Section 12(4) IGST Act: GST on Personal Services Explained

1. Introduction

Not all services are delivered remotely or through online platforms — some happen in person. Think of a restaurant meal, a spa session, a fitness class, or a health check-up. These services are consumed where they’re actually performed, not where the customer or business is located.

That’s exactly what Section 12(4) of the Integrated Goods and Services Tax (IGST) Act, 2017 clarifies — the place of supply (PoS) for such personal, physical, or presence-based services.

Let’s break it down simply, with clear examples, practical explanations, and the latest GST updates.

2. What Section 12(4) Says

The law provides:

That means GST for such services depends on where the service takes place — not where the customer lives or the provider is registered.

3. Why This Rule Exists

Services like dining, beauty, or healthcare are consumed instantly at a physical place. You can’t deliver a haircut online or serve dinner over Zoom!

So, GST follows the principle of actual performance — the place where the customer physically avails the service is treated as the place of supply.

This ensures tax revenue goes to the State where consumption happens, aligning with GST’s destination-based tax philosophy.

4. Key Categories Covered under Section 12(4)

This clause includes several types of services:

• Restaurant and Catering Services
• Personal Grooming Services
• Fitness and Health Services
• Beauty and Cosmetic Services
• Medical or Surgical Services (including cosmetic and plastic surgery)

If the service requires the customer’s physical presence, Section 12(4) applies.

5. Simple Understanding

Here’s the thumb rule:

It doesn’t matter:

• Where the customer lives
• Where the supplier is registered
• Where the payment is made

If the service happens in Mumbai, then Mumbai gets the GST.

6. Examples from ICAI PDF and Practical Scenarios

Let’s go through detailed examples for each service category.

Example 1 – Restaurant Service

Mr. Rohan from Delhi visits a restaurant in Goa while on vacation.

• PoS = Goa (where food consumed)
• Tax Type = CGST + SGST (Goa)
• Even though Rohan is from Delhi, the tax belongs to Goa because that’s where he ate.

Note: If a restaurant delivers food to another State, it becomes an “online food supply” through e-commerce operators (covered separately under Section 9(5)), not Section 12(4).

Example 2 – Catering Service at a Venue

A catering firm in Pune (Maharashtra) provides food services at a wedding event in Bengaluru (Karnataka).

• PoS = Bengaluru (place where catering performed)
• Tax Type = IGST (supplier in Maharashtra, PoS in Karnataka)

Example 3 – Beauty Salon Service

A client from Kolkata travels to Mumbai and takes a spa and beauty treatment there.

• PoS = Mumbai (location of salon)
• Tax Type = CGST + SGST (Maharashtra)

Even if payment is made through an online wallet registered in Kolkata, PoS remains where service occurred.

Example 4 – Fitness Training

FitLife Gym Pvt. Ltd. operates a gym in Chandigarh. A member from Delhi visits regularly to train at that branch.

• PoS = Chandigarh (service performed)
• Tax Type = CGST + SGST (Chandigarh)

If the same gym offers online training sessions, that would be covered under Section 12(2) (general rule), not 12(4).

Example 5 – Cosmetic Surgery

A cosmetic clinic in Hyderabad performs plastic surgery on a client from Chennai.

• PoS = Hyderabad (surgery performed)
• Tax Type = CGST + SGST (Telangana)

Example 6 – Health Check-Up

A hospital in Kochi (Kerala) conducts a full-body health check-up for a client registered in Tamil Nadu.

• PoS = Kochi (where check-up performed)
• Tax Type = CGST + SGST (Kerala)

Even if report and payment are later shared online, the place of supply remains where the actual medical service occurred.

7. Core Principle: Physical Presence Determines PoS

The unifying rule across all these cases is the customer’s physical presence during the service.

If the service:

• Needs the customer to be there physically (like haircut, meal, gym, or treatment),
• Then Section 12(4) applies — and PoS = where the person was served.

8. Cases Where Section 12(4) Does NOT Apply

There are instances where such services are not covered under Section 12(4):

9. Multiple Service Locations

When services are performed across different States (like catering for events in multiple cities), the supplier must:

• Split the invoice value State-wise based on service location, and
• Apply appropriate tax (CGST+SGST or IGST) for each State.

Example: A caterer from Delhi serves events in Delhi, Haryana, and Rajasthan → Three invoices or State-wise splits must be issued.

10. CBIC Clarifications & 2024–25 Updates

These clarifications make clear that in-person presence is key — not booking location, invoice address, or payment origin.

11. Comparison with Other Provisions

12. Common Mistakes to Avoid

• Charging IGST when service performed locally.
• Using client’s billing address instead of service location.
• Including virtual services under Section 12(4).
• Failing to split invoices for multi-State catering events.
• Ignoring “Place of Supply – State Code” field on e-invoices.

13. Documentation & Compliance Tips

• Mention service address/location (venue or branch) on every invoice.
• If performing at client’s site, record event address clearly.
• Split multi-State invoices correctly.
• Maintain attendance records, booking details, and work orders for proof.
• Update accounting system to auto-tag PoS by service venue.

14. Case Studies

Case 1 – Restaurant Chain Billing

DineWell Pvt. Ltd. operates restaurants in Delhi and Gurugram. A customer from Delhi dines in the Gurugram outlet.

• PoS = Gurugram (where meal consumed)
• Tax Type = CGST + SGST (Haryana)

Even if the customer pays via Delhi billing address, tax belongs to Haryana.

Case 2 – Wedding Catering Across States

TasteCater Pvt. Ltd. (Mumbai) serves food at a wedding in Jaipur.

• PoS = Jaipur (Rajasthan)
• Tax Type = IGST (since supplier in Maharashtra, PoS in Rajasthan).

Case 3 – Cross-State Health Service

An eye specialist from Kerala performs surgery in Chennai hospital as a visiting consultant.

• PoS = Chennai (where surgery performed)
• Tax Type = CGST + SGST (Tamil Nadu).

Even if the doctor is registered in Kerala, GST applies where the actual treatment happened.

Case 4 – Multi-City Fitness Workshops

A Delhi-based fitness coach conducts workshops in Mumbai and Hyderabad.

• Split PoS per city → Maharashtra & Telangana.
• IGST charged for each city separately based on proportionate service value.

15. Simplified Table Summary

16. Impact on Service Providers

This rule affects:

• Restaurants & caterers
• Spas, salons, wellness centres
• Gyms, fitness trainers, yoga studios
• Medical professionals & clinics

They must correctly identify PoS based on where services are actually delivered, especially if they operate in multiple States.

17. Key Takeaways

• Section 12(4) applies to services requiring personal presence.
• PoS = where service performed — not client’s address or payment source.
• For multi-State operations, split invoices as per service location.
• Online or remote services are governed by Section 12(2), not 12(4).
• Always mention service venue on invoices and returns.

18. Quick Recap

19. Final Thoughts

Section 12(4) ensures GST remains experience-based — the tax belongs to the State where the service is enjoyed. Whether you dine at a café, attend a yoga class, or get a facial, the tax revenue benefits that location — not where you live or pay from.

For businesses, this rule is simple but powerful:

“Where your customer sits, eats, or gets served — that’s where your GST goes.”

So next time you issue an invoice for an in-person service, make sure the place of supply matches the place of performance — that’s the golden rule under GST.

Also Read: Place of Supply of Services Related to Immovable Property