion of value attributable to different States / UTs, under sub-section (7) of section 13 of the IGST Act, in the case of supply of services directly in relation to an…
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IGST Rules · Rule 8
Rule 8 — Cross-border immovable property multi-State POS proxy
Inserted by Notification 04/2018-IT effective 01.01.2019.
The proportion of value attributable to different States / UTs, under sub-section (7) of section 13 of the IGST Act, in the case of supply of services directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, where the location of the supplier of services or the location of the recipient of services is outside India, and where such services are supplied in more than one State / UT, in the absence of any contract or agreement between the supplier of service and recipient of services for separately collecting or determining the value of the services in each such State / UT, as the case may be, shall be determined by applying the provisions of rule 4, mutatis mutandis.
BLOCK 2 — PARALLEL / OPERATIVE FRAMEWORK
PROVISION
NOTE
s. 13(7) IGST — Multi-State cross-border services framework
Parent section.
s. 13(4) IGST — Immovable property cross-border POS
Substantive POS = property location.
Rule 4 IGST Rules — Domestic immovable property multi-State proxy
Applied mutatis mutandis through Rule 8.
s. 12(3) IGST
Domestic equivalent (Rule 4).
s. 22 IGST
Rule-making power.
Notification 04/2018-IT
Inserted Rule 8 effective 01.01.2019.
Circular 209/3/2024-GST
Comprehensive POS clarifications.
BLOCK 3 — COMMENTARY
1. Statutory Architecture
Rule 8 is a single-sentence rule that applies Rule 4 (domestic immovable property multi-State proxy) mutatis mutandis to cross-border immovable property services. The three Rule 4 formulas — nights for accommodation, area for other immovable, time for houseboat — operate for cross-border scenarios where Indian property is involved with foreign supplier or foreign recipient.
2. Historical Context
Rule 8 was part of Notification 04/2018-IT structural expansion. The mutatis mutandis application avoids duplication of Rule 4 framework for cross-border scenarios.
3. Judicial Evolution
GVK Industries Ltd v Income Tax Officer — (2011) 4 SCC 36 [Supreme Court — 5-Judge Constitution Bench]
Brief Facts: Question was the extent of Parliament's legislative competence to tax extraterritorial events. GVK had paid fees to a Swiss consultant for services rendered abroad in connection with raising finance for an Indian power project. Question was whether such fees could be taxed under the Income-tax Act when the service was entirely rendered abroad.
Issue: Constitutional limits of extraterritorial legislation under Article 245 — whether Parliament can tax events occurring wholly outside India if there is a 'real and substantial' nexus with India.
HELD: Parliament has competence to legislate with extraterritorial operation provided there is a real and substantial nexus with India — not merely an illusory or fanciful connection. A nexus that is rationally connected to the welfare of India is sufficient. Pure extraterritoriality without nexus is impermissible.
"Parliament's competence to legislate with extraterritorial operation is conditioned on the existence of a real and substantial — and not merely fanciful — nexus with India. The nexus must be rational and connected to India's legitimate concerns."
Relevance: Constitutional anchor for cross-border place-of-supply provisions under s. 13 of the IGST Act (services where supplier or recipient is outside India) — establishes the nexus doctrine that underpins extraterritorial GST on imports of services.
All India Federation of Tax Practitioners v Union of India — (2007) 7 SCC 527 [Supreme Court — 3-Judge Bench]
Brief Facts: The constitutional validity of the service-tax levy on chartered accountants, cost accountants, and architects was challenged on the ground that these professions had been historically regulated by State legislation and were therefore outside Union legislative competence.
Issue: Constitutional foundation of the service-tax levy — whether 'service' can be taxed by the Union under the residuary entry (Entry 97 List I) and what is the doctrinal nature of a service-tax levy.
HELD: Service-tax upheld. The Court held that service-tax is a value-added tax on the value of services rendered, traceable to Entry 97 of List I until Entry 92C was inserted by the Constitution (88th Amendment). The economic concept of value addition through services is the doctrinal basis on which service-tax — and now GST on services — rests.
"Service-tax is a value-added tax on the commercial activity of providing services. The taxable event is the rendition of service and the levy attaches to the value addition at the point of service delivery."
Relevance: Constitutional anchor for taxation of services under GST — pre-101st-Amendment doctrinal framework that informs the place-of-supply concept under s. 12 and s. 13 of the IGST Act.
Union of India v Mohit Minerals Pvt Ltd — (2022) 10 SCC 700 [Supreme Court — 3-Judge Bench (Constitution Bench questions)]
Brief Facts: Importers of coal on CIF basis were held liable under Notification Nos. 8/2017-Integrated Tax (Rate) and 10/2017-Integrated Tax (Rate) to pay IGST on ocean freight component under reverse charge under s. 5(3)/(4) of the IGST Act. Importers challenged the levy as ultra vires the charging section and contended that IGST had already been paid on CIF value (which included freight) at the time of import under s. 3(7) of the Customs Tariff Act.
Issue: Whether IGST could be levied separately on the ocean freight component of CIF imports when the entire CIF value (inclusive of freight) had suffered IGST under s. 3(7) of the Customs Tariff Act; and whether GST Council recommendations are binding on the Union and States.
HELD: Levy struck down. The Court held that the impugned notification offended the principle of 'composite supply' under s. 8 of the CGST Act because ocean freight in CIF imports is part of the composite supply of imported goods and cannot be artificially severed. Further, the GST Council's recommendations are recommendatory, not binding, on the Union and States — both Parliament and State legislatures have simultaneous legislative power under Article 246A.
"The recommendations of the GST Council are not binding on the Union and the States. The recommendations only have a persuasive value. To regard them as binding would disrupt fiscal federalism, where both the Union and the States are conferred equal power to legislate on GST."
Relevance: Foundational authority on the IGST charging section, the limits of reverse-charge notifications under s. 5(3)/(4), and the constitutional architecture of the GST Council. Repeatedly cited in RCM, place-of-supply, and composite-supply disputes.
Commissioner of Income Tax v Vatika Township Pvt Ltd — (2015) 1 SCC 1 [Supreme Court — 5-Judge Constitution Bench]
Brief Facts: The Income-tax Act's surcharge provisions had been amended mid-year. Question was whether the amendment applied retrospectively to assessment years already commenced. Constitution Bench was constituted to settle conflicting two-Judge Bench rulings on the presumption of prospectivity for fiscal statutes.
Issue: Whether a fiscal statute that imposes or enhances a burden operates prospectively unless expressly or by necessary implication retrospective; and what is the standard of clarity required for retrospective imposition.
HELD: Strong presumption of prospectivity for any provision that imposes or enhances a burden. Retrospective imposition requires either an express statutory direction or a necessary implication so unmistakable that no reasonable construction can avoid it. Beneficial provisions may be construed retrospectively; burden-imposing provisions cannot.
"If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on another, it could be construed to be retrospective. The same is not true of a provision imposing a tax or otherwise creating a fresh burden — there, the presumption of prospectivity is at its strongest."
Relevance: Constitutional anchor for prospective operation of GST amendments. Decisive in every dispute over the effective date of a notification, amendment, or rule change under IGST.
4. Circulars and Notifications
Notif 04/2018-Integrated Tax dated 31.12.2018 — Rule 8 insertion
Cross-border immovable property multi-State POS proxy.
Rule 4 IGST Rules dated Effective 01.01.2019 — Domestic equivalent applied via Rule 8
Nights / area / time formulae apply mutatis mutandis.
Circular 209/3/2024-GST dated 26.06.2024 — POS clarifications including cross-border immovable
Reaffirms cross-border framework.
5. Worked Examples
Example 1 — Foreign architect services on Indian property in multiple States
Facts: Foreign architect provides design services for Indian property spanning Delhi and Haryana; consolidated billing.
Computation / Steps:
Step 1. s. 13(4) — POS = property location.
Step 2. Property in two States — Rule 8 multi-State trigger.
Step 3. Rule 4(ii) mutatis mutandis — area ratio.
Step 4. Apply area ratio for State-wise apportionment.
Step 5. Indian taxable supply under s. 5(3) RCM on Indian recipient.
Result: Area ratio per Rule 4(ii) applied mutatis mutandis. Indian recipient pays IGST under RCM split between Delhi and Haryana.
Example 2 — Foreign hotel chain consolidated bill for Indian properties
Facts: Foreign hotel chain charges consolidated bill for stays at Indian properties in 3 States.
Computation / Steps:
Step 1. s. 13(4) — POS = property location.
Step 2. Multi-State Indian properties — Rule 8 trigger.
Step 3. Rule 4(i) mutatis mutandis — nights ratio.
Result: Nights ratio mutatis mutandis. Operational for foreign-chain bookings.
Example 3 — Contract overrides Rule 8
Facts: Foreign-Indian property service contract specifies State allocation.
Computation / Steps:
Step 1. Contract priority.
Step 2. Rule 8 default not applied.
Result: Contract priority.
Example 4 — Cross-border houseboat service
Facts: Indian-owned houseboat between Kerala and Karnataka; foreign tourist recipient.
Computation / Steps:
Step 1. s. 13(4) — POS = property location.
Step 2. Multi-State houseboat — Rule 8 trigger.
Step 3. Rule 4(iii) mutatis mutandis — time ratio.
Result: Time ratio mutatis mutandis for cross-border houseboat.
Example 5 — All Rule 4 framework applies
Facts: Any of Rule 4(i)/(ii)/(iii) scenarios with cross-border element.
Computation / Steps:
Step 1. Apply applicable Rule 4 sub-clause mutatis mutandis.
Step 2. All Rule 4 framework available for Rule 8.
Result: Rule 8 inherits entire Rule 4 framework for cross-border equivalence.
6. Practitioner Planning
7. Litigation Defence
8. Procedural Map
Step 1. Identify cross-border immovable property service
s. 13(4) framework.
Step 2. Confirm multi-State Indian property
Rule 8 trigger.
Step 3. Confirm supplier or recipient outside India
s. 13 prerequisite.
Step 4. Check contract for State-wise split
Contract priority.
Step 5. Apply Rule 4 mutatis mutandis
Sub-clause per service type.
Step 6. Compute State-wise allocation
Per Rule 4 formula.
Step 7. For RCM, apply s. 5(3) IGST
Indian recipient.
Step 8. Issue separate State invoices
Standard practice.
Step 9. Report in GSTR-1 / 3B accordingly
Multi-State reporting.
Step 10. Document factual basis
Audit defence.
Rule 8 — Cross-border immovable property checklist (10 items)
□ Identified cross-border immovable service
□ Confirmed multi-State Indian property
□ Confirmed supplier or recipient outside India
□ Checked contract for State-wise split
□ Applied Rule 4 mutatis mutandis
□ Computed State-wise allocation
□ Applied RCM under s. 5(3) for Indian recipient
□ Issued separate State invoices
□ Reported in GSTR-1 / 3B accordingly
□ Documented factual basis for audit
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