GST (Goods and Service Tax) is four year old now and right from its inception we have seen lot of changes and amendments in the law. Now, most of the taxpayers are familiar with GST Laws, processes and procedures in GST and are moving smoothly as it becomes older and more streamlined.
The present article one would come to know some of the provisions relating to tax invoice as well as provisions relating to delivery challan as prevailing under the GST law. The article also figures out the difference between tax invoice and delivery challan.
Provisions relating to Tax Invoice [Section 31 of the CGST Act’17]
The importance of an invoice known as tax invoice cannot be underestimated in GST. In terms of Section 31 of CGST Act, this is the primary and an important document of supply of goods and service which is also basis for deciding time and place of supply,hence relevant for determining rate of tax and valuation. This is also a primary document for availing ITC. It evidences the supply of goods or services and It is vital for availing input tax credit.
In case of supply of Goods: As per sec 31 (1) of CGST Act 2017, a registered person supplying taxable goods shall,before or at the time of —
a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
b) delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing the description, quantity and value of goods, the tax charged there on and such other particulars as may be prescribed.
In case of supply of Services: As per sec 31 (2) of CGST Act 2017, a registered person supplying taxable services shall,before or after the provision of service but within a prescribed period issue a tax invoice,showing the description, value, tax charged thereon and such other particulars as may be prescribed.
Prescribed contents in Tax Invoice : As per Rule 46 of CGST Rule’17- Tax Invoice – Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars,namely,-
The same is listed here under-
a) Details of the Supplier- Name, address and GSTIN of the supplier
b) Invoice Serial Number – Invoice number (Notably, it should be a consecutive serial number. The number should not exceed 16 characters. Also, the number should be a combination of alphabets, numerals, special characters and slash symbols).
c) Date of the invoice.
d) Details of the Recipient-Name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient.
e) Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is unregistered and where the value of the taxable supply is fifty thousand rupees (Rs.50,000) or more;
f) Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is unregistered and where the value of the taxable supply is less than fifty thousand rupees (Rs.50,000) and the recipient requests that such details be recorded in the tax invoice;
g) Harmonised System of Nomenclature code for goods or Services Accounting Codes for services; (HSN/SAC codes).[ Refer the Notification No.78/2020-C.T.,dated 15-10-2020]
h) Description of goods or services;
i) Quantity in case of goods and unit or Unique Quantity Code thereof;
j) Total value of supply of goods or services or both;
k) Taxable value of the supply of goods or services or both taking into account discount or abatement, if any;
l) Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
m) Amount of tax charged in respect of taxable goods or services (central tax, State tax,integrated tax, Union territory tax or cess);
n) Place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce;
o) Address of delivery where the same is different from the place of supply;
p) Whether the tax is payable on reverse charge basis; and
q) Signature or digital signature of the supplier or his authorized representative;
r) Quick Response Code,having embedded Invoice Reference Number (IRN) in it,in case invoice has been issued in the manner prescribed under sub-rule (4) of rule 48 [Refer the Notification No. 72/2020-C.T., dated 30-09-2020]
> Export invoices shall carry an endorsement “SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST”.
As per rule 47 of CGST Rule’17 Time Limit for issuing Tax Invoice- The invoice referred to in rule 46,
√ Within 30 days from the date of supply of services
√ Within 45 days from the date of supply of services in case of insurer, banking company, financial institution and non banking financial companies (NBFCs)
√ For RCM liabilities tax invoice has to be issued on Self either daily,weekly or at least once at the end of the month.
√ In case of continuous supply of services, the issuance of invoice will depend on the terms of contract.
√ In case of combined supply of taxable and exempted goods and services the person can issue one tax invoice for the taxable invoice and also declare exempted supply in the same invoice.
As per rule 48, the tax invoice should be prepared in the following manner- GST Law requires taxpayers to issue specified number of tax invoice copies. Let’s have a look at number of invoices we have to issue.
|In case of a supply of goods||In case of a supply of services|
|Tax Invoice is to be prepared in Triplicate (issue 3 copies) as follows:
Original copy marked as ‘Original for Recipient’,
Duplicate copy marked as ‘Duplicate for Transporter,’ and
Triplicate copy marked as ‘Triplicate for Supplier’.
|Tax invoice is to be prepared in duplicate (issue 2 copies) as follows:
Original copy marked as ‘Original for Recipient’, and
Duplicate copy marked as ‘Duplicate for Supplier’.
The serial number of invoices issued during a tax period shall be furnished electronically through the Common Portal in Form GSTR-1.
E-Invoice- New sub-Rule (4),(5) and (6) have been inserted in Rule 48 of CGST Rules’ 2017 w.e.f.13-12-2019 providing for preparation of E-Invoice by Notified class of registered person after obtaining Invoice Reference Number (IRN) by uploading information on Common Portal. In terms of these Rules, a further Notification No. 70/2019–Central Tax had been issued that w.e.f. 1-04-2020, all registered persons whose aggregate turnover in any preceding financial year from 2017-18 exceeds Rs. One hundred crore in respect of supplies of goods or services to registered person or for exports,would be class of registered person who shall prepare E-invoice.
Tax Invoice and ITC:- Input tax credit (ITC) is an important and inherent aspect in GST. System of ITC embedded in GST is very much essential to remove cascading effects of taxes in the distribution channel. Though the benefit ITC in GST is a Constitutional objective and not a concession, still it is considered only as an entitlement on mandatory fulfillment of certain pre and post conditions as specified in Sec 16 of CGST Act. As such one of the basic conditions to avail ITC as per Sec 16(2) (a) of CGST Act read with Rule 36(1) of CGST Rules is possession of tax invoice or other documents as detailed below:
It is not only enough to have one of the aforesaid documents, but these documents should contain all particulars as specified in Rule 46 or 53 or 54 depending upon the document on the basis of which ITC is claimed.
It is important to ensure that the tax invoice and other documents contain all particulars specified in law. In the absence of any particular, the recipient of supply may suffer due to denial of ITC and consequential interest and penalty as specified in Sec 50, Sec 122 and Sec 132 of CGST Act. It must also be noted that demand against such denial can be raised within 3 or 5 years under Sec 73 or Sec 74 from the due date of filing of annual return.
However, w.e.f. 4th September 2018, one relaxation has been given. Even where the particulars as mandated in Rule 46 are not available, ITC may be availed based on the information contained in following fields in the tax invoice:
Despite such relaxation, it is advisable to have all contents as required in Rule 46 or Rule53 to avoid litigation which may result in cash loss.
Section 17(5)(i) of the CGST Act restricts the registered person to avail input tax credit in case tax has been paid under Section 74 or Section 129 or Section 130. In consonance with this provision, rule 53(3) of CGST rules provides that any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of section 74 or section 129 or section 130 shall prominently contain the words ― INPUT TAX CREDIT NOT ADMISSIBLE.
Thus for the purpose of the entitlement of ITC the registered person shall possess various documents in the form of tax invoice, debit note, bill of entry, etc. as those document are prima facie evidence for availment of such ITC.
Tax Invoice- Offence and Penalty:- As per Sec.122 of CGST Act, following are the offence related to tax invoice:
i. Supplies any goods or services or both without any invoice. Example – Non-accounting of supply transactions
ii. Issues a false invoice for supply of any goods or services or both. Example – Product XY is taxed at 18% and Product YZ is taxed at 5%. A supplier issues invoice mentioning supply of product YZ whereas he actually supplies product XY.
iii. Issues any invoice or bill without supply of goods or services or both in violation of the provisions of GST Act or Rules. Example – Fake bill transactions.
iv. Issues any invoice or document using the registration number of another Registered person. Example – Mr. UM actually supplies goods to Mr. BM However Mr. UM invoices Mr. CM though he has not purchased from Mr. UM. Mr. BM does not account this transaction and Mr. CM takes input tax credit without receipt of goods. Here, all the three are subject to penalty and prosecution
provisions of section 122 and 132 respectively.
The offending Taxable person is liable for penalty as under:
|Sec.122(1)||Offence as specified above||Higher of the following :|
|√ 100% of tax due or|
Further as per Sec 122(3) any person who aids or abets any of the offence specified as above with respect to issue of invoice or fails to issue invoice in accordance with the provisions of the GST Act or Rules, then such person is liable to a penalty of Rs.25,000/.
With effect from 27th March, 2020 sub-section (1A) has been inserted in section 122 by Finance Act 2020, according to which any person who retains the benefit of above transactions shall also be liable to a penalty equivalent to tax evaded.
Punishment for certain Offence relating to Invoice: [Sec 132] Any person who commits or causes to commit and retain the benefits arising out of following offence shall be liable with a punishment which may extend to fine and prosecution:
i. Supplies any goods or services or both without issue of any invoice in violation of the provisions of the GST Act / Rules with the intention to evade tax
ii. Issues any invoice without supply of goods or services or both in violation of the provisions of the GST Act / Rules leading to wrong availment or utilization of Input Tax Credit or refund of tax
iii. Avails fraudulently Input tax credit without any invoice or availed input tax credit based on the invoice issued in violation of the provisions of the GST Act / Rules
Punishment for the above Offence in the nature of tax evaded or ITC wrongly availed or utilized or refund wrongly taken will be as under:
|Sr.No.||Amount of Offence||Imprisonment & Fine|
|1||More than Rs.5 Crore||5 year with Fine|
|2||More than Rs. 2.50 Crore but upto Rs.5 Crore||3 year with Fine|
|3||More than Rs.1 Crore but upto Rs.2.50 Crore||1 year with Fine|
Provisions relating to delivery challan [Rule 55 of the CGST Rules]-
Specified transportation of goods is allowed without the issue of an invoice (i.e., tax invoice). When there is the transportation of such specified goods, the consigner (sender)will issue a delivery challan instead of a tax invoice.
The following are the instances when delivery challan can be issued for transportation of goods without an invoice:
> Supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known.
> Transportation of goods for job work as per Sec 143
> Transportation of goods for reasons other than by way of supply viz., Branch transfer within the State, goods remove for line sales, goods sent on approval basis, movement of goods in case of supply of services like works contract, pandalshamiana, etc. , goods given as free samples, gifts, goods moved by artists for display in an exhibition, etc.
> Other supplies as notified by the Board.
In case the goods are being transported on a delivery challan instead of invoice, the same shall be declared as specified in Rule 138.
Initially the supplier has transported the goods without invoice at the time of removal for the purpose of supply but such supplier has to issue a tax invoice on delivery of goods.
Issue of Delivery Challan in case of goods sent for Job Work
Normally when the goods are removed from the place of business of a principal who is registered, for purpose of job work, GST has to be paid, but by virtue of Sec 143 of CGST Act, the principal can remove such goods for Job work without payment of tax subject to fulfillment of certain conditions mentioned therein.
Detailed procedure to be followed by a principal as well as the job worker has been laid down in Circular No. 38/12/2018 dated 26th March 2018.
Issue of Delivery Challan in case of movement of goods for Job Work
Form GST ITC – 04 which has to be furnished by all principals who are registered, showing the details of inputs or capital goods dispatched or received from a job worker during a particular quarter. Such Form GST ITC – 04 shall serve as an intimation as envisaged in Sec143 of CGST Act.
The following are the four major types of transactions which require issuance of delivery challan and furnishing of intimation Form GST ITC-04 on a quarterly basis:
Contents of Delivery Challan – As per rule 55(1): The consigner may issue a delivery Challan, serially numbered not exceeding 16 characters, in one or multiple series, in lieu of invoice at the time of removal of goods for transportation, containing the following details, namely:-
|1||Date and Number of the delivery challan|
|2||Name, address and GSTIN of the consigner, If registered|
|3||Name, address and GSTIN or UID of the consignee, if registered|
|4||HSN Code and description of goods|
|Quantity (provisional, where the exact quantity being supplied is not known)|
|Tax Rates and Tax Amount- IGST,CGST,SGST or CES, where the transportation is for supply to the consignee|
|8||Place of supply, in case of inter-state movement and|
As per rule 55(2), the delivery challan should be prepared in three copies (triplicate) in the following manner-Issue of Delivery Challan in case of movement of Goods:
As per rule 55A,Tax Invoice or bill of supply to accompany transport of goods- The person-in-charge of the conveyance shall carry a copy of tax invoice or the bill of supply issued in accordance with the provisions of rules 46,46A or 49 in a case where such person is not required to carry an e-way bill under these rule.
Tax Invoice & Delivery Challan- Retention of Records: As per Sec.36 of CGST Act, books of account or other records shall be retained by every registered person for a period of 72 months from the due date of furnishing of Annual Return for the year pertaining to such accounts and records.
As per Rule 56, accounts and records maintained by the registered person shall include all the invoices, bills of supply, credit and debit notes, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers and shall be preserved for a period of 72 months from the due date of furnishing of Annual Return for the year pertaining to such accounts and records.
Further, where such accounts and documents are maintained manually, the said accounts and documents shall be kept at every related place of business mentioned in the certificate of registration and shall be accessible at every related place of business where such accounts and documents are maintained digitally.
Understanding basic difference between tax invoice and delivery challan-
The following table summarizes the basic difference between tax invoice and delivery challan-
|Particulars||Tax invoice||Delivery challan|
|Meaning||In general terms, a tax invoice is a bill reflecting a sale transaction. It reflects the amount to be paid by the buyer.||A delivery challan just acknowledges that the goods are sent by the sender and received/accepted by the customer/buyer|
|Transfer of ownership of goods||Issuance of tax invoice means the ownership of goods is transferred.||Issuance of delivery challan doesn’t transfer the ownership.|
|Availment of Input Tax Credit||Receiver can avail input tax credit on the basis of tax invoice||Availment of input tax credit on the basis of delivery challan is not possible.|
|Supply of goods or services||A tax invoice is applicable in case of a supply of both taxable goods or taxable services||Delivery challan is applicable only in the case of a supply of goods.|
|Issuance of further document||Once the tax invoice is issued there is no need to issue any further documents||In case the goods are supplied on the basis of delivery challan and such goods are supplied/transported for the purpose of supply (sale). Then, the supplier is required to issue a tax invoice after the delivery of such goods.|
|E-Invoicing applicable and QR Code mandatory||IRN covered only effect documents such as Tax Invoice and it’s mandatory to print IRN on invoice. Tax invoices are required to be issued, the QR code shall also be applicable.||IRN and QR Code is not required to be obtained for delivery challan|
To conclude this article, It is important to understand the before issuance of Tax Invoice and Delivery Challan. If particulars as per law are not present in the invoice,then ITC taken on such invoice should be reversed as per law. Thus it is important to ensure that invoices issued as well as invoices received by taxpayers are verified while entering the same in their books. Therefore each and every taxpayer should take care to see that issue correct document before transaction in correct manner.
DISCLAIMER: This publication is merely a general guide meant for knowledge purposes only. All the references or content are for educational purposes only and do not constitute a legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information or conclusion contained in this publication. Prior to acting upon this publication, you’re suggested to seek the advice. This work is entirely in the interest of profession and to contribute into my beloved subject of GST