E-Invoicing System under GST Act. 2017
1. Background of E-Invoicing under GST
E-Invoicing is being implemented in a phase manner since October 2020. The history of E-Invoicing is as under: –
| S. No. | Notification No. | Turnover | Effective Date |
| 1. | 13/2020 – Central Tax | 500 Crore | 01/10/2020 |
| 2. | 61/2020 – Central Tax | 500 Crore | 01/10/2020 |
| 3. | 88/2020 – Central Tax | 100 Crore | 01/01/2021 |
| 4. | 05/2021 – Central Tax | 50 Crore | 01/04/2021 |
| 5. | 01/2022 – Central Tax | 20 Crore | 01/04/2022 |
| 6. | 17/2022 – Central Tax | 10 Crore | 01/10/2022 |
2. Update as on 01st August, 2022
The CBIC has notified that e-invoicing will be applicable from 1st October, 2022 for businesses with a turnover of more than Rs.10 crores (in any financial year from FY 2017-18 onwards) Notification No. 17/2022 Central Tax dated 01/08/2022 for business-to-business transaction. (Change in Notification no. 13/2021 Central Tax Dated 21/03/2021).
3. The documents that will be covered under e-Invoicing system are as follows-
1. Invoices
2. Credit Notes
3. Debit Notes
4. Export
5. Any other document as notified under GST law to be reported as e-invoice by the creator of the document
4. Exemption form E-Invoices under GST-
A) Entity Level: – Irrespective of the turnover, e-Invoicing shall not be applicable to the following categories of registered persons for now, as notified in CBIC Notification No.13/2020 – Central Tax:
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- An insurer or a banking company or a financial institution, including an NBFC
- A Goods Transport Agency (GTA)
- A registered person supplying passenger transportation services
- A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services.
- Input Service Distributor.
- An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)
B) Transaction Level:-
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- E-Invoicing is not applicable for import Bills of Entry.
- Business to consumer Transactions (B2C).
- Non-GST Supplies (Alcoholic Liquor, Petrol and other).
C) Documents Level: – Following Documents that not be covered under E-Invoicing Systems are as Follows:-
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- Bill of Supply
- Self-Invoice in case of RCM u/s 9(4)
- Delivery Challan
- Advance Receipts Voucher.
5. Amendment / cancellation of e-invoices
1. Can an e-Invoice be cancelled partially/fully?
An e-Invoice cannot be partially cancelled, it has to be cancelled fully. Once cancelled, it will need to be reported into the IRN within 24 hours. A cancellation done after 24 hours cannot be done on the IRN and needs to be manually cancelled on the GST portal before the returns are filed.
2. How can an e-Invoice be amended?
All amendments to an e-invoice can be made only on the GST Portal.
6. What are the modes available for getting e-Invoices Registered?
Multiple modes will be made available for getting e-Invoices registered on the Invoice Registration Portal (IRP). Some of the proposed modes are-
1. Web based,
2. API based,
3. Offline tool based and
4. GSP based.
7. What is the penalty for non compliance with E-Invoicng Provisions?
In the event that there are any differences/errors in e-Invoices, the following 2 penalties are applicable, according to sub-rule (5) of Rule 48 under the CGST Act 2017:
- Penalty for non-issuance of e-invoice- 100% of the tax due or Rs.10,000 whichever is higher.
- Penalty for incorrect or erroneous e-invoice is Rs.25,000.
As is evident, any non-compliance with the e-invoice mandate can result in heavy penalties to the taxpayers. Hence, it is important that taxpayers soon start to upgrade their systems to e-invoicing if not done already.
8. Consequences of non-compliance with e-invoicing mandate
1. Invalid Tax Invoice: As per Section 31 of the CGST Act, 2017, it is mandatory to issue an invoice or a bill of supply for every supply of goods or services or both. And Rule 46 (r) – provides for mentioning of QR Code where the invoice is issued under Rule 48(4). The QR code, as suggested above, is received when IRN is generated. Hence, If an invoice is not registered on the IRP, then such an invoice is not considered as a valid tax invoice and consequently attracts a penalty.
2. Failure of Invoice Issuance: As notified via several notifications, Rule 48(4) provides that a class of registered persons as may be notified shall issue an e-invoice and Rule 48(5) – provides that if an e-invoice is not issued even if it is required to be issued, then the invoice so issued shall not be a valid invoice. Hence, if a taxpayer fails to generate IRN, then it is considered as a failure of the issuance of an invoice.
3. Detention of Goods: As per Section 129 of CGST Act 2017, any transport of goods not in accordance with the rules laid down under the GST Act can lead to the detention of goods. As an invoice without a QR code is not to be considered as a valid invoice, hence, starting the transportation of goods without a valid tax invoice with an IRN may result in the detention of the items and the vehicles. This may also result in a standard penalty related to e-way bill.
4. Denial to ITC Claim: Under GST a tax invoice is an important document. It not only evidences the supply of goods or services or both but is also an essential document for the recipient to avail Input Tax Credit (ITC). As per Section 16 of CGST Act 2017, a registered person cannot avail input tax credit unless he is in possession of a tax invoice or a debit note. Hence, without a proper tax invoice that has an IRN, the buyer has the option to refuse delivery of the products and/or payment, which may affect the buyer’s ability to claim ITC. Also, without IRN, the invoice data will not be auto-populated to GSTR-1 of supplier and buyer’s GSTR-2A. In this scenario, buyer can not claim Input Tax Credit (ITC) for the tax already paid by supplier.
5. EWB and E-invoicing: Now with the e-way bill and e-invoicing pairing, it is all the more important to be extra cautious when carrying out transit transactions. Theoretically, an E-Way Bill should not be generated for an invalid document. And an invoice is invalid without an IRN (subject to applicability). Hence, a transit happening on an E-way bill generated for invalid e-invoice can be considered unauthorized movement of goods. While current govt systems are not ready to identify such cases, taxpayers should remain vigilant for the consequence.
Author Bio
If I started e invoice from 01/10/22, then any penalty can charge by the department from 1/4/22 to 30/9/22 ?