Goods Sent On Approval Basis Section 31(7) - GST Ready Reckoner - GST

Goods Sent On Approval Basis As per Section 31(7 ) Where the goods being sent on approval are removed before the supply takes place, the invoice shall be issued a) before or at the time of supply, or b) six months from the date of removal, whichever is earlier. Thus, the tax invoice must be issued within six months from removal . Goods can be removed on an approval basis within the State or outside the State. Delivery Challan should be issued at the time of removal of goods. E-way bills will also be issued wherever applicable. The person carrying goods for such a supply can carry the invoice book so that he can issue the invoice once the supply is made. Clarification on issues wherein the goods are moved within the State or from the State of registration to another State for supply on approval basis Circular No. 10/10/2017-GST : howsoever in case of suppliers of jewellery who are registered in one State but may have to visit other States (other than their State of registration) and need to carry the goods (such as jewellery) along for approval. In such cases if jewellery etc. is approved by the buyer, then the supplier issues a tax invoice only at the time of supply. If sale is outside state IGST Is payable Example :- Mr. Ramesh, a registered person supplies goods on approval for sale or return basis as on 5/5/2023 of worth Rs. 75000 to mr. sagar with option of return within 2 month. As on 15/06/2023 Mr. Sagar signifies his approval for the entire of goods. In this case Mr. Ramesh required to issue a invoice as per section 31(7) of CGST Act a) before or at the time of supply, (i.e. 15/06/2023) or b) six months from the date of removal, (i.e. 05/11/2023 ) whichever is earlier. (i.e 15/06/2023) CBE C Circular No. 10/10/2017-GST dated 18-10-2017 clarifies Removal of artwork to galleries for subsequent sale Artists removes their artworks to various galleries where these are exhibited. the artworks should be removed under-delivery challan and e-way bill (where applicable ). Once the artwork is sold, the tax invoice should be generated. Removal of goods outside India for the exhibition : The removal of goods out of India for exhibition or on a consignment basis for export promotion is neither supply nor export . CBI C Circular No. 108/27/2019-GST dated 18.07.2019 clarifies Since it is not export , LUT or bond is not required. Goods should be sent under Delivery Challan. The exporter should maintain proper records in the form given in Annexure to the circular dated 18-7-2019. As and when goods are sold, the tax invoice should be issued. If goods are not brought back within six months, a tax invoice should be issued and GST paid. If goods are sold within six months, refund claim under rule 89(4) of CGST for ITC can be filed even if goods were cleared without bond or LUT.