This circular provides clarification on the GST implications for movement of goods within a State or from one State to another for supply on an approval basis, particularly in cases where goods are carried by suppliers before finalisation of sale.

It clarifies that where goods are transported for reasons other than immediate supply, such as for approval by the buyer, the supplier may move such goods on a delivery challan in accordance with rule 55 of the CGST Rules, along with an e-way bill wherever applicable. Since the supply is not known at the time of removal, the tax invoice is required to be issued only when the buyer approves the goods and the supply is completed. For this purpose, the supplier may carry invoice books to issue the invoice at the time of final supply.

The circular further clarifies that where goods are carried from one State to another State and supplied there, such supplies constitute inter-State supplies and are liable to IGST under the IGST Act.

This clarification is applicable to all goods supplied under similar approval-based arrangements and aims to remove practical difficulties faced by suppliers who are unable to determine tax liability at the time of movement of goods.