In day today business ,there can be cases where the supplier does not have the stock of the goods ordered or it not economically viable for him to first get goods at his place and then forward it to recipient’s place . In such cases he will asks the third party to ship the goods directly to the customer. This is called as Bill to – ship transactions.
In Pre GST Regime also ,Bill to Ship to transactions was a common practice in trade .
For example :-
M/s. Sonu Ltd, a dealer in automobile goods, located in Maharashtra receives an order from M/s. Monu Ltd , located in Gujrat. The order is for the supply of 5,000 qty of automobile part, with an instruction to ship this goods to M/s. Natu Ltd (Customer of M/s.Monu Ltd), located in Karnataka.
There are two transactions involved in this example:-
| Transaction-1 | Transaction-2 |
| Between Sonu Ltd. and Monu Ltd. :
Sonu Ltd. is the supplier and Monu Ltd. is the buyer. Accordingly, Sonu Ltd. will bill the transaction to Monu Ltd., and as per the instruction, ships the goods to Natu Ltd. in Karnataka. |
Between Monu Ltd. and Natu Ltd. :
Monu Ltd. is the supplier and Natu Ltd. is the buyer. Monu Ltd. bills the transaction to Natu Ltd., and endorses the lorry receipt (goods shipped in a lorry by Sonu Ltd.) in favour of Natu Ltd. |
| Taxes:- CST 2% | Taxes:- NIL |
| Forms:- Monu Ltd. – C Form
Sonu Ltd. – E-1 Form |
Forms:- Natu Ltd. – C Form
Sonu Ltd. – Lorry Receipt |
In the above illustration, Sonu Ltd. bills to Monu Ltd., and ships the goods to Natu Ltd. Sonu Ltd. issues Form E1 to Monu Ltd. as against the C form produced by Monu Ltd for availing CST @ 2%. Subsequently, Monu Ltd. bills to Natu Ltd. against C Form without charging any tax, and endorses the Lorry Receipt in favour of Natu Ltd.
Bill to – Ship to transactions in GST Regime :Section 10(1)(b) of IGST Act covers supply before or during movement of goods by transfer of documents or otherwise. In case of such sale, it shall be presumed that the final recipient’s place is place of supply of goods. Thus, if supplier and final recipient are in different States, the supply will be inter-state even if goods are delivered in the same State on direction of final customer (third party).
In GST Regime , the place of supply of goods is an important factor to determine the transaction as interstate or intrastate and accordingly, the applicable taxes can be levied.
if the goods are supplied by the supplier to the recipient on the direction of a third person, it will be deemed that the third person has received the goods, and the place of supply will be the principal place of business of such third person.
Place of supply for Bill to – Ship to transactions is defined under GST under Section 10 (b) of IGST;
(b) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;
Input Tax Credit :- The third person (under whose instructions goods are supplied to recipient) can take ITC of GST charged by supplier and in turn charge GST to final recipient in bill to ship to transaction under section 10(1)(b) of IGST Act.( Umax Packaging (A unit of Uma Polymers Ltd.), In re [2018] (AAR- RAJASTHAN)
Let’s take a same example in GST regime.:-
In the example, on the instruction from Monu Ltd., Sonu Ltd. ships the goods to Natu Ltd. located in Karnataka. Here, Monu Ltd. is deemed as the third person. Therefore, the place of supply will be the principal place of business of the third person i.e., Gujrat. Accordingly, Sonu Ltd. charges IGST on billing to Monu Ltd. and in second part of transaction between Monu Ltd. and Natu Ltd. will also be interstate, and IGST will be charged.
Let us discuss further with various scenarios along with understanding purpose-
| Supplier | Bill to (Third party) | Ship to (Recipient) | Place of Supply | GST |
| Maharashtra | Maharashtra | Maharashtra | Maharashtra | CGST+SGST |
| Maharashtra | Karnataka | Maharashtra | Karnataka | IGST |
| Maharashtra | Maharashtra | Karnataka | Maharashtra | CGST+SGST |
| Maharashtra | Karnataka | Karnataka | Karnataka | IGST |
E Way Bill : As per GST rules, an E-way Bill Number is to be generated whenever there is any movement of goods. In Bill-to and Ship-to scenario, though there are two invoices, the physical movement of goods is happening only once. Thus E-way bill needs to be created only once and could be based on either of the invoices.
In the e-way bill form, there are two portions under ‘TO’ section. On the left-hand side – ‘Billing To’ GSTIN and trade name is entered and in the right-hand side – ‘Ship to’ address of the destination of the movement is entered. The other details are entered as per the invoice. In case, ship to state is different from Bill to State, the tax components are entered as per the billing state party. That is if the Bill to location is inter-state for the supplier, IGST is entered and if the Bill to Party location is intra-state for the supplier, the SGST and CGST are entered irrespective of movement of goods whether movement happened within the state or outside the state.
Considering the GST provisions, it is very important to have an accurate determination of place of supply for below reasons:
- Wrong classification of supply between interstate or intra-state and vice-versa may lead to hardship to the taxpayer as per section 19 of IGST Act and section 70 of CGST Act.
- The taxpayer will have to pay the correct tax along with interest for delay on the basis of revised/correct classification.
- Also, correct determination of place of supply will help us in knowing the incidence of tax.
- Where wrong taxes have been paid on the basis of the wrong classification, refund will have to be claimed by the taxpayer.
Lastly, it is very important to understand first the main purpose of transaction in proposed Bill to – Ship to transactions, as it will define the place of supply under GST regime and taxes will be applicable accordingly.
(Republished with Amendments. Amendments been made by CA Anita Bhadra)
Author Bio
Hi,
please advise below…
Our business is supply and installation of solar system..our office in maharashtra and we are supply in maharashtra (shift to) but customer want to bill on Haryana state (bill to) so in this need to generate e-way bill and which tax consider..IGST or CGST,SGST
Hello,
I have GST at AP, on Dell website I have purchased Laptop for my business using my GST and Billing address of AP. As I was in Hyderabad during that period and wanted delivery at Hyderabad, I have kept Shipping address of Hyderabad, Telangana. In this scenarios where supplier address is Tamilnadu, My GST billing address is AP and Shipping address is Telangana. Can is ITC of GST on the laptop which I paid.
Yes you can
I have purchase material from Punjab and the billing address is Jharkhand and Shipping address is MP. Please suggest that Bill from Jharkhand to MP is mandatory with shipment, please confirm
Which Address(State) to consider for GST as per given scenario below,
e.g. “A”-Seller, “B”-Buyer (IGST, CGST/SGST will be as per office and godown, which ever state)
1. “A” Bill To “B” in office address(Register) and Ship To godown address(Register).
2. “A” Bill To “B” in office address(Register) and Ship To godown address(UnRegister).
3. “A” Bill To “B” in office address(UnRegister) and Ship To godown address(Register).
4. “A” Bill To “B” in office address(UnRegister) and Ship To godown address(UnRegister).
Hello, Bill to outside India and ship to Maharashtra, IN this case how can make invoice under GST.
if we purchase the goods from gujrat when we can take input at the time relase of the material or when we recived the goods
We are from chennai and having one order for supply of goods from our customer at Mumbai and delivery of goods to UK as per terms in PO. Entire value of sale proceeds received from our customer at Mumbai. My question is whether we can issue invoice in INR to Mumbai customer address and shipment address to UK. If we issue so Customs dept will accept this type of Invoice.?. And If the customs dept take it this invoice as export invoice the amount of invoice will be reflected in EDPMS as export amount receivables. For this amount we’ve to submit export documents to our AD Bank and report to the RBI as per FEMA. Could you plz let us clarify how to proceed in this type of supply of goods.
It is not your export. It is your customer who is exporting. So your customer has to raise a invoice on the importer.
we are @ bangalore karnataka and we got order from bangalore karnataka, party asking bill to bangalore karnataka, and name and address of the consignee out of country but material going india port how to bill
Plz ask o what’s app
Dear Sir,
We are registered under GST in Bangalore. we are expecting USD 1000 from one of our US customer for supply of electronics goods. we need to Bill to USA and we need to Supply goods TN , India as per instruction of our cutomer. Is it will be considered Exports of goods or Interstate sales with GST or without GST? Kindly clarify.
Interstate with gst as the place of supply is in India
Under ” Bill to Ship to” consignment, customer (bill to party) invoice is required along with truck.
Please advice.
What is the document issued to consignee is case of bill to ship to model?
I am importing goods from Germany based in Delhi hence bill to on invoice is Delhi but clearance is done at Chennai as ship to ( directly to customer)
Now the Freight Forwarder will raise the Invoice from its Chennai office to our Delhi office
In this case can avail the input tax credit?
I have supplied material to Party ‘x’ at Hyderabad from Party ‘y’ (Seller) from Hyderabad. Through Bill To Ship To under Waybill. Billing on My Name. Now I need to Suit Bill to Party ‘x’ do I need to generate Waybill.
we have purchased the material from France and bill to address is Kolkata and ship to address is Bangalore , can we move the material to Bangalore , how to generate the e way bill .
I am a supplier from chennai , received order from Mumbai . Both supplier and buyer registered in respective state. But Buyer wants to delivery to end customer. End Customer don’t have GST number. Is it mandatory that delivery location should have GST number pls reply.
A is Maharashtra based party & purchased goods from Odisha & sales {Invoicing} goods to Maharashtra based party but material shipped to Delhi. then how the invoice making with SGST + CGST or with IGST.
Please clarify.
i m exporter in UP but our godown at Gujarat. we are purchaes goods from UP. this condition we bill to ship to condition. or what
i m exporter in UP but our godown at Gujarat. we are purchaes goods from UP. this condition we bill to ship to condition. or what
In the begining Para “Bill to – Ship to transactions in GST Regime” it is confusing on the “place of supply” which ‘taxguru’ is humbly requested to calrify. If as per Section 10(b) of IGST, the ‘place of supply’ shall be the principal place of business of the third person on whose direction the goods have been supplied to recipient of the supply, then how ‘taxguru’ says that the final recipient’s place is place of supply of goods. Thus, if actual supplier & the said third person are in same state but final recipient are in different State, then also CGST+SGST will be payable whereas as per ‘taxguru’ sicne final recepient is in another stae IGST shall be payable.
I most hubmly request ‘taxguru’ to clarify above so that one follows the correct course.
For goods movement..
I purchased a machinery in Ahmedabad to be shipped to Delhi. But I get an order to move the goods to jaipur.
I dont want the manufacturer to know the place of supply.
In such case how should be move the goods.
Hi, I have a doubt on making ewaybill for shipment which need to be billed to a customer in USA and material should get delivered to Bangalore, how do we make ewaybill for this. pl advise
we deal with solar system, we received order from customer whose head office in Telangana, and the place of supply in delhi, can we prepare intrastate bill, and how can we prepare waybill with billing adress different and shipping adress different.and the customer is un registred person without gst number
Hi,
Need to know, if buyer and seller are both in maharastra, and service/supply is given in other state than maharastra. What gst tax break wil be applicable, igst or cgst/sgst
Sir, Please tell me in the situation of bill to ship which person liable for RCM in the case payment made to transport agency
A-supplier
B-buyer
C-recipient(Unregistered)
if transport freight was 30000 and it was paid by buyer but we have taken 30000 from the recipient no addition amount charge on the freight from recipient.this amount we did not show in the bill.
in the case both the situation we have to pay Rcm
otherwise we have to pay rcm at purchase otherwise we do not require to pay rcm in this situation.
We manufacture and supplier of Concrete Sleepers for Railways at Assam. We billed to Railway at Guwahati. On instruction of Railway, Our resposibility is up to loading in vehicles of the Purchaser. Purchaser(Railways) send it to various lacatiops in other state also. Suppose we railway send it to MIZORAM, then whose GSTIN is to be filled and which tax is to charged. Please comment
Hi everyone,
What if I get order from USA to send material/goods directly to mumbai.??
Let me clear, Im registered in Ahmedabad, gujarat.
Please elaborate with the tax treatment.
Thanks in advance
Hi sir
Supposed I have a order from USA but goods ship to oly how this transaction gst return
i have registeration in delhi darya ganj but my godwoon in munrika supplier party mention the same address in bill to ship to invoice is wrong or right place clear me or call me 9711074423
In Bill to – Ship Transaction, There are two invoices.
Is it mandatory that the date of both invoices must be the same.??
if yes how could be it possible.
WILL GST BE APPLICABLE IN CASE ORDER IS RECEIVED IN INR FROM ABC INDIAN COMPANY . bILL TO ABC INDIAN COMPANY AND SHIP TO XYZ THAILAND (OUT OF INDIA ) COMPNAY
we are in Chennai , recd order from Chennai , but place of supply will be Andhrapradesh , we have mention cgst / sgst or IGST . PLS GUIDE .
XYZ mumbai, bought goods from ABC Surat and instruct ABC to deliver it to PQR Transport co Surat.
XYZ mumbai sell the goods to RST Ahmedabad and mail the invoice to PQR transport co Surat.
Is the invoice issued by XYZ mumbai in order to validate the movement of goods from Surat to Ahmedabad. Can Eway bill be created by XYZ mumbai for movement of goods in Gujarat.
1. Our company Registered dealer in Kerala sending a parcel to Tamil Nadu through a transporting agency . Which tax is applicable and by whom and to whom is payable.
2. Our company registered in Kerala we have participated in a trade fair at Bangalore. In connection with that trade fair Our staff purchased different goods from Bangalore .Our Kerala address is mentioned in their bill . What tax is payable CGST and SGST or IGST
as per section 19(2) of the IGST act,2017, where tax is paid as CGST/SGST…where it turns out to be an inter-state supply liable to IGST NO INTEREST IS PAYABLE there on…
In Bill to Ship to case who will take credit of GST Either Bill to or Ship To
Pl do not link with supply to SEZ/ merchant exporter in this case. This is simply E1 transaction under VAT regime to avoid double taxation but in GST regime the place of supply is the most important both in case of Good and service. Under the GST regime no importance of Forms is available which is a very good concept I believe . A.SAHA
30 years of costing journey
If the bill to party is in Europe and and its Joint Venture is located in SEZ MH ..Supply of Goods from India to SEZ MH…In this case IGST will be exempted or charged..Please help.
HI..
A is shipper in Maharashtra… where buyer B is from SEZ zone, but the material receiver C is in Gujarat… So, in this condition how will GST tax charge??? kindly explain with both conditions, material exports with payment and without payment of tax.
A’ is supplier from Uttrakhand, B’ is buyer in Delhi, C’ is consignee in UP & D’ is receiver of material in Haryana. How the Invoice & E way prepared. Please help.
Hi
We have a shipment from Bangalotre to Gujrat, but Bill to adress is Bangalore only, please let me know for tax SGST/CGST or IGST?
Is it mandatory to have “Shipping address” in Tax invoice if “Billing address” is same where material being sent. E Way bill also generated
Is it mandatory to have “Shipping address” in invoice if “Billing address” is the same where shipping being done. E way bill also generated.