QUESTION

ABC Ltd. is a manufacturing unit registered under GST in the state of Haryana. XYZ ltd. is a trading concern registered under GST in Delhi . ABC ltd. regularly supplies all its goods to XYZ Ltd. only on Ex-factory basis considering place of supply Delhi and accordingly charge IGST on its invoice. However, no eway bill is being generated by ABC as it is making Ex-factory sale to XYZ. XYZ Ltd. sells these goods to PQR Ltd (registered under GST in the state of MP). XYZ Ltd. raise eway bill showing place of dispatch from Haryana where ABC is located and ask ABC to deliver these goods directly to his customer PQR ltd. from Haryana. XYZ Ltd. issues invoice for supply of goods to PQR Ltd. and charge IGST on the same. Query: 1. Whether this transaction can be covered under Bill to Ship to transaction as defined under section 10(1)(b) of the IGST Act. 2. Whether only one E-way bill generated by XYZ from Haryana to MP is sufficient for both the transactions? Or do we require two E-way bills from Haryana to Delhi by ABC and Delhi to MP by XYZ ? 3. As XYZ is making supply of taxable goods from Haryana, can it become liable for registration in Haryana under section 22 of the CGST Act.?

ANSWER

FACTS OF THE CASE:

ABC in Haryana is making a "Bill To Ship To" supply which is billed to XYZ in Delhi and shipped to PQR in Madhya Pradesh.

LAW APPLICABLE:

Clause (b) of section 10(1) IGST dictates the place of supply as follows;

" 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. "

INTERPRETATION:

In cases of "Bill To Ship To" transactions where the supply of goods is delivered to a place other than the place which is billed, the place of supply shall be the principal place of business of the buyer and it shall be deemed that such buyer is in receipt of goods for the purpose of claiming ITC thereon.

eWaybill is required where there is a movement of goods involved in a transaction. Eway bill is not dependent on generation of other documents, like a tax invoice or a delivery challan etc. Rather it is dependent on the movement of the goods and therefore it is not required in cases where no movement is involved.

CONCLUSION:

So to answer your questions,

Question 1: Whether this transaction can be covered under Bill to Ship to transaction as defined under section 10(1)(b) of the IGST Act?
Yes this is a "Bill To Ship To" transaction. The place of supply under section 10(1)(b) IGST is Delhi. Therefore the transaction is liable to IGST.

Question 2: Whether only one E-way bill generated by XYZ from Haryana to MP is sufficient for both the transactions? Or do we require two E-way bills from Haryana to Delhi by ABC and Delhi to MP by XYZ ?
Since there is only a single movement of goods, i.e from Haryana to Madhya Pradesh, therefore only a single eway bill to this effect is required. No eway bill from Haryana to Delhi is required since there is no movement of goods in this route.

Question 3: As XYZ is making supply of taxable goods from Haryana, can it become liable for registration in Haryana under section 22 of the CGST Act.?
In the current case, it can not be interpreted that XYZ is making a supply from Haryana. Rather, XYZ is making a supply from its registered Place of Business in Delhi but the same is dispatched from its vendor's premises in Haryana since this is a "Bill To Ship To" transaction. XYZ is rightly charging IGST on its tax invoice to PQR in Madhya Pradesh. XYZ does not require a registration in Haryana. (Reply dt. 11/04/2022)