GST Place of Supply: Installation or Assembly at Site

1. Introduction

Some supplies are not as simple as “sending goods from one place to another.” Many industries — like construction, manufacturing, or energy — deal with large machinery or components that must be installed or assembled at the customer’s site before they’re usable.

So here’s the question:

To answer that, the Integrated Goods and Services Tax (IGST) Act, 2017, under Section 10(1)(d), lays down a specific rule. This ensures that tax revenue goes to the correct State — the one where the goods are actually installed or assembled.

Let’s break this down clearly, with examples and latest updates included.

2. Understanding Section 10(1)(d)

The law states:

So, in plain English:

👉 When goods are supplied for installation or assembly, the place of supply (PoS) will be the site where installation happens, not the supplier’s location.

This rule overrides other clauses like 10(1)(a) (movement-based) or 10(1)(c) (no movement) because here, movement and supply both relate to an installation activity.

3. Why This Rule Matters

The government designed this rule to avoid confusion when goods cross State borders for on-site assembly or plant setup.

If GST were charged based only on the seller’s or buyer’s address, it would misdirect tax revenue to the wrong State. Section 10(1)(d) ensures GST benefits the State where the goods are actually used or fixed — aligning with the principle that GST is a destination-based tax.

4. When Does This Clause Apply?

This section applies when:

• Goods are supplied along with installation or assembly obligation.
• The installation/assembly happens at a specific location/site.
• The site of installation is known at the time of supply.
• The installation forms part of the contract of supply (not a separate service contract).

If the supply is only of goods (and installation charged separately), the two must be treated distinctly — one under Section 10(1)(a) and the other as a service under Section 12(3).

5. Examples from ICAI and Practice

Let’s go through real examples to make this easier to grasp.

Example 1 – Machinery Installed at Factory

Scenario: MA Pvt. Ltd. (New Delhi) supplies a heavy industrial machine to MB Pvt. Ltd. for installation in its Noida (U.P.) factory.

• The sale agreement includes installation at site.
• The machine moves from Delhi to Noida.

✅ Place of Supply = Noida, Uttar Pradesh (site of installation)

✅ Tax Type = Inter-State → IGST

Even though the supplier is in Delhi, GST belongs to U.P. because that’s where the machine is finally installed and consumed.

Example 2 – Turnkey Contract for Assembly at Site

Scenario: Pure Refineries Ltd. (Mumbai, Maharashtra) awards a contract to PQ Engineering Ltd. (Ranchi, Jharkhand) to supply and assemble a distillation column at its refinery site in Kutch, Gujarat.

• PQ Ltd. ships equipment parts from Jharkhand to Gujarat.
• Assembly is done entirely at the Kutch site.

✅ Place of Supply = Kutch, Gujarat

✅ Tax Type = Inter-State → IGST

So even though goods originated from Jharkhand and the buyer is in Maharashtra, Gujarat gets the GST because installation occurred there.

Example 3 – Intra-State Installation

Scenario: A solar-panel manufacturer in Pune (Maharashtra) supplies and installs solar units at a Nagpur factory.

Since both locations are within Maharashtra:

✅ Place of Supply = Nagpur

✅ Tax Type = Intra-State → CGST + SGST

Example 4 – Imported Equipment Installed in India

Scenario: An overseas supplier exports an imported conveyor system to Global Cement Ltd. in Rajasthan, and the Indian importer assembles it on site.

Here, even though import occurs through a port in Gujarat, the place of supply (for subsequent Indian supply) = Rajasthan, the place of installation.

This ensures IGST on import and local GST on domestic installation are handled distinctly.

6. Comparison with Other Rules

Section 10(1)(d) specifically covers supplies that involve both delivery and assembly obligations.

7. GST Treatment – Goods vs Service

It’s common to confuse installation as a service with installation as part of goods supply.

Here’s how to distinguish:

So, in a “supply + installation” contract — like turnkey industrial projects — GST treats it as supply of goods under Section 10(1)(d).

8. Documentation & Compliance

To stay compliant, suppliers should maintain clear records showing the site location and nature of installation.

Invoice requirements:

• Mention “Installation at site – PoS: [State Name] under Sec 10(1)(d)”
• Include address of installation site
• Link transport document (e.g., e-way bill) to the same site
• Maintain installation report / completion certificate signed by buyer

E-way Bill: For movement, “place of installation” must appear as “Ship-to” address even if billing address differs.

9. CBIC Clarifications & 2024-25 Updates

Although Section 10(1)(d) hasn’t changed much since 2017, recent updates fine-tune compliance and digital invoicing:

These updates stress accurate site details — the State mentioned as installation site determines which tax applies (CGST + SGST or IGST).

10. Common Mistakes to Avoid

• Wrong PoS recorded (using buyer’s address instead of site).
• Separate invoices raised for goods & installation when the contract is composite.
• Failure to mention installation address on e-way bill → auto mismatch.
• Incorrect classification of supply as service instead of goods.
• No completion certificate or site proof — difficult during GST audit.

11. Special Situations

(a) Installation Across Multiple States

If one contract covers sites in multiple States, the supplier must:

• Issue separate invoices State-wise, or
• Register as a “casual taxable person” in each installation State.

(b) Cross-border Installation Projects

If goods are imported and assembled in India by an overseas company, installation in India is a taxable supply under IGST (reverse charge may apply if recipient is importer).

(c) EPC / Turnkey Contracts

For engineering-procurement-construction projects, each stage — procurement, fabrication, installation — may attract different PoS rules. The “installed at site” part follows Sec 10(1)(d).

12. Practical Checklist for Businesses

• Identify if installation is part of sale or a separate service.
• Mention exact installation address on invoice and e-way bill.
• Capture site completion reports for audit trail.
• Update accounting/ERP to auto-link “installation site State” to PoS.
• If multiple sites → raise separate invoices per State.

13. Illustrative Case Study

Scenario: Mega Infra Projects Ltd. (Karnataka) sells and installs a conveyor system at Sagar Cement Plant in Andhra Pradesh.

• Goods shipped from Bengaluru.
• Installation done entirely in Andhra Pradesh.
• Buyer registered in Telangana.

✅ Place of Supply = Andhra Pradesh

✅ Tax Type = Inter-State → IGST

If Mega Infra Projects had wrongly charged CGST + SGST (Karnataka), they would later need to pay IGST and claim refund — a costly compliance error.

14. Key Takeaways

• The place of supply for goods that are installed or assembled at site is the location of installation, not supplier’s or buyer’s State.
• Installation becomes part of the supply of goods if it’s incidental to the sale.
• Always mention installation site address and State code on invoice.
• Misidentifying PoS leads to wrong tax type (IGST vs CGST/SGST).
• For multiple-State projects, split invoices State-wise or register as casual supplier.

15. Quick Recap Table

16. Why Section 10(1)(d) Is Crucial

Industries dealing with large machinery, energy systems, or construction depend heavily on this rule. It aligns GST collection with the actual destination of consumption — where the goods become functional.

Without it, tax confusion between supplier and buyer States could lead to dual taxation or refund disputes.

17. Final Thoughts

Section 10(1)(d) of the IGST Act is a simple yet powerful rule that keeps GST fair and destination-based. It recognizes that when goods are installed or assembled at a specific site, that’s where consumption truly happens.

So, whenever you supply or receive equipment requiring on-site assembly, remember this golden rule:

Ensure invoices, e-way bills, and records reflect the installation site clearly. One small detail can make the difference between a seamless GST return and a messy audit correction later.

Also Read: GST Place of Supply: When Goods Don’t Move Explained