Is invoice required in case of Goods sent on approval👨‍✈️#gst #shortsfeed #gstupdates #taxupdate

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Is invoice required in case of Goods sent on approval👨‍✈️

📜 1. Legal Provision: Section 31(7) – CGST Act, 2017
Section 31(7) of the CGST Act:

“Where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued at the time of supply or six months from the date of removal, whichever is earlier.”

🔍 Interpretation:
When goods are sent on approval (i.e., not yet sold), the supply is not complete at the time of dispatch.

Since GST is applicable only on “supply”, no tax invoice is required at the time of dispatch.

However, a delivery challan should be issued at the time of movement accompanied with E-way bill if applicable.

Once the buyer approves and accepts the goods (i.e., supply is confirmed), an invoice must be issued.

⏳ 2. Time Limit for Invoice – 6 Months
The supplier must issue the invoice:

At the time of supply when communicated as confirmed by buyer, OR

Within 6 months from the date of removal,

Whichever is earlier.

📌 If the buyer does not return or approve the goods within 6 months, it is deemed as a supply, and GST must be paid accordingly.

📄 3. Rule 55 – CGST Rules, 2017 (Delivery Challan)
When goods are sent without an invoice (like in approval cases), you must follow Rule 55:

Goods may be transported under a delivery challan instead of a tax invoice in the following cases:

(c) Transportation of goods for job work or other than by way of supply, or

For goods sent on approval basis.

Delivery challan must contain:

Date and number

Name, address & GSTIN of consignor and consignee

HSN code and description of goods

Quantity

Tax rate & amount (if applicable)

Place of supply (for inter-state)

Signature

🚚 4. E-Way Bill Requirement
If goods are transported on approval basis, and the value exceeds ₹50,000:

An E-Way Bill is mandatory, even though an invoice is not raised.

The delivery challan details must be used in the e-way bill.

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