GST E-invoicing : what will happen if won’t comply

GST E-invoicing : what will happen if won’t comply

“E-Invoicing”, as we know, compulsory for all large corporates having GST aggregate turnover of more than  ₹500 crore. The Government notified the implementation of e-invoice from 1st October 2020, which will mandate registration of all tax invoices details on a centralised portal.

This will involve uploading of invoice details on a notified Invoice Registration Portal (“IRP”) where validation of key invoice particulars would be undertaken, and a unique number called IRN (“Invoice Reference Number”) along with a digitally signed QR code (Quick Response code) will be issued. Post issuance of the IRN and QR code, the uploaded invoice will attain validity and the status of a Government validated document.

Since every invoice has to be validated, this necessitates the transformation of existing accounting ERPs and an overhaul of related processes for a successful adaptation to the newly envisaged requirement. With limited time left for modification of systems and processes, businesses need to adopt an aggressive approach to ensure readiness before the ‘Go-live’ date.

One way of looking at this issue could be that to the extent an invoice (invoice without unique ID) is available, not having an e-invoice should attract very nominal penal consequences. This view would also find support from the fact that this being a new requirement, the Government may be lenient in invoking penal provisions for the first few months.

However, businesses should be cautious with this kind of approach since a careful reading of GST laws throws up some unique challenges.

Some of the challenges could be as follows:

  • If an invoice is not registered on the IRP, then such an invoice would not be treated as a valid tax invoice for all GST related matters and therefore attract a penalty of  ₹10,000 for each instance of non-compliance.
  • Transportation of goods without a valid tax invoice may cause detention of goods and vehicle and imposition of penalty.
  • Customers may refuse to accept the goods and/ or make payments in the absence of a valid tax invoice as this would impact a recipient’s eligibility to avail ITC.
  • Further, the Government also plans to implement a check which would restrict the generation of e-way bill in the absence of IRN.

Given the above set of likely challenges that may follow on account of non-compliance of e-invoicing provisions, it becomes imperative for businesses to pick up the pace and initiate requisite modifications in their invoicing process.


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