e-Invoice & e-Way Bill

What e-invoicing actually is

The name misleads. The government does not generate your invoice, does not give you a format to bill your customer on, and has no view on what your invoice looks like. You raise the invoice in your own system, as you always did. E-invoicing is the step after that: the invoice details are sent in a prescribed schema to an Invoice Registration Portal, which validates them, allots an Invoice Reference Number, signs the payload digitally, returns a QR code, and keeps a copy.

The IRN is a hash computed from your GSTIN, the document type, the document number and the financial year. Because it is derived from those four things, the same invoice cannot be registered twice, and a duplicate attempt is rejected rather than accepted quietly.

What changes on the printed document is small: the invoice must carry the QR code returned by the portal. What changes behind it is not small. The portal now holds an authenticated copy of the invoice, timed and signed, and that copy is what flows into the return system.

Which documents must be reported, and which need not

The obligation attaches to documents, not to a business as a whole. A covered taxpayer reports some of what it issues and none of the rest.

Who is covered

Applicability follows aggregate turnover, and the test is wider than it first appears. A taxpayer is covered if aggregate turnover exceeded the notified figure in any financial year from 2017-18 onwards — not merely in the year immediately preceding. A business whose turnover crossed the line once and has since fallen below it remains covered.

Aggregate turnover for this purpose is computed across all registrations on the same permanent account number, on an all-India basis, and includes exempt supplies and exports. A group with several state registrations therefore looks at the combined figure, not at each state.

Certain classes are exempt from e-invoicing whatever their turnover, because of the nature of what they supply.

• Banking companies, financial institutions and non-banking financial companies
• Insurers
• Goods transport agencies supplying services in relation to the transport of goods by road
• Suppliers of passenger transportation services
• Suppliers of services by way of admission to the exhibition of cinematograph films in multiplex screens
• Units in a special economic zone, though developers of one are not exempt
• Government departments and local authorities

The turnover figure from which e-invoicing applies has been lowered in stages since the scheme began and may be lowered again. Do not take a threshold from a document written a year ago; check the current notification, and check it against every year since 2017-18 rather than only the last one.

The time limit for reporting

Reporting was open-ended at first, which allowed invoices to be registered months after they were raised and defeated much of the purpose. A time limit now applies to larger taxpayers: an invoice, credit note or debit note must be reported to the portal within a fixed number of days of the document date, and the portal refuses an older document.

Both parts of that rule — the turnover above which the limit applies, and the number of days allowed — have been revised since it was introduced, and the limit has been extended down to smaller taxpayers over time. Take the current position from the e-invoice portal rather than from memory.

A document the portal refuses because it is too old cannot be registered at all. There is no late-reporting facility and no fee that fixes it. The invoice is left without an IRN permanently, which is precisely the outcome the next section describes.

What happens if an invoice is not reported

This is the part that gives the scheme its teeth. Where a taxpayer is covered by e-invoicing, an invoice issued without an IRN is not a valid tax invoice. It is not a formatting defect; the document does not answer the description in section 31.

Two things follow. The supplier has issued no valid invoice for a supply that has been made, which attracts penalty in its own right. And the buyer holds a document that does not satisfy the first condition in section 16, so the credit he took on it is at risk even though he did nothing wrong and paid the tax in full.

The invoice will also not auto-populate into GSTR-1, so the supplier ends up reporting the supply manually while the portal's records show no registered document behind it — a mismatch that is straightforward for the department to find.

A buyer's own compliance does not protect him here. Before taking credit on an invoice from a large supplier, the QR code and IRN are worth checking, because if they are absent the credit is being taken on a document that does not legally exist.

Cancellation, and why there is no amendment

An IRN may be cancelled within twenty-four hours of its generation, and only in full — there is no partial cancellation, and no facility to correct a field and re-register the same document number. After the window closes, the IRN stands.

An IRN can be cancelled but never amended. This is a deliberate design choice: the whole value of a registered invoice is that a signed copy exists as at a moment in time, and a document that could be edited afterwards would be worth nothing as evidence. Corrections are therefore made where corrections have always been made under GST — by a credit or debit note, or by amending the entry in GSTR-1.

Cancelling within the window frees the document number in the sense that the supply must then be re-invoiced, but the cancelled number cannot be reused for a fresh IRN. A new document number is required.

An IRN found to be wrong on the second day is a credit note, not a cancellation. Businesses that discover this late tend to have raised a replacement invoice for the same supply and left both in the system, so the same sale is reported twice and the difference surfaces at the annual reconciliation.

What e-invoicing feeds

Because the portal already holds the invoice, the same data need not be entered twice.

• GSTR-1 is populated from the registered invoices for the period. The figures remain editable before filing, so the auto-population is a starting point rather than a filed return.
• Part A of an e-way bill can be generated from the same payload, since the invoice already carries the parties, the value and the goods. Part B, being the vehicle, still has to be supplied.
• The buyer sees the supply reflected in his GSTR-2B once the supplier files, which is what makes his credit claimable.

Auto-population is not filing. An invoice registered on the portal but omitted from a filed GSTR-1 gives the buyer no credit, because credit is built from the filed return, not from the portal's copy.

e-Way bill — when it is required

Rule 138 requires an e-way bill before a consignment of goods worth more than the notified value is moved, whether the movement is in relation to a supply, a return, an inward supply from an unregistered person, or a movement for a reason other than supply such as a transfer between your own branches or goods sent for job work.

The value is taken per consignment as the invoice value including tax, and excludes the value of exempt goods where a single document covers both. For inter-state movement the figure is set in the rule itself and is fifty thousand rupees.

For movement within a state, each state may set its own figure and several have raised it, with a few setting a separate figure for movement within a single city or district. There is no single national answer for intra-state movement, and the figure that matters is the one notified by the state in which the goods are moving.

• Some goods require an e-way bill regardless of value, and some are exempt regardless of value — the exempt list covers, among others, goods moved by a non-motorised conveyance and goods moved from a customs port to an inland container depot for clearance.
• A movement for job work between states requires an e-way bill whatever the consignment value.
• Handicraft goods moved by a person exempt from registration require one whatever the value.

The threshold is per consignment, not per invoice and not per day. Splitting one movement across several invoices to stay under the figure does not work, and a vehicle carrying several small consignments is looked at as a whole.

Who generates it, and the two parts

The obligation sits first with the registered person causing the movement, whether that is the consignor or the consignee. If neither has generated one, the transporter must, and a transporter who moves goods without one carries the exposure himself.

The bill is in two parts. Part A carries the commercial detail — the GSTINs, the place of delivery, the document number and date, the value, the HSN code and the reason for transport. Part B carries the transport detail, which is the vehicle number for road movement or the transport document number for rail, air or ship.

Part B may be left for a short while at the start of the journey. Where goods are moved from the consignor's place of business to a transporter's premises for onward carriage, and the distance is up to fifty kilometres within the same state or union territory, Part B need not be filled in for that leg. The reason is practical: at the point the goods leave the factory for the transporter's yard, the vehicle that will carry them onward is often not yet known.

The e-way bill number becomes valid only once Part B is completed. A bill with Part A alone does not authorise the main journey, and validity does not begin to run until Part B is entered.

A vehicle changed mid-journey — a breakdown, a transhipment, a change of transporter — requires Part B to be updated before the goods move again. The commonest detention on record is not a missing e-way bill but a valid one showing the wrong vehicle.

Validity, and how a day is counted

Validity runs by distance, and the clock starts when Part B is first entered, not when Part A was created.

• A 'day' is not twenty-four hours. The first day expires at midnight of the day immediately following the date on which validity began, so a bill generated at nine in the evening has a first day of about twenty-seven hours, and one generated at eleven in the morning has about thirty-seven.
• Distance is the approximate road distance between the origin and destination pin codes; the portal computes it and allows a margin above the computed figure.
• Over-dimensional cargo means a consignment carried as a single indivisible unit exceeding the dimensional limits set under the motor vehicle rules.

Because a day ends at midnight rather than at the hour of generation, a bill created late in the evening for a long journey buys much less time than the driver expects. Where the timing can be chosen, generating in the morning is worth a good deal.

Extension, cancellation and rejection

An e-way bill whose journey is not going to finish in time can be extended, but only within a narrow window around expiry: from eight hours before it expires to eight hours after. Outside that window there is nothing to extend, and the only course is a fresh bill for the remaining leg. The extension requires the reason and the current place of the consignment, and validity is recomputed from the remaining distance.

A limit now applies to how long a bill may be kept alive by successive extensions, and a separate restriction bars generating a bill against a document older than a stated number of days. Both were introduced by notification and both should be confirmed on the portal.

Cancellation is available within twenty-four hours of generation, and only where the goods have not been moved or the bill was generated in error. A bill that has already been verified in transit by an officer cannot be cancelled at all.

The other party has a say. The recipient — or the supplier, where the bill was raised by the other side — may reject an e-way bill raised against his GSTIN within seventy-two hours of its generation, or by the time of delivery, whichever comes first. Silence past that point is treated as acceptance.

The eight-hour window is the one that is missed. A driver who reports a delay the next morning, twelve hours after expiry, has left it too late; the consignment is travelling on an expired bill, and that is treated as travelling on none.

Consolidated bills, and blocking

A transporter carrying several consignments in one vehicle may generate a consolidated e-way bill, which is a single document listing the individual e-way bill numbers. It is a convenience for the driver and nothing more: it does not replace the individual bills, does not extend their validity, and does not cure a defect in any of them. Each consignment still stands on its own bill.

Rule 138E blocks generation where returns have not been filed. A registered person who has not filed for two consecutive tax periods — two quarters, for somebody filing quarterly — cannot generate an e-way bill, either as consignor, consignee or transporter, until the returns are brought up to date. The block also follows the GSTIN when somebody else tries to raise a bill naming that person.

Blocking is the point at which a filing problem becomes a despatch problem. A business that discovers it on the loading bay has usually lost a day, because unblocking follows the filing and is not immediate.

Detention and penalty

Goods moving without a valid e-way bill, or with one that does not match the consignment, may be detained or seized under section 129 along with the vehicle. Release is against payment, and what is payable depends on whether the owner of the goods comes forward.

• The officer must issue a notice and pass an order within the periods fixed in the section, and the detention is not open-ended.
• Where the amount is not paid within the period allowed after detention, proceedings for confiscation of the goods and the conveyance follow under section 130.
• A purely clerical error — a wrong digit in a vehicle number, with everything else in order — has repeatedly been held not to warrant the full penalty, and the department's own instructions recognise a class of minor discrepancies. That is a defence to be argued, not a rule to rely on at the checkpoint.

The percentages in section 129 were changed when the section was recast, and older commentary states the earlier amounts alongside a demand for the tax itself. Read the current text of the section rather than a summary of it, including this one, before conceding an amount.

The two side by side

The distinction worth holding on to is that one is about a document and the other is about a journey.