Government has vide Press release dated 23-April-2018 has clarified on the generation on e-way bill in case of Bill to Ship to (“BTST”) transaction. In both the options, as a welcome step, government has made it clear that only one e-way bill shall be issued. Before we proceed to understand that options, we shall understand the structure of a BTST transaction:
The government has clarified that there can be two options for generation of e-way bill in case of bill to ship to transaction:
Option 1: e-way bill by Mr. B
In this option, Mr B will generate the e-way bill and shall send the same along with his invoice. The e-way bill shall have the name of Mr A in ‘bill to’ field and details of Mr C in “ship to”/ Delivery address details. Thus, there is no need of invoice of Mr A to accompany goods and he shall send his invoice directly to Mr C.
This option discloses the price of procurement as charged by Mr B to Mr A to the ultimate buyer Mr C, thus, Mr C gets to know the margin earned by Mr A. Accordingly, most of the middleman would not find it feasible to disclose the destination and pricing to their source and buyer. Thus, this option would remain more of an academic option or shall work in cases where the work is a tender based work and not regular and the first supplier (Mr B) or ultimate buyer (Mr C) has no incentive in approaching the other part.
If the invoice details can be replaced with a delivery challan detail whereby the pricing is only indicative and not the transaction price which can be filled at the instruction of Mr. A, then the option can work for most of the suppliers. The price on delivery challan is not the final price of the goods but only indicative of the fair market value. In case of any discrepancy when found during transit in the goods detail, the final invoice can be called from the second Supplier (MR A) for levy of tax and penalty and other proceedings under the Act.
Option 2: e-way bill by Mr A
In this option, Mr A shall send his invoice along with goods, and detail of such invoice shall be filled in the e-way bill. In this transaction Mr A shall fill in detail of Mr C in both Bill to and ship to columns and thus, this is a simple-way bill, however, the place of dispatch shall show the address of Mr B.
This option has the following perils for buyer and supplier:
a. Whether supply of Mr B shall constitute an intra state or inter state supply: In this case, the application of section 10(1)(b) can itself be challenged by the authorities. The provision reads as under:
(b) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;
Thus, the provision speaks of a situation when the supplier (Mr B) delivers the goods to a person other than the buyer (Mr A). The buyer is the third person on whose instruction the goods are delivered to the recipient or any other person. Thus, in case Section 10(1)(b) is found to be not applicable, the transaction shall fall prey to 10(1)(a) and may be considered as intra state supply as movement for delivery to buyer (Mr A) has terminated in the same state as Mr A is undertaking movement from that state to the state of buyer.
b. Whether Mr A be considered as casual taxable person: When Mr A dispatches the goods from a state and generates a e-way bill showing dispatch from a place in State where he is not registered, he may be called upon to explain as to why it cannot be said that he has undertaken transaction of supply in the state of dispatch. The other side of the story surfaces a possibility that if the transaction of dispatch from another state is allowed, every casual taxable person might start supplying from a state in which he is not registered under the garb of BTST transactions. Thus, in such case, the very requirement of obtaining registration as a causal taxable person in a state might loose its sheen.
The above option is not a case of BTST ideally. The above case has both bill to and ship to as same person and thus, the e-way bill fail to fit into the BTST transaction. The very idea of such e-way bills has inherent latent towards mount of litigation in days ahead.