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Sales & Distribution Guide

Delivery Challans & Warehouse Dispatch

Delivery Challans (DC) govern the physical movement and dispatch of goods from warehouses before or alongside financial invoicing. Learn how to manage dispatches, execute FEFO batch allocations, avoid duplicate inventory deductions, and convert challans into GST-compliant tax invoices.

1. What is a Delivery Challan & When to Use It?

Under Rule 55 of the Central Goods and Services Tax (CGST) Rules, 2017, goods can be legally transported without an immediate tax invoice using a formal Delivery Challan. In Indian wholesale distribution, pharma logistics, and FMCG trade, the Delivery Challan serves critical operational functions:

Warehouse Dispatch

Goods physically leave the warehouse for transport before customer acceptance or payment confirmation.

Partial Deliveries

A large Sales Order (e.g. 100 boxes) can be dispatched across multiple vehicle trips using separate Delivery Challans.

Transit Compliance

Satisfies statutory road-check requirements and supports e-Way Bill generation with vehicle registration details.

Crucial Invariant: Delivery Challan vs. Tax Invoice

In Katixo, Delivery Challan DISPATCH is what deducts physical inventory (`stock_movement.SALE`) and consumes FIFO cost lots. When you subsequently convert a Delivery Challan into a Tax Invoice, inventory is NOT deducted a second time. The invoice only creates the financial receivables entry (`AR 1100`) and books GST liability.

2. How to Create a Delivery Challan (Step-by-Step)

There are two standard ways to create a Delivery Challan in Katixo ERP:

Method A: From an Approved Sales Order (Recommended Workflow)

Standard Distribution Flow
  1. 1
    Navigate to Sales > Sales Orders: Open the confirmed or partially dispatched Sales Order.
  2. 2
    Click "Create Delivery Challan": The system automatically copies customer details, shipping address, place of supply, and remaining un-dispatched quantities for each line.
  3. 3
    Adjust Dispatched Quantities & Select Batches: If executing a partial dispatch, reduce quantities. For batch-tracked items, click Select Batches or use Auto-Pick FEFO to allocate stock from the nearest-expiry batch.
  4. 4
    Enter Transport Details: Specify vehicle registration number (e.g. MH-12-AB-1234), transporter name, and driver contact number for e-Way bill compliance.
  5. 5
    Save as DRAFT: Review lines, batches, and delivery instructions. At this stage, warehouse stock is NOT yet deducted.

Method B: Standalone Delivery Challan (Direct Dispatch)

Used when dispatching promotional samples, demo equipment, job-work items, or direct ad-hoc deliveries without a prior Sales Order.

1. Go to Sales > Delivery Challans and click "New Delivery Challan".

2. Select the Customer Contact and Dispatch Warehouse.

3. Add items manually, specify quantities, and select batch lots from available warehouse rack balances.

4. Save the challan in DRAFT state.

3. Dispatch Execution & Stock Deduction

When goods are physically loaded onto the truck, warehouse managers click the "Dispatch" button. This initiates atomic backend validations:

Strict Stock Validation: The server acquires a pessimistic write lock on the item and batch balance rows. If warehouse stock is insufficient, the dispatch is aborted with DC_INSUFFICIENT_STOCK.
Inventory Movement Recording: Inserts an immutable stock_movement of type SALE referencing the challan number.
FIFO Cost Lot Consumption: Automatically draws cost from active FIFO lots (`cost_lot_consumption`) and computes the exact blended COGS cost basis for the dispatch.
Status Update: The challan transitions to DISPATCHED and locks line edits.

4. Converting Challan to Sales Invoice

Once the customer receives the goods and signs the physical delivery slip, the challan is converted into a final GST Tax Invoice.

How to Convert:

Open the dispatched Delivery Challan and click "Convert to Invoice". You can invoice the full challan or adjust quantities if the customer rejected damaged units.

Accounting Journal Created on Invoice:
  • DEBIT: Accounts Receivable (1100) — [Gross Total with GST]
  • CREDIT: Sales Revenue (4000) — [Taxable Amount]
  • CREDIT: Output CGST / SGST / IGST — [Tax Amount]
  • DEBIT: Cost of Goods Sold (5000) / CREDIT: Inventory Asset (1200) — [Inherited from DC dispatched FIFO cost]

5. Lifecycle States & Allowed Actions

StatusMeaningStock ImpactAllowed Actions
DRAFTCreated by sales/warehouse operator; under packing.None (Stock is still free in warehouse)Edit lines, Change batches, Delete, Dispatch
DISPATCHEDVehicle has departed warehouse; goods in transit.Deducted from warehouse batch balancePrint Challan PDF, Convert to Invoice, Cancel
INVOICEDFinal Tax Invoice has been generated and booked to AR.Already deducted by DC (No duplicate movement)View linked Invoice, Print PDF
CANCELLEDOrder cancelled before or after dispatch.If cancelled after dispatch, stock is returned to warehouseAudit trail only

Developer & API Integration Reference

JWT Bearer Required

Programmatically automate dispatches from warehouse management systems (WMS) or mobile barcode scanners:

GET/api/v1/delivery-challans
GET/api/v1/delivery-challans/{id}
POST/api/v1/delivery-challans
POST/api/v1/delivery-challans/{id}/dispatch
POST/api/v1/delivery-challans/{id}/convert-to-invoice
GET/api/v1/delivery-challans/{id}/pdf
# Dispatch a delivery challan via cURL
curl -X POST https://api.katixo.com/api/v1/delivery-challans/b4a2c1d0-1111-2222-3333-444455556666/dispatch \
  -H "Authorization: Bearer eyJhbGciOiJIUzI1NiIs..."