Bill-to-Ship-to Transactions under GST (2026): Place of Supply under Section 10(1)(b)
CA Meet Dhrangadhariya 
May 22, 2026
CA Meet Dhrangadhariya May 22, 2026
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Last updated: 08 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
GST is a destination-based tax, so getting the place of supply right matters most precisely in the cases where the billing address and the shipping address are different people in different places - the bill-to-ship-to transaction.
A supplier delivers goods to a recipient on the instructions of a third party. Three parties are involved: the original supplier, the third party who instructs the delivery (and is billed), and the ultimate recipient who physically receives the goods.
Where the supplier delivers goods to the recipient, or to any other person, on the instruction of a third party, the place of supply is deemed to be the principal place of business of that third party, not the location the goods are actually delivered to. This applies only where the instruction is given before or during the movement of goods, not after the movement is already complete.
Because of this deeming rule, a single physical movement of goods is legally treated as two separate supplies:
Each leg is taxed independently - as IGST if that particular leg is an inter-State supply, or as CGST plus SGST/UTGST if that leg is intra-State - based on its own place of supply, not the place of supply of the other leg.
Using X as the original supplier, Z as the third party who instructs delivery, and Y as the ultimate recipient:
| Scenario | X (supplier) | Z (third party) | Y (recipient) | First supply (X to Z) | Second supply (Z to Y) |
|---|---|---|---|---|---|
| 1 | Karnataka | Maharashtra | Karnataka | Inter-State, place of supply Maharashtra - X charges Z IGST | Inter-State, place of supply Karnataka - Z charges Y IGST |
| 2 | Karnataka | Karnataka | Telangana | Intra-State, place of supply Karnataka - X charges Z CGST + Karnataka SGST | Inter-State, place of supply Telangana - Z charges Y IGST |
| 3 | Karnataka | Tamil Nadu | Tamil Nadu | Inter-State, place of supply Tamil Nadu - X charges Z IGST | Intra-State, place of supply Tamil Nadu - Z charges Y CGST + Tamil Nadu SGST |
Each leg’s tax treatment depends purely on whether that specific leg crosses a State border - the two legs can independently be intra-State or inter-State, in any combination, regardless of where the goods physically move.
Yes. The same bill-to-ship-to logic extends to a service that is billed to one party but actually supplied to a different recipient on that party’s instruction.
If the ultimate recipient (Y) is a branch of the third party (Z) located in a different State, the bill-to-ship-to provisions still apply, because branches in different States are treated as distinct persons under section 25. If, instead, Y is merely an additional place of business of Z within the same State, Y and Z are not distinct persons, and the transaction is invoiced only to Z - the bill-to-ship-to split does not arise.
Two separate tax invoices exist - the original supplier’s invoice to the third party, and the third party’s invoice to the ultimate recipient. Each bill-to party claims input tax credit on the invoice addressed to it. The combined effect is that the ultimate recipient ends up holding the input tax credit for the supply, once both legs have been accounted for.
The e-way bill form carries separate “bill-to” and “ship-to” address fields, with the tax components charged as per the bill-to party’s invoice. Under e-invoicing, the two legs are invoiced separately and each follows the normal e-invoicing procedure independently - one e-invoice from the original supplier to the third party, and a second from the third party to the ultimate recipient.
Bill-to-ship-to transactions are a frequent source of invoicing and place-of-supply errors, especially across multiple State combinations - please reach out to our team and we will be happy to assist with invoicing structure and GST return reporting for these transactions.
| Term | What it means |
|---|---|
| Bill-to-ship-to transaction | A transaction where the invoice is billed to one party, but the goods are physically delivered to a different party, on the billed party’s instruction. |
| Place of supply | The location that GST law treats as the destination of a supply, which decides whether CGST+SGST or IGST applies. |
| Distinct persons | Separate GST registrations (including branches in different States) treated as separate “persons” for GST purposes. |
| Intra-State supply | A supply where the place of supply and the supplier’s location are in the same State, taxed as CGST plus SGST/UTGST. |
| Inter-State supply | A supply where the place of supply and the supplier’s location are in different States, taxed as IGST. |
A transaction where the supplier delivers goods to the recipient on the instructions of a third party - the invoice is billed to the third party, but the goods are shipped directly to the recipient, without passing physically through the third party.
Section 10(1)(b) of the IGST Act. Where goods are delivered to a recipient, or any other person, on the instruction of a third party, the place of supply is deemed to be the third party’s principal place of business, provided the instruction is given before or during the movement of goods.
Two - a first supply from the original supplier to the third party (invoiced to the third party, place of supply at the third party’s location), and a second supply from the third party to the ultimate recipient (invoiced to the recipient, place of supply at the recipient’s location).
Yes. The same bill-to-ship-to logic applies where a service is billed to one party on whose instructions it is actually supplied to another recipient.
Although two separate tax invoices are raised and two separate credit chains exist on paper, the net commercial effect is that the ultimate recipient ends up with the input tax credit for the supply once both legs are accounted for.
The e-way bill has separate “bill-to” and “ship-to” address fields, with tax charged as per the bill-to party’s invoice. Under e-invoicing, two separate e-invoices are raised - one by the original supplier to the third party, and one by the third party to the ultimate recipient - each following the normal e-invoicing procedure.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.
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