Delivery challan under GST

Understanding of the Delivery Challan

Delivery Challan is a document which is is given upon delivery of goods, which may or may not lead to a sale. It is an important document for facilitating reconciliation, evidence in audit, and mainly as a record for goods in transit. In case the recipient is not registered then the address of the business need to be mentioned.

Delivery challan is important for the delivery of goods. Get help from Profesional Utilities in all matter related to GST.

Table of content  

• What is the Delivery challan?

• Issue of the Delivery Challan

• Content of the Delivery Challan

• Delivery challan for job work

• When to use the Delivery challan

• Delivery challan vs. e-way bill 

• Conclusion

• Frequently Asked Question

What is the Delivery challan?

Delivery challan can be defined as the documents which are used to escort the movement of goods from one place to the other place. it acts as proof of delivery. Delivery challan contains detailed information about the goods in transportation.

Issue of the delivery challan

Under rule 55(1) CGST Rules, conditions under which delivery challan for the transportation of goods without issue of an invoice. 

• Supply of the goods for job work - When goods are sent from principal to the job worker or goods returned from the job work to the principal or goods send from one job worker to another job worker

• Supply of the liquid gas in which at the time of the removal Quantity is not known.

Transportation of goods other than supply of the goods - 

Delivery challan used by the supplier other than supply of the goods

• Supply of the Art Work to different galleries - Artwork is transported from one gallery to another outside the state or inside the state by the artists. This is done by them for exhibit and if selected sold to the buyers.

• Supply of the goods approval basis - At the time of removal of the goods Delivery challan is issued. When goods are sent outside or within the state on a return basis or approval for sales\

• Multiple shipments for transfer of goods - When goods are supplied in complete knockdown or semi-knockdown condition in case of a supply of multiple shipments. A full Invoice is issued at the time of the first consignment. Then for the subsequent consignment delivery challan is issued.

• E-Way Bill - Under rule 55A under CGST Rules, an E-Way bill, bill of supply, or tax invoice is not required to be carried then a delivery challan is issued.

At the time of removal tax invoice is not issued 

Under Rule 55(4) of CGST and SGST Rules, 2017 supply at the time of supply and removal of the goods in which tax invoice can not be issued. Then delivery challan is issued. For Example, When a tax invoice cannot be produced at the time of removal because the weight must be completed after the goods have been cleared, delivery challans must be issued. 

Content of the Delivery Challan

Below mention elements need to be mentioned in the Delivery challan - 

• In the Delivery, challan place of the supply, the Date and number of the delivery challan need to be mentioned.

• GSTIN, Name, address of the consignor 

• GSTIN, Name, and address of the consignee in case of the registered supplier and in case of unregistered name, address, and place of supply.

• Harmonised System of Nomenclature code

• Description of the goods that are delivered 

• Quantity and tax rate and tax amount – Union territory tax or cess,  integrated tax, central tax, State tax, where the transportation is for supply to the consignee.

• Taxable value

•  In case of inter-State movement; the place of supply

• Supplier’s Signature (authorised person)

Delivery challan for job work

• Goods sent for the Job work must be sent on the delivery challan.

• The principle issues the Delivery Challan.

• Delivery challan must be issued for all the input or capital goods directly send to the job worker.

• In form GSTR-1 detail about the challans are shown.

• In GST ITC 04 detail about the challans are filled.

When to use the Delivery challan

Under section 55(2) delivery challan needs to be issued in four copies as mentioned below - 

• For Buyers

• For Transporter

• For Accounts department

• Sales department for record maintenance

Delivery challan vs Invoice

Delivery challan vs e-way bill 

Conclusion 

Delivery challan is used where goods are moved not for the sale. The main purpose of the Delivery challan is to send goods for repair, transfer of goods to different locations or branches and send goods for job work. Certain rules are followed while the issue of the delivery challan like serial number, location of the supplier need to be mentioned, etc.

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What does delivery challan mean under GST?

In certain circumstances, a delivery challan is issued in place of a tax invoice. A delivery challan is thus a document that authorizes the transfer of goods from one location to another. It is also known as a delivery slip or a dispatch slip.

Under GST Rule 55, what is a delivery challan?

As per Rule 55 (1) of CGST Rules, The following situations are when a delivery challan for the transportation of goods without an invoice may be issued: Liquid gas supply for which the amount at the time of removal from the supplier's place of business is unknown. transporting products for labor purposes.

What distinguishes between an invoice and delivery challan?

To confirm that the consumer has received or accepted the products, a delivery challan, slip, or note is helpful. No legal ownership or rights are transferred. The consumer takes complete ownership of the products, along with all associated risk, rights, and responsibilities, through the receipt of an invoice or bill.

What distinguishes between challan and receipt?

The delivery challan only demonstrates that the consumer has acknowledged receiving the items; it does not demonstrate their legal obligations or ownership.

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