A GST-registered business issues a tax invoice to the buyer. The GST rate charged on the products and services sold is specified on such an invoice. However, certain GST-registered businesses cannot levy tax on invoices they issue.
Such vendors must provide a Bill of Supply. A supplier produces a Bill of Supply when GST does not apply to a transaction. The supplier also uses it when the supplier cannot recover GST from their customers.
Who should be in charge of issuing the Bill of Supply?
The following applicants should issue bills of Supply:
Composition Dealer
A composition plan is available to taxpayers earning less than Rs 1.5 crores. For northeastern states and Uttarakhand, the limit is Rs 75 lakhs.
A dealer that chooses the composition system must deposit tax on their receipts; they are not permitted to collect tax from their customers. The composition vendor must pay the GST out of pocket. They are unable to include GST in the invoice.
As a result, a composition dealer must issue a Bill of Supply rather than a Tax Invoice. On the Bill of Supply, the composition dealer must include the phrase ‘composition taxable person not qualified to collect taxes on supplies.’
Exporters
The exporter does not need to impose GST on their invoice because, as a result, export supplies are zero-rated. Therefore, GST is not applicable to such transactions. As a result, a taxpayer exporting goods can use a Bill of Supply instead of a tax invoice.
Dealers must mention in their Bill of Supply: “Supply Meant For Export On Payment Of IGST” or “Supply Meant For Export Under Bond Or Letter Of Undertaking Without Payment Of IGST.”
Supplier of Exempted Goods
A Bill of Supply is necessary when a licensed dealer supplies exempt goods or services.
Registered taxpayers must present a Bill of Supply instead of a tax invoice for unprocessed agricultural products.
Elements of Bill of Supply
The GST law specifies specific details to include in a Bill of Supply. A Bill of Supply should include the following information:
- Name, address, and GSTIN of the provider
- Bill of Supply number that does not exceed 16 characters. Furthermore, you should generate it consecutively and assign a unique number for the fiscal year.
- Date of publication
- Enter the recipient’s name, address, and GSTIN if the receiver is registered.
- HSN Code
Consequences of not carrying Eway bill
Failure to generate and carry the EWay bill might result in monetary and non-monetary damages to taxpayers. Goods transferred in violation of the law are responsible for:
Financial Penalty
Moving goods without an invoice or Eway bill is an offense punishable by a Rs.10,000 fine or the avoided tax.
As a result, the bare minimum penalty for failing to comply with the rules is Rs. 10,000.
Detention and Seizure
If an officer discovers a vehicle moving goods without an E-way bill, they may detain or seize the vehicle and release it only after the recipient pays the applicable tax and penalty. There are two possibilities in this case:
- If the owner desires to pay the penalty, he must pay the tax due.
- If not, the penalty will be 50% of the value of the products.
Aside from the legal implications described above, it is also crucial to know that the vehicle and the taxpayer’s goods may be seized.
The lengthy waits at the checkpoints will hamper the taxpayer’s supply chain.
Penalty for Mistakes in E-Way Bills
Following repeated requests from truck drivers and owners of goods, the Government of India (GoI) made an announcement. If the supplier of goods or the transporter carrying goods registers under GST and has a GST e-way bill, the officer will apply penalties if the e-way bill contains minor mistakes. Therefore, it is important to ensure accuracy to avoid any penalties.
The enforcement officer shall impose a penalty of Rs. 1,000 on the written business and/or the transporter.
On September 14, 2018, the GoI announced this step via Circular No. 64/ 38/ 2018-GST. As a result, if the e-way bill has minor errors during transit, the supplier or transporter is only liable for a Rs.1000 penalty.
It will, however, apply if the owner or carrier registers the items on the e-way bill portal or through other ways. The individual must also have paid all applicable taxes on the entire worth of the commodities included in the transfer.
Documents Required During Transit
During the transit of the products, the supplier or transporter shall carry the tax invoice or delivery challan. They must also carry the e-way bill.
According to the Circular, the following errors shall apply, and the penalty of Section 129 of the CGST Act shall not apply if the e-way bill, tax invoice, or other relevant documents contain the following errors for the stated goods as transported by the owner of the goods:
- If an e-way bill, tax invoice, or other associated document contains spelling errors in the name of the consignor or consignee, but the document includes the relevant GSTIN, the document is acceptable.
- If an e-way bill, tax invoice, or other connected document contains an error in the Pin-code to the indicated place deliverable, but the address of the consignor or consignee fits relevant information, the error in the pin-code shall apply. However, the inaccuracy in the pin code should have no influence on the e-way bill’s validity term.
- If the consignor or consignee provides an incorrect address on an e-way bill, tax invoice, or other associated document, but the address in the paperwork is close to the recipient’s location, the officer will accept the document as valid. This shall apply, however, only if the appropriate documents contain a mistake in the address and all other facts linked to the aforementioned items that are required.
- Suppose the e-way bill, tax invoice, or other related papers contain an error in the first or second digits of the document number for the goods listed on the e-way bill. If the relevant documents have many mistakes in the document number, the Circular’s benefits become ineffective.
- If an e-way bill, tax invoice, or other related document contains an error in the fourth or sixth digits of the HSN, but the first two digits of the HSN Codes appear relevant to the goods transported by the supplier or transporter, and the concerned individual paid the tax and mentioned it appropriately in the e-way bill, the penalty under Section 129 of the CGST Act becomes ineffective.
- The penalty does not apply if an e-way bill, tax invoice, or other connected document contains an error in specifying the vehicle number that only extends up to two digits or characters of the allotted vehicle number.
If the authorized officer notes any of these scenarios, they will apply a penalty of Rs. 500 as per Section 125 of the CGST Act and Rs. 500 as per the respective state GST Act. In all, the person must pay Rs.1000 for any minor errors in the preceding paragraph.
The owner of the goods or the carrier must pay the penalty on Form GST DRC-07 for each applicable consignment.
Record-Keeping by Enforcing Officers
Each month, the enforcing officer records all penalties under Section 125 of the CGST Act and explains to the controlling officer why they did not implement Section 129 of the CGST Act.
Penalty for Transporting Goods in E-Way Bills Without Valid Documents
If a transporter or a supplier transports or stores goods without any valid documents related to the goods during transit in violation of the GST Act or any rules made thereunder, and the supplier uses the same goods or the goods stored in transit, the concerned officers may detain or seize the goods.
Officers must release seized or detained goods if the supplier or transporter meets the required conditions. The person must pay the penalty in accordance with Section 129(1) clauses (a) and (b) of the CGST Act. The following are the conditions:
Transporting goods without paying taxes or providing valid documentation
If the supplier or transporter fails to pay taxes and transports goods without proper documentation, the individual in question must pay the applicable tax and a penalty equal to 100% of the entire tax payable on the value of the products moved.
If the person transported exempted items, the person must pay a penalty equivalent to 2% of the value of the products or pay a penalty of Rs.25,000, whichever is less.
Only transporting goods without valid documents
If the supplier or transporter paid the tax for the products but transported them without appropriate paperwork, the individual must pay 50% of the total worth of the commodities carried.
If the concerned individual carries exempted items, the individual must make a payment equal to 5% of the value of the products or pay a penalty of Rs.25,000, whichever is less.
Wrapping It Up
The Bill of Supply is a required document for registered persons who are tax-exempt or use the composition scheme. To avoid inconsistencies, the business must ensure they include all relevant details in the Bill of Supply.
FAQs
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What are the implications of an e-way bill?
Moving goods without the cover of an invoice and Eway bill is an offense punishable by a fine of Rs. 10,000 or the amount of tax sought to be evaded (whichever is greater).
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What is the penalty for submitting an incorrect invoice?
In such circumstances, GST penalties can be as high as 100% of the unpaid tax or a minimum penalty of Rs. 10,000.
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Who and why can oppose the E-Way Bill?
A taxpayer has the option to reject e-way bills created by third parties using the former’s GSTIN.
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What are the consequences of incorrect invoicing?
Invoice mismatches can lead to financial losses for the company. If the invoice amount is inaccurate, the company may not receive the full amount owed, leading to a revenue loss.
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What are the implications of not registering charges?
It has no bearing on the contract or the company’s duty to return the money secured.
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Can I charge GST even though I am not registered?
The first GST commandment is that you cannot charge GST if you are not registered.
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Is the eWay bill required?
You do not need to prepare an eWay bill if you transport products worth less than Rs. 50,000.
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Can I cancel an eWay bill?
Yes, you can revoke the e-way bill if you do not transport the products or if you transport them differently from the information provided in the e-way bill.
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Who is responsible for paying the EWAY bill?
A person in charge of the conveyance is needed to carry an e-way bill.
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Is it possible to reject an invoice?
It discovered that over 810,000, or 10%, were rejected owing to failing to follow the standards of the receiving business.
