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Place of Supply in case of Hotel Accommodation
Facts
The Hotel Division provided accommodation services to a US citizen and resident for a wedding ceremony organized at its hotel in Udaipur, Rajasthan. The total amount of Rs. 2 crores for such services was paid by an Indian individual residing in Delhi on behalf of the US resident in Indian currency. The amount was received by the Mumbai, Maharashtra Office of Hotel Division.
Question 1: For the accommodation services provided to the US resident and citizen, the place of supply shall be:
(a) Udaipur
(b) Delhi
(c) Mumbai
(d) USA
Answer: Udaipur (Explanation is given in the end of the Questions)
Question 2: If the Consideration is Paid in USD directly by the US Citizen, Can it be considered as Export of Service:
(a) Yes
(b) No
Answer: No (Explanation is given in the end of the Questions)
Question-3: Indian Citizen (Un-Registered) based out of Delhi booked and paid advance payment to Mumbai Head office for stay in Hotel situated in Udaipur. Place of Supply in this case will be
(a) Udaipur
(b) Delhi
(c) Mumbai
Answer: Udaipur (Explanation is given in the end of the Questions
Question-4: Indian Citizen (Registered) based out of Delhi booked and paid advance payment to Mumbai Head office for stay in Hotel situated in Udaipur. Place of Supply in this case will be
(a) Udaipur
(b) Delhi
(c) Mumbai
Answer: Udaipur (Explanation is given in the end of the Questions
Question-5: Indian Citizen (Registered/Un-Registered) based out of Delhi booked and paid advance payment to for stay in Hotel situated in USA. Place of Supply in this case will be
(a) USA
(b) Delhi
Answer: USA (Explanation is given in the end of the Questions
Question-6: Indian Citizen (Registered/Un-Registered) based out of Delhi booked and paid advance payment to the ABC Ltd. (situated in Mumbai) for stay in Hotel situated in USA (owned by ABC Ltd.). Place of Supply in this case will be
(a) USA
(b) Delhi
(c) Mumbai
Answer: Delhi (Explanation is given in the end of the Questions)
Explanation
There are two sections in IGST Act i.e. Section 12 & 13 which defines the place of Supply of Service. Section-12 defines Place of Supply of Service in case where both Supplier and Recipient is situated in India and Section-13 defines Place of Supply of Service where either Supplier or Recipient is situated outside India.
Summary of Section-12 & 13 regarding Hotel Accommodation Service
Where Both Supplier and Recipient is situated in India
In case Hotel is situated in India: Place where Hotel is situated.
In case Hotel is situated outside India: Place of Recipient of Service.
(Answer of Quesiton-3 to 6 can be answered from this)
Where Either Supplier and Recipient is situated outside India
Place where Hotel is situated (whether situated in India or outside India).
Further, as per Section 2(6) of IGST Act, for any service to be qualified as Export of Service, one of the condition is that Place of Supply should be outside India. Since, in case Hotel is situated in India, Place of Supply becomes India, accordingly, It can not be considered as Export of Service.
(Answer of Quesiton-1 & 2 can be answered from this)
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Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.
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