Place of Supply and Levy of IGST on Intermediary Courier Facilitation Services
Legal Framework, Practical Scenarios and Return Implication
1. Introduction
In recent years, GST professionals have increasingly encountered transactions where goods are ordered online by persons residing outside India, delivered within India, and subsequently re-couriered abroad through an Indian registered person.
Although goods ultimately move outside India, the GST treatment of the Indian service provider—who merely receives, repacks and arranges courier—often becomes contentious, particularly on:
Place of supply determination
Export vs taxable supply classification
Whether IGST or CGST/SGST is chargeable
This article examines the place of supply provisions applicable to courier-related services, explains why intermediary services are treated differently, and clarifies why IGST is chargeable even when the place of supply is deemed to be in India.
2. Courier Services under GST – Understanding the Nature of Supply
GST law does not define “courier services” separately. Such services generally fall under transportation of goods, unless the person involved is not actually transporting the goods, but merely arranging or facilitating transportation.
Hence, the first and most critical question is:
Is the person providing transportation on his own account, or merely arranging transportation through a third-party courier?
The answer to this question determines:
The applicable place of supply provision, and
Whether the service can qualify as an export.
3. Place of Supply Provisions Relevant to Courier-Related Services
3.1 Courier as Transportation of Goods (Principal Service)
When the service provider:
Physically transports goods,
Issues a consignment note / airway bill, and
Bears responsibility for delivery,
the service is treated as transportation of goods.
(a) Domestic transportation
Section 12(8), IGST Act
Recipient: Registered Place of Supply is Registered Location of recipient
Recipient:Unregistered Place of supply is where goods are handed over
(b) International transportation
Section 13(9), IGST Act
Place of supply = destination of goods
This provision follows the destination-based principle and allows export of services when other export conditions are satisfied.
3.2 Courier Arrangement / Facilitation – Intermediary Services
Where a person:
Does not transport goods himself,
Uses third-party courier companies,
Merely receives goods, repacks and arranges shipment, and
Charges courier cost plus a margin,
the service is not transportation, but facilitation.
Such services fall under:
Section 13(8)(b), IGST Act – Intermediary Services
Under this provision:
Place of supply = location of the supplier of services
This is a statutory deeming fiction which overrides the general rule.
4. Scope of Section 13(8) – A Special Override Provision
Section 13(8) applies only to three categories of services:
Clause
Nature of Service
13(8)(a)
Services performed on goods requiring physical availability
13(8)(b)
Intermediary services
13(8)(c)
Short-term hiring of means of transport
When Section 13(8) applies:
Place of supply is fixed in India,
Export of services conditions fail, and
Zero-rating and LUT benefits are not available.
5. Application to Common E-commerce Courier Scenarios
In typical arrangements where:
Overseas individuals order goods directly on e-commerce platforms,
Goods are delivered to an Indian registered person,
The Indian person repacks and arranges courier abroad,
Consideration is received in INR from Indian bank accounts,
the Indian registered person:
Does not own or sell the goods,
Does not transport goods on own account,
Merely facilitates courier movement.
Accordingly, the activity qualifies as an intermediary service under Section 13(8)(b), and the place of supply is deemed to be in India.
6. Why IGST Is Chargeable (and Not CGST/SGST)
This aspect often causes confusion.
6.1 Determining the Nature of Supply
Under GST, whether IGST or CGST+SGST is chargeable depends on:
Location of supplier, and
Place of supply
These parameters are tested under Sections 7 and 8 of the IGST Act.
6.2 Effect of Section 13(8)(b)
Applying Section 13(8)(b):
Place of supply is deemed to be India (supplier’s location).
However, this does not automatically make the supply intra-State.
6.3 Why the Supply Is Still Inter-State
A supply can be treated as intra-State only if:
Supplier and place of supply are in the same State, and
The supply is not specifically excluded.
Supplies where the recipient is located outside India are excluded from the definition of intra-State supply.
Section 7 of the IGST Act therefore treats such supplies as inter-State supplies, even though the place of supply is deemed to be in India.
6.4 Final Legal Position
Parameter
Result
Supplier location
India
Recipient location
Outside India
Applicable PoS rule
Section 13(8)(b)
Place of supply
Deemed India
Intra-State supply
❌ Not possible
Nature of supply
Inter-State
Tax to be charged
IGST
Hence, CGST + SGST cannot be charged. IGST is mandatory.
7. Practical Return Reporting Implications
Such supplies are taxable, but not exports
No LUT or refund claim is permissible
IGST must be charged on the invoice
Due to GST portal limitations:
These supplies are reported in GSTR-1 Table 7 (B2CS) with Place of Supply: “97 – Other Territory”
Liability flows to GSTR-3B Table 3.1(a) as taxable outward supply
8. Common Errors to Avoid
Practitioners should avoid:
Treating facilitation services as export of services
Reporting under export tables
Claiming zero-rating or refunds
Charging CGST + SGST instead of IGST
Such errors frequently result in tax demands, interest and penalties.
9. Conclusion
The GST treatment of courier-related arrangements highlights the importance of identifying the true nature of the service. Physical movement of goods outside India does not, by itself, determine taxability.
Where an Indian registered person merely facilitates courier services, the activity is classified as an intermediary service, attracting Section 13(8)(b). Although the place of supply is deemed to be in India, the supply is statutorily treated as inter-State, making IGST the correct levy.
A clear understanding of these provisions ensures accurate tax compliance and avoids unnecessary litigation.