Delivery Challan Under GST: Rule 55 Guide

A delivery challan under GST is the document that goes with goods when they move without a tax invoice. It is governed by Rule 55 of the CGST Rules, which allows it only in a short list of cases — job work, movement that is not a supply, liquid gas of unknown quantity, and a few others — and sets out what it must contain, how many copies are made and how it ties to the e-way bill. This guide covers each of those, with a filled-in format and the mistakes that most often turn a routine movement into a detention.

What a delivery challan is, and what it is not

Section 31 of the CGST Act ties the tax invoice to the removal of goods: for a supply involving movement, the invoice is issued before or at the time of removal. That works for an ordinary sale. It does not work when the goods leave but nothing is being sold, or when the seller cannot yet know what to bill. Rule 55 fills that gap with a transport document that identifies the goods, the parties and the value, without being a tax invoice.

Two consequences follow. A delivery challan carries no input tax credit for the consignee, because it is not one of the documents credit can be claimed on. And it is a different thing from the "challan" used to deposit tax, which is Form PMT-06 — covered in our GST payment challan guide. The two share a word and nothing else.

When Rule 55 allows a challan instead of an invoice

Rule 55(1) lets the consignor issue a delivery challan in lieu of an invoice at the time of removal for:

• Supply of liquid gas where the quantity at the time of removal from the supplier's place of business is not known. The exact quantity is known only at delivery, so the invoice follows.
• Transportation of goods for job work, from the principal to the job worker, between job workers, and back. The rules for each leg are in e-way bill for job work.
• Transportation for reasons other than by way of supply — stock moved between two places of business under the same GSTIN, goods sent for repair or testing, goods taken to an exhibition, and returnable items moving back to their owner.
• Such other supplies as may be notified. CBIC has clarified that goods sent on approval or on a sale-or-return basis may move under a delivery challan, with the invoice issued when the sale happens.

Rule 55(5) adds a separate case: goods sent in semi-knocked-down (SKD) or completely-knocked-down (CKD) condition, or in batches or lots. Here the challan does not replace the invoice. It supplements one, as explained below.

The particulars a delivery challan must carry

Like the tax invoice under Rule 46, the delivery challan has no prescribed layout. The rule lists the information; the design is yours. Rule 55(1) requires:

The field that causes the most trouble downstream is the consignee's GSTIN. It is copied onto the e-way bill and, for job work, into ITC-04, so a mistyped or cancelled number surfaces in three places at once. Check it before the first despatch with the GSTIN validator for the format, or a GSTIN verification lookup for live registration status.

Three copies, and how each is marked

Rule 55(2) requires the challan in triplicate, each copy marked:

• ORIGINAL FOR CONSIGNEE — travels with the goods and stays with the receiver;
• DUPLICATE FOR TRANSPORTER — carried by the person in charge of the conveyance;
• TRIPLICATE FOR CONSIGNER — kept by the sender as its record.

This mirrors the three copies of a tax invoice for goods under Rule 48, described in our GST invoice format guide, with "consignee" and "consigner" in place of "recipient" and "supplier". Keep the triplicate filed against the e-way bill number. When an officer, an auditor or your own ITC-04 reconciliation asks what left the premises, that pairing is the answer.

Delivery challan and e-way bill: both, not either

A common misreading is that a delivery challan is an alternative to the e-way bill. It is the opposite. Rule 55(3) says that where goods are transported on a delivery challan in lieu of an invoice, the challan must be declared as specified in Rule 138, the e-way bill rule. Rule 138 in turn covers movement for reasons other than supply, not only sales. The challan is the source document, and the e-way bill is generated against it.

In practice, when the consignment value crosses the threshold:

• In Part A, choose Delivery Challan as the document type and enter the challan number and date exactly as printed. The reason for transportation — job work, SKD/CKD, own use, exhibition or fairs, and so on — must match why the goods actually moved. Every field is explained in the Part A and Part B guide.
• The value on the e-way bill is the value on the challan. Where no tax is charged, the tax fields are nil.
• The threshold is ₹50,000, or the state's higher limit for movement within that state — see the state-wise limits. Inter-state movement from a principal to a job worker needs an e-way bill at any value.

Below the threshold, or where an exemption applies, the e-way bill falls away but the challan does not. Movement to or from a weighbridge within 20 km is exempt only if the goods travel with a delivery challan. The full list is in the e-way bill exemption list, and the general framework in e-way bill rules and limits.

When a tax invoice has to follow the challan

For job work and movement within one GSTIN, there is no supply, so no invoice ever follows — unless the goods are later sold. In the other cases, the challan only postpones the invoice.

Goods sent for supply where the invoice could not be issued at removal. Rule 55(4) requires the supplier to issue the tax invoice after delivery. Liquid gas is the standard example: the challan shows a provisional quantity and the invoice bills what was actually delivered.

Goods on approval or sale-or-return. Section 31(7) requires the invoice before or at the time the recipient accepts the goods, or six months from the date of removal, whichever is earlier. Stock that has been neither accepted nor returned after six months becomes a taxable supply at that point. The time of supply guide covers this, and it is why approval stock needs an ageing report run against challan dates.

SKD, CKD and goods in lots. Rule 55(5) reverses the order. The supplier issues the complete invoice before the first consignment is despatched. Each consignment then travels with its own delivery challan that refers to that invoice, together with a duly certified copy of the invoice. The original invoice goes with the last consignment.

A delivery challan format, filled in

An illustrative challan for goods sent to a job worker in another state. Names and numbers are examples.

Printing the purpose on the face of the challan is not a listed particular, but it answers the first question an officer will ask and ties the document to the reason chosen in the e-way bill. The series prefix DC/26-27/ keeps challans separate from invoices while staying inside sixteen characters.

Common mistakes

• Using a challan for what is really a sale. If the goods are being sold and the price is known, a tax invoice is due at removal. Moving them on a challan and invoicing later is a supply without an invoice.
• Treating the challan as a substitute for the e-way bill. Above the threshold the goods need both, and the penalty for moving without a valid e-way bill is set out in our e-way bill penalty and detention guide.
• Challan details that do not match Part A. A different number, date, value or HSN on the e-way bill is enough for an officer to question the whole consignment.
• Using the challan across two GSTINs. Inter-state branch transfers need a tax invoice.
• Losing track of approval stock. The six-month limit under Section 31(7) runs whether or not anyone is watching it.
• Missing the first invoice for SKD/CKD lots. The complete invoice must exist before the first lot moves, not after the last.
• Leaving out the value because no tax is due. Taxable value is a required particular on every challan.

Frequently asked questions