When a Delivery Challan Must Be Issued Under GST Regulations

When a Delivery Challan Must Be Issued Under GST Regulations in India

This blog guide outlines key scenarios where a delivery challan is required under GST, along with mandatory documentation and compliance requirements.

Structured Scenarios Requiring a Delivery Challan to be Issued by Taxpayer:

Transportation of Goods for Job Work

• Every consignment for job work must be accompanied by a delivery challan. The principal (owner of goods), even if goods are sent directly to the job worker. And objective/purpose: Goods sent for processing, repair, or enhancement. And reporting requirements as per Rule 45 and 55 of the CGST Rules, 2017:
  • Details must be included in FORM GSTR-1 (outward supplies).
  • Must be reported in FORM GST ITC-04 (quarterly return for job work).
  • Form ITC-04 reporting by the principal. FORM GST ITC-04 (Quarterly Compliance for Job Work), i.e Due Date: 25th of the month following the quarter.
  • Who files it? The principal (supplier of goods). Contents:
  • Goods dispatched to a job worker.
  • The Goods received back from a job worker.
  • Goods transferred between job workers.
• What are the Documentation required to be retain in this case
  • A Delivery Challan must accompany the goods.
  • Details such as description, quantity, and purpose (e.g., “For Job Work”) must be mentioned.
• Mandatory Details in a Delivery Challan
  • Date & Number: Unique serial number.
  • Consignor & Consignee Details: Name, Address, and GSTIN.
  • Goods Description: HSN Code, description, and quantity.
  • Tax Details (if applicable): Taxable value, CGST, SGST, IGST, UTGST (separately).
  • Place of Supply & Signature.

Goods Sent for Testing or Approval

Goods Returned After 6 Months from Appointed Day (Post-31st December 2017)

For the purpose: quality checks, certification, or buyer validation.

• GST will be payable by the buyer (who is returning the goods) if the goods are taxable under GST.
• The original seller must also pay GST on the returned goods.
• Example:
  • Goods Sent: 20th June 2017
  • Goods Returned: 1st January 2018 → GST payable by both buyer and seller

Compliance Form for Goods Sent on Approval Basis

• Every person who sent goods on approval under the pre-GST regime must submit FORM GST TRAN-1 within 90 days of the appointed day (i.e., by 29th September 2017).
• This form records transitional tax credits and goods in transit under the new GST regime.
• What are the Documentation required to be retain in this case

• • Delivery Challan with the description of goods and the purpose (e.g., “For Testing/Approval”).
  • The location of the testing/approval center must be mentioned

• Key Consideration: No GST liability unless supplied.

Movement of Goods for Repairs or Return of Goods

• Purpose: Transport of goods needing repair or returning repaired goods.
• What are the Documentation required to be retain in this case

• • Delivery Challan mentioning “For Repairs” or “Return after Repairs.”
  • Reference to the original invoice, if available, should be included

Key Requirement: Reference to the original invoice (if available).

Difference Between Job Work and Repair & Maintenance under GST

Aspect	Job Work	Repair & Maintenance
Taxability	Exempt (depending on the agreement between job worker & principal)	Taxable under GST (also taxable in pre-GST era)
HSN Code	9988	9987
Definition	“Treatment or process” performed on goods belonging to another person, leading to a transformation or enhancement.	Post-manufacture activity that involves rectification of defects or maintenance to extend shelf life.
Interchangeability	Not interchangeable with Repair & Maintenance. Job work involves modification or improvement, whereas repair is restoration.
Legal Precedent	Authority for Advance Ruling (AAR) – West Bengal Decision: 2019 (23) – Alok Bhanuka case	Confirmed that repair & maintenance is distinct from job work and is subject to GST.

Transportation of Semi-Finished Goods Between Two Branches

• Under GST, branch transfers are subject to tax depending on whether they occur within the same state or across different states, and the objective is movement for further processing between manufacturing units. And GST applicable if branches are in different states.
• Taxability of Branch Transfers: Interstate Stock Transfers (Different States, Same PAN)
• GST is applicable on transfers between branches registered in different states under the same PAN.
• These branches are considered distinct persons under GST.
• Intrastate Stock Transfers (Within the Same State, Same PAN)
• GST is applicable only if the organisation has multiple GST registrations in the same state (i.e., considered distinct persons).
• If there is only one GST registration in the state, no GST is applicable.
• Valuation of Branch Transfers Under GST : Since stock transfers occur within the same entity (but distinct persons under GST law), the transaction value method cannot be used. Instead, valuation is determined using the following methods:

Sl. No.	Valuation Type	Explanation
1	Open Market Value (OMV)	The full monetary value of goods/services excluding GST. If the recipient can avail full ITC, the invoice value is considered the OMV.
2	Value of Similar Goods/Services	If OMV is not available, the value of similar goods or services of similar quality is used.
3	90% of the Price Charged to an Unrelated Customer	If the recipient further supplies the goods, the supplier can opt to value the transfer at 90% of the price charged to an unrelated buyer.

What are the Documentation required to be retain in this case

• Delivery Challan mentioning “For Further Processing” or “Semi-Finished Goods.”
• Include details of both branches’ GSTIN and addresses.

Stock Transfer Between Branches with the Same GSTIN (Within the Same State)

Process of Stock Transfer Under GST : Stock transfers under GST involve key steps to ensure compliance and avoid tax complications. Purpose: Internal movement without a tax invoice.

Determining Taxability under Stock Transfer Under GST

• Interstate Transfers (Between Different States, Same PAN): Taxable: Subject to Integrated GST (IGST). And Treated as a supply since branches in different states are considered distinct persons under GST law.
• IntrastateTransfers (Within the Same State, Same PAN): Exempt from GST if both branches operate under the same GSTIN. Exception: If the entity has multiple registrations in the same state, GST may apply. Ot is not considered a “supply” under GST.

Valuation of Stock Transfer: The value of goods transferred determines the GST amount to be paid:

Valuation Method	Description
Transaction Value	Used if the branches are unrelated and a clear price is available.
Market Value	Used- when a transaction value is not available. The price of similar goods in the market is considered.

Documentation Required for GST Compliance: Proper records are crucial for stock transfers:

• Transfer Challan: Details of goods transferred (quantity, value, GST rate, branch details).
• Invoice
  • Mandatory for taxable transfers.
  • Must specify value, GST rate, origin, and destination.
• Tax Payment and Returns Filing : If the transfer is taxable, calculate GST based on:
• The valuation method used.
• Applicable IGST/CGST/SGST rates.
• File relevant GST returns (e.g., GSTR-1, GSTR-3B) on time to avoid penalties.
• What are the Documentation required to be retain in this case :

Delivery Challan mentioning “Stock Transfer.”

The GSTIN of the sender and receiver must be the same

Goods Being Transported Without a Supply (Exhibitions/Demonstrations)

Purpose: Goods moved for display or promotional events. Goods moved for display or promotional purposes at exhibitions or for demonstrations do not constitute a supply since there is no consideration involved. Goods Being Transported Without a Supply Must be accounted for upon return/loss

What are the Documentation required to be retain in this case:

• Delivery Challan stating “For Exhibition” or “For Demonstration.”
• Include details of the event/location where the goods will be displayed

E-Way Bill for Goods Sent for Exhibition

• An invoice is mandatory for generating an E-way bill. E-way bills cannot be modified after generation. If there’s an error, you must cancel and generate a new one. Each consignment requires a separate E-way bill.
• E-way bill is required for goods sent to an international exhibition. Additional customs documentation may also be required. Different types of goods require separate E-way bills, even for the same event.
• E-Way Bill for Exhibitions It ensures smooth transport and compliance with GST regulations; it Helps businesses avoid penalties and ensure hassle-free logistics. And Mandatory for intra-state and inter-state movements of goods beyond specified value limits. Regulatory Checks & Physical Inspection of Goods in Transit

• • Proper officers may intercept vehicles to check E-way bills (physical/electronic).
  • RFID readers installed by the Commissioner verify vehicle movements.
  • Inspection Process: Summary report in Part A of GST EWB-03 (within 24 hours of inspection). And Final report in Part B of GST EWB-03 (within 3 days of inspection). If tax evasion is suspected, physical verification can be conducted again.

General Documentation & Compliance for Delivery Challan Under GST

• Following Mandatory Details in Delivery Challan: Date, challan number, sender & receiver details, description of goods, purpose, place of delivery, vehicle details.
• Taxpayer must require E-Way Bill Requirement: If goods value exceeds ₹50,000 or as per state rules.
• GST Taxpayer must retain books and records maintained by consignor, consignee, and transporter for audit purposes.