E-Invoicing under GST: Items to be excluded from Aggregate Turnover?
Whether E-Invoicing is voluntarily?
Rule 48(4) of CGST Rules 2017 notifies certain class of suppliers who are required to undertake E-Invoicing procedure for issuance of a tax invoice. This rule was inserted w.e.f. 13.12.2019 vide Notification No. 68/2019 dt: 13.12.2019.
In pursuance of this rule, Govt has issued notifications to prescribe for aggregate turnover limit for applicability of E-Invoicing and the initial limit of Rs. 500 Crs has been reduced gradually from year after year to expand reach to more and more suppliers. As per latest Notification[1], the turnover limit was reduced from Rs. 50 Crs to 20 Crs w.e.f. 1st April 2022.
The E-Invoicing compliance is based on the ‘aggregate turnover’ of the supplier. The definition of ‘Aggregate Turnover’ is defined under CGST Act 2017. As per Sec 2(6) of CGST Act, it is defined to mean the aggregate value of all taxable supplies, exempt supplies, exports of goods or services.
Further, Sec 2(47) of CGST Act 2017 defines ‘exempt supply’ to mean supply of any goods or services which attracts nil rate of tax or which is exempt from tax and includes non-taxable supply. And Sec 2 (78) of CGST Act 2017 defines ‘non-taxable supply’ to mean a supply of goods or services or both which is not leviable to tax under CGST Act or under IGST Act.
As per above mentioned definitions, it appears that the ‘aggregate turnover’ covers various types of supplies of goods or services which could be either taxable or exempt or non-taxable supplies.
Now a doubt may arise whether following transactions should be considered in the ‘aggregate turnover’:
- Sale of land or
- Sale of flats post its completion or
- Supply of goods from one non-taxable territory to another non-taxable territory or
- Supply of warehoused goods before its clearance for home consumption would need to be considered for ‘aggregate turnover’
The above-mentioned transactions are listed in the Schedule -III appended to CGST Act 2017 which is as per Section 7(2) of CGST Act 2017.
Section 7 provides for scope of supply and as per sub-clause (2), the activities listed in Schedule – III (mentioned above) are neither treated as supply of goods nor a supply of services.
Since these activities are not regarded as ‘supplies’ per se; hence these gets excluded from the purview of applicability of GST law.
Accordingly, these activities (Schedule – III) will also get excluded from the definition of ‘aggregate turnover’. Hence for determining the aggregate turnover, these activities need to be excluded for determining the turnover limit.
Can a supplier opt for E-Invoicing voluntarily?
A query may arise as to whether a supplier having aggregate turnover below notified limit, can opt for E-Invoicing on voluntary basis?
Notification No. 70/2019-Central tax, Dt: 13.12.20219 has used language which is as below:
“ ….hereby notifies registered person, whose aggregate turnover in a financial year exceeds one hundred crore rupees, as a class of registered person who shall prepare invoice in terms of sub-rule (4) of rule 48 of the said rules”
…… Emphasis supplied
In view of the usage of words ‘shall prepare’ in said notification denotes that E-Invoicing procedure is mandatory for those persons who are notified.
Therefore, if a person is not falling in criteria of notified person, then e-invoicing compliance is not compulsory for the said person. This also mean that if the said person is interested in complying with e-invoicing then there appears no restriction under GST law and hence said person may opt for e-invoicing voluntarily.
However, E-Invoicing portal appears to be creating a hurdle for opting for E-invoicing voluntarily. For enabling E-Invoicing, the said portal requires the turnover details to be filled in for activating the E-Invoicing functionality and only if the turnover is above notified limit then E-Invoicing is enabled otherwise E-Invoicing is not enabled.
In view of this, it appears that though GST law nowhere restricts voluntarily opting for e-invoicing but E-Invoice portal casts restriction which appears to be in contravention with the law.
[1] No. 01/2022 -CT dt: 24.02.2022
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