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
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
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
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.
Can we bill in IGST from Maharashtra to Odisha with 3rd party transaction and Bill to and ship to address site has another GST No.
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.
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
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
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
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.
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
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
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?
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..!!!
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?
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.
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
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?
We are from MH and billing to Tamilnadu. Consignee is in MH so what will be GST? and Place of supply
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
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
what document to be attached to shipped party?
it means billed to…place of supply ( gst applicable)
sir, kindly tell about the lorry receipt..when supplier of state A directly supply to State c on instruction of state b
ISSUE OF BILL TO SHIP REALLY WELL ADDRESSED.
Supplier : Maharastra, Bill to : Karnataka, Ship to (Recipient) : Maharastra and Place of supply : Maharastra in this case is IGST or C +SGST applicable?
Sir, whether we need to take GST no of Ship to Party in the GST Regime ? is it mandatory ?
whose name Registration certificate will be issued
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.
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.
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
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
Good article!!
sir, kindly tell about the lorry receipt..when supplier of state A directly supply to State c on instruction of state b..
How to prepare invoice for sending goods to third party after receiving instruction from party B
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?
IGST to 29
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?
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.
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.
To the point explanation.
Excellent article.. Really helpful !!
Excellent article…Really helpful !!
Superb Article…nicely written…keep it up..
Simply explained.good one.
To the point, exact and accurate article.. Too good..
Very Well Written… Keep it up..
Very good article. Explained with basics and in a very simple language. Great One !!!!
Good One
Well explained and simple language
good one
Thanks for giving brief understanding of the subject matter