GST UPDATE ON RESTRICTION ON GENERATION OF E-WAY BILL

GST UPDATE ON RESTRICTION ON GENERATION OF E-WAY BILL
After the recommendations made by the government in its 31st council meeting, the requisite notifications have been issued for the purpose of implementing these proposals. One such proposal made was that taxpayers who have not filed the returns for two consecutive tax periods shall be restricted from generating e-way bills. Thus, in this regard, the government has issued notification no. 74/2018- Central tax dated 31.12.2018 inserting a new Rule 138E after rule 138D of the CGST Rules. The provision contained in Rule 138E reads as follows:-
Restriction on furnishing of information in PART A of FORM GST EWB-01.- Notwithstanding anything contained in sub-rule (1) of rule 138, no person (including a consignor, consignee, transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the information in PART A of FORM GST EWB-01 in respect of a registered person, whether as a supplier or a recipient, who,—
(a) being a person paying tax under section 10, has not furnished the returns for two consecutive tax periods;
or
(b) being a person other than a person specified in clause (a), has not furnished the returns for a consecutive period of two months
Provided that the Commissioner may, on sufficient cause being shown and for reasons to be recorded in writing, by order, allow furnishing of the said information in PART A of FORM GST EWB 01, subject to such conditions and restrictions as may be specified by him:
Provided further that no order rejecting the request of such person to furnish the information in PART A of FORM GST EWB 01 under the first proviso shall be passed without affording the said person a reasonable opportunity of being heard: Provided also that the permission granted or rejected by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed to be granted or, as the case may be, rejected by the Commissioner. Explanation:– For the purposes of this rule, the expression ―Commissioner‖ shall mean the jurisdictional Commissioner in respect of the persons specified in clauses (a) and (b).‖.

From the above amendment it seems as if the government is determined to establish a well knitted framework to keep overall check on the assessee so as to ensure proper compliance with the GST Laws. The government is bringing such provisions which mandatorily require assessee to file returns and pay taxes else their business would be hampered. It is very well known that the provisions of e-way bill for movement of goods has been strictly adopted and it is provided that if the assessee fails to file return for two consecutive tax periods, the facility to generate e-way bill would be de-activated thereby effecting the working of the business of the assessee. This provision will be a setback for all assessees except service providers who do not generate e-way bills.

Another point that is worth observing is that the restriction to generate e-way bill will be applicable for supplier and recipient both so as to ensure that there is no loophole in the control mechanism developed by the government. Although, the liability to generate e-way bill is generally of supplier of goods but the recipient of goods is liable to generate e-way bill if the goods are purchased from un-registered supplier. However, in case where supplier and recipeint both are registered, there may be possibility that receiver can generate e-way bill. In order to prohibit recipeint to generate e-way bill in cases where the supplier defaults in furnishing return for two consecutive tax periods, it is being mentioned that e-way bill cannot be generated either in the capacity of supplier or recipeint thereby ensuring total check on the assessee.

However, the government has discriminated among the assessees as this restriction of generation of e-way bill will be attracted for composition assessees is they have not filed returns for consecutive two tax periods meaning two quarters. This is for the reason that the composition assessees are required to pay tax and file returns on quarterly basis. As against this, the normal assessees (having turnover below 1.5 Crores or above) will come within purview of this restriction if they fail to furnish returns for two consecutive months as they are required to file GSTR-3B on monthly basis. Accordingly, lenient approach has been adopted for assessees opting under composition scheme as the provisions of restriction of generation of e-way bill will attract at comparatively later point of time than normal assessees.

Lastly, the discretion given to the Commissioner to allow generation of e-way bill in exceptional circumstances for reasons to be recorded in writing on certain conditions is unreasonable as practically it is impossible to satisfy genuineness of case. The provision should illustrate the situations where the discretion could be exercised by the Commissioner. Moreover, the provisions as regards activation of the facility to generate e-way bills upon filing the returns for the required period is not incorporated which puts question mark on the removal of restriction after the assessee has complied with the GST law and has filed the desired returns. The government should also clearly state the period within which the assessee would be able to generate e-way bills after furnishing the required returns.

The content of this GST update is for educational purpose only and not intended for solicitation.

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GST UPDATE ON RESTRICTION ON GENERATION OF E-WAY BILL

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