Introduction
In today’s competitive era, customer is the KING and companies do everything to keep the KING happy and satisfied. The companies employ various strategies to boost their sales. One such strategy is line sales.
Line sales are sales undertaken by the sellers to reach customers at their doorsteps. It is a type of push-sales, wherein the seller carries goods to the customer’s location for them to buy. The customer purchases products as per their requirements. When the sale is made, the seller issues a tax invoice to the customer.
This type of sale is popular among:
Non-alcoholic beverages
Sin goods like cigarettes & pan-masala
Bakery items
Dairy products and other daily-use goods
Goods are taken directly to small vendors and sold at their doorsteps.
There is limited literature available on line sales and their operational/legal impact. This type of sale is a form of “sale on approval basis”—goods are sold only after customer approval. On the GST e-way bill portal, “line sales” appears under the outward transactions category.
GST Implications
Goods are transported to the customer’s location without immediate sale. Until sold, the ownership remains with the supplier, and hence, the risks and rewards remain with them.
Key GST points:
Goods are transported under a delivery challan.
If the value exceeds ₹50,000, an e-way bill must be generated.
E-Way Bill Configuration for Line Sales:
Supply Type: Outward
Sub-type: Line sales
Document Type: Delivery Challan
Transaction Type: Regular
Bill From: Own GSTIN
Ship From: Place of business from where goods are dispatched
Bill To: Self GSTIN
Ship To: Final destination point (e.g., if dispatch is from Kolkata to Durgapur, enter the last known shop in Durgapur or next stop like Asansol)
Value of Goods: Cost + margin (as per Explanation 2 of Rule 138(1))
Treatment of Goods (Sold or Unsold)
When Goods Are Sold:
Supplier issues a tax invoice/bill of supply (manual, POS machine, or handheld device).
Invoices can be integrated with the ERP system either in real-time or at day-end.
B2B/B2C invoices are issued accordingly.
If e-invoicing is applicable, e-invoice for B2B sales must be generated and issued.
When Goods Remain Unsold:
Unsold goods are returned to the Place of Business (POB).
No financial entry is made in the books.
If ERP recorded it as stock-out, then it’s returned as stock-in.
Departmental Clarifications
Circular 10/10/2017-GST, dated 18th October 2017, clarified goods movement under approval basis:
Goods may be moved within the state or inter-state with a delivery challan and e-way bill (if applicable).
Invoice is issued only when the sale is confirmed.
The person carrying the goods can carry a manual invoice book to issue the invoice upon sale.
If goods are sold inter-state, IGST is applicable.
E-Way Bill FAQ (Applicable Scenario)
Query:
In many cases where a manufacturer or wholesaler supplies to retailers, or a consolidated shipment is distributed to multiple consignees, the recipient is unknown at dispatch (e.g., FMCG trucks supplying to kirana stores). What should be done?
Answer:
In such cases:
Movement is caused on behalf of self.
No supply is being made at dispatch.
Goods are moved using a delivery challan.
E-way bill is generated following delivery challan rules.
Conclusion
Line sales represent a strategic sales method for direct-to-customer delivery, especially in FMCG and daily consumer goods sectors. While they offer convenience and revenue growth potential, they involve specific compliance requirements under GST.
Proper handling of:
Delivery challans
E-way bills
Tax invoices
…is crucial to avoid legal or logistical issues.
As this sales model grows in popularity, companies must:
Stay updated with regulatory changes
Implement efficient documentation processes
Adapt ERP and inventory systems to ensure operational efficiency and compliance