GST Update No 329 on recent FAQ for E-invoicing under RCM

Recently FAQs were released by Goods and Service Tax E-invoicing system wherein the difficulties of the taxpayers related to issuance of E-invoicing were addressed. However, it seems that the dispute and confusion regarding issuance of e-invoicing in case of reverse charge mechanism needs to be resolved. In this present update, we shall have detailed discussion of the subject matter under consideration.

As per the FAQ regarding uploading of RCM invoices, the clarification given is as follows:
Question: Do you need to upload RCM invoices also?
Answer: Yes, if the taxpayer is eligible for E-invoicing, all the invoices including RCM invoices issued by suppliers needs to be registered.

Aligning with the above, we would like to refer to the amendment made in the GST Council Meeting regarding furnishing of declaration on the invoice where assessee is not required to prepare e-invoice in terms of Rule 48(4) of the CGST Rules, 2017. The relevant extract of Rule 48(4) of the CGST Rules, 2017 is as follows: -

Rule 48(4)
(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.
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt a person or a class of registered persons from issuance of invoice under this sub-rule for a specified period, subject to such conditions and restrictions as may be specified in the said notification.

Furthermore, as per Notification no. 13/2020-Central Tax dated 21.03.2020, the government on the recommendations of the GST Council has notified that the persons referred to in sub-rules (2), (3), (4), and (4A) of Rule 54 of the said Rules are not required to issue e-invoice.
The class of persons specified are listed below:-
•   Insurance, Banking or Financial Institution including NBFC [Rule 54(2)]
•   Goods Transport Agency transporting goods by road [Rule 54(3)]
•   Supplier of passenger transportation service [Rule 54(3)]
•   Person supplying services by of admission to exhibition of cinematographic film in multiplex screen [Rule 54 (4A)]
•   Special Economic Zone Unit
•   Government Department
•   Local Authority

From the above, it is crystal clear that E-invoice is not required to be issued by Goods Transport Agency. However, as per the recently released FAQ, all invoices including RCM invoices issued by supplier needs to be registered on the portal. As there is contradiction between the FAQs released by the government and the notification issued thereon, the provisions contained in the notification will have precedence. Moreover, another doubt that arises is whether e-invoice is to be made applicable for services covered under RCM availed from unregistered suppliers wherein the liability to issue invoice lies on the recipient of service as stated in section 31(2)(f) of the CGST Act, 2017. As the FAQ mentions that RCM invoice issued by the supplier needs to be registered on e-invoice portal, one may interpret that the e-invoicing is applicable only where the supplier providing services under RCM is registered under GST Laws and is issuing invoices.
The recently issued FAQ has increased the confusion as regards applicability of e-invoicing in case of GTA service providers who are covered under exception list. Although it is well settled that the FAQ cannot have an overriding effect over the notification, yet a prompt action by way of issuance of suitable clarification from the Government is anticipated to avoid unnecessary dispute at the earliest possible.

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GST Update No 329 on recent FAQ for E-invoicing under RCM

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