GST Advance Ruling Authority Cannot Decide Place of Supply
The GST Authority for Advance Ruling rejected an application because it lacks legal power to determine place of supply questions.
- Ruling
- ORDER No. 2/AAR/2018 DATED 27.06.2018
- Dated
- 27 Jun 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Engineering firm asked whether to charge IGST or CGST and SGST
- Design work was done in Tamil Nadu for a project in Jharkhand
- The Tamil Nadu AAR rejected the application without deciding tax type
- Authority ruled that place of supply falls outside its statutory powers
In short
An engineering consultancy firm in Chennai created design drawings for a coal handling plant located in Jharkhand. The client was an EPC contractor also based in Chennai, where the drawings were delivered. The consultancy firm asked the Tamil Nadu GST Authority for Advance Ruling whether to charge Integrated Goods and Services Tax (IGST) treating Jharkhand as the place of supply, or Central GST (CGST) and State GST (SGST) treating Tamil Nadu as the place of supply.
What has changed
How it worked before
Businesses assumed they could use the GST advance ruling process to resolve doubts about place of supply and decide whether a transaction should be billed as an inter-state or intra-state supply.
What has changed
In order TN/02/AAR/2018, the authority held that Section 97(2) of the Goods and Services Tax Act lists the specific matters on which a ruling can be given. Since place of supply is not on that list, the authority ruled it has no jurisdiction to answer such questions. As a result, businesses cannot get an advance ruling to decide if a transaction requires IGST or CGST and SGST.
Who this affects
Engineering firms, consultants, contractors, and service providers who carry out work in one state for project sites located in another state.
An example
An architectural firm in Mumbai designs a hotel located in Gujarat for a developer whose office is in Mumbai. The architect wants to confirm whether to charge IGST or Maharashtra CGST and SGST. If the architect files an application with the advance ruling authority to clear this doubt, this ruling shows the authority will dismiss the application without giving an answer.
What you should do
Do not file an advance ruling application solely to determine your place of supply, as the tax authority will reject it for lack of power. Instead, review the place of supply provisions under the IGST Act with your tax advisor to decide how to bill your client. Remember that advance rulings bind only the specific business that applied.
If you do nothing
If you file an advance ruling application expecting an answer on place of supply, you will spend time and legal fees only to have it rejected. If you guess wrong and bill CGST and SGST instead of IGST, tax officers during an audit can demand the unpaid IGST along with interest and penalties.
The terms explained
- place of supply
- The location determined by GST law that decides whether a sale is treated as happening within a single state or across state borders.
- advance ruling
- A formal written decision given by tax authorities to a specific business explaining how GST law applies to their transaction.
- integrated goods and services tax
- The tax charged under GST rules on sales where the supplier and the customer or project site are in different states, commonly called IGST.
- central goods and services tax
- The central government portion of tax charged on sales where both supplier and customer are located in the same state, commonly called CGST.
The ruling in detail
Authority for Advance Ruling
M/s. Fichtner Consulting Engineers (India) Private Limited
ORDER No. 2/AAR/2018 DATED 27.06.2018 · Tamil Nadu
Questions before the authority
- Charging IGST treating the place of supply as outside Tamil Nadu since the project site is in the state of Jharkhand( where the mine/end user is located) as per Sec 12(3) of IGST Act or Charging SGST and CGST, treating place of supply as Tamil Nadu since the drawings are delivered to the client at their Chennai Office. in Tamil Nadu.
Facts
The applicant is an engineering consultancy firm in Chennai contracted by an EPC sub-contractor in Chennai to provide engineering design services for a coal handling plant located in Jharkhand. The applicant executes the design work in Chennai and delivers drawings to the client's Chennai office. The applicant sought an advance ruling on whether the supply should be charged to IGST (treating place of supply as Jharkhand) or CGST and SGST (treating place of supply as Tamil Nadu).
Ruling
The Authority for Advance Ruling **rejected the application without deciding on merits** due to **lack of jurisdiction**. It held that determination of the place of supply is not covered under the specified matters in Section 97(2) of the GST Act.
Reasoning
The Authority held that Section 97(2) of the CGST Act and TNGST Act exhaustively lists the specific questions on which an Advance Ruling can be sought. The question posed by the applicant essentially required determining the place of supply to decide whether the transaction was an inter-State or intra-State supply. As place of supply does not fall under any of the clauses (a) to (g) of Section 97(2), the Authority ruled that it has no jurisdiction to decide the matter.
Provisions relied on
- Section 97(1) of CGST Act, 2017
- Section 97(2) of CGST Act, 2017
- Section 98(2) of CGST Act, 2017
- Section 12(3) of IGST Act, 2017
For the practitioner
This order confirms that **place of supply questions fall outside AAR jurisdiction** under Section 97(2). Taxpayers cannot use the advance ruling mechanism to resolve disputes regarding whether a supply is inter-State or intra-State based on place of supply.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/tn.2ara_2018-fceipl.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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