Section 10(1)(b): Bill-to Ship-to and the Third Person

Section 10 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Two supplies, one physical movement, and two deeming provisions that have to be read together — one in the IGST Act for the place of supply, one in the CGST Act for the credit.

Section 10(1)(b) of the IGST Act: where goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods, and the place of supply shall be the principal place of business of such person. And the Explanation to s.16(2)(b) of the CGST Act matches it: the registered person is deemed to have received the goods where they are delivered to any other person on his direction, before or during the movement, by transfer of documents of title or otherwise.

The structure: two supplies, one movement

The classic case. A in Maharashtra sells to B in Karnataka, and B directs A to deliver the goods to C in Tamil Nadu.

There are two supplies:

A to B. Governed by clause (b). It is deemed that B has received the goods, and the place of supply is B's principal place of business — Karnataka. So A charges IGST, with Karnataka as the place of supply.

B to C. Governed by clause (a) — the movement terminates in Tamil Nadu for delivery to C. So B charges IGST, with Tamil Nadu as the place of supply.

And the credit works. B never physically received the goods, but the Explanation to s.16(2)(b) deems it to have received them, so the s.16(2)(b) condition is satisfied and B takes the credit on A's invoice.

The two deemings are the whole design. Without the IGST deeming, B's purchase would have a place of supply in Tamil Nadu — where B is not registered. Without the CGST deeming, B could not take the credit on goods it never received. Section 16(2)(b) →

The four elements of clause (b)

1. Delivery to a recipient or any other person. The physical delivery may be to anyone.

2. On the direction of a third person. The direction is what engages the clause. Without a third person directing, it is an ordinary clause (a) supply.

3. "Whether acting as an agent or otherwise." So the third person need not be an agent. A trader buying and on-selling, with the goods drop-shipped, is within it.

4. "Before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise." The direction may be given before despatch or while the goods are in transit, and the transfer may be by documents of title or by any other means.

"Or otherwise" is doing real work in two places — the third person need not be an agent, and the transfer need not be by documents of title. The clause is deliberately wide.

"Principal place of business of such person"

Not where the third person is located generally. Not the address on the purchase order. The principal place of business — which for a multi-State entity means the principal place of business of the registration concerned.

The practical question that arises: where B has registrations in several States and places the order through its Karnataka registration, the place of supply is Karnataka, because that is the registration whose principal place of business is engaged.

Which is why the GSTIN on the purchase order matters. The GSTIN identifies the registration, and the registration identifies the principal place of business. A purchase order carrying the wrong GSTIN produces the wrong place of supply on the supplier's invoice — and a credit problem for the buyer, since the credit will appear in the wrong State's ledger. Section 25(4) distinct persons →

The documentation both sides need

On the supplier's invoice (A to B):

• bill-to: B, with B's GSTIN and address;
• ship-to: C, with C's address — Rule 46(o) requires the address of delivery where it differs from the place of supply, along with the State and its code;
• place of supply: B's State;
• IGST or CGST+SGST determined against B's State, not C's.

On the second invoice (B to C):

• ordinary invoice from B to C;
• place of supply: where the movement terminates for delivery to C;
• e-way bill: generated for the actual movement, with the correct document reference.

The e-way bill is where this most often unravels. There is one physical movement and two invoices. The e-way bill must reflect the actual movement, and both parties' records must be consistent with it — because an audit reconciling e-way bills to GSTR-1 by document type will otherwise find a difference. Rule 46 particulars →

Where clause (b) does not apply

No third person directing. A straightforward sale with delivery to the buyer's own site is clause (a), and the place of supply is where the movement terminates.

The "third person" is the recipient itself. A buyer directing delivery to its own branch is not a third person; the supply is to the buyer, and clause (a) governs — with the destination being the branch's location.

Supplies to an unregistered person. Clause (ca), from 01.10.2023, applies notwithstanding anything contrary in clause (a) or clause (c) — it does not override clause (b). So a bill-to ship-to arrangement with a registered third person remains within clause (b). Section 10(1)(ca) →

Export. Where the goods leave India, s.11(b) applies and the place of supply is a location outside India, whatever the intermediate directions.

Key takeaways

• Clause (b) deems the third person to have received the goods, with the place of supply at its principal place of business.
• The Explanation to s.16(2)(b) of the CGST Act matches it, so the third person's credit is preserved.
• The third person need not be an agent, and the transfer need not be by documents of title.
• The direction may be given before or during the movement.
• The GSTIN on the purchase order determines which registration's principal place of business governs.
• One movement, two invoices — the e-way bill must reconcile to both.

Read next

• Section 10(1)(a): Where the Movement Terminates for Delivery
• Bill-to Ship-to: ITC and Deemed Receipt Under Section 16(2)(b)
• Section 10(1)(ca): Supplies to Unregistered Persons
• Rule 46: Particulars of a Tax Invoice

Disclaimer: Positions stated as on 5 September 2026, based on the IGST Act and the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).