Sometimes goods need to move without a sale actually happening — sent for job work, on approval, or shifted between locations. For these situations GST provides the delivery challan, a transport document that is not a tax invoice. Knowing when to use which keeps your movements compliant.
The core difference
- A tax invoice is issued when there is an actual taxable supply — it charges GST and transfers ownership.
- A delivery challan is issued when goods move but no supply occurs (yet) — it does not charge GST.
Both can accompany goods in transit, but only the invoice represents a sale.
When to use a delivery challan
Rule 55 of the CGST Rules allows a delivery challan for movement of goods without a tax invoice in cases such as:
- Job work — sending goods to a job worker and receiving them back
- Goods on approval / sale-or-return — sent before the customer decides to buy
- Supply of liquid gas where quantity is not known at removal
- Transportation in batches or lots (e.g. semi-knocked-down / completely-knocked-down goods)
- Transport for reasons other than supply — such as moving goods between your own branches or to an exhibition
What a delivery challan must contain
A compliant delivery challan includes:
- Date and a serial number
- Consignor’s name, address and GSTIN
- Consignee’s name, address and GSTIN (or details, if unregistered)
- HSN code and description of goods
- Quantity (actual, or provisional where the exact quantity isn’t known)
- Taxable value
- GST rate and amount — shown for reference, where the movement may lead to a supply
- Place of supply (for inter-state movement)
- Signature
Note that although tax amounts may be shown for reference, the challan itself does not create a GST charge.
Delivery challan and the e-way bill
If the consignment value exceeds ₹50,000, you need an e-way bill for the movement — whether the goods travel on an invoice or a delivery challan. The challan’s details (value, HSN, quantity, parties) feed the e-way bill. So a job-work dispatch over ₹50,000 needs challan + e-way bill.
From challan to invoice
The delivery challan is often a precursor to an invoice:
- Goods on approval: challan on dispatch → if the customer accepts, issue a tax invoice (within the time limit, or 6 months of removal, whichever is earlier).
- Job work: challan out and back → the job worker charges GST only on the job-work service, not on the goods themselves.
Copies of a delivery challan
Like an invoice for goods, a delivery challan is typically prepared in triplicate:
- Original — for the consignee
- Duplicate — for the transporter
- Triplicate — for the consignor
A quick example (job work)
A garment manufacturer sends ₹2,00,000 of fabric to a job worker for stitching:
- Delivery challan issued for the fabric (no GST — it’s not a supply)
- Consignment over ₹50,000 → e-way bill generated from the challan
- The job worker returns finished garments under a challan and bills only the stitching charges (SAC 9988) with GST
The bottom line
Use a delivery challan when goods move without a supply — job work, goods on approval, branch transfers — and a tax invoice when a real sale happens. The challan carries no GST but still needs an e-way bill above ₹50,000, and it often converts into an invoice once the supply is confirmed.
When the supply does happen, create the tax invoice in seconds with the free RaiseBill Bill Maker.