A consolidated bill need not have a single place of supply
The explanation to IGST Act section 12(11) addresses leased circuits installed in more than one State or Union territory with a consolidated charge. It allocates the service across those locations in proportion to values separately collected or determined under the contract or agreement. This article covers that contractual-value route. Where the necessary contractual determination is absent, the prescribed fallback basis must be applied; an accountant cannot simply choose a convenient allocation.
Read the applicable text: CBIC: IGST Act sections 7, 8 and 12(11), including its explanation.
Prove the circuit and service locations
Obtain circuit IDs, service descriptions, installation records, site addresses and the agreement. Confirm domestic supplier and recipient locations for section 12. A corporate headquarters billing address does not automatically override the leased-circuit installation rule. Conversely, an internal office using an unrelated mobile connection should not be inserted into the leased-circuit map merely because both costs sit in telecom expenses.
Translate the contract into a value schedule
Identify the operative schedule that separately collects or determines State or UT service values, its effective period and its relationship with the consolidated invoice. An internal management allocation by employees, revenue or floor area is not automatically the contractual value. If the contract contains a genuine determination formula, retain its actual inputs and calculation. A total price alone does not establish the required State split.
Deal with amendments and credits transparently
Match additions, removals, renewals and price changes to their supported effective periods. The illustrations assume valid contractual values and properly established taxable adjustments; they do not decide credit-note eligibility, retrospective contract effectiveness or tax reporting deadlines. Keep original terms and amendments rather than overwriting all earlier invoices with the latest schedule.
Apply tax head after the location allocation
For each established portion, compare place of supply with the actual supplier location under sections 7 and 8 and review exceptions. The recipient’s available GSTIN and credit entitlement require their own evidence. The examples that compute tax assume ordinary non-SEZ supplies, the stated hypothetical taxable bases and an aggregate 18% rate. Establish actual taxability, valuation, applicable rates and input-credit entitlement independently; allocation alone does not prove them.
Reconcile the final invoice population
The sum of contractual portions must equal the relevant charge, but numerical agreement alone does not establish legal correctness. Preserve service-to-contract mapping, State values, tax heads, source invoices and corrections. This use case is distinct from post-paid billing records, prepaid recharge channels and broad cloud-service place-of-supply questions.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Two contractual State portions
Assume operative contract values of ₹40,000 for Maharashtra and ₹60,000 for Karnataka for the relevant consolidated charge. Total is ₹1 lakh, split 40% and 60%. The head-office location does not change those assumed valid contractual values.
Illustrative example 2: Three State schedule
Verified contract portions are Delhi ₹30,000, Haryana ₹20,000 and Uttar Pradesh ₹50,000. Their ₹1 lakh total reconciles in the ratio 3:2:5. A single ₹1 lakh invoice line should not erase the separately established locations.
Illustrative example 3: Contractual common reduction
Assume a valid agreement reduces an original ₹1 lakh charge by 10% proportionately across original State values ₹40,000 and ₹60,000, with all tax-adjustment conditions separately met. Revised values are ₹36,000 and ₹54,000, total ₹90,000. This is not a universal rule for every discount.
Illustrative example 4: State-specific adjustment
The supported schedule originally has ₹25,000 for State A and ₹75,000 for State B. An actual eligible ₹5,000 adjustment relates only to B. Revised portions are ₹25,000 and ₹70,000, total ₹95,000; do not spread it equally without contractual support.
Illustrative example 5: Tax heads after allocation
Assume supplier location Maharashtra, valid portions Maharashtra ₹40,000 and Karnataka ₹60,000, and the stated ordinary 18% tax assumption. The Maharashtra portion has ₹3,600 CGST and ₹3,600 Maharashtra GST; Karnataka has ₹10,800 IGST. Total tax is ₹18,000, gross ₹1.18 lakh.
Illustrative example 6: Different contract periods
Assume three complete monthly charges under a valid old schedule of ₹20,000/₹30,000 and three under a valid new schedule of ₹25,000/₹35,000. Six-month State totals are ₹1.35 lakh and ₹1.95 lakh, aggregate ₹3.30 lakh. Do not apply the new split to all six months without support.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm domestic scope | Actual supplier and recipient locations. |
| 2 | Identify leased-circuit supply | Contract, circuit ID and service details. |
| 3 | Map installed locations | State/UT site evidence. |
| 4 | Identify consolidated charge | Invoice period and value. |
| 5 | Find contractual determination | Operative value schedule or supported formula. |
| 6 | Separate internal cost allocation | No assumed substitution for contract values. |
| 7 | Apply period-specific amendments | Preserved effective terms and inputs. |
| 8 | Reconcile adjustments | Supported discounts and State-specific changes. |
| 9 | Determine tax head and credit separately | Actual supplier location, exceptions and recipient conditions. |
| 10 | Archive the final bridge | Contract portions equal unique invoice population. |
Sixteen practitioner FAQs
1. Does a consolidated invoice require one place of supply?
Not under the stated multi-State leased-circuit explanation.
2. What contractual information matters?
Values separately collected or determined for the relevant locations.
3. Can headquarters billing override this automatically?
No. Establish the leased-circuit installation and allocation facts.
4. Is an employee-count spreadsheet enough?
Not merely because management uses it internally.
5. What if the contract has only one total?
Do not invent State values; examine the prescribed fallback basis.
6. Does this guide provide that fallback computation?
No. Its scope is the contractual-value route where a valid determination exists.
7. Are prepaid and post-paid mobile rules interchangeable here?
No. They address different branches.
8. Must the locations relate to the actual circuit?
Yes. Map the relevant installation and service.
9. Can later terms be applied backwards automatically?
No. Establish their actual effective scope.
10. Are all discounts proportional?
No. The example assumes valid proportionate terms.
11. Must a State-specific adjustment affect all portions?
Not on the stated supported State-specific facts.
12. Does value allocation alone determine tax head?
No. Compare with actual supplier location and applicable exceptions.
13. Does it automatically establish input credit?
No. Review recipient and credit conditions separately.
14. Is 18% asserted for all telecom charges?
No. It is an explicit arithmetic assumption in the tax example.
15. Why preserve original schedules?
To substantiate historical periods and changes.
16. Does a balancing allocation prove compliance?
No. Legal and factual support is also required.
Official sources
CBIC: IGST Act sections 7, 8 and 12(11), including its explanation