Question

Main documents used in internal trade, performance invoice, debit note, credit notes. LR (lorry receipt) and (RR) railway receipt.

Answer 1

In internal trade or domestic business, an invoice is drawn up when the goods are despatched. If they are despatched by truck, a copy of the invoice is handed over to the truck driver along with the filled-in road permit received from the customer along with the purchase order. The road permit is issued by the customer's jurisdictional sales tax office; in some states it is called way bill. The road permit ensures that the goods are actually despatched to the specified consignee. The transporter's copy of invoice ensures the customer is able to avail of CENVAT credit of the cenvat or excise duty paid on the goods. The transporter issues an LR or lorry receipt after the goods are loaded on to the truck. Besides details of the goods and the truck, the LR also mentions the point of origin and the destination as well as the names of the consignor (seller) and the consignee (buyer). In case the goods are despatched through the railways, RR or railway receipt is issued in lieu of LR. As the invoice is a statutory document, sometimes a seller also sends its own challan, a document detailing the goods and packages sent, along with the goods. As a token of receipt, the buyer or consignee signs the Consignee's copy of LR and/or the challan as an acknowledgement of goods received from the transporter.
Debit notes are raised by the seller for sundry charges that do not form a part of the sale process, e.g. delayed payments. Similarly, credit notes are raised for sundry reasons to give relief to the customer, like quantity discounts, cash discounts, shortages etc.
Most goods attract sales tax, which are levied on the invoices at the time of shipment. If the customer is registered with the sales tax authority in its place of operation, a concessional rate of tax is charged for which a declaration form has to be collected by the seller at a later date.
It may be noted that the seller cannot derive any benefit from CENVAT, earlier called Central Excise Duty, or Sales Tax. It only collects these on behalf of the Government and deposits them at the prescribed banks against treasury challans.