With the implementation of GST in India with effect from 1 July 2017, if transportable goods are supplied by a registered supplier, a tax invoice should be issued. However, in case the goods are not supplied by the means of sales and purchase, a delivery challan needs to be issued. Delivery Challan is used by suppliers when the supplies are not intended for instant sales.
What is Delivery Challan?
As mentioned above, Delivery Challan is a document that is created and utilized by suppliers or merchants to transport goods that are not for sale and no amount of GST is applicable on them. For example, if a factory product is to be stored in a warehouse that is situated in another state or domain, a delivery challan has to be issued for the transportation of that particular product.
How to use the right Template Format of Delivery Challan?
A prescribed format of a Delivery Challan needs to be followed for ease of business. A Delivery Challan template is helpful for maintaining uniform formats across states, assisting an individual to prepare the challan with great ease. These blank templates can be filled in with specific details necessary, which can later be signed off with the goods for final transportation.
Delivery Challan Format
Delivery Challan needs to be in one or multiple series, not exceeding sixteen characters that must be serially numbered. Here is the information that must be enclosed in the Delivery Challan:
- The Date of Creation of the Delivery Challan with its number
- Name, GSTIN number or UIN number and Address of the Registered Consignee. If there is no Registered Consignee, in that case, the GSTIN or UIN of the location of that supply needs to be mentioned
- HSN code of the goods being transported
- Description of the goods
- The exact or provisional quantity of goods being transported
- The taxable amount of supply
- The applicable GST rate, broken down into IGST, CGST, SGST, and GST Cess
- Name of the location where goods are being supplied if the transport is happening outside the state
- Signature of the Supplier or Designated Authority of the Supplier
The above are vital key components of the prescribed format that must not be missed while creating a Delivery Challan. Particulars in a delivery challan should be filled properly.
Approval of a Delivery Challan Under GST
- Rule 55 (2) of CGST Rules suggests that the Delivery Challan must be prepared in a treble format.
- The original copy should have the mark of ORIGINAL FOR CONSIGNEE.
- The duplicate copy should have the mark of DUPLICATE FOR TRANSPORTER.
- The third copy should have the mark of TRIPLICATE FOR CONSIGNER.
Why is a Delivery Challan needed?
Section 55(1) of the CGST rule states the circumstances where a supplier can issue a Challan in place of an invoice receipt. Those specific conditions are mentioned below:
- While supplying liquid gas, and the supplying quantity of the gas separated from the supplies place is unknown.
- When goods are being deported from Principal to Job worker or from one job worker to another job worker.
- Artists sell their artworks through exhibitions. In the case of artworks that need to be delivered or carried from one place to another or from one exhibition to another, a Delivery Challan is needed.
- CBE&C Circular No. 108/27/2019-GST dated 18.07.2019 states that amputation of goods outside India for promotional purposes or as consignments does not satisfy the categories of either “supply” or “export”. Such goods should therefore be dispatched under Delivery Challan.
- In case of multiple goods transportation, where goods are being moved in a semi-knocked down or knocked down condition, the supplier needs to issue an invoice and Delivery Challan before dispatching the first consignment, subsequently issuing a challan for the other consignments, with reference to the invoice.
- According to Rule 55(4) of CGST and SGST Rules, 2017, while the removal of goods is for supply to the recipient but the tax invoice could not be obtained at the time of the removal of the goods, the supplier needs to issue a tax invoice after the delivery of those goods. For example, a Delivery Challan can be used when the tax invoice cannot be issued while removing the weighments, and it needs to be done after the authorization of those goods.
- When goods are removed on the basis of the approval of the sale or are being returned within the state or outside of the state, Delivery Challan needs to be issued while the supply is taking place.
A Delivery Challan becomes essential while transporting goods that are not for sale. There are several businesses that mandatorily need Delivery Challans for their proper functional and operational procedures. For example, Trading business, Multiple warehouse owners, National Suppliers, etc.
