Every GST registered Taxpayer having a turnover of more than INR 500 crores in any Financial Year from 2017-18 had to implement the e-Invoicing mechanism mandatorily from 1 October 2020. Furthermore, Taxpayers with a turnover of more than INR 100 crores in any Financial Year from 2017-18 have to implement this new invoicing system from 1 January 2021.
Under the e-Invoicing system, Taxpayers have to raise invoices in their internal systems and submit it to the Invoice Registration Portal (IRP). The IRP will validate the invoice details and generate an Invoice Reference Number (IRN) and a Quick Response (QR) code and send back the signed e-Invoice with these details (IRN and QR code) to the Taxpayer. The invoice shared with the buyer should mandatorily contain the QR code.
In case a Taxpayer fails to generate an e-Invoice when required, it will be a default on his/her part. In other words, non-generation of e-Invoice will imply that the supply transaction is not intimated to the Government when it is mandatory to do so.
Note: e-Invoicing is applicable only on B2B transactions as of now.
Failure To Generate E-Invoice
As per rule 48(5) of the CGST Rules, failure to generate an IRN (e-Invoice) will be considered as a ‘failure to issue an invoice’.
Penalties For Non-issuance of Invoice
As mentioned above, 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. The penalties applicable here are:
- Penalty for non-issuance of invoice: 100% of the tax due or INR 10,000 (whichever is higher) will be imposed for each instance of non-compliance.
- Penalty for incorrect invoice: INR.25,000 will be imposed as penalty here.
- In case the goods are transported without a valid invoice, the department may detain the goods and the vehicle. Penalty may be imposed here.
- E-Way Bill (EWB) generation will not be possible without a valid IRN. This may impose further penalties (related to EWBs).
Note: For October 2020, the Government has waived off penalties on e-Invoices, if the Taxpayer generates the IRN within 30 days.