Delivery Challan – Procedure for Issuing & Format

The transportation of goods is sometimes a tricky process as there are chances that items may go missing either due to theft or spillage, or any such reason. Documents such as delivery challans help track and verify all the contents of a particular shipment.

Meaning of delivery challan

A delivery challan is a document that contains details of the products in that particular shipment. It is issued at the time of delivery of goods that may or may not result in a sale.

When do we issue a delivery challan?

The delivery challan is issued in the following cases-

• Where goods are transported on a sale or return basis.
• Where goods are transported for job work.

For example, the printing of newspapers.

• Where goods are transported for reasons other than for supply.

For example, shifting of goods from the old warehouse to a new one.

• Where the quantity of the goods supplied is not known.
• At the time of supply of liquified gas from the supplier’s place, the quantity is unknown.
• Where goods being transported are works of art that are to be delivered to galleries.
• Where goods are being transported abroad for an event such as an exhibition, fair or promotional purposes.

This cannot be termed “supply” or “export” since the goods are going for a specific short term purpose and returning.

• Where, at the time of removal of goods, the seller cannot issue a tax invoice.

Businesses using delivery challans

• Businesses that are involved in trading and manufacturing (especially the FMCG industry as a whole)
• Businesses that have multiple warehouses where the transportation of goods between warehouses is a regular occurrence (textile, clothing and apparel industries)
• Businesses that supply goods (furniture/home furnishings industry)
• Businesses that are wholesalers (electronics and electrical goods)

Format and Contents of a delivery challan

• Name, address and GSTIN of the consignor
• Name, address and GSTIN of the consignee
• HSN code
• Description of the goods being delivered
• Quantity and rate of the goods along with the amount in figures and words
• Signature of the supplier/authorised person
• Date of the challan
• Serial number of the challan
• Place of supply
• Amount of tax, where it is applicable

Important GST rules on delivery challan

A tax invoice must be issued in a case where a registered taxpayer intends to transport goods from one place of supply to another as per the provisions of Section 31 of the CGST Act. Particulars regarding the invoice value, description of the goods supplied, their quantities, rates and amount and the GST applicable on them will form part of the tax invoice.

Certain cases arise where the transportation does not result in a sale, and hence there is no tax invoice issued. In these cases, instead of a tax invoice, a delivery challan is issued. Therefore, a delivery challan is a document that permits the transportation of goods from one place to another. It also goes by the name dispatch slip or delivery slip.

Rule 55 (2) of the CGST Rules, delivery challans must be issued in three copies as follows-

• For the buyer to be marked as “Original”
• For the transporter to be marked as “Duplicate”
• For the seller to be marked as “Triplicate”

Differences between tax invoice and delivery challan

Tax Invoice	Delivery Challan
Contains ownership proof and legal responsibilities.	Does not contain proof of ownership or legal responsibilities.
Shows the actual value of goods.	Shows that the customer has acknowledged receipt of the goods.
It is proof that a sale transaction has taken place.	May or may not result in a sale.
Depicts the actual value of the goods, including the applicable taxes.	Displays the rate of a particular product but not the full value of the sale.

FAQs on delivery challans

Who creates the delivery challan?

A delivery challan is usually issued by a seller to the buyer when making the delivery of goods. These goods that are being delivered may or may not result in a sale.

What is the difference between a delivery note and a delivery challan?

A delivery note is a mere document that accompanies a shipment of goods. Delivery challans, on the other hand, are issued while making a delivery of goods to the buyer and have an impact on the inventory levels since it decreases the inventory stock.

What is a non-returnable delivery challan?

If a non-returnable gate pass accompanies the delivery challan, it helps the authorities understand that the goods are delivered permanently and cannot be returned.

What is a returnable challan?

Where the goods are transported out of the warehouse for a specific purpose and are due for return shortly, a returnable challan will be generated for the same.

Can we make an e-way bill using a delivery challan?

Yes. Any registered taxpayer or transporter may generate an e-way bill using the GST portal. Tax invoice, bill of sale, delivery challan, etc., are some of the documents that can be provided when creating the e-way bill.