E-Way Bill: The #1 Mistake Zone—Delivery Challan vs Tax Invoice (Especially for Branch Transfers)
- Mayur Bhadani
- 6 days ago
- 4 min read
If your goods are moving on roads, the GST department usually checks only two things first:
What document is travelling with goods (Tax Invoice / Bill of Supply / Delivery Challan / Bill of Entry), and
Whether the e-way bill data matches that document.
Most penalties and detentions under GST happen not because tax is unpaid, but because the movement document is wrong, or the e-way bill is generated with wrong “Reason/Sub-type”—especially when a Delivery Challan (DC) is used casually.
This guide is a practical “CA-desk” explanation to help you pick the correct document every time.
A. What is the legal base of an E-Way Bill?
Rule 138 of CGST Rules is the backbone of e-way bill. It requires e-way bill before commencement of movement in prescribed cases, and sets the process (Part A/Part B), validity, and exceptions.
Also note a very practical change: from 1 Jan 2025, the e-way bill system restricts generation to documents dated within 180 days (and extension limits etc.). So “old invoice/DC” can become a technical failure point.
B. Delivery Challan (Rule 55): When is it correct to use?
A Delivery Challan is not a “replacement” for tax invoice in all cases. It is allowed only in specific situations under Rule 55 – transportation of goods without issue of invoice.
One key compliance link: If goods are transported on delivery challan, it must be declared in e-way bill as per Rule 138.
Common valid situations where DC is used (practical view)
Job work movements (sending goods to job worker / returning)
“For own use” movement (certain internal movements)
Exhibition / fairs
Recipient not known at dispatch
SKD/CKD / lots/batches (invoice first, then DC for subsequent lots with invoice reference)
The e-way portal itself maps typical transaction sub-types to document type (e.g., Job Work → Delivery Challan; For own use → Delivery Challan).
C. The BIG confusion: Branch/Stock Transfer—When DC is WRONG and Tax Invoice is REQUIRED
1) Branch transfers between different GSTINs (same PAN) = “distinct persons”
Under GST, registrations in different States (and even separate registrations) are treated as distinct persons (Section 25 concept), and supplies between distinct persons can be treated as supply even without consideration (Schedule I concept).
CBIC’s own FAQs clearly reflect this “distinct persons” principle for branches in different States.
✅ Practical result (conservative, safest approach):
If goods move from GSTIN A to GSTIN B (even same PAN), treat it as supply and generally issue a Tax Invoice (with GST, valuation as per rules), and generate e-way bill on that invoice.
🚫 Common mistake: Using Delivery Challan for such inter-GSTIN branch transfer.This often triggers detention because the officer expects an invoice for a supply between distinct persons.
2) Movement within the same GSTIN (same registration) between locations
This is often not a “supply” merely because you moved goods internally, but e-way bill may still be needed because Rule 138 can apply to movement “for reasons other than supply” as well. A DC may be used depending on the nature of movement and your internal documentation policy (and state-specific e-way requirements).
Best practice: Treat internal movement as “For own use / Others” with DC + proper stock transfer records + e-way bill (where applicable).
D. E-Way Bill + Delivery Challan: The “Mismatch” traps (where clients slip most)
Trap 1: Wrong “Reason/Sub-type” in e-way bill
Example: You created DC for job work, but selected “Supply” with “Tax Invoice” in e-way bill.Solution: Follow portal mapping: Job Work → Delivery Challan; For own use → Delivery Challan; Supply → Tax Invoice, etc.
Trap 2: Wrong Document Number / Date (typo)
A single digit mismatch between invoice/DC and e-way bill is a classic detention trigger.
Relief point: CBIC clarified that if invoice (or specified document) and e-way bill are present, then for certain minor mistakes, Section 129 proceedings should not be initiated, and instead a small penalty can be imposed (₹500 CGST + ₹500 SGST per consignment, etc.). So, when the error is clerical and tax intent is not suspicious, you should rely on this circular in your defence.
Trap 3: Part-B vehicle details not updated (or updated late)
Rule 138 explains Part-B requirement and the limited relaxation for short distance within State/UT in certain cases.
Trap 4: Using “old” invoice/DC to generate e-way bill
From 1 Jan 2025, e-way bill generation is restricted to documents within 180 days. If you generate late, the portal may not allow it.
E. Penalties & consequences (what actually happens on the road)
1) If e-way bill is missing
CBIC circular clarifies: if consignment is accompanied by invoice/other specified document and not an e-way bill, proceedings under Section 129 may be initiated.
2) If e-way bill exists but has minor clerical mistakes
For specified minor mistakes, don’t jump to Section 129; officer should levy small penalty under Section 125 (as per circular guidance).
F. Practical tips from a CA’s desk (simple system to stop mistakes)
1) Adopt a “Document Decision Tree” in your office:
Supply to customer? → Tax Invoice (+ e-way bill if applicable)
Branch transfer to another GSTIN (same PAN but different GSTIN)? → Tax Invoice (treat as distinct person supply) + e-way bill
Job work / exhibition / own use / recipient not known / SKD lots? → Delivery Challan + e-way bill (correct sub-type)
2) Pre-dispatch checklist (2 minutes)
Document type correct? (Invoice vs DC)
Document number/date exactly matches e-way bill
Reason/sub-type correct
HSN/description reasonably aligned
Vehicle number/Part-B updated before movement
3) Training point for staff
Most “problems” are not GST rate problems—they are data discipline problems.
Key Takeaways for Business Owners
DC is not a default document—use it only where Rule 55 logic fits.
Branch/stock transfer between different GSTINs should be handled like supply (invoice + e-way).
Always keep document number/date identical in e-way bill.
If it’s a clerical mistake, use CBIC Circular 64/38/2018 to argue for small penalty, not detention under 129 (where applicable).
Don’t delay: e-way bill generation is restricted for documents older than 180 days.
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