Decide whether the movement is a supply before choosing a document
Rule 55(1)(c) permits a delivery challan at removal for transportation for reasons other than by way of supply. A company sending its own identifiable tools for its staff to perform work at a customer's site may use this route on the facts if the tools themselves are not supplied. Review the contract, possession, rights of use and what the customer pays for. The tool movement and invoicing the company's service are separate questions.
Read the applicable text: CBIC CGST Rules compilation, Rule 55 and Rule 138 Consolidated CGST Rules, Rule 55 and transport documentation Central Goods and Services Tax Act, 2017, section 7, section 25 and Schedule I.
Check exceptions that can change the answer
Movement with no sale price can still be a supply, including a covered Schedule I transaction between distinct persons in the course or furtherance of business. Do not call a transfer to another GST registration a simple internal movement without checking section 25 and Schedule I. Also separate job work, goods sent on approval, permanent disposals and goods transferred to fulfil a taxable contract. A document caption cannot change the legal character of the facts.
Create a usable movement record
Under Rule 55(1), the serial number is limited to sixteen characters. Capture the date, number, party details as applicable, HSN and description, quantity, taxable value, place of supply for interstate movement as specified by the rule, and signature. The listed rate and tax amount particulars refer to transportation for supply to the consignee; do not fabricate tax merely because a value is captured on a movement record. Rule 55(3) links transport on a challan in lieu of an invoice to declaration under Rule 138. The general e-way bill trigger applies when a registered person causes movement of goods with a consignment value exceeding ₹50,000, including movement for reasons other than supply. Check exceptions, special cases and applicable State rules. Under Rule 138A, the person in charge generally carries the applicable invoice, bill of supply or challan and the e-way bill or its number when required. Rule 55(2) specifies triplicate copies for supply of goods.
Close the custody loop and review changed facts
Match serial numbers, staff custody, site receipts and return evidence. A later sale, write-off, unreturned tool or change in use needs independent review. An unexplained shortage is an exception to investigate and does not itself prove a sale. Keep movement documentation, asset or inventory reconciliation and any separate service invoice cross-referenced without recording the same goods movement as service turnover.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Complete return
A site receives 28 tools listed by serial number and returns all 28. Outstanding tool units are zero on matched evidence.
Illustrative example 2: Split return dates
Of 45 units sent, 19 come back on one date and 17 later. Nine remain at site or unresolved until supported.
Illustrative example 3: Duplicate serial in extract
A file lists 32 entries but two are duplicates of separately listed items. The distinct movement population is 30; reconcile to the actual dispatch.
Illustrative example 4: Separate service consideration
The service invoice is ₹2.4 lakh and tools have a ₹3.6 lakh carrying amount. On the assumed non-supply facts, the ₹6 lakh combined figure is not service consideration; the service invoice base remains ₹2.4 lakh before other adjustments.
Illustrative example 5: One damaged item
Twenty items leave, 18 return serviceable, one returns damaged and one remains unconfirmed. Physically returned units total 19, with one unresolved; investigate damage separately.
Illustrative example 6: Partial transfer under a separate order
Of 12 units on site, three are later transferred under a separate supported sale and eight return. One remains outstanding. Assess invoicing for the three under the relevant sale facts.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Read the contract | Service and equipment clauses |
| 2 | Test the GST supply perimeter | Section 7 and Schedule I analysis |
| 3 | Identify registrations and parties | GSTIN and custody details |
| 4 | Separate distinct transactions | Service, job work, approval or sale documents |
| 5 | Capture tools and identifiers | Dispatch and asset list |
| 6 | Prepare the delivery challan | Rule 55 particulars and serial control |
| 7 | Test transport declaration | Applicable Rule 138 evidence |
| 8 | Obtain site acknowledgment | Custodian and receipt record |
| 9 | Match returns and exceptions | Open movement and incident register |
| 10 | Reconcile service and goods records | Sales, asset and GST review |
Sixteen practitioner FAQs
1. Is an inter-State movement always a supply?
No. Test the actual parties, registrations and supply facts.
2. Does no payment settle the supply question?
No. Schedule I can apply even without consideration.
3. What if the company moves tools to its own separately registered establishment?
Review distinct-person supply rules before choosing a challan.
4. What if staff retain and use tools at the customer site?
That can support a non-supply movement when the contract and facts agree.
5. Can customer use change the result?
Yes. Check whether rights or an equipment supply have actually been granted.
6. Are services invoiced separately?
Determine the service invoicing obligation independently.
7. How long can a challan number be?
Rule 55 specifies at most sixteen characters.
8. Is serial-number tracking a universal Rule 55 field?
No. It is useful evidence for identifiable tools.
9. Is the carrying amount the service value?
No. Determine consideration and valuation for the service separately.
10. Does a challan displace the e-way bill requirement?
No. Check Rule 138 and the relevant facts.
11. What if the truck carries goods for separate purposes?
Classify and document each population.
12. Can a return transport need documentation?
Check the movement facts and applicable challan and transport rules.
13. How should damaged returned tools be counted?
Count them as physically returned and flag the condition separately.
14. Does missing stock automatically prove a sale?
No. Investigate custody, disposal and records.
15. What if the parties later agree to sell the tools?
Review the resulting supply and invoice requirements on the new facts.
16. What is the closing record?
A matched dispatch, custody and return register with unresolved items explained.
Official sources
CBIC CGST Rules compilation, Rule 55 and Rule 138 Consolidated CGST Rules, Rule 55 and transport documentation Central Goods and Services Tax Act, 2017, section 7, section 25 and Schedule I