Library / Goods and Services Tax: The Professional's Master Guide

22. E-Invoicing and E-Way Bills

E-invoicing validates B2B invoices on a Government portal before they reach the customer; the e-way bill tracks goods on the road. Both feed returns automatically and both carry penalties when ignored.

22.1 E-invoicing: scope and thresholds

Under rule 48(4) of the CGST Rules, notified persons must prepare invoices and credit and debit notes for B2B supplies, exports and supplies to SEZs by uploading them to an Invoice Registration Portal (IRP). The IRP validates the data, generates a unique Invoice Reference Number (IRN), signs the invoice and returns it with a QR code; the details flow to GSTR-1 and the e-way bill system. An invoice that should have been an e-invoice but was issued without an IRN is not a valid invoice (rule 48(5)).

The test is whether aggregate turnover (PAN level) exceeded the limit in any financial year from 2017-18. Once covered, a person stays covered even if turnover later falls. Exempt whatever their turnover: SEZ units (not developers), insurers, banks, financial institutions and NBFCs, goods transport agencies, passenger transport, cinema admission in multiplexes, and Government departments and local authorities.

The 30-day reporting limit

From 1 April 2025, taxpayers with aggregate annual turnover (AATO) of Rs. 10 crore or more cannot report a document to the IRP after 30 days from the document date. The restriction covers invoices, credit notes and debit notes. (From 1 November 2023 it applied at Rs. 100 crore.) The IRP rejects late documents.

Cancellation, B2C dynamic QR and consequences

An IRN can be cancelled, in full only, within 24 hours of generation on the IRP. An active e-way bill must be cancelled first. After 24 hours, correction is by credit note or GSTR-1 amendment, and the cancelled number cannot be reused.

Taxpayers with aggregate turnover above Rs. 500 crore must show a dynamic QR code on B2C invoices. Not issuing an e-invoice where required attracts penalty under section 122 (Rs. 10,000 or the tax involved, whichever is higher) and the general penalty under section 125 for procedural lapses, apart from loss of credit to the customer.

22.2 E-way bill: when required

Section 68 and rules 138 to 138E require an e-way bill (EWB) for movement of goods of consignment value above Rs. 50,000, whether for supply, for reasons other than supply (stock transfer, job work), or for inward supply from an unregistered person. Consignment value is the section 15 value in the document including GST and cess, excluding exempt goods in the same document. Inter-State movement for job work and of handicraft goods needs an EWB even below Rs. 50,000. States may notify a higher intra-State limit.

Parts A and B. Part A has the invoice details, GSTINs, delivery place, value, HSN and reason for transport. Part B has the vehicle or transport document number. The EWB is not valid until Part B is filled, except for movement up to 50 km within the State from the consignor to the transporter's place. Two-factor authentication is required for generation, and EWBs can be generated only for documents not older than 180 days (from 1 January 2025).

Exemptions (rule 138(14)) include non-motorised conveyance; movement from a port, airport or land customs station to an ICD or CFS for clearance; goods under customs bond; transit to or from Nepal or Bhutan; empty containers; movement up to 20 km to a weighbridge under a delivery challan; annexure goods such as household LPG and currency; exempt goods; and alcoholic liquor and petroleum products.

Job work and stock transfer. Job work goods move under a delivery challan with an EWB; stock transfers to another registration under a tax invoice and EWB.

Bill-to-ship-to. Where A in Delhi sells to B in Mumbai but ships directly to B's customer C in Pune, the EWB is generated on the invoice of A to B with the delivery address of C. One EWB covers the movement, generated by A or B.

22.3 Validity and extension

Rule 138(10) gives validity according to distance: 1 day for up to 200 km and 1 more day for every further 200 km or part. For over dimensional cargo (ODC) it is 1 day for every 20 km or part. A "day" ends at midnight of the day following the date of generation. Where goods cannot reach in time (breakdown, accident, law and order), validity may be extended within 8 hours before or after expiry, up to 360 days in all.

22.4 Interception and detention (sections 68 and 129)

The officer may stop a conveyance, record the driver's statement (MOV-01) and order physical verification (MOV-02), with a summary report within 24 hours and a final report within 3 days. If documents are missing or wrong, the goods are detained (MOV-06) and a notice in MOV-07 proposes the penalty. Under section 129(3), the notice must be issued within 7 days of detention, and the order in MOV-09 passed within 7 days of service of the notice. The goods are released on payment of the penalty (MOV-05) or on furnishing security equal to it.

An appeal against a section 129(3) order requires pre-deposit of 25% of the penalty (proviso to section 107(6)). Section 130 (confiscation, with a redemption fine up to market value less tax, plus tax and penalty) is for intent to evade, such as goods not in the books, and should not be used for documentary lapses covered by section 129.

© Vipin Nair. This guide is for reading online only. Copying, downloading, printing and redistribution are not permitted. For study and general reference; not legal, tax or investment advice.