Tax Invoice - Bill To Ship To Model

[Kaustubh Karandikar]

XYZ (Maharashtra) issued Tax Invoice as ‘Bill To: Madhya Pradesh’(PQR) and ‘Ship To: Gujarat’ (ABC). The invoice issued by XYZ accompanied the consignment, but the Tax Invoice in turn issued by PQR to ABC was not accompanying the consignment and was sent by courier by PQR to ABC. This consignment was seized by the check post authorities on the ground that the Tax Invoice of PQR issued to ABC was not accompanying the consignment. What is the correct legal requirement?

[Shilpi Jain]

This is quite a common phenomenon happening. THere is a press release/circular in this regard where it is clearly stated that in case of bill to ship to transactions (where 2 invoices are issued by 2 parties i.e. the bill to party and XYZ) it is sufficient if e-way bill is issued on one of the bills.

In such a scenario requiring both the bills to accompany the consignment is absurd. If the department has doubt whether the bill to party has issued invoice or not they can float a separate enquiry and not trouble XYZ.

The tax authorities turn a blind eye to the business realities. There are many cases where the Bill to party would not want to XYZ to know his price. So it is practically impossible to fulfill what the department wants.

[ABHISHEK TRIPATHI]

Agree.

XYZ’s invoice along with e-way bill satisfy the requirement of Section 68 read with rule 138A. XYZ part of the transaction is proper and valid in terms of law. Law cannot compel XYZ to carry invoices issued by PQR, extremely impractical.

‘Lex Non Cogit ad impossibilia’ is an age-old maxim meaning that the law does not compel a man to do which he cannot possibly perform.

129's purpose is to stop clandestine removal, it should not become bone in the throat for normal and legit movement of goods.

[Adarsh Gupta]

In the complete Bill To / Ship To transaction, two different tax invoices have to be issued. This is to ensure compliances under GST Law and proper flow of credit so that all parties are able to claim ITC. In the present case, the relation between PQR and XYZ is that of a principal and agent, based on the instructions of PQR; XYZ ships the goods to ABC, it will be treated as supply. Tax invoice has to be issued with Bill To as PQR and Ship To as ABC. This is to enable the movement of goods.

The second tax invoice will be issued by PQR to ABC to complete the commercial transaction and also enable ABC to claim Input Tax Credit.

The department in its press issue* released on 23rd April 2018 addressed the issues regarding “Bill To Ship To” for e-Way Bill and clarified that as per the CGST Rules, 2017 either of the party can generate the e-Way Bill and that only one e-Way Bill is required to be generated. The person generating the eway bill will mention the details of his tax invoice.

Therefore, in the above situation, either PQR or XYZ can generate an e-Way bill along with respective tax invoice which must accompany the consignment in order to comply with the legal provisions. The requirement for the other tax invoice does not seem to be in line with the clarification.

* https://pib.gov.in/Pressreleaseshare.aspx?PRID=1529945

AI Summary

Bill-to-ship-to model: e Way Bill on one accompanying invoice suffices for lawful movement; other invoice not required to travel.
Bill-to-ship-to supplies involve two tax invoices to preserve Input Tax Credit. Administrative guidance permits either party to generate the e Way Bill and requires only one e Way Bill for goods movement; the invoice for which the e Way Bill is generated must accompany the consignment. The alternate invoice, issued to complete the commercial transaction, need not physically travel with the goods, though authorities may investigate separately if issuance is disputed.