Summary: GST e-invoicing requires specified taxpayers to report prescribed invoices to the Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN) and QR code. The present turnover threshold is Rs.5 crore from 1 August 2023, determined with reference to aggregate turnover across GST registrations under the same PAN and preceding financial years from 2017-18 onwards. E-invoicing generally covers B2B supplies, exports, supplies to SEZs, deemed exports and prescribed credit and debit notes, while specified categories of taxpayers remain exempt. Taxpayers with aggregate annual turnover of Rs.10 crore and above are also subject to a 30-day reporting restriction on the IRP. Rule 48(5) of the CGST Rules provides that an invoice required to be prepared under the e-invoicing mechanism but issued otherwise shall not be treated as an invoice. This creates consequences not only for the supplier but also for recipients claiming input tax credit, since Section 16(2)(a) requires possession of a valid tax invoice or prescribed document. Where goods move on the strength of an invoice that should have carried an IRN but does not, questions concerning interception, detention and penalty may also arise.
GST E-Invoice: IRN Requirement, 30-Day Reporting Rule and ITC Consequences
A taxpayer recently asked me, “Sir, I gave the bill, delivered the goods and got the payment. What more does the law want?” Under e-invoicing, the answer is that the bill itself must be registered with the government before it counts as a bill.
E-invoicing started in GST as a voluntary facility in late 2019. It became mandatory from 1 October 2020 for businesses with turnover above Rs.500 crore. The limit then came down in steps: Rs.100 crore (January 2021), Rs.50 crore (April 2021), Rs.20 crore (April 2022), Rs.10 crore (October 2022) and currently the threshold is turnover of Rs.5 crore since 1st August 2023.
Two points are often missed. Turnover is counted across all GST registrations under one PAN. And if you crossed the limit in any year since 2017-18, you are covered.
The process that goes into the generation of e-invoice is simple. You prepare the invoice in your billing software as usual. The software sends its details to the government’s Invoice Registration Portal (IRP), which returns a unique 64-character Invoice Reference Number (IRN) and a QR code. Both must appear on your invoice. The data then flows automatically to your GSTR-1 and to the e-way bill system.
It is important to note that e-invoice applies to B2B supplies, exports, supplies to SEZs and deemed exports. Credit and debit notes are covered too. B2C sales do not need an IRN.
There are some categories that are exempt from e-invoicing even if the turnover is above the limit, such as SEZ units, insurers, banks and NBFCs, goods transport agencies and passenger transport.
Businesses with turnover of Rs.10 crore and above must report an invoice to the IRP within 30 days of its date. Later than that, the portal will not accept it. A wrong e-invoice can be cancelled on the portal only within 24 hours. After that, you can correct it through a credit note.
Taxpayers often ask a very pertinent question that why an invoice without IRN is treated as no invoice by the department. The answer is the Act itself. Rule 48(5) of the CGST Rules says that an invoice which should have been issued the e-invoice way, but was not, shall not be treated as an invoice. This is not a technicality. It is mandatory compliance.
The same reason applies to the validity of an IRN-less e-way bill. Strictly, it is the missing IRN that makes the invoice invalid, not the missing e-way bill. But the two are linked. For an e-invoiced supplier, the e-way bill is meant to be generated from the IRN. A truck carrying goods with an IRN-less invoice can therefore be detained and penalised at the roadside under Section 129.
This compliance has so deligently been mandated as a condition to claim ITC. This is where the honest buyer gets hurt. Section 16(2)(a) allows ITC only to a person who holds a valid tax invoice. If the law says the paper is not an invoice, that first condition fails.
So ITC already claimed on such invoices is at risk. The department can ask for reversal with interest. The supplier faces penalty, and the tax remains payable. The damage is limited to that invoice, not the buyer’s other credits. A buyer who acted in good faith can argue that he could not have known of his supplier’s lapse, but that is an argument, not a guarantee.
Aijaz Hussain Malik, JKAS is State Taxes Officer Circle-Budgam, Kashmir and writes
