GST on Goods Sold via Challan Today and Invoiced the Following Day
or
Key Points on GST Liability
(A) Use of Delivery Challan:
Delivery challans are applied in the cases of removal of goods without an invoice. Here the examples may be job work, stock transfer, and sale on approval. No GST is payable at the time of issuance of a delivery challan because it is not a taxing document for the purpose of GST.
(B) Time of Supply for Goods under GST:
Section 12(2) of the CGST Act, 2017 defines supply time for goods; it is the earlier of:
- Date of issuance of the invoice if issued within the prescribed period of which thirty days from the date of removal in general.
- Where Payment is done in advance, date of receipt of such payment.
- Where payment has been done in advance, date on which goods are removed but only if invoice is not produced within the given time period.
(C) When Goods are Delivered by Challan and Billed Next Day:
GST liability arises on the "date of the invoice", but the invoice must be issued within the prescribed time limit (30 days from the date of delivery).
- Delivery challan is raised but invoice is prepared on the following day.
- No GST liability arises on the date of issuance of the delivery challan.
(D) Delayed Issuance of Invoice:
In case the invoice is not issued within the prescribed
period, as pointed in (a)above; that is, the GST liability would arise from the "date of removal of the goods" of the same date of the delivery challan.
Example:
- Goods are delivered on Sep 10 using a delivery challan.
- The invoice is issued on Sep 11.
- Sep 11 is the date when the invoice is generated; so the GST liability arises on Sep 11.
In this rule, "GST is payable" if there has been an invoice but if there is no invoice then GST is payable from a delivery challan, if it has been issued within the specified timeframe.
What's say, is Section 31 of the CGST Act for the time limit to issue invoices when goods are delivered by challan and billed in the next days.
Key Points from Section 31 for the time limit to raise Invoices:
1. Section 31(1) – Time Limit for Supply of Goods:(धारा 31(1) –
- The invoice must be issued before or at the time of removal of goods for supply, where the movement of goods is involved.
- Where movement of goods is not concerned, then the bill of invoice should be rendered either prior or along with delivery or making the goods accessible to the recipient.
2. Bill of invoice issued at the time of delivery through Challan:
- Goods can be transferred through a "delivery challan"-job work, sale on approval, or stock transfer-whereas, instead of the bill of invoice.
- The last invoice should be raised within 30 days from the date of delivery (for normal supplies) as incorporated under Section 31(1).
3. CGST Rules – Rule 55 Special Cases:
- If goods are moved on a delivery challan, then invoice has to be issued as under Rule 55 of the CGST Rules.:
- At or within 30 days from date of delivery
- or within 30 days from the date of delivery" (excluding the sale on approval, wherein the period is six months).
4. GST Liability:
- GST liability is incurred in the event of an issue of invoice as well but within a specified period of 30 days. If any invoice is not issued within such a time frame, then such liability would emerge from the date of removal of goods, i.e. date of the delivery challan.
Source Links:
- Section 31(1) of the CGST Act, 2017: [CGST Act - Section 31]
- Rule 55 of CGST Rules, 2017: [CGST Rules]
C onclusion:
In summary about GST Liability when "GST on Goods Sold via Challan Today and Invoiced the Following Day" or goods sold on one day by delivery challan and billed next Day, Section 31 requires that the invoice be issued "within 30 days" of the delivery if the goods were initially delivered by a
delivery challan, and GST liability will arise on the date the invoice is
issued, provided it is within this time frame.