What is Delivery Challan?
According to Section 31 of the CGST Act, 2017, if a registered supplier transports taxable goods from one place to another, a tax invoice should be issued. This tax invoice contains the number of goods, their description, value, GST charged on them, and other details that are prescribed under Section 31(1) of the Act. However, in certain cases, transportation of goods does not result in a sale or supply and so, a tax invoice is not issued. In such cases, a delivery challan is issued instead. Suppliers use the delivery challan format and create a delivery challan when transporting goods that are not intended for immediate sale.
Thus, a delivery challan is a document that is issued when goods are being transported to another place but they are not exactly meant for sale and no GST is applicable on such supply. It is also called a dispatch challan or delivery slip. It contains the details of the goods that are being transported. For example, if a factory sends goods from one warehouse to another warehouse, this challan will be issued for such transportation. You can use myBillBook billing software to create delivery challan on android and desktop.
Delivery Challan Meaning
A delivery challan is a document created during the transportation of goods from one place to another which may or may not result in sales. This delivery challan is sent along with the goods shipped for delivery. Majorly this delivery challan contains the details of the items shipped, quantity of goods marked for delivery, buyer address, delivery address. Generally, there are three major type of copies created for delivery challan. They are
|Type of Delivery Challan||Whom it is Created for|
|Original||Delivery challan is for Buyer|
|Duplicate||Delivery challan is for Transporter|
|Triplicate||Delivery challan is for Seller|
Delivery Challan Template
How to use delivery Challan Format ?
The delivery challan format template helps you create the challan easily. You can use the blank template, fill in the details in the fields on the template and take a print of the same.
The format would be printed containing all the necessary details of the transported goods. You can sign the challan and send it across to the recipient along with the goods being transported.
Why is a Delivery Challan needed?
Section 55(1) of the CGST Rules specify the instances when suppliers can issue a delivery challan instead of an invoice. These instances of issuing challans under GST are as follows –
- Where the quantity of goods supplied is not known. Suppose, when supplying liquid gas where the quantity of the gas that is being removed from the supplier’s place of business is unknown
- When goods are being transported for job work. In this case, the delivery challan is needed in any of the following cases –
- If the principal is sending goods to a job worker
- If one job worker is transporting goods to another job worker
- If the job worker is sending goods back to the principal
- When the goods are being transported before they would eventually be supplied. For example, moving of goods from the factory to the warehouse or from one warehouse to another
Moreover, in some cases, issuing this challan in an acceptable format is needed for transporting goods. Such cases are as follows –
- When the goods are transported on an approval basis
If the goods are transported inter or intra-state on a sale or return basis and then they are removed before the supply happens, a challan is needed.
- When work of art is transported to galleries
If works of art are transported to galleries for exhibition, such transport can be done with these challans.
- Transporting goods abroad for promotion or exhibition
As per the CBIC Circular No. 108/27/2019-GST issued on 18th July 2019, if goods are sent outside India for exhibition or promotional activities, such transportation cannot be treated as ‘supply’ or ‘export’. Thus, such transportation should be done under this challan.
- Transporting goods in multiple shipments
If goods are transported using different modes of shipments in a partial or full non-assembled state, the supplier is required to issue a tax invoice when transporting the first consignment. Then, a challan should be issued for every subsequent consignment where a reference of the invoice should be given.
- When issuing tax invoice is not possible at the time of removing the goods
As per Rule 55(4) of CGST and SGST Rules, 2017, if the goods being transported are meant for sale or supply but it is not possible to issue the tax invoice, the supplier can issue a delivery challan and transport the goods. The tax invoice would, then, be issued, after the goods are delivered.
- When an e-way bill is not needed
According to Rule 55A of the CGST Rules with effect from 23rd January 2018, if the e-way bill is not needed and in cases when the tax invoice or Bill of Supply is not needed, the goods should be transported using this challan.
Key components of a Delivery Challan
The main components of this challan are as follows:
- The date of creating the challan and its number. It should be numbered serially
- The name, address, and the GSTIN number of the consignor
- The name, address, GSTIN number, or UIN number of the consignee. If, however, the consignee is unregistered, the place of supply should be mentioned instead of the GSTIN or UIN
- HSN code of the goods being transported
- Description of the goods
- The exact or provisional quantity of goods being transported
- The taxable amount of the supply
- The applicable GST rate, broken down into IGST, CGST, SGST, and cess
- The place of supply of the goods if the transportation is being done between two states
- Signature of the supplier or designated authority of the supplier
Businesses that need Delivery Challan
Some businesses that need these challans under GST include the following –
- Businesses that are involved in the trading of goods, i.e. trading businesses
- Owners having multiple warehouses where goods are usually transported between different warehouses
- Suppliers of goods
- Wholesalers of goods
- Manufacturers of goods
FAQs on Delivery Challan
What is the rule of issuing a delivery challan?
Issuance of a delivery challan is governed under Rule 55 (2) of CGST Rules. According to the rules, it should be issued in triplicate. The original one is meant for the consignee (recipient of goods), the duplicate copy is for the transporter of goods and the triplicate copy is meant for the consignor (supplier of goods)
Does the delivery challan format contain the details of the mode of transport?
Yes, the challan should have the mode of transportation being used to transport the goods
Can I use a delivery challan if I transport the goods from a warehouse in one state to another warehouse in another state?
Yes, a delivery challan can be used for the inter-state movement of goods from one warehouse to another. You should ensure that the format contains the details of the warehouses too.
What is the difference between delivery challan and invoice?
A GST invoice is issued when the supply of goods or services is made or when payment has been received by the supplier. Whereas, a delivery challan is issued for transportation of goods.
A delivery challan may or may not include the value of goods, but it never states tax charged on the goods. But an invoice always shows the taxes charged on goods sod.
Sometimes, both delivery challan and invoice are merged together and called “Tax invoice cum delivery challan”
What is delivery challan for job work in GST?
Delivery challan is required for sending goods by the principal to a job worker or one job worker to another job worker or return of goods after job work to the principal.
Can we generate an e-way Bill on delivery challan?
The delivery challan, or invoice, or bill of sale and transporter’s ID must be available for generating the e-way bill.