Bill to Ship to under GST : Taxability, Place of Supply, E-way Bill

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Bill to Ship to under GST, Generally when the supplier receives the Purchase order from his customers he will ship the goods from his place directly to the customer. But if the supplier does not have the stock of the required goods or he does not deal in such item them. In such cases he will procure the goods from another party and then deliver / supply to his customer or asks the third party to ship the goods directly to the customer. also if the customer wants the goods on an urgent basis or if they feel the cost of transportation is more or there is a time lag for the goods to reach the customer’s place. Such transactions are known as Bill To / Ship To transactions .In such cases, what are the tax implications under GST like place of supply, time of supply, issue of e-waybills etc.,

In a typical “Bill To Ship To” model of supply, there are three persons involved in a transaction, namely:

• ‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’.
• ‘B’ is the person who is sending goods directly to ‘C’ on behalf of ‘A’.
• ‘C’ is the recipient of goods.

There are three transactions being impacted due to the Bill To / Ship To transactions and the areas are
 Tax Invoice
 Place of Supply
 E-waybills
 Input Tax Credit
 Returns

Tax Invoice in case of Bill To / Ship To transactions

invoice bill to ship to, In this complete scenario two supplies are involved and accordingly two tax invoices are required to be issued:

• Invoice -1, which would be issued by ‘B’ to ‘A’.
• Invoice -2 which would be issued by ‘A’ to ‘C’.

Bill to Ship to under GST

Place of Supply in case of Bill To / Ship To transactions

The place of Supply on this tax Invoice will be determined as per the provisions of Section 10, Sub-section 1, clause (b) of the IGST Act, when it comes to the Bill To and Ship To transactions.
“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;”

As per the provisions of Section 10, sub-section 1, clause (b) of the IGST Act, the place of supply will be the principal place of business of the principal supplier and not the recipient’s place. In this case, if the place of supply supplier is  Delhi, so the place of supply will be Delhi for the tax invoice issued by supplier for delivery of goods to his customer even though he is located in another state.

 

E-waybill in case of Bill To / Ship To transactions
There are two tax invoices being issued, then is it required to issue to two different E-waybills? In the first case only, there is movement of goods and in the second case there is no movement of goods. In such a case is it required to issue an e-waybill if the goods value is more than Rs 50,000 and if it is an interstate transaction, It is not required as there is no movement of goods as per Rule 138 of the CGST Rules 2017.

Information to be furnished prior to commencement of movement of goods and generation of e-way bill. – (1) Every
registered person who causes movement of goods of consignment value exceeding fifty thousand rupees –
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person

Input Tax Credit in case of Bill To / Ship To transactions

As per the provisions of GST input tax credit is available seamlessly across the supply chain cycle. In case of Bill To
and Ship To cases who are eligible to take input tax credit and on basis of which tax invoice the input tax can be
claimed? This is the most common question which many are having in their minds.

As per provisions of Section 16, sub-section 2 of the CGST Act 2017, Input Tax Credit will be eligible to be claimed only when
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed;
(b) he has received the goods or services or both.

For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;