Delivery challan for goods to be returned to vendor by supplier, Goods and Services Tax - GST

[Anurag Chopra]

Hi All,

We are in process to return the goods which we purchased from one of our vendors. Say, the quantity purchased was 100 units, now we are sending back 20 units of the same.

Just want clarification on what is the documentary requirement in the following scenarios:

Scenario I: We are raising the E-way bill for the movement:

Understand that in such cases apart from E-way bill, we would be required to raise Delivery Challan for the movement of the goods.

The above would qualify as transportation (movement) of goods for reasons “other than by way of supply” in terms of Rule 55 of CGST rules.

Scenario I: We are not raising the E-way bill for the movement:

Understand that in such cases we would be required to raise rejection note/ goods sent back note to clear the inventory from our books.

Please solicitate your view on the above.

Hi All,

We are in process to return the goods which we purchased from one of our vendors. Say, the quantity purchased was 100 units, now we are sending back 20 units of the same.

Just want clarification on what is the documentary requirement in the following scenarios:

Scenario I: We are raising the E-way bill for the movement:

Understand that in such cases apart from E-way bill, we would be required to raise Delivery Challan for the movement of the goods.

The above would qualify as transportation (movement) of goods for reasons “other than by way of supply” in terms of Rule 55 of CGST rules.

Scenario I: We are not raising the E-way bill for the movement:

Understand that in such cases we would be required to raise rejection note/ goods sent back note to clear the inventory from our books.

Please solicitate your view on the above.

Posts / Replies

[YAGAY andSUN]

In your case, you're in the process of returning goods that you purchased from a vendor. You're looking for clarification on the documentary requirements in two scenarios involving the movement of goods. Let's go through each scenario and the requirements under GST regulations.

Scenario I: Raising the E-way Bill for the Movement

In this case, you are sending goods back to your vendor (i.e., you're returning 20 units out of 100 purchased), and you're raising an E-way bill for the movement of these goods.

• Documentary Requirements:
  1. E-way Bill: As per the CGST Act and Rule 138 of the CGST Rules, the E-way bill is mandatory for the movement of goods. In this case, since you're returning goods, the E-way bill is required for transporting the goods from your premises back to the vendor.
  2. Delivery Challan: According to Rule 55 of the CGST Rules, when goods are being moved for reasons other than by way of supply (like a return of goods), you are required to raise a Delivery Challan instead of an invoice. The delivery challan should include details like:
     • The description of goods being returned.
     • Quantity of goods.
     • The reason for return.
     • The names and addresses of both the sender and recipient (you and the vendor).
     • Date and serial number of the delivery challan.
     • If applicable, mention the E-way bill number on the delivery challan.

The Delivery Challan is necessary because, although this is a return (which does not qualify as a taxable supply), the goods are being transported, and the movement needs to be documented separately from an invoice.

Key points:

• E-way bill for the movement of goods.
• Delivery Challan is required to document the movement of goods when there is no sale involved.

Scenario II: Not Raising the E-way Bill for the Movement

If you're not raising an E-way bill for the movement of goods (which could happen if the value of goods is below the threshold for requiring an E-way bill or if the movement is within the same state and does not meet the criteria for the E-way bill), the documentary requirements are slightly different.

• Documentary Requirements:
  1. Rejection Note/Goods Sent Back Note: Since you're returning the goods, you'll need to issue a Rejection Note or Goods Sent Back Note to account for the goods that are being returned to the vendor. This note will serve as evidence that the goods are being removed from your inventory.
  2. The Rejection Note should include:
     • The details of the goods being returned (quantity, description).
     • The reason for the return.
     • Reference to the original purchase invoice (to connect the returned goods to the purchase transaction).
     • Any other relevant details, such as the date of return and the vendor's details.

This document helps to clear the goods from your inventory records, and the GST implications will be managed through the Rejection Note, even if no E-way bill is generated.

Key points:

• Rejection Note/Goods Sent Back Note to adjust the inventory.
• You won't need an E-way bill in this case, but documentation for the movement must still be maintained.

Summary

• Scenario I (Raising E-way bill):
  • E-way Bill for movement.
  • Delivery Challan to document the return (this is required as the movement is for reasons other than supply).
• Scenario II (Not Raising E-way bill):
  • Rejection Note or Goods Sent Back Note to adjust inventory.

Both scenarios require documentation to properly handle the return of goods. The main difference is that in Scenario I, when an E-way bill is raised, you also need a Delivery Challan, whereas in Scenario II, a Rejection Note or Goods Sent Back Note suffices to clear the goods from your books.

Let me know if you need further clarification on any specific point!

[Shilpi Jain]

Any movement of goods requires issuance of e-way bill.