The supply of products or services requires the production of the tax invoice as per section 31 of the CGST Act, 2017. Yet, certain transactions are not treated as supplies even if they need transportation from one place to the next. In these cases, you need a delivery challan.
- Goods transported to one place and then returned to their origin once the work completes.
- Sending items from one branch to another within the same state
What is a Delivery Challan?
It is a document used to transport products from one location to another. The transportation may or may not result in sales. This delivery challan is sent along with the goods for delivery.
- Details of the item shipped
- Quantity of the products delivered
- Delivery Address
- Buyer's Address
Difference between Tax invoice and Delivery Challan
A Tax invoice indicates the value of a particular product.
A delivery challan usually does not include such value but sometimes may include product worth.
It is a legal proof of ownership of goods and services.
It presents that a customer has acknowledged the receipt of goods, however shows no legal ownership.
A document provided when a sale occurs
It is most commonly used to move items from one location to another while noting the products' description, condition, and amount, although it does not always end in a sale.
Displays the real worth of the commodities
It will not display the items' true worth. The delivery challan may include the value of the products indicated on the delivery challan, but it will not include the tax payable.
Copies of the Delivery Challan
As per rule 55(2) of CGST Rules, the following are the type of copies created for delivery challan:
Type of Delivery Challan
Created for whom?
Created for the buyer
Created for the transporter
Created for the seller
Delivery Challan Format
The documents are all serially numbered and exceed sixteen characters. Every delivery challan format includes the following information:
- The delivery challan's date and number.
- If the consignor, who is an individual or party who brings goods for selling on behalf of another party, is registered, his or her name, address, and GSTIN.
- If the consignee, the party to whom the goods are sold by the consignor is registered, include his or her name, address, and GSTIN or Unique Identity Number. Name, address, and point of supply if unregistered.
- The item's HSN code.
- Details of the goods
- The number of products delivered (when the precise quantity to be delivered is known).
- The supply's taxable value.
- Where the transportation is for supply to the consignee, the GST tax rate and the amount should be broken down as CGST, SGST, IGST, and GST Cess.
- The location of supply is important in the case of interstate transport of commodities.
When Do You Need A Delivery Challan?
Section 55(1) of the CGST Rules outlines instances when a supplier can issue a delivery challan rather than invoices. They are as follows:
- When the number of items delivered is unknown: Consider the case of delivering liquid gas when the quantity of gas withdrawn from the supplier's location is unknown.
- When products are transported for job work, the delivery challan is required in any of the following situations:
- Principal sends goods to job worker
- One job worker sends an item to another job worker
- Job worker is returning goods to the principal
- When products are transferred from a factory to a warehouse or from one warehouse to another before they are ready for supply
Other Cases For Issuing a Delivery Challan
Furthermore, there are cases where issuing a delivery challan for transported goods is acceptable. They are:
- Transporting goods on an approval basis:
- When an inter or intra-state product transportation occurs on a sale or return basis but is then withdrawn before the supply happens.
- Transporting ‘works of art' to galleries:
- Challan issued because art pieces are moved to galleries for exhibition and then returned.
- Goods sent abroad for promotion or exhibition:
- This is according to CBIC Circular No. 108/27/2019-GST dated July 18, 2019.
- Items shipped outside India for display or promotional purposes are not considered a "supply" or "export.”
- As a result, such transportation should be done using this delivery challan.
- Goods delivered in multiple shipments
- When goods are transferred using several means of shipping in partially or fully constructed state:
- Before shipping the first consignment, the supplier must submit a comprehensive invoice.
- For each succeeding consignment, the supplier must submit a delivery challan that includes the invoice reference.
- Each consignment must be accompanied by copies of the appropriate delivery challan and invoice.
- The original copy of the invoice must accompany the original copy of the delivery challan.
- When producing tax invoice is impossible at the time of delivery of goods
- If issuing a tax invoice during a sale or supply is impossible, the suppliers can produce a delivery challan for transporting the goods.
- This is in accordance with Rule 55(4) of CGST and SGST Rules, 2017.
- The supplier can give the tax invoice after the delivery of the products.
- When an e-way bill is not necessary
- In this case, suppliers issue a delivery challan if the e-way bill is not required.
- In this case, the tax invoice or Bill of Supply are also not essential.
- This is as per Rule 55A of the CGST Rules, which took effect on January 23, 2018.
Also Read: All About Tax Deducted At Source
Which Businesses Need Delivery Challan?
We have discussed the many instances where suppliers require a delivery challan rather than a tax invoice. Businesses that need these delivery challans for their operation are:
- Trading businesses
- Companies that have several warehouses where items are transported between warehouses.
- Businesses supplying goods
What Are The Contents For The GST Delivery Challan Format In Excel and Word Template?
There are five sections in the GST delivery challan format in excel:
- Section 1: Header
- A section containing information on the consignee.
- A section containing Transport information
- A section for Product Specifications.
- A section for Signatures and remarks
The Header section will feature information such as:
- Firm name
- Document heading “GST Delivery Challan” at the top
Consignee Details Section
In terms of transportation, the consignee is the person who receives the cargo.
This section will contain the consignee’s information such as:
- Delivery Challan Number
- Place of Supply (POS)
- Issue date
Transport detail section
This section contains transport details such as:
- Transportation mode(air/land/sea)
- The name of the transport company
- Number of the vehicle
- Dispatch Date
This section contains the details of the product, which are as follows:
- Sr. No.: Serial Number
- Description of the product’s colour, size, dimension, etc.
- HSN/SAC Codes: Harmonized System Nomenclature code of Products or Services Accounting Code
- Quantity of Goods
- Units of the products, i.e. how many meters, bags, or pieces of items
- Rate of the product
- The total sale is the quantity of the products multiplied by their rate
- Discount if available
- The taxable value column is calculated automatically
Signature and Remarks Section
This section includes:
- Challan total in words
- Authorized signatory box
- Business Greetings
Contents of the Delivery Challan Format in Word
The information in the Delivery Challan Format in Word template is similar to the excel format. The delivery challan comprises dispatch information while also ensuring an accurate transaction.
The document must contain the following information:
- Serial number of a delivery challan
- Date of dispatch
- Order number of the purchase
- HSN/SAC code
- Information of the customer
- Description of the products
- Sales tax
- Other charges
- The total amount
- After reviewing the document, it is essential to sign the document to complete the process.
To go through the procedure, businesses can freely download the delivery challan in excel and word format. Since three copies are necessary, the supplier triplicates the document every time.
Goods sent for Job Work under GST
Principal – The GST taxpayer whose products are used during the job work process.
- A GST-registered person may deliver raw materials, capital goods, or semi-finished items to a job worker to perform job work.
- The individual who sends the materials for the work has the option of paying GST or not paying GST.
Also Read: Important Benefits of Registering for Composition Scheme under GST
Bringing back the processed goods in time
- After the job work process is completed, the principal who provided the materials for the job work process may return the items to their location.
- Additionally, they may supply these things straight to their ultimate consumer, including exports, from the job worker's location.
- In the case of inputs, the commodities must be provided further or brought back from job worker premises within one year.
- Capital items, excluding moulds and dyes, such as jigs and fixtures or tools, shall be provided or returned to the job worker's premises within three years.
Liabilities on the Principal
- It is the principal's responsibility to keep track of commodities provided for job work and return them in accordance with GST guidelines.
- If they fail to do so, as a general rule, commodities will be considered as supplied at the moment of issuance for job labour.
- They will be accountable to pay the total amount for the goods.
- Goods supplied from a job worker’s place to an end customer are counted as a supply from the principal.
Job Work Delivery Challan
- After downloading the job work challan under GST, the principal can send the goods for job work processing.
- The challan format is prepared as per GST rules.
- The delivery challan format in GST is downloaded in excel and filled out.
- The document will help maintain a record for the GSTR 4 return
- Principal needs to triplicate the form
- The job work challan is also used while the job worker returns goods to the principal after processing them.
- You can download the delivery challan format in excel for further changes. You can also convert it into a word file.
Also Read: GSTR-1 – Return Filing, Format, Eligibility & Rules
We have understood the importance of a delivery challan and how it brings clarity to all job work proceedings. It is also an essential document that plays a vital role in record-keeping. For this reason, it is important to make an effective delivery challan. To make a challan more efficient, one must capture the specific details of the goods like the HSN codes, the taxable amount, and the description.
When is a Delivery Challan Issued?
A delivery challan is issued in the following situations:
- When the specific quantity of goods supplied is unknown
- Goods transported for job work
- Transported goods not considered as sale or supply
Does the delivery challan contain details of the transport?
Yes, the challan should contain the details of the mode of transport and the vehicle details.
Can a delivery challan be used while transporting items between different states?
Yes, a delivery challan is used during interstate good transportation. The challan should contain the delivery location details.
Can we use a delivery challan instead of an e-way bill?
In certain cases, when an e-way bill cannot be issued while transporting goods, a delivery challan is used instead.
Who is liable if a product or good is not returned in a given period during a job work?
The principal or supplier of the raw material is answerable to pay the GST on the goods if they do not return within the stipulated time.