Sale in approval bases under circular 10/2017 C.Tax Rate

[Hasmukh Patel]

Dear Sir,

We are supplier-manufacture of INTRAOCULAR LENSES -HSN CODE 9021. We directly supply it to doctors. The doctors are generate library-stocks of various lenses ( power , diameter and company wise). As per requirement of patient, they utilize our lenses. As per new circular 10/2017 C.Tax Rate, we can supply our lenses under approval bases under challans and issue invoice as per consumption of lenses by doctors?
Your reply is very-very helpful for our business.

[PAWAN KUMAR]

As per my view, your case does not qualify under approval basis, since doctors are not approving the quantity supplied by you. They are keeping the stock of whatever you sent. the circular not applicable for ur case.

rather this you may supply directly under invoice as per my view. if it is not done, you may have asked in future as per my view.

[Hasmukh Patel]

Dear HASMUKH PATEL,

You have posted following query on GSTClub.in website.
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Query:
Dear Sir,

We are supplier-manufacture of INTRAOCULAR LENSES -HSN CODE 9021. We directly supply it to doctors. The doctors are generate library-stocks of various lenses ( power , diameter and company wise). As per requirement of patient, they utilize our lenses. As per new circular 10-10-2017, we can supply our lenses under approval bases under challans and issue invoice as per consumption of lenses by doctors?
Your reply is very-very helpful for our business.
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Your query will be answered within 24 hours.

Yours Sincerely,
The GSTClub.in Team

[CSSANJAY MALHOTRA]

Dear Mr. Patel,

Yes, you can follow the process of Sales under approval basis, provided the contract is worded accordingly. Contract should specifically mentions of that stock ownership remains with you and upon its sales/ consumption by doctors, Invoice shall be raised or else the material after specific period shall be brought back.

Maximum period under GST for sales on approval basis is 6 months from date of Issue of Delivery Challan or else the same is treated as supply.

What happens in case of retail chain stores like Best price, Shoppers Stop,etc..... they entered into agreement with Vendors that they will provide shelf to them at their place and Buyer can keep their material there. As and when sales takes place, Buyer can raise invoice or else Vendor has right to lift the material.

Hence, on similar lines, if you enter into contract, you can dispatch material on approval basis.

AI Summary

Sales on approval basis: suppliers may retain ownership and invoice on consumption if contract and documentation support approval terms.
Supplies of intraocular lenses may be treated as sales on approval basis only if the contract preserves supplier ownership, provides invoicing upon actual consumption or sale by the doctor, and specifies return or repossession of unsold goods; absent those terms routine stocking by doctors requires regular invoicing and supply treatment. Use of delivery challans and clear contractual wording is necessary to evidence dispatch on approval terms and avoid deemed supply treatment.