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 .

GST Bill to – Ship to model

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.:-

Bill to – Ship to transactions 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)

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85 Comments

  1. NISHU says:

    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

  2. v.gokulkumar says:

    we are in Chennai , recd order from Chennai , but place of supply will be Andhrapradesh , we have mention cgst / sgst or IGST . PLS GUIDE .

  3. Aman Garg says:

    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.

  4. Prakash Kumar says:

    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

  5. ANAND MANGALVEDHEKAR says:

    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…

  6. CMA ASIM SAHA says:

    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

  7. Jitendra Chaudhari says:

    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.

    1. ca vikas kumar says:

      Yes, this transaction covered by section 16 of IGST act 2017. it is called zero rated supply………………..
      There is levy of GST but Due to export Benefit govt provide benefit to taxpayer and rate comes down to ZERO

  8. Sanjana says:

    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.

  9. Raj Kumar Jain says:

    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.

  10. Vinod says:

    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?

  11. VK CHITTORA says:

    Is it mandatory to have “Shipping address” in Tax invoice if “Billing address” is same where material being sent. E Way bill also generated

  12. VK CHITTORA says:

    Is it mandatory to have “Shipping address” in invoice if “Billing address” is the same where shipping being done. E way bill also generated.

  13. HIMANSHI AGRAWAL says:

    I AM BUYER IN JAIPUR AND SUPPLIER IS IN PUNJAB AND PLACE OF SUPPLY IS ALSO IN PUNJAB BUT BILLING IS TO JAIPUR. CAN I CLAIM ITC OF IGST. PLEASE SUGGEST

  14. REVATHI says:

    I AM SUPPLIER IN MAHARASHTRA AND PLACE OF SUPPLY IS MAHARASHTRA BUT BILLING IS TO BANGALORE. WHAT SHOULD I CHARGE (CGST+SGST ) OR IGST . PLEASE SUGGEST

  15. Ramesh Devadiga says:

    vendor from Delhi raised invoice to our registered business place at Delhi with IGST for providing the service (Mannequins Repair & Repaint) at various states other than delhi.
    We would like to know whether they can charge IGST under bill to ship to concept in spite of being in the same state.

  16. Vijay M Pawar says:

    If party place PO from Maharashtra to supplier in Maharashtra & saying that material supplied to UP in this case supplier charge IGST in UP due to material supplied to UP.
    My question is that it is necessary that supplier need to print billing address on Invoice as UP or Billing address is is Maharashtra & Delivery at UP will ok & apply tax iGST.

  17. Rahul says:

    My Trading firm is registered in Telengana and I want to send material directly from my supplier’s factory(Pune) to Delhi.

    I want my customers to get my bill instead of factory bill…..My question is what all documents are required to send along with material ?

    As per my understanding My bill and my waybill are required. Please suggest correct meathod

  18. Gaurav goyal says:

    pls solve my doubt,I have a customer which is Having gst no in Delhi and haryana gurugram,he wants that that when I am sending goods to him,then I mention Delhi gst no bill to side,and haryana gst on ship to side,in that case which tax is charge cgst + sgst or igst.
    Kindly revert
    Also in eway bill which gst no is to be enter Delhi or gurugram haryana

  19. Sumeet says:

    We would like to sell material from maharashtra (ABC Co) to telangana (XYZ Co) as sold to party & ship to also in telangana (LKJ Co). In such case GST will be claimed by LKJ Co on whose invoice (ABC or XYZ) ?

    Further who should issue documents & what are the documents which should be given to LKJ Co if payment of item is to be done by LKJ Co to XYZ Co

  20. Jeevan Patil says:

    Please help me on this , My GST state Code Is 27(Maharashtra ),I raised a Bill on Maharashtra, but supply given in Delhi…which GST I should charged.

    In My Knowledge, GST Always charge on where is party Bill a invoice, if he supply in Delhi he should raised a bill on Delhi,not in Maharashtra.then I charge (IGST).IF he Supply in Delhi But Bill Raised in Maharashtra, then i charge (CGST+SGST)

    Please Help me on this.

  21. Buvana says:

    Hi, please solve my doubt
    Legal services is rendered from Bangalore to Chennai and paid by Chennai unit.
    But charged to Mumbai address.
    Since it attracts RCM, Please tell me who have to pay taxes? Chennai or Mumbai unit?
    Chennai and Mumbai units are from same group of companies

  22. vasanth says:

    We have supplied to (Shipped to)SEZ in Bangalore & billed to X firm In Bangalore without collecting GST.We have lot of INPUT gst.. Is our billing is correct or wrong

  23. Kajal Kansara says:

    Our firm A & co. is located in ahmedabad and provides services to B Ltd also located in ahmedabad but we have to bill B LTD in address of Mumbai. In short our firm is in ahmedabad, bill to is mumbai and ship to is ahmedabad of same company i.e B LTD What should we charge IGST or CGST/SGST?

  24. Manish says:

    lets go in other step:
    Scenario 1- ABC Ltd Delhi got the order from BCB Ltd Delhi to Supply goods to CBC Ltd Haryana then according to you CGST/SGST applicable. OK

    Scenario 2- ABC Ltd Delhi got the order from BCB Ltd Delhi to Supply goods to BCB Ltd Haryana then which GST has to be charge IGST or CGST/SGST..!!!

      1. manish says:

        It Should be IGST. if the both Bill To & Ship to customer are same then GST will applicable on SHip to

        and if Bill to & Ship to is different the on BIll to

  25. Digant Sanghavi says:

    Dear Sir,

    we are bases and maharashtra and purchase goods from gujarat. we supply the same goods to our customer in gujarat. We cannot revel our customer name in gujarat to our supplier in gujarat to maintain secrecy of business. Please suggest how do we prepare e-way bill for the same?

  26. bhairav sheth says:

    How to make e-way bill in bill to ship to transaction…when Monu will make e-way bill from Gujarat ….does heetit distance from Gujarat to Karnataka or Maharashtra to Karnataka… mentioning kms accordingly…? So will it be Sonu .. Maharashtra to Gujarat and Monu Gujarat to karanataka….? Than kms will be more as it’s going from Maharashtra to Karnataka directly.

  27. PRASAD says:

    M/s. Sonu Ltd, a dealer in automobile goods, located in Maharashtra receives an order from M/s. Monu Ltd , located in Maharashtra. The order is for the supply of 5,000 qty of automobile part, with an instruction to ship this goods to M/s. Monu Ltd located in Karnataka both are same legal entity Which Gst Applicable cgst, sgst or igst and who will eligible to take the itc

  28. CHANDRESH says:

    i AM FORM MUMBAI. WE HAVE TAKEN PART IN EXHIBHITION IN AHEMDABAD. WE PAID STALL RENT FOR AHEMDABAD EXHIBITION.

    EXHIBITOR GAVE US THE GST INVOICE. BUT THEY MENTIONED IGST & CGST INSTEAD OF IGST. WE HAD SHARE OUR GST NO WHICH IS OF MUMBAI. NOW WHAT TO DO?

    1. Harjinder says:

      Hi Sir, I have a question that I belong to Punjab State and I have sent the goods to my first customer in Andhra Pradesh, but he is not able to pay such amount. Now I wish to send these goods from Andhra Pradesh to my second customer in Tamilnadu. Kindly suggest what is the procedure and rules under GST.

  29. Mayur Bagade says:

    we from Maharashtra are making bill to Tamilnadu and Consignee is in maharashtra. what will be the GST? SGST 14% and CGST 14% or IGST 28%.
    Also give place of supply details

  30. Milind says:

    BILL TO PARTY IS IN INDIA AND SHIP TO PARTY IS OUTSIDE INDIA THEN WHAT TRANSACTION IS DONE IN GST PLEASE ADVICE….
    NOTE: BILL TO PARTY SEND ORDER ALSO PAYMENT

  31. Lalitha satish says:

    Supplier : Maharastra, Bill to : Karnataka, Ship to (Recipient) : Maharastra and Place of supply : Maharastra in this case is IGST or C +SGST applicable?

  32. vimal kharva says:

    we purchase material to Delhi and direct martial send to consignee address state Gujarat and our state all same as consignee,
    so what tax charge in consignee?
    igst or cgst & sgst charge to consignee ?
    please do the needful.

  33. LOCHAN says:

    Our company is registered under GST in Rajasthan and purchasing goods from registered dealer of Kolkata. And we will export that goods from kolkata port. So whether we will be liable to CGST & SGST OR IGST as dealer will send that goods directly to CHA at our order.

  34. Manmohan says:

    very good article…hope i get answer of this. IGST law permits do bill to/ ship to model within indian states other than export transtion outside India under section 10 (1)(b). further section 11 b for export to understand place of supply. now being a exporter in state ‘a’ , can instruct supplier in state ‘b’ to supply goods near custom department in state ‘c’, and using export invoice of exporter make custom clearance to supply outside of India. here want to cover 10 and 11 both section to save fright cost. please guide with natural justice

    1. Milind says:

      Good Morning Sir
      thanks for reply
      in this connection we have received purchase order with charge IGST then can we charged IGST in this transaction or not?
      and if we have charge the IGST then can third party take its ITC?
      If we have not charge the IGST theb said supply can this shipment is treated as export and also said transaction shown in EXP. trans. in GSTR1?

  35. Srividya says:

    What documents should be sent with material ?
    What will be the price for invoicing of third party to consignee -will it be invoice value of consignor+GST or will it be basic price of consignor + gst

  36. Akhil Rungta says:

    sir, kindly tell about the lorry receipt..when supplier of state A directly supply to State c on instruction of state b..

  37. gourav bagaria says:

    ONE SMALL DOUBT:
    supplier A from odisha gets order from B of karnataka to supply the material to orissa address itself and bill to KARNATAKA address with gstin registration of karnataka. what shall i charge cgst/sgst or igst?

    1. TEJAS says:

      You will charge IGST in this case. please see the 4 scenarios mentioned above. Your case falls in 2nd scenario and hence IGST will be applicable.

  38. Sk Nausar says:

    Let assume Pary “A” from Bengal Supply and install goods to “B” at Chennai with the instraction of C carring his business also from Bengal. Then “A” bill raise to “C” CGST+SGST as per section 10(1)(b). Here is another point to be noted that there is no bill issue by C to B. assuming that it is a business expenses (Fabrication) treated by C in his accounts. Then in that case Sec 10(1)(b) applicable or 10(1)(a). Where I consider supply of goods?

      1. TEJAS says:

        The correct course of billing will be A will raise an invoice on C with IGST and showing B as recepient of goods. That will take care of everything.

    1. Suchindra says:

      This is a very pertinent question. In my opinion 10(1)(d) is attracted and place of supply will be where goods are installed.
      If you have taken any other tax position please do clarify for benefit of all.

  39. Pradeep Kumar Madhogaria says:

    I the Buyer do not want the original invoices to be seen by the “ship to party”. What are the documents to be carried with the transport. Can I as buyer send a scan copy of my invoice to the seller to be attached with the consignment.

  40. Karan says:

    Sir, the example were very good and the concept cleared but one query-
    1. Is the supplier liable to issue any Form, like E1 or other.

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