In the below given situation, there are four different parties involved with three different transactions between them for supply of goods. All these transactions in together lead to single movement of goods.
The transaction is explained as below:
1. D places order to C (Trader) for supply of material X;
2. C orders the same back-to-back to B (Trader) and;
3. B places order to A (Manufacturer of X) and asks to deliver the same to D;
4. In compliance to the Purchase Order, A supplies material X to B with consignee address of D and the goods leaves the premises of A and moves to D. In continuation B bills for the same supply to C and then C bills to D.
Issue 1 – No. of way bill??
In the above situation, there is involvement of 3 different supply transaction for one single movement of good. How many waybills are required to be generated for movement of goods in above transactions?
Now before arriving at the conclusion about how many waybills need to be issued, first we need to understand the purpose of waybill.
What is a waybill and why is it required ?
Waybill is a document required to be carried by a person in charge of the conveyance carrying any consignment of goods of value exceeding fifty thousand rupees as mandated by the Government in terms of Section 68 of the Goods and Services Tax Act read with Rule 138 of the rules framed thereunder. It is required to be generated by the registered persons (Consignor or Supplier or Consignee or Buyer) or transporters who cause movement of goods of consignment before commencement of such movement.
Section 68 of the CGST Act, 2017 mandates that the Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents as may be prescribed. Rule 138 of CGST Rules, 2017 prescribes e-way bill as the document to be carried for the consignment of goods in certain prescribed cases.
After combined reading of Section 68 with Rule 138, it is understood that every person in-charge of conveyance is required to carry e-way bill which is required to be generated by person causing movement of goods. This is a document evidencing proper movement of goods from consignor to consignee.
Now in present case, where there is movement of consignment from consignor to consignee, however, there are multiple parties involved in transaction, the issue arises that whether every person involved in the transaction is required to generate way bill?
As mentioned earlier also that waybill generated under GST law is a document evidencing movement of goods from one place to another. This is document, which must be carried by the transporter along with invoice to justify the genuineness of goods being transported. Hence, if there is a single movement of goods, than single way is required to be issued.
In addition to this, section 129 and section 130 of CGST Act, 2017 dealing with detention, seizure and confiscation of goods also provides for penal provision where goods are being transported in contravention to provision of GST law.
The e-way bill portal also provides multiple option where the registered person can fill separate details for Supplier, Consignor, Recipient and consignee, as per the need od of business transaction.
For the sake of convenience, the Way bill portal has also put FAQ’s on its website and relevant part is re-produced below:
How to handle “Bill to” – “Ship to” invoice in e-way bill system?
Sometimes, the tax payer raises the bill to somebody and sends the consignment to somebody else as per the business requirements. There is a provision in the e-way bill system to handle this situation in the “Transaction Type”. Select the Bill to – Ship to option in Transaction Type dropdown, then system will enable the “Ship to” field for entering different state pincode for the Consignment.
How to handle “Bill from” – “Dispatch from” invoice in e-way bill system?
Sometimes, the supplier prepares the bill from his business premises to consignee, but moves the consignment from some others’ premises to the consignee as per the business requirements. This is known as ‘Billing From’ and ‘Dispatching From’. E-way bill system has provision for this in the “Transaction Type”. Select the “Bill From – Dispatch From” in Transaction Type dropdown, then system will enable the Dispatch From field for entering different Dispatch state pincode for the Consignment.
It is understood from this mechanism that a single waybill will suffice the transaction.
Issue 2 – Input Tax Credit??
There is confusion that if there are multiple parties (say more than 4) involved in single movement and single way bill is generated, than name of few parties may not be reflected on the face of way bill, due to which they may be denied Input Tax Credit on Purchase invoice corresponding that transaction.
The GST law defines Input Tax Credit as credit of Input Tax and the definition of Input Tax is as below:
Clause (62) of Section 2 of CGST Act, 2017
“input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes–
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
So, Input Tax Credit is credit of GST paid on purchase of goods or services or both. Further Section 16 lays down various condition for eligibility for claiming Input Tax Credit. Clause (a) of section 16(2) provides that the person claiming Input Tax Credit is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed. Hence there is no such condition that the recipient of supply should have e-way bill for claiming credit.
I would therefore wish to conclude that waybill has nothing to do with flow of Input Tax Credit between the supplier and recipient. In a case where there are multiple parties (may be 4 or more than 4) involved in single movement of goods, the person in-charge of conveyance may carry a single invoice and e-waybill generated on the basis of such invoice and no other waybill is required to be issued or generated.
I hope you find the same helpful.
This note is based on the statutory/ legal position including the judicial and administrative interpretations thereof prevailing as on the date of the note. The note is issued for easy understanding of the changes taken into effect. We had taken due care in preparation of it but not responsible for any adverse consequences.