A brief Note on E-Invoicing compliance

[Ganeshan Kalyani]

Manner of issuance of invoice

Rule 48 of the Central Goods and Services Tax Rules, 2017 (CGST Rules) provides for the ‘manner of issuing invoice’.

Sub-rule (1) of rule 48 states that the invoice should be raised in triplicate on supply of goods and as per sub-rule (2) the invoice should be raised in duplicate on supply of services.

On 13^th of December, 2019 sub-rule (4), (5) and (6) was inserted to rule 48 providing the additional condition for the manner of issuance of invoice. The newly inserted sub-rules are re-produced below:

“(4) The invoice shall be prepared by such class of registered persons as may be notified by the Government, on  the  recommendations  of  the  Council, by  including  such  particulars contained  in FORM   GST  INV-01 after  obtaining   an   Invoice  Reference  Number  by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the notification.

(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice.

(6)  The  provisions  of  sub-rules  (1)  and  (2)  shall  not  apply  to  an  invoice  prepared  in  the manner specified in sub-rule (4).”.

Sub-rules (1) and (2) is re-produced below:

Sub-rule (1) The invoice shall be prepared in triplicate, in the case of supply of goods, in the following manner, namely,-

(a) the original copy being marked as ORIGINAL FOR RECIPIENT;

(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and

(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.

Sub-rule (2) The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner, namely,-

(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and

(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.

As per above stated rules, the Government will select certain class of registered persons on the recommendations of the GST Council who shall be uploading the information of the invoice in Form GST INV-01 in the common electronic portal subject to certain conditions and restrictions and get invoice reference number and shall incorporate it in the invoice.

In the event the selected class of registered person fails to upload the information in the common electronic portal then the invoice raised shall not be treated as an invoice. In other words, the invoice raised by certain class of registered person, not having invoice reference number incorporated on it shall not be considered as a valid invoice. If this be the case then one of the condition prescribed u/s 16(2)(a) to claim input tax credit by the recipient person will not get fulfilled and as a reason his claim of input tax credit would be rejected. .  

The selected class of registered person who meets the compliance of sub-rule (4) are not required to fulfill the requirement of sub-rule (1) and (2) i.e. invoice need not be prepared in triplicate or duplicate on the supply of goods or services as the case may be.  

Selected class of registered persons

CBIC has notified the class of registered person vides Notification no. 70/2019 – Central Tax dated 13.12.2019 that shall be generating invoice reference number. As prescribed in the notification, the registered persons whose aggregate turnover in a financial year exceeds one hundred crore rupees shall do the compliance of rule 48(4) effective from 01.04.2020.

In the month of March, 2020 a Notification no. 13/2020 – Central Tax dated 21.03.2020 was published superseding notification no. 70/2019 supra, and extending the date of implementation of rule 48(4) to 01.10.2020.

E-invoicing: 500 crore turnover- 01.10.2020

On 30.07.2020 the said threshold limit was increased to 500 crores vide notification no. 61/2020 – Central Tax.

On 30^th September, 2020 Notification no. 70/2020 – Central Tax was published to amend the Notification no. 13/2020 – Central dated 21.03.2020 so as to substitute, – a) ‘financial year’ with ‘any preceding financial year from 2017-18 onwards and b) ‘goods or services or both to a registered person’, the words ‘’or exports’ shall be inserted.

E-invoicing was implemented on 01.10.2020. As a first time relief a special procedure was prescribed for period from 01.10.2020 to 31.10.2020 whereby it was allowed to generate e-invoice within thirty days from the date of such invoice.

E-invoicing: 100 crore turnover- 01.01.2021

On 10^th November, 2020, notification no. 88/2020 – Central Tax was published to lower the threshold to 100 crore  effective from 01.01.2021.

E-invoicing: 50 crore turnover- 01.04.2021

On 8^th March, 2021, notification no. 05/2021 – Central Tax was published to lower the threshold to 50 crore effective from 01.04.2021.

A notification no. 23/2021 – Central Tax dated 01.06.2021 was published to amend first para of the notification no. 13/2020 – Central Tax dated 21.03.2020. After the words “notified registered person, other than” the words “a government department, a local authority,’

E-invoicing: 20 crore turnover- 01.04.2022

On 24^th February, 2022 a notification no. 01/2022 – Central Tax was published to lower the threshold limit to 20 crore effective from 01.04.2022.

E-invoicing: 10 crore turnover- 01.10.2022

On 01^st August, 2022 a notification no. 17/2022 – Central Tax was published to lower the threshold limit to 10 crore effective from 01.10.2022.

E-invoicing: 5 crore turnover- 01.08.2023

On 10^th May, 2023 a notification no. 10/2023 – Central Tax was published to lower the threshold limit to 5 crore effective from 01.08.2023

Summary of the date-wise change in the e-invoice compliance

Turnover limit	Effective date	Notification
01.10.2020	500 crore	13/2020 – Central Tax dated 21.03.2020
01.01.2021	100 crore	88/2020 – Central Tax dated 10.11.2020
01.04.2021	50 crore	05/2021 – Central Tax dated 08.03.2021
01.04.2022	20 crore	01/2022 – Central Tax dated 24.02.2022
01.10.2022	10 crore	17/2022 – Central Tax dated 01.08.2022
01.08.2023	5 crore	10/2023 – Central Tax dated 10.05.2023

Few important points given below :

Threshold / Aggregate turnover for the purpose of checking if you fall under the compliance of rule 48(4)

• Aggregate value of all taxable suppliers,
• exempt suppliers
• exports of goods or services or both
• interstate supplies of persons having same PAN

To be computed on all India basis.

Excludes

• value of inward supplies on which reverse charge applies
• all taxes viz IGST, CGST, SGST, UTGST

Invoice Reference Number

It is 64 character hash algorithm containing GSTIN of supplier, invoice number, document type and financial year.

QR Code

Quick Reference code consist of

• GSTIN of supplier
• GSTIN of buyer
• Invoice number,
• Invoice date
• Invoice value
• Number of line items
• HSN of major commodity as per value
• Unique IRN (Hash)

Applicability of e-invoicing

• B2B invoices
• Export invoices
• Credit notes
• Debit notes

Non- applicability of e-invoice

• B2C supplies
• Bill of entry /imports
• SES Units
• Insurer or a banking company or a financial institution, including a non-banking financial company.
• Goods transporter agency supplying services in relation to transportation of goods by road in a goods carriage.
• Suppliers of passenger tra nsportation service
• Suppliers of services by way of submission to exhibition of cinematograph films in multiplex screens

Modes of generation of e-invoice

1. Through GST System – Invoice Registration Portal (IRP) – Machine to Machine
2. Small Taxpayers – NIC –GePP – On System, & GePP-off System
3. API Based, SMS Based, Mobile App based, offline tool (JSON file).
4. GSP Based & Web Based

Cancellation of E-invoice

1. IRN generated on the portal can be cancelled within 24 houres
2. IRN cannot be cancelled, if valid E-Way Bills exists for that IRN
3. Once e-invoice (IRN) is cancelled, then one more IRN cannot be generated on same invoice number

Discussions to this article

[Sadanand Bulbule]

Dear Sir

The analysis of provisions governing the issue of E-Tax Invoice explained by you is quite beneficial. Many a times the taxpayers for the movement of consignment of goods generate E-way bill but fail to issue E-Tax Invoice without any intent to evade tax. However there is provision to levy penalty which may extend to Rs. 25000/- under Section 122[3][e] of the CGST Act.

But in reality, the officers deliberately don't invoke such dealer friendly provision but want to extract maximum penalty under Section 129, despite knowing the fact of no intent to evade tax. Unfortunately, some Appellate Authorities too approve the penalty levied under Section 129. Thus for failure to issue E-Tax Invoice or valid tax invoice, the amount of penalty prescribed under Section 122[3][e] of the CGST Act is a dream. Consequently the object of law makers has become a fruit in the mirror, unreachable to the honest tax payers.

[KASTURI SETHI]

Dear Sir,

Your arguments hold water. Non imposition of penalty should not be treated as revenue loss. In case evasion has not materialled, there is no logic to impose penalty on the so-called mala fide intention. Heavy penalty cannot be imposed upon due to 'intention' which has not materialized with actual loss of revenue. .

Undoubtedly, rules and regulations have been framed to be honoured and not meant for flouting like anything. In the event of technical lapse, there should be nominal penalty. Nominal penalty should not prove a pipe dream.