MOVEMENT OF GOODS FROM ONE PLACE TO ANOTHER FOR SUPPLY ON APPROVAL BASIS IN GST REGIME
The Goods and Services Tax
Act, 2017 came into force with effect from 1.7.2017 in India.
The manufacturers and
wholesalers in jewellery carry the jewels i.e. goods to the recipient’s place
of business and supplies to the recipient after selection and approval by the
recipient. The rings, bangles, chains, bracelets, necklaces etc., were selected
by the recipients based on the design, size, weight, value according to the business
area’s fast moving choice. For that purpose a supplier has to carry jewellery
in bulk quantity without a bill of sale or delivery note or e-way bill.
Similarly some jewellers take
jewels to the consumers’ residence and display the same and after selection of
size and design and weight etc, the supplier supplies the goods to the
consumer.
In such cases the suppliers
are not able to ascertain their actual supplies beforehand and while
ascertainment of tax liability in advance is a mandatory requirement for
registration as a casual taxable person, the supplier is not able to register
as a casual taxable person.
Similar difficulties were also
faced by the suppliers of silk sarees, readymade garments, silver kolusu, bridal
make up materials etc.
Considering the above aspects,
the Central Government has clarified that the goods which are taken for supply
on approval basis can be moved from the place of business of the registered
supplier to another place within the same State or to a place outside the State
on a delivery challan along with the e-way bill wherever applicable and the
invoice may be issued at the time of delivery of goods. For this purpose, the
person carrying the goods for such supply can carry the invoice book with him
so that he can issue the invoice once the supply is fructified.
The Central Government has
also clarified that this clarification would be applicable to all goods supplied
under similar situations.
The Government Circular is
given below for ready reference:
Circular No.
10/10/2017-GST
CBEC - 20/16/03/2017-GST
Government
of India
Ministry of Finance
Department of Revenue
Central
Board of Excise and
Customs
GST Policy Wing
New Delhi,
dated 18th October, 2017
To,
The Principal Chief Commissioners/Chief Commissioners/Principal
Commissioners/ Commissioners of Central Tax (All)
The Principal Director
Generals/ Director Generals (All) Madam/Sir,
Subject: Clarification on issues wherein the goods are moved within the State or from
the State of registration to another State for supply
on approval
basis
–Reg.
Various communications have been received particularly from the suppliers of
jewellery etc. who are registered in one State but may have to visit other States (other than their State of registration) and need to carry the goods (such as jewellery) along for approval. In such cases if jewellery etc. is approved by the buyer, then the supplier issues a tax invoice only
at
the time of supply. Since the suppliers are not able to ascertain their actual supplies beforehand
and
while ascertainment
of tax liability in
advance is a mandatory requirement
for registration as a casual taxable person, the supplier is not able to register as a
casual taxable person. It has also been represented that such goods are also carried within the same State for the purposes of supply. Therefore, in exercise of the powers conferred under section 168 (1)
of the Central Goods and Services Tax Act, 2017, for the purpose of uniformity
in the implementation of the Act,
it has been decided to
clarify this
matter as follows -
2. It is seen that clause (c) of sub-rule (1) of rule 55 of the Central Goods and Services
Tax
Rules, 2017 (hereafter referred as “the said Rules”) provides
that the supplier shall issue a delivery
challan for the initial transportation of goods where such transportation is for reasons other than by
way of supply. Further, sub-rule (3) of the said rule also provides that the said delivery
challan shall be declared as specified in rule 138 of the said Rules. It is also
seen that sub-rule (4) of rule
55 of
the said Rules provides that “Where the goods being
transported are for the purpose of supply to the recipient but the
tax invoice could not be issued at the time of removal of goods for the purpose
of supply, the supplier shall issue a tax invoice after delivery of
goods”.
3. A combined reading of the above provisions indicates that the goods which are taken
for supply on approval basis can be moved from the place of business of the registered supplier to another place within the same State or to a place outside the State on a delivery challan along with the e-way
bill
wherever applicable and the invoice may be issued at the
time
of delivery of goods. For this purpose, the person carrying the goods for such supply can
carry the invoice book
with him so that he can issue the
invoice once the supply is fructified.
4. It is further clarified that all such supplies, where the supplier
carries goods from one
State to another and supplies them in a different State, will be
inter-state
supplies and attract
integrated tax in terms of
Section 5 of the Integrated Goods
and
Services Tax Act, 2017.
5. It is also clarified that this clarification would be applicable to all goods supplied under similar situations.
6. It is requested that suitable trade notices may be issued to publicize the contents of this
circular.
7. Difficulty, if any, in the implementation
of the above instructions may please be brought to
the notice of the Board. Hindi version would follow.
(Upender Gupta)
Commissioner (GST)