Telangana State Authority for Advance Ruling (AAR Telangana) in an advance ruling ruled that Integrated Goods and Service Tax (IGST) will be applied to ex-factory inter-State sales.
The advance ruling was requested by the applicant, M/s. Penna Cement Industries Limited. The applicant had filed an application in form GST ARA-01 under Section 97(1) of the Telangana Good and Service Tax (TGST) Act, 2017 read with Rule 104 of CGST/ TGST Rules.
As per the application data, the applicant is a cement manufacturer and they have two cement plants in Telangana. The applicant occasionally makes the inter-State sale of cement on ex-factory/works basis from their plants in Telangana.
According to Section 10(1)(a) of IGST Act, 2017 
Get to know all about the IGST (Integrated GST) model under GST law in India. Also, we have highlighted IGST model features and advantages with an illustration. Read more, a place where the movement of goods terminates will be considered as the place of supply. In this matter, when the applicant makes ex-factory sales from their plant, the delivery ends at the gate of their factory itself and thus these attract CGST and SGST.
However, Section 10(1)(a) of IGST Act, 2017 also states that the movement of goods can be by the supplier/ the recipient/ any other person, and the location of recipient where delivery terminates to the recipient can be also considered as the place of supply.
Regarding the ex-factory sale, supply terminates at the factory gate by the applicant but still, further movement of good is taking place by the recipient or transport or any other person up to the billing address state. Hence, in this case, the delivery terminates in another State and therefore they can charge IGST on such supplies.
The applicant filed an application seeking Advance Ruling seeking clarification as to what tax will be applicable and charged by them on ex-factory inter-State sales made by them.
The ruling came from the authority consisting of J. Laxminarayana, Additional Commissioner of State Tax, and B. Raghukiran Joint Commissioner of Central Tax and they state that the Integrated Goods and Service Tax (IGST) will be applicable on ex-factory inter-State supplies.
