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In a typical Bill To Ship To transaction, three persons are involved:
There are two supplies involved in the complete transaction. Accordingly, two tax invoices are required.
The invoices are:
Invoice 1:
B → A
Invoice 2:
A → C
For the movement of goods from B to C on behalf of A, either A or B can generate the e-Way Bill under the CGST Rules, 2017.
No. Only one e-Way Bill is required for the movement of goods from B to C in the Bill To Ship To transaction.
If B generates the e-Way Bill, the following details are required in Part A of GST FORM EWB-01:
|
Field |
Details to be entered |
|
Bill From |
Details of B |
|
Dispatch From |
Actual place from where goods are dispatched; it may be the principal or additional place of business of B |
|
Bill To |
Details of A |
|
Ship To |
Address of C |
|
Invoice Details |
Details of Invoice-1 (B → A) |
If A generates the e-Way Bill, the following details are required in Part A of GST FORM EWB-01:
|
Field |
Details to be entered |
|
Bill From |
Details of A |
|
Dispatch From |
Actual place from where goods are dispatched; it may be the principal or additional place of business of B |
|
Bill To |
Details of C |
|
Ship To |
Address of C |
|
Invoice Details |
Details of Invoice-2 (A → C) |
No. Where the goods are physically dispatched by B, the Dispatch From location may be the principal or additional place of business of B.
The difference is who generates the e-Way Bill and which invoice details are reported:
In both cases, the physical movement is from B to C.
The transaction involves:
Commercial flow:
B → A → C
Physical movement:
B → C
Invoices:
e-Way Bill:
Only one e-Way Bill, which can be generated by either A or B as per the prescribed procedure.
Source: Ministry of Finance / Press Information Bureau, clarification dated 23 April 2018, “Issues regarding ‘Bill To Ship To’ for e-Way Bill under CGST Rules, 2017.”
Question:
Whether formulations cleared have to be assessed to GST under the transferprice mechanism or on the basis of the MRP printed on them?
Answer:
The assessment of drugs and formulations under GST is generally based on the transaction value at each level of supply, and not on the MRP printed on the product.
GST follows an end-to-end Input Tax Credit (ITC) mechanism. Therefore, GST is charged on the actual transaction value between the supplier and recipient at each stage, subject to the valuation provisions under GST.
In simple terms:
GST Value = Transaction Value at the relevant stage of supply
Not = MRP printed on the formulation
For example:
|
Particulars |
Amount |
|
Manufacturer's transaction price to distributor |
₹100 |
|
GST @ 12% |
₹12 |
|
Distributor's purchase value |
₹100 |
|
Distributor's sale price to retailer |
₹120 |
|
GST @ 12% |
₹14.40 |
|
Less: ITC |
₹12 |
|
Net GST payable by distributor |
₹2.40 |
Thus, MRP is not the basis for determining GST merely because it is printed on the formulation. MRP may become relevant for other regulatory/pricing purposes, but GST valuation ordinarily follows the transaction value, provided the conditions of Section 15 of the CGST Act are satisfied.
In the case of physician samples distributed free of cost, Input Tax Credit (ITC) availed on such samples is required to be reversed under Section 17(5)(h) of the WBGST Act, 2017, as goods disposed of by way of gifts or free samples are ineligible for ITC.
No GST is payable on the distribution of such physician samples free of cost, provided the transaction does not qualify as a supply under the GST law. However, the ITC reversal requirement must be complied with, wherever applicable.
Note: The statement that no tax is payable because the value of supply is zero should be used cautiously. Free distribution is not automatically outside the scope of supply in every circumstance.
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